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FISHERIES AND COASTAL RESOURCES MANAGEMENT

Philippine Fisheries Code of 1998 (RA 8550)


Republic of the Philippines
Congress of the Philippines
Metro Manila
Tenth Congress

Republic Act No. 8550

February 25, 1998

AN ACT PROVIDING FOR THE DEVELOPMENT, MANAGEMENT AND


CONSERVATION OF THE FISHERIES AND AQUATIC RESOURCES,
INTEGRATING ALL LAWS PERTINENT THERETO, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled::
Section 1. Title. - This Act shall be known as "The Philippine Fisheries Code of
1998."
CHAPTER I
Declaration of Policy and Definitions

waters. Such preferential use, shall be based on, but not limited to,
Maximum Sustainable Yield (MSY) or Total Allowable Catch (TAC) on the
basis of resources and ecological conditions, and shall be consistent with
our commitments under international treaties and agreements;
(e) to provide support to the fishery sector, primarily to the municipal
fisherfolk, including women and youth sectors, through appropriate
technology and research, adequate financial, production, construction of
post-harvest facilities, marketing assistance, and other services. The
protection of municipal fisherfolk against foreign intrusion shall extend to
offshore fishing grounds. Fishworkers shall receive a just share for their
labor in the utilization of marine and fishery resources;
(f) to manage fishery and aquatic resources, in a manner consistent with
the concept of an integrated coastal area management in specific natural
fishery management areas, appropriately supported by research, technical
services and guidance provided by the State; and
(g) to grant the private sector the privilege to utilize fishery resources
under the basic concept that the grantee, licensee or permittee thereof
shall not only be a privileged beneficiary of the State but also active
participant and partner of the Government in the sustainable development,
management, conservation and protection of the fishery and aquatic
resources of the country.
The state shall ensure the attainment of the following objectives of the fishery
sector:
1. Conservation, protection and sustained management of the country's
fishery and aquatic resources;

Section 2. Declaration of Policy. - It is hereby declared the policy of the State:


(a) to achieve food security as the overriding consideration in the
utilization, management, development, conservation and protection of
fishery resources in order to provide the food needs of the population. A
flexible policy towards the attainment of food security shall be adopted in
response to changes in demographic trends for fish, emerging trends in the
trade of fish and other aquatic products in domestic and international
markets, and the law of supply and demand;lawphi1

2. Poverty alleviation and the provision of supplementary livelihood among


municipal fisherfolk;
3. Improvement of productivity of aquaculture within ecological limits;
4. Optimal utilization of offshore and deep-sea resources; and
5. Upgrading of post-harvest technology.

(b) to limit access to the fishery and aquatic resources of the Philippines for
the exclusive use and enjoyment of Filipino citizens;
(c) to ensure the rational and sustainable development, management and
conservation of the fishery and aquatic resources in Philippine waters
including the Exclusive Economic Zone (EEZ) and in the adjacent high seas,
consistent with the primordial objective of maintaining a sound ecological
balance, protecting and enhancing the quality of the environment;
(d) to protect the rights of fisherfolk, especially of the local communities
with priority to municipal fisherfolk, in the preferential use of the municipal

Section 3. Application of its Provisions. - The provisions of this Code shall be


enforced in:
(a) all Philippine waters including other waters over which the Philippines
has sovereignty and jurisdiction, and the country's 200-nautical mile
Exclusive Economic Zone (EEZ) and continental shelf;
(b) all aquatic and fishery resources whether inland, coastal or offshore
fishing areas, including but not limited to fishponds, fishpens/cages; and

(c) all lands devoted to aquaculture, or businesses and activities relating to


fishery, whether private or public lands.lawphi1
Section 4. Definition of Terms. - As used in this Code, the following terms and
phrases shall mean as follows:
1. Ancillary Industries - firms or companies related to the supply,
construction and maintenance of fishing vessels, gears, nets and other
fishing paraphernalia; fishery machine shops; and other facilities such as
hatcheries, nurseries, feed plants, cold storage and refrigeration,
processing plants and other pre-harvest and post-harvest facilities.
2. Appropriate Fishing Technology - adaptable technology, both in fishing
and ancillary industries, that is ecologically sound, locally source-based and
labor intensive.
3. Aquaculture - fishery operations involving all forms of raising and
culturing fish and other fishery species in fresh, brackish and marine water
areas.
4. Aquatic Pollution - the introduction by human or machine, directly or
indirectly, of substances or energy to the aquatic environment which result
or is likely to result in such deleterious effects as to harm living and nonliving aquatic resources, pose potential and/or real hazard to human
health, hindrance to aquatic activities such as fishing and navigation,
including dumping/disposal of waste and other marine litters, discharge of
petroleum or residual products of petroleum or carbonaceous
materials/substances, and other, radioactive, noxious or harmful liquid,
gaseous or solid substances, from any water, land or air transport or other
human-made structure. Deforestation, unsound agricultural practices such
as the use of banned chemicals and excessive use of chemicals, intensive
use of artificial fish feed, and wetland conversion, which cause similar
hazards and deleterious effects shall also constitute aquatic pollution.
5. Aquatic Resources - includes fish, all other aquatic flora and fauna and
other living resources of the aquatic environment, including, but not limited
to, salt and corals.
6. Artificial Reefs - any structure of natural or man-made materials placed
on a body of water to serve as shelter and habitat, source of food, breeding
areas for fishery species and shoreline protection.
7. Catch Ceilings - refer to the annual catch limits allowed to be taken,
gathered or harvested from any fishing area in consideration of the need to
prevent overfishing and harmful depletion of breeding stocks of aquatic
organisms.
8. Closed Season - the period during which the taking of specified fishery
species by a specified fishing gear is prohibited in a specified area or areas
in Philippine waters.

9. Coastal Area/Zone - is a band of dry land and adjacent ocean space


(water and submerged land. in which terrestrial processes and uses directly
affect oceanic processes and uses, and vice versa; its geographic extent
may include areas within a landmark limit of one (1. kilometer from the
shoreline at high tide to include mangrove swamps, brackish water ponds,
nipa swamps, estuarine rivers, sandy beaches and other areas within a
seaward limit of 200 meters isobath to include coral reefs, algal flats,
seagrass beds and other soft-bottom areas.
10. Commercial Fishing - the taking of fishery species by passive or active
gear for trade, business & profit beyond subsistence or sports fishing, to be
further classified as:
(1) Small scale commercial fishing - fishing with passive or active
gear utilizing fishing vessels of 3.1 gross tons (GT) up to twenty
(20) GT;
(2) Medium scale commercial fishing - fishing utilizing active gears
and vessels of 20.1 GT up to one hundred fifty (150) GT; and
(3) Large commercial fishing - fishing utilizing active gears and
vessels of more than one hundred fifty (150) GT.
11. Commercial Scale - a scheme of producing a minimum harvest per
hectare per year of milkfish or other species including those raised in pens,
cages, and tanks to be determined by the Department in consultation with
the concerned sectors;
12. Coral - the hard calcareous substance made up of the skeleton of
marine coelenterate polyps which include reefs, shelves and atolls or any of
the marine coelenterate animals living in colonies where their skeletons
form a stony mass. They include: (a. skeletons of anthozoan coelenterates
characterized as having a rigid axis of compact calcareous or horny
spicules, belonging to the genus corallium as represented by the red, pink,
and white corals which are considered precious corals; (b. skeletons of
anthozoan coelenterates characterized by thorny, horny axis such as the
antipatharians represented by the black corals which are considered semiprecious corals; and (c. ordinary corals which are any kind of corals that
are not precious nor semi-precious.
13. Coral Reef - a natural aggregation of coral skeleton, with or without
living coral polyps, occurring in intertidal and subtidal marine waters.
14. Demarcated Areas - boundaries defined by markers and assigned
exclusively to specific individuals or organizations for certain specified and
limited uses such as:
(a) Aquaculture, sea ranching and sea farming;
(b) Fish aggregating devices;

(c) Fixed and passive fishing gears; and

25. Fish fingerlings - a stage in the life cycle of the fish measuring to about
6-13 cm. depending on the species.

(d) Fry and fingerlings gathering.


15. Department - shall mean the Department of Agriculture.
16. Electrofishing - the use of electricity generated by batteries, electric
generators and other source of electric power to kill, stupefy, disable or
render unconscious fishery species, whether or not the same are
subsequently recovered.
17. Endangered Rare and/or Threatened Species - aquatic plants, animals,
including some varieties of corals and sea shells in danger of extinction as
provided for in existing fishery laws, rules and regulations or in the
Protected Areas and Wildlife Bureau of the Department of Environment and
Natural Resources (DENR. and in the Convention on the International Trade
of Endangered Species of Flora and Fauna (CITES).
18. Exclusive Economic Zone (EEZ. - an area beyond and adjacent to the
territorial sea which shall not extend beyond 200 nautical miles from the
baselines as defined under existing laws.
19. FARMCs - the Fisheries and Aquatic Resources Management Councils.
20. Farm-to-Market Roads - shall include roads linking the fisheries
production sites, coastal landing points and other post-harvest facilities to
major market and arterial roads and highways.
21. Fine Mesh Net - net with mesh size of less than three centimeters (3
cm.. measured between two (2. opposite knots of a full mesh when
stretched or as otherwise determined by the appropriate government
agency.
22. Fish and Fishery/Aquatic Products - include not only finfish but also
mollusks, crustaceans, echinoderms, marine mammals, and all other
species of aquatic flora and fauna and all other products of aquatic living
resources in any form.
23. Fish Cage - refers to an enclosure which is either stationary or floating
made up of nets or screens sewn or fastened together and installed in the
water with opening at the surface or covered and held in a place by
wooden/bamboo posts or various types of anchors and floats.
24. Fish Corral or "Baklad" - a stationary weir or trap devised to intercept
and capture fish consisting of rows of bamboo stakes, plastic nets and
other materials fenced with split blood mattings or wire mattings with one
or more enclosures, usually with easy entrance but difficult exit, and with
or without leaders to direct the fish to the catching chambers, purse or
bags.

26. Fish fry - a stage at which a fish has just been hatched usually with
sizes from 1-2.5 cm.
27. Fish pen - an artificial enclosure constructed within a body of water for
culturing fish and fishery/aquatic resources made up of poles closely
arranged in an enclosure with wooden materials, screen or nylon netting to
prevent escape of fish.
28. Fisherfolk - people directly or personally and physically engaged in
taking and/or culturing and processing fishery and/or aquatic
resources.lawphi1
29. Fisherfolk Cooperative - a duly registered association of fisherfolk with
a common bond of interest, who have voluntarily joined together to
achieve a lawful common social or economic end, making equitable
contribution to the capital requirement and accepting a fair share of the
risks and benefits of the undertakings in accordance with universally
accepted cooperative principles.
30. Fisherfolk Organization - an organized group, association, federation,
alliance or an institution of fisherfolk which has at least fifteen (15.
members, a set of officers, a constitution and by-laws, an organizational
structure and a program of action.
31. Fisheries - refers to all activities relating to the act or business of
fishing, culturing, preserving, processing, marketing, developing,
conserving and managing aquatic resources and the fishery areas,
including the privilege to fish or take aquatic resource thereof.
32. Fish Pond - a land-based facility enclosed with earthen or stone
material to impound water for growing fish.
33. Fishing Boat/Gear License - a permit to operate specific types of fishing
boat/gear for specific duration in areas beyond municipal waters for
demersal or pelagic fishery resources.
34. Fishery Management Areas - a bay, gulf, lake or any other fishery area
which may be delineated for fishery resource management purposes.
35. Fishery Operator - one who owns and provides the means including
land, labor, capital, fishing gears and vessels, but does not personally
engage in fishery.
36. Fishery Refuge and Sanctuaries - a designated area where fishing or
other forms of activities which may damage the ecosystem of the area is
prohibited and human access may be restricted.

37. Fishery Reserve - a designated area where activities are regulated and
set aside for educational and research purposes.
38. Fishery Species - all aquatic flora and fauna including, but not
restricted to, fish, algae, coelenterates, mollusks, crustaceans,
echinoderms and cetaceans.
39. Fishing - the taking of fishery species from their wild state of habitat,
with or without the use of fishing vessels.
40. Fishing gear - any instrument or device and its accessories utilized in
taking fish and other fishery species.
(a) Active fishing gear - is a fishing device characterized by gear
movements, and/or the pursuit of the target species by towing,
lifting, and pushing the gears, surrounding, covering, dredging,
pumping and scaring the target species to impoundments; such
as, but not limited to, trawl, purse seines, Danish seines, bag
nets, paaling, drift gill net and tuna longline.
(b) Passive fishing gear - is characterized by the absence of gear
movements and/or the pursuit of the target species; such as, but
not limited to, hook and line, fishpots, traps and gill nets across
the path of the fish.
41. Fishing vessel - any boat, ship or other watercraft equipped to be used
for taking of fishery species or aiding or assisting one (1. or more vessels
in the performance of any activity relating to fishing, including, but not
limited to, preservation, supply, storage, refrigeration, transportation
and/or processing.
42. Fishing with Explosives - the use of the dynamite, other explosives or
other chemical compounds that contain combustible elements or
ingredients which upon ignition by friction, concussion, percussion or
detonation of all or parts of the compound, will kill, stupefy, disable or
render unconscious any fishery species. It also refers to the use of any
other substance and/or device which causes an explosion that is capable of
producing the said harmful effects on any fishery species and aquatic
resources and capable of damaging and altering the natural habitat.
43. Fishing with Noxious or Poisonous Substances - the use of any
substance, plant extracts or juice thereof, sodium cyanide and/or cyanide
compounds or other chemicals either in a raw or processed form, harmful
or harmless to human beings, which will kill, stupefy, disable or render
unconscious any fishery species and aquatic resources and capable of
damaging and altering the natural habitat.
44. Fishworker - a person regularly or not regularly employed in
commercial fishing and related industries, whose income is either in wage,
profit-sharing or stratified sharing basis, including those working in fish
pens, fish cages, fish corrals/traps, fishponds, prawn farms, sea farms, salt

beds, fish ports, fishing boat or trawlers, or fish processing and/or packing
plants. Excluded from this category are administrators, security guards and
overseers.
45. Food Security - refers to any plan, policy or strategy aimed at ensuring
adequate supplies of appropriate food at affordable prices. Food security
may be achieved through self-sufficiency (i.e. ensuring adequate food
supplies from domestic production), through self-reliance (i.e. ensuring
adequate food supplies through a combination of domestic production and
importation), or through pure importation.
46. Foreshore Land - a string of land margining a body of water; the part
of a seashore between the low-water line usually at the seaward margin of
a low tide terrace and the upper limit of wave wash at high tide usually
marked by a beach scarp or berm.
47. Fully-developed Fishpond Area - a clean leveled area enclosed by dikes,
at least one foot higher than the highest floodwater level in the locality and
strong enough to resist pressure at the highest flood tide; consists of at
least a nursery pond, a transition pond, a rearing pond or a combination of
any or all said classes of ponds, and a functional water control system and
producing in a commercial scale.
48. Gross Tonnage - includes the underdeck tonnage, permanently
enclosed spaces above the tonnage deck, except for certain exemptions. In
broad terms, all the vessel's 'closed-in' spaces expressed in volume terms
on the bases of one hundred cubic feet (that equals one gross ton).
49. Inland Fishery - the freshwater fishery and brackishwater fishponds.
50. Lake - an inland body of water, an expanded part of a river, a reservoir
formed by a dam, or a lake basin intermittently or formerly covered by
water.
51. Limited Access - a fishery policy by which a system of equitable
resource and allocation is established by law through fishery rights granting
and licensing procedure as provided by this Code.
52. Mangroves - a community of intertidal plants including all species of
trees, shrubs, vines and herbs found on coasts, swamps, or border of
swamps.
53. Maximum Sustainable Yield (MSY. - is the largest average quantity of
fish that can be harvested from a fish stocks/resource within a period of
time (e.g. one year. on a sustainable basis under existing environmental
conditions.
54. Migratory species - refers to any fishery species which in the course of
their life could travel from freshwater to marine water or vice versa, or any
marine species which travel over great distances in waters of the ocean as
part of their behavioral adaptation for survival and speciation:

(a) Anadromous species - marine fishes which migrate to


freshwater areas to spawn;

61. Pearl Farm Lease - public waters leased for the purpose of producing
cultured pearls.

(b) Catadromous species - freshwater fishes which migrate to


marine areas to spawn.

62. People's Organization - a bona fide association of citizens with


demonstrated capacity to promote the public interest and with identifiable
leadership, membership and structure. Its members belong to a sector/s
who voluntarily band themselves together to work for and by themselves
for their own upliftment, development and greater good.

55. Monitoring, control and surveillance (a) Monitoring - the requirement of continuously observing: (1)
fishing effort which can be expressed by the number of days or
hours of fishing, number of fishing gears and number of fisherfolk;
(2) characteristics of fishery resources; and (3) resource yields
(catch);
(b) Control - the regulatory conditions (legal framework) under
which the exploitation, utilization and disposition of the resources
may be conducted; and
(c) Surveillance - the degree and types of observations required to
maintain compliance with regulations.lawphi1ALF

63. Person - natural or juridical entities such as individuals, associations,


partnership, cooperatives or corporations.
64. Philippine waters - include all bodies of water within the Philippine
territory such as lakes, rivers, streams, creeks, brooks, ponds, swamps,
lagoons, gulfs, bays and seas and other bodies of water now existing or
which may hereafter exist in the provinces, cities, municipalities, and
barangays and the waters around, between and connecting the islands of
the archipelago regardless of their breadth and dimensions, the territorial
sea, the sea beds, the insular shelves, and all other waters over which the
Philippines has sovereignty and jurisdiction including the 200-nautical miles
Exclusive Economic Zone and the continental shelf.

56. Municipal fisherfolk - persons who are directly or indirectly engaged in


municipal fishing and other related fishing activities.

65. Post-harvest facilities - these facilities include, but are not limited to,
fishport, fishlanding, ice plants and cold storages, fish processing plants.

57. Municipal fishing - refers to fishing within municipal waters using


fishing vessels of three (3. gross tons or less, or fishing not requiring the
use of fishing vessels.

66. Purse Seine - a form of encircling net having a line at the bottom
passing through rings attached to the net, which can be drawn or pursed.
In general, the net is set from a boat or pair of boats around the school of
fish. The bottom of the net is pulled closed with the purse line. The net is
then pulled aboard the fishing boat or boats until the fish are concentrated
in the bunt or fish bag.

58. Municipal waters - include not only streams, lakes, inland bodies of
water and tidal waters within the municipality which are not included within
the protected areas as defined under Republic Act No. 7586 (The NIPAS
Law), public forest, timber lands, forest reserves or fishery reserves, but
also marine waters included between two (2. lines drawn perpendicular to
the general coastline from points where the boundary lines of the
municipality touch the sea at low tide and a third line parallel with the
general coastline including offshore islands and fifteen (15. kilometers from
such coastline. Where two (2. municipalities are so situated on opposite
shores that there is less than thirty (30. kilometers of marine waters
between them, the third line shall be equally distant from opposite shore of
the respective municipalities.
59. Non-governmental organization (NGO. - an agency, institution, a
foundation or a group of persons whose purpose is to assist peoples
organizations/associations in various ways including, but not limited to,
organizing, education, training, research and/or resource accessing.
60. Payao - a fish aggregating device consisting of a loating raft anchored
by a weighted line with suspended materials such as palm fronds to attract
pelagic and schooling species common in deep waters.

67. Resource Rent - the difference between the value of the products
produced from harvesting a publicly owned resource less the cost of
producing it, where cost includes the normal return to capital and normal
return to labor.
68. Sea farming - the stocking of natural or hatchery-produced marine
plants or animals, under controlled conditions, for purposes of rearing and
harvesting, but not limited to commercially-important fishes, mollusks
(such as pearl and giant clam culture), including seaweeds and seagrasses.
69. Sea ranching - the release of the young of fishery species reared in
hatcheries and nurseries into natural bodies of water for subsequent
harvest at maturity or the manipulation of fishery habitat, to encourage the
growth of the wild stocks.
70. Secretary - the Secretary of the Department of Agriculture.
71. Superlight - also called magic light, is a type of light using halogen or
metal halide bulb which may be located above the sea surface or

submerged in the water. It consists of a ballast, regulator, electric cable


and socket. The source of energy comes from a generator, battery or
dynamo coupled with the main engine.
72. Total Allowable Catch (TAC. - the maximum harvest allowed to be
taken during a given period of time from any fishery area, or from any
fishery species or group of fishery species, or a combination of area and
species and normally would not exceed the MSY.
73. Trawl - an active fishing gear consisting of a bag shaped net with or
without otter boards to open its opening which is dragged or towed along
the bottom or through the water column to take fishery species by
straining them from the water, including all variations and modifications of
trawls (bottom, mid-water, and baby trawls) and tow nets.
CHAPTER II
Utilization, Management, Development, Conservation and Allocation
System of Fisheries and Aquatic Resources
Section 5. Use of Philippine Waters. - The use and exploitation of the fishery
and aquatic resources in Philippine waters shall be reserved exclusively to Filipinos:
Provided, however, That research and survey activities may be allowed under strict
regulations, for purely research, scientific, technological and educational purposes
that would also benefit Filipino citizens.
Section 6. Fees and Other Fishery Charges. - The rentals for fishpond areas
covered by the Fishpond Lease Agreement (FLA) and license fees for Commercial
Fishing Boat Licenses (CFBL) shall be set at levels that reflect resource rent accruing
from the utilization of resources and shall be determined by the Department:
Provided, That the Department shall also prescribe fees and other fishery charges
and issue the corresponding license or permit for fishing gear, fishing accessories
and other fishery activities beyond the municipal waters: Provided, further, That the
license fees of fishery activity in municipal waters shall be determined by the Local
Government Units (LGUs) in consultation with the FARMCs. The FARMCs may also
recommend the appropriate license fees that will be imposed.
Section 7. Access to Fishery Resources. - The Department shall issue such
number of licenses and permits for the conduct of fishery activities subject to the
limits of the MSY of the resource as determined by scientific studies or best
available evidence. Preference shall be given to resource users in the local
communities adjacent or nearest to the municipal waters.
Section 8. Catch Ceiling Limitations. - The Secretary may prescribe limitations
or quota on the total quantity of fish captured, for a specified period of time and
specified area based on the best available evidence. Such a catch ceiling may be
imposed per species of fish whenever necessary and practicable: Provided, however,
That in municipal waters and fishery management areas, and waters under the
jurisdiction of special agencies, catch ceilings may be established upon the
concurrence and approval or recommendation of such special agency and the
concerned LGU in consultation with the FARMC for conservation or ecological
purposes.

Section 9. Establishment of Closed Season. - The Secretary may declare,


through public notice in at least two (2) newspapers of general circulation or in
public service announcements, whichever is applicable, at least five (5) days before
the declaration, a closed season in any or all Philippine waters outside the boundary
of municipal waters and in bays, for conservation and ecological purposes. The
Secretary may include waters under the jurisdiction of special agencies, municipal
waters and bays, and/or other areas reserved for the use of the municipal fisherfolk
in the area to be covered by the closed season: Provided, however, That this shall
be done only upon the concurrence and approval or recommendation of such special
agency and the concerned LGU and FARMC: Provided, further, That in municipal
waters, fishery management areas and other areas reserved for the use of the
municipal fisherfolk, closed season may be established by the concerned LGU in
consultation with the FARMC for conservation or ecological purposes. The FARMCs
may also recommend the establishment of closed seasons in municipal waters,
fisheries management and other areas reserved for the use of the municipal
fisherfolk.
Section 10. Introduction of Foreign Aquatic Species. - No foreign finfish,
mollusk, crustacean or aquatic plants shall be introduced in Philippine waters
without a sound ecological, biological and environmental justification based on
scientific studies subject to the bio-safety standard as provided for by existing laws:
Provided, however, That the Department may approve the introduction of foreign
aquatic species for scientific/research purposes.
Section 11. Protection of Rare, Threatened and Endangered Species. - The
Department shall declare closed seasons and take conservation and rehabilitation
measures for rare, threatened and endangered species, as it may determine, and
shall ban the fishing and/or taking of rare, threatened and/or endangered species,
including their eggs/offspring as identified by existing laws in concurrence with
concerned government agencies.
Section 12. Environmental Impact Statement (EIS). - All government agencies
as well as private corporations, firms and entities who intend to undertake activities
or projects which will affect the quality of the environment shall be required to
prepare a detailed Environmental Impact Statement (EIS) prior to undertaking such
development activity. The preparation of the EIS shall form an integral part of the
entire planning process pursuant to the provisions of Presidential Decree No. 1586
as well as its implementing rules and regulations.
Section 13. Environmental Compliance Certificate (ECC). - All Environmental
Impact Statements (EIS) shall be submitted to the Department of Environment and
Natural Resources (DENR) for review and evaluation. No person, natural or juridical,
shall undertake any development project without first securing an Environmental
Compliance Certificate (ECC) from the Secretary of the DENR.
Section 14. Monitoring, Control and Surveillance of Philippine Waters. - A
monitoring, control and surveillance system shall be established by the Department
in coordination with LGUs, FARMCs, the private sector and other agencies concerned
to ensure that the fisheries and aquatic resources in Philippine waters are
judiciously and wisely utilized and managed on a sustainable basis and conserved
for the benefit and enjoyment exclusively of Filipino citizens.

Section 15. Auxiliary Invoices. - All fish and fishery products must have an
auxiliary invoice to be issued by the LGUs or their duly authorized representatives
prior to their transport from their point of origin to their point of destination in the
Philippines and/or export purposes upon payment of a fee to be determined by the
LGUs to defray administrative costs therefor.
ARTICLE I
MUNICIPAL FISHERIES
Section 16. Jurisdiction of Municipal/City Government. - The municipal/city
government shall have jurisdiction over municipal waters as defined in this Code.
The municipal/city government, in consultation with the FARMC shall be responsible
for the management, conservation, development, protection, utilization, and
disposition of all fish and fishery/aquatic resources within their respective municipal
waters.
The municipal/city government may, in consultation with the FARMC, enact
appropriate ordinances for this purpose and in accordance with the National
Fisheries Policy. The ordinances enacted by the municipality and component city
shall be reviewed pursuant to Republic Act No. 7160 by the sanggunian of the
province which has jurisdiction over the same.
The LGUs shall also enforce all fishery laws, rules and regulations as well as valid
fishery ordinances enacted by the municipal/city council.
The management of contiguous fishery resources such as bays which straddle
several municipalities, cities or provinces, shall be done in an integrated manner,
and shall not be based on political subdivisions of municipal waters in order to
facilitate their management as single resource systems. The LGUs which share or
border such resources may group themselves and coordinate with each other to
achieve the objectives of integrated fishery resource management. The Integrated
Fisheries and Aquatic Resources Management Councils (FARMCs) established under
Section 76 of this Code shall serve as the venues for close collaboration among
LGUs in the management of contiguous resources.
Section 17. Grant of Fishing Privileges in Municipal Waters. - The duly
registered fisherfolk organizations/cooperatives shall have preference in the grant of
fishery rights by the Municipal/City Council pursuant to Section 149 of the Local
Government Code: Provided, That in areas where there are special agencies or
offices vested with jurisdiction over municipal waters by virtue of special laws
creating these agencies such as, but not limited to, the Laguna Lake Development
Authority and the Palawan Council for Sustainable Development, said offices and
agencies shall continue to grant permits for proper management and
implementation of the aforementioned structures.
Section 18. Users of Municipal Waters. - All fishery related activities in
municipal waters, as defined in this Code, shall be utilized by municipal fisherfolk
and their cooperatives/organizations who are listed as such in the registry of
municipal fisherfolk.

The municipal or city government, however, may, through its local chief executive
and acting pursuant to an appropriate ordinance, authorize or permit small and
medium commercial fishing vessels to operate within the ten point one (10.1) to
fifteen (15) kilometer area from the shoreline in municipal waters as defined herein,
provided, that all the following are met:
(a) no commercial fishing in municipal waters with depth less than seven
(7) fathoms as certified by the appropriate agency;
(b) fishing activities utilizing methods and gears that are determined to be
consistent with national policies set by the Department;
(c) prior consultation, through public hearing, with the M/CFARMC has been
conducted; and
(d) the applicant vessel as well as the shipowner, employer, captain and
crew have been certified by the appropriate agency as not having violated
this Code, environmental laws and related laws.
In no case shall the authorization or permit mentioned above be granted for fishing
in bays as determined by the Department to be in an environmentally critical
condition and during closed season as provided for in Section 9 of this Code.
Section 19. Registry of Municipal Fisherfolk. - The LGU shall maintain a registry
of municipal fisherfolk, who are fishing or may desire to fish in municipal waters for
the purpose of determining priorities among them, of limiting entry into the
municipal waters, and of monitoring fishing activities an/or other related purposes:
Provided, That the FARMC shall submit to the LGU the list of priorities for its
consideration.
Such list or registry shall be updated annually or as may be necessary, and shall be
posted in barangay halls or other strategic locations where it shall be open to public
inspection, for the purpose of validating the correctness and completeness of the
list. The LGU, in consultation with the FARMCs, shall formulate the necessary
mechanisms for inclusion or exclusion procedures that shall be most beneficial to
the resident municipal fisherfolk. The FARMCs may likewise recommend such
mechanisms.
The LGUs shall also maintain a registry of municipal fishing vessels by type of gear
and other boat particulars with the assistance of the FARMC.
Section 20. Fisherfolk Organizations and/or Cooperatives. - Fisherfolk
organizations/cooperatives whose members are listed in the registry of municipal
fisherfolk, may be granted use of demarcated fishery areas to engage in fish
capture, mariculture and/or fish farming: Provided, however, That an
organization/cooperative member whose household is already in possession of a
fishery right other than for fish capture cannot enjoy the fishing rights granted to
the organization or cooperative.
Section 21. Priority of Resident Municipal Fisherfolk. - Resident municipal
fisherfolk of the municipality concerned and their organizations/cooperatives shall

have priority to exploit municipal and demarcated fishery areas of the said
municipality.
Section 22. Demarcated Fishery Right. - The LGU concerned shall grant
demarcated fishery rights to fishery organizations/cooperatives for mariculture
operation in specific areas identified by the Department.
Section 23. Limited Entry Into Overfished Areas. - Whenever it is determined
by the LGUs and the Department that a municipal water is overfished based on
available data or information or in danger of being overfished, and that there is a
need to regenerate the fishery resources in that water, the LGU shall prohibit or limit
fishery activities in the said waters.
Section 24. Support to Municipal Fisherfolk. - The Department and the LGUs
shall provide support to municipal fisherfolk through appropriate technology and
research, credit, production and marketing assistance and other services such as,
but not limited to training for additional/supplementary livelihood.
Section 25. Rights and Privileges of Fishworkers. - The fishworkers shall be
entitled to the privileges accorded to other workers under the Labor Code, Social
Security System and other benefits under other laws or social legislation for
workers: Provided, That fishworkers on board any fishing vessels engaged in fishing
operations are hereby covered by the Philippine Labor Code, as amended.
ARTICLE II
COMMERCIAL FISHERIES
Section 26. Commercial Fishing Vessel License and Other Licenses. - No
person shall operate a commercial fishing vessel, pearl fishing vessel or fishing
vessel for scientific, research or educational purposes, or engage in any fishery
activity, or seek employment as a fishworker or pearl diver without first securing a
license from the Department, the period of which shall be prescribed by the
Department: Provided, That no such license shall be required of a fishing vessel
engaged in scientific, research or educational purposes within Philippine waters
pursuant to an international agreement of which the Philippines is a signatory and
which agreement defines the status, privileges and obligations of said vessel and its
crew and the non-Filipino officials of the international agency under which said
vessel operates: Provided, further, That members of the crew of a fishing vessel
used for commercial fishing except the duly licensed and/or authorized patrons,
marine engineers, radio operators and cooks shall be considered as fisherfolk:
Provided, furthermore, That all skippers/master fishers shall be required to
undertake an orientation training on detection of fish caught by illegal means before
they can be issued their fishworker licenses: Provided, finally, That the large
commercial fishing vessels license herein authorized to be granted shall allow the
licensee to operate only in Philippine waters seven (7) or more fathoms deep, the
depth to be certified by the NAMRIA, and subject to the conditions that may be
stated therein and the rules and regulations that may be promulgated by the
Department.
Section 27. Persons Eligible for Commercial Fishing Vessel License. - No
commercial fishing vessel license shall be issued except to citizens of the
Philippines, partnerships or to associations, cooperatives or corporations duly

registered in the Philippines at least sixty percent (60%) of the capital stock of
which is owned by Filipino citizens. No person to whom a license has been issued
shall sell, transfer or assign, directly or indirectly, his stock or interest therein to any
person not qualified to hold a license. Any such transfer, sale or assignment shall be
null and void and shall not be registered in the books of the association, cooperative
or corporation.
For purposes of commercial fishing, fishing vessels owned by citizens of the
Philippines, partnerships, corporations, cooperatives or associations qualified under
this section shall secure Certificates of Philippine Registry and such other documents
as are necessary for fishing operations from the concerned agencies: Provided, That
the commercial fishing vessel license shall be valid for a period to be determined by
the Department.
Section 28. Commercial Fishing Vessel Registration. - The registration,
documentation, inspection and manning of the operation of all types of fishing
vessels plying Philippine waters shall be in accordance with laws, rules and
regulations.
Section 29. Registration and Licensing of Fishing Gears Used in Commercial
Fishing. - Before a commercial fishing vessel holding a commercial fishing vessel
license may begin fishing operations in Philippine waters, the fishing gear it will
utilize in fishing shall be registered and a license granted therefor. The Department
shall promulgate guidelines to implement this provision within sixty (60) days from
approval of this Code.
Section 30. Renewal of Commercial Boat License. - The commercial fishing
boat license shall be renewed every three (3) years.
The owner/operator of a fishing vessel has a period of sixty (60) days prior to the
expiration of the license within which to renew the same.
Section 31. Report of Transfer of Ownership. - The owner/operator of a
registered fishing vessel shall notify the Department in writing of the transfer of the
ownership of the vessel with a copy of such document within ten (10) days after its
transfer to another person.
Section 32. Fishing by Philippine Commercial Fishing Fleet in International
Waters. - Fishing vessels of Philippine registry may operate in international waters
or waters of other countries which allow such fishing operations: Provided, That
they comply with the safety, manning and other requirements of the Philippine
Coast Guard, Maritime Industry Authority and other agencies concerned: Provided,
however, That they secure an international fishing permit and certificate of
clearance from the Department: Provided, further, That the fish caught by such
vessels shall be considered as caught in Philippine waters and therefore not subject
to all import duties and taxes only when the same is landed in duly designated fish
landings and fish ports in the Philippines: Provided, furthermore, That landing ports
established by canneries, seafood processors and all fish landing sites established
prior to the effectivity of this Code shall be considered authorized landing sites:
Provided, finally, That fishworkers on board Philippine registered fishing vessels
conducting fishing activities beyond the Philippine Exclusive Economic Zone are not
considered as overseas Filipino workers.

Section 33. Importation of Fishing Vessels or Construction of New Fishing


Boats. - Prior to the importation of fishing vessels and the construction of new
fishing vessels, the approval/clearance of the Department must first be obtained.
Section 34. Incentives for Municipal and Small-Scale Commercial
Fisherfolk. - Municipal and small-scale commercial fisherfolk shall be granted
incentives which shall include, but are not limited to, the following:
(a) at least ten percent (10%) of the credit and the guarantee funds of
government financing institutions shall be made available for post-harvest
and marketing projects for the purpose of enhancing our fisherfolk
competitiveness by reducing post-harvest losses. Qualified projects shall
include, but shall not be limited to, ice plants, cold storage, canning,
warehouse, transport and other related infrastructure projects and
facilities; and
(b) the Department shall undertake the following programs:
1. a capability-building program for targeted parties shall be
developed by the Department to promote greater bankability and
credit worthiness of municipal and small-scale commercial fishers.
Such program shall include organizing activities, technology
transfer, and skills training related to commercial fishing as well as
credit management. Groups and cooperatives organized under the
program shall have priority access over credit and guarantee
funds established under this Code; and
2. an information campaign shall be conducted to promote the
capability building and credit programs. The campaign shall
ensure greater information dissemination and accessibility to
targeted fisherfolk.
Section 35. Incentives for Commercial Fishers to Fish Farther into the
Exclusive Economic Zone. - In order to encourage fishing vessel operators to fish
farther in the EEZ and beyond, new incentives for improvement of fishing vessels
and acquisition of fishing equipment shall be granted in addition to incentives
already available from the Board of Investments (BOI). Such incentives shall be
granted subject to exhaustive evaluation of resource and exploitation conditions in
the specified areas of fishing operations. The incentive shall include, but not be
limited to:
(a) long term loans supported by guarantee facilities to finance the building
and acquisition and/or improvement of fishing vessels and equipment;
(b) commercial fishing vessel operators of Philippine registry shall enjoy a
limited period of tax and duty exemptions on the importation of fishing
vessels not more than five (5) years old, equipment and paraphernalia, the
period of exemption and guidelines shall be fixed by the Department within
ninety (90) days from the effectivity of this Code;

(c) commercial fishing operator of Philippine registry engaged in fisheries in


the high seas shall be entitled to duty and tax rebates on fuel consumption
for commercial fisheries operations. Guidelines shall be promulgated within
ninety (90) days from the effectivity of this Code by the Department; and
(d) all applicable incentives available under the Omnibus Investment Code
of 1987: Provided, That the fishing operation project is qualified for
registration and is duly registered with the BOI.
Section 36. Complement of Fishing Vessels. - Every commercial fishing vessel
of Philippine registry when actually operated, shall be manned in accordance with
the requirements of the Philippine Merchant Marine rules and regulations.
Section 37. Medical Supplies and Life-Saving Devices. - All fishing vessels
shall be provided with adequate medical supplies and life-saving devices to be
determined by the Occupational Safety and Health Center: Provided, That a fishing
vessel of twenty (20) GT or more shall have as a member of its crew a person
qualified as a first aider duly certified by the Philippine National Red Cross.
Section 38. Reportorial Requirements. - Each commercial fishing vessel shall
keep a daily record of fish catch and spoilage, landing points, and quantity and
value of fish caught, and off-loaded for transshipment, sale and/or other disposal.
Detailed information shall be duly certified by the vessel's captain and transmitted
monthly to the officer or representative of the Department, at the nearest
designated landing point.
Section 39. Report of Meteorological and Other Data. - All vessels and crafts
passing navigational lanes or engaged in fisheries activity shall be required to
contribute to meteorological and other data, and shall assist the Department in
documentation or reporting of information vital to navigation and the fishing
industry.
Section 40. Color Code and Radio Frequency. - For administrative efficiency and
enforcement of regulations, registered fishing vessels shall bear a color code as may
be determined by the Department and may be assigned a radio frequency specific
and distinct to its area of operation.
Section 41. Passage. - Commercial and other passage not in the regular conduct
of fisheries activity shall be made at designated navigational lanes.
Section 42. Transshipment. - Foreign fishing vessels wishing to avail of land, air
and sea facilities available in the Philippines to transport fishery products which are
caught outside Philippine territorial waters to its final destination shall call only at
duly designated government-owned or -controlled regional fishport complexes after
securing clearance from the Department.
Section 43. Operation of Radio Communication Facilities on Board Fishing
Vessels. - The Department shall promulgate guidelines in the operation of radio
communication facilities on board fishing vessels and the assignment of radio
frequencies specific and distinct to area of operation in coordination with the
National Telecommunications Commission.

Section 44. Use of Superlight. - The number and wattage of superlights used in
commercial fishing vessels shall be regulated by the Department: Provided, That the
use of superlights is banned within municipal waters and bays.
ARTICLE III
AQUACULTURE
Section 45. Disposition of Public Lands for Fishery Purposes. - Public lands
such as tidal swamps, mangroves, marshes, foreshore lands and ponds suitable for
fishery operations shall not be disposed or alienated. Upon effectivity of this Code,
FLA may be issued for public lands that may be declared available for fishpond
development primarily to qualified fisherfolk cooperatives/associations: Provided,
however, That upon the expiration of existing FLAs the current lessees shall be given
priority and be entitled to an extension of twenty-five (25) years in the utilization of
their respective leased areas. Thereafter, such FLAs shall be granted to any Filipino
citizen with preference, primarily to qualified fisherfolk cooperatives/associations as
well as small and medium enterprises as defined under Republic Act No. 8289:
Provided, further, That the Department shall declare as reservation, portions of
available public lands certified as suitable for fishpond purposes for fish sanctuary,
conservation, and ecological purposes: Provided, finally, That two (2) years after the
approval of this Act, no fish pens or fish cages or fish traps shall be allowed in lakes.
Section 46. Lease of Fishponds. - Fishpond leased to qualified persons and
fisherfolk organizations/cooperatives shall be subject to the following conditions:
(a) Areas leased for fishpond purposes shall be no more than 50 hectares
for individuals and 250 hectares for corporations or fisherfolk
organizations;
(b) The lease shall be for a period of twenty-five (25) years and renewable
for another twenty-five (25) years: Provided, That in case of the death of
the lessee, his spouse and/or children, as his heirs, shall have preemptive
rights to the unexpired term of his Fishpond Lease Agreement subject to
the same terms and conditions provided herein provided that the said heirs
are qualified;
(c) Lease rates for fishpond areas shall be determined by the Department:
Provided, That all fees collected shall be remitted to the National Fisheries
Research and Development Institute and other qualified research
institutions to be used for aquaculture research development;
(d) The area leased shall be developed and producing on a commercial
scale within three (3) years from the approval of the lease contract:
Provided, however, That all areas not fully producing within five (5) years
from the date of approval of the lease contract shall automatically revert to
the public domain for reforestation;
(e) The fishpond shall not be subleased, in whole or in part, and failure to
comply with this provision shall mean cancellation of FLA;

(f) The transfer or assignment of rights to FLA shall be allowed only upon
prior written approval of the Department;
(g) The lessee shall undertake reforestation for river banks, bays, streams,
and seashore fronting the dike of his fishpond subject to the rules and
regulations to be promulgated thereon; and
(h) The lessee shall provide facilities that will minimize environmental
pollution, i.e., settling ponds, reservoirs, etc: Provided, That failure to
comply with this provision shall mean cancellation of FLA.
Section 47. Code of Practice for Aquaculture. - The Department shall establish
a code of practice for aquaculture that will outline general principles and guidelines
for environmentally-sound design and operation to promote the sustainable
development of the industry. Such Code shall be developed through a consultative
process with the DENR, the fishworkers, FLA holders, fishpond owners, fisherfolk
cooperatives, small-scale operators, research institutions and the academe, and
other potential stakeholders. The Department may consult with specialized
international organizations in the formulation of the code of practice.
Section 48. Incentives and Disincentives for Sustainable Aquaculture
Practices. - The Department shall formulate incentives and disincentives, such as,
but not limited to, effluent charges, user fees and negotiable permits, to encourage
compliance with the environmental standards and to promote sustainable
management practices.
Section 49. Reversion of All Abandoned, Undeveloped or Underutilized
Fishponds. - The DENR, in coordination with the Department, LGUs, other
concerned agencies and FARMCs shall determine which abandoned, underdeveloped
or underutilized fishponds covered by FLAs can be reverted to their original
mangrove state and after having made such determination shall take all steps
necessary to restore such areas in their original mangrove state.
Section 50. Absentee Fishpond Lease Agreement Holders. - Holders of
fishpond lease agreements who have acquired citizenship in another country during
the existence of the FLA shall have their lease automatically cancelled and the
improvements thereon to be forfeited in favor of the government and disposed of in
accordance with rules and regulations promulgated thereon.
Section 51. License to Operate Fish Pens, Fish Cages, Fish Traps and Other
Structures for the Culture of Fish and Other Fishery Products. - Fish pens,
fish cages, fish traps and other structures for the culture of fish and other fishery
products shall be constructed and shall operate only within established zones duly
designated by LGUs in consultation with the FARMCs concerned consistent with
national fisheries policies after the corresponding licenses thereof have been
secured. The area to be utilized for this purpose for individual person shall be
determined by the LGUs in consultation with the concerned FARMC: Provided,
however, That not over ten percent (10%) of the suitable water surface area of all
lakes and rivers shall be allotted for aquaculture purposes like fish pens, fish cages
and fish traps; and the stocking density and feeding requirement which shall be
controlled and determined by its carrying capacity: Provided, further, That fish pens
and fish cages located outside municipal waters shall be constructed and operated

only within fish pen and fish cage belts designated by the Department and after
corresponding licenses therefor have been secured and the fees thereof paid.

and ancillary industries, in the formulation of a comprehensive plan for post-harvest


and ancillary industries. It shall take into account among others, the following:

Section 52. Pearl Farm Leases. - The foregoing provisions notwithstanding,


existing pearl farm leases shall be respected and allowed to operate under the
terms thereof. New leases may be granted to qualified persons who possess the
necessary capital and technology, by the LGUs having jurisdiction over the area.

(a) detailed and clear guidelines on the distribution, construction,


maintenance and use of post-harvest infrastructure facilities;

Section 53. Grant of Privileges for Operations of Fish Pens, Cages,


Corrals/Traps and Similar Structures. - No new concessions, licenses, permits,
leases and similar privileges for the establishment or operation of fish pens, fish
cages, fish corrals/traps and other similar structures in municipal areas shall be
granted except to municipal fisherfolk and their organizations.
Section 54. Insurance for Fishponds, Fish Cages and Fish Pens. - Inland
fishponds, fish cages and fish pens shall be covered under the insurance program of
the Philippine Crop Insurance Corporation for losses caused by force majeure and
fortuitous events.
Section 55. Non-Obstruction to Navigation. - Nothing in the foregoing sections
shall be construed as permitting the lessee, licensee, or permittee to undertake any
construction which will obstruct the free navigation in any stream, river, lakes, or
bays flowing through or adjoining the fish pens, fish cages, fish traps and fishponds,
or impede the flow of the tide to and from the area. Any construction made in
violation hereof shall be removed upon the order of the Department in coordination
with the other government agencies concerned at the expense of the lessee,
licensee, or occupants thereof, whenever applicable. The Department shall within
thirty (30) days after the effectivity of this Code formulate and implement rules and
regulations for the immediate dismantling of existing obstruction to navigation.
Section 56. Non-Obstruction to Defined Migration Paths. - Nothing in the
foregoing sections shall be construed as permitting the lessee, permittee, or
licensee to undertake any construction which will obstruct any defined migration
path of migratory fish species such as river mouths and estuaries with a distance
determined by the concerned LGUs in consultation with and upon the
recommendation of the FARMCs.
Section 57. Registration of Fish Hatcheries and Private Fishponds, etc. - All
fish hatcheries, fish breeding facilities and private fishponds must be registered with
the LGUs which shall prescribe minimum standards for such facilities in consultation
with the Department: Provided, That the Department shall conduct a yearly
inventory of all fishponds, fish pens and fish cages whether in public or private
lands: Provided, further, That all fishpond, fish pens and fish cage operators shall
annually report to the Department the type of species and volume of production in
areas devoted to aquaculture.
ARTICLE IV
POST-HARVEST FACILITIES, ACTIVITIES AND TRADES
Section 58. Comprehensive Post-harvest and Ancillary Industries Plan. The Department shall conduct a regular study of fisheries post-harvest operations

(b) extension of credit and incentives for post-harvest operations;


(c) promotion and strengthening of semi-processing, processing and
handling;
(d) development of domestic fishmeal industry;
(e) development of fisheries ship-building and repair as a viable industry;
(f) development and strengthening of marketing facilities and activities,
including the pricing system, with emphasis on collective marketing and
the elimination of middlemen;
(g) increased participation of cooperatives and non-governmental
organizations in post-harvest operations and ancillary industries; and
(h) integration of fisheries post-harvest operations into the national
fisheries plan.
Section 59. Establishment of Post-Harvest Facilities for Fishing
Communities. - The LGUs shall coordinate with the private sector and other
concerned agencies and FARMCs in the establishment of post-harvest facilities for
fishing communities such as, but not limited to, municipal fish landing sites, fish
ports, ice plants and cold storage and other fish processing establishments to serve
primarily the needs of municipal fisherfolk: Provided, That such post-harvest
facilities shall be consistent with the Comprehensive Post-harvest and Ancillary
Industries Plan.
Section 60. Registration and Licensing of all Post-Harvest Facilities. - All
post-harvest facilities such as fish processing plants, ice plants, and cold storages,
fish ports/landings and other fishery business establishments must register with and
be licensed by the LGUs which shall prescribe minimum standards for such facilities
in consultation with the Department.
Section 61. Importation and Exportation of Fishery Products. (a) Export of fishery products shall be regulated whenever such exportation
affects domestic food security and production: Provided, That exportation
of live fish shall be prohibited except those which are hatched or
propagated in accredited hatcheries and ponds;
(b) To protect and maintain the local biodiversity or ensure the sufficiency
of domestic supply, spawners, breeders, eggs and fry of bangus, prawn and

other endemic species, as may be determined by the Department, shall not


be exported or caused to be exported by any person;
(c) Fishery products may be imported only when the importation has been
certified as necessary by the Department in consultation with the FARMC,
and all the requirements of this Code, as well as all existing rules and
regulations have been complied with: Provided, That fish imports for
canning/processing purposes only may be allowed without the necessary
certification, but within the provisions of Section 61(d) of this Code; and
(d) No person, shall import and/or export fishery products of whatever
size, stage or form for any purpose without securing a permit from the
Department.
The Department in consultation with the FARMC shall promulgate rules and
regulations on importation and exportation of fish and fishery/aquatic resources
with the Government's export/import simplification procedures.
Section 62. Instruments of Weights and Measures, and Quality
Grades/Standards. - Standards for weights, volume and other measurements for
all fishery transactions shall be set by the Department.
All fish and fishery products for export, import and domestic consumption shall
meet the quality grades/standards as determined by the Department.
The LGU concerned shall, by appropriate ordinance, penalize fraudulent practices
and unlawful possession or use of instruments of weights and measures.
CHAPTER III
Reconstitution of The Bureau of Fisheries and Aquatic Resources and
Creation of Fisheries and Aquatic Resources Management Councils
ARTICLE I
RECONSTITUTION OF THE BUREAU OF FISHERIES AND AQUATIC
RESOURCES
Section 63. Creation of the Position of Undersecretary for Fisheries and
Aquatic Resources. - There is hereby created in the Department of Agriculture the
position of Undersecretary for Fisheries and Aquatic Resources, solely for the
purpose of attending to the needs of the fishing industry, to be appointed by the
President. Such Undersecretary shall have the following functions:
(a) set policies and formulate standards for the effective, efficient and
economical operations of the fishing industry in accordance with the
programs of the government;
(b) exercise overall supervision over all functions and activities of all offices
and instrumentalities and other offices related to fisheries including its
officers;

(c) establish, with the assistance of the director, such regional, provincial
and other fishery officers as may be necessary and appropriate and
organize the internal structure of BFAR in such manner as is necessary for
the efficient and effective attainment of its objectives and purposes; and
(d) perform such other functions as may be necessary or proper to attain
the objectives of this Code.
Section 64. Reconstitution of the BFAR. - The Bureau of Fisheries and Aquatic
Resources (BFAR) is hereby reconstituted as a line bureau under the Department of
Agriculture.
Section 65. Functions of the Bureau of Fisheries and Aquatic Resources. As a line bureau, the BFAR shall have the following functions:
(a) prepare and implement a Comprehensive National Fisheries Industry
Development Plan;
(b) issue licenses for the operation of commercial fishing vessels;
(c) issue identification cards free of charge to fishworkers engaged in
commercial fishing;
(d) monitor and review joint fishing agreements between Filipino citizens
and foreigners who conduct fishing activities in international waters, and
ensure that such agreements are not contrary to Philippine commitment
under international treaties and convention on fishing in the high seas;
(e) formulate and implement a Comprehensive Fishery Research and
Development Program, such as, but not limited to, sea farming, sea
ranching, tropical/ornamental fish and seaweed culture, aimed at
increasing resource productivity, improving resource use efficiency, and
ensuring the long-term sustainability of the country's fishery and aquatic
resources;
(f) establish and maintain a Comprehensive Fishery Information System;
(g) provide extensive development support services in all aspects of
fisheries production, processing and marketing;
(h) provide advisory services and technical assistance on the improvement
of quality of fish from the time it is caught (i.e. on board fishing vessel, at
landing areas, fish markets, to the processing plants and to the distribution
and marketing chain);
(i) coordinate efforts relating to fishery production undertaken by the
primary fishery producers, LGUs, FARMCs, fishery and
organizations/cooperatives;

(j) advise and coordinate with LGUs on the maintenance of proper


sanitation and hygienic practices in fish markets and fish landing areas;

fishery/aquatic resources, the Fisheries Inspection and Quarantine Service in the


BFAR is hereby strengthened and shall have the following functions:

(k) establish a corps of specialists in collaboration with the Department of


National Defense, Department of the Interior and Local Government,
Department of Foreign Affairs for the efficient monitoring, control and
surveillance of fishing activities within Philippine territorial waters and
provide the necessary facilities, equipment and training therefor;

(a) conduct fisheries quarantine and quality inspection of all fish and
fishery/aquatic products coming into and going out of the country by air or
water transport, to detect the presence of fish pest and diseases and if
found to harbor fish pests or diseases shall be confiscated and disposed of
in accordance with environmental standards and practices;

(l) implement an inspection system for import and export of fishery/aquatic


products and fish processing establishments, consistent with international
standards to ensure product quality and safety;

(b) implement international agreements/commitments on bio-safety and


bio-diversity as well as prevent the movement or trade of endemic fishery
and aquatic resources to ensure that the same are not taken out of the
country;

(m) coordinate with LGUs and other concerned agencies for the
establishment of productivity enhancing and market development
programs in fishing communities to enable women to engage in other
fisheries/economic activities and contribute significantly to development
efforts;
(n) enforce all laws, formulate and enforce all rules and regulations
governing the conservation and management of fishery resources, except
in municipal waters, and to settle conflicts of resource use and allocation in
consultation with the NFARMC, LGUs and local FARMCs;
(o) develop value-added fishery-products for domestic consumption and
export;lawphi1
(p) recommend measures for the protection/enhancement of the fishery
industries;
(q) assist the LGUs in developing their technical capability in the
development, management, regulation, conservation, and protection of the
fishery resources;
(r) formulate rules and regulations for the conservation and management
of straddling fish stocks and highly migratory fish stocks; and
(s) perform such other related functions which shall promote the
development, conservation, management, protection and utilization of
fisheries and aquatic resources.
Section 66. Composition of BFAR. - As a line bureau, the BFAR shall be headed
by a Director and assisted by two (2) Assistant Directors who shall supervise the
administrative and technical services of the bureau respectively. It shall establish
regional, provincial and municipal offices as may be appropriate and necessary to
carry out effectively and efficiently the provisions of this Code.
Section 67. Fisheries Inspection and Quarantine Service. - For purposes of
monitoring and regulating the importation and exportation of fish and

(c) quarantine such aquatic animals and other fishery products determined
or suspected to be with fishery pests and diseases and prevent the
movement or trade from and/or into the country of these products so
prohibited or regulated under existing laws, rules and regulations as well as
international agreements of which the Philippines is a State Party;
(d) examine all fish and fishery products coming into or going out of the
country which may be a source or medium of fish pests or diseases and/or
regulated by existing fishery regulations and ensure that the quality of fish
import and export meet international standards; and
(e) document and authorize the movement or trade of fish and fishery
products when found free of fish pests or diseases and collect necessary
fees prescribed by law and regulations.
ARTICLE II
THE FISHERIES AND AQUATIC RESOURCES MANAGEMENT COUNCILS
(FARMCs)
Section 68. Development of Fisheries and Aquatic Resources in Municipal
Waters and Bays. - Fisherfolk and their organizations residing within the
geographical jurisdiction of the barangays, municipalities or cities with the
concerned LGUs shall develop the fishery/aquatic resources in municipal waters and
bays.
Section 69. Creation of Fisheries and Aquatic Resources Management
Councils (FARMCs). - FARMCs shall be established in the national level and in all
municipalities/cities abutting municipal waters as defined by this Code. The FARMCs
shall be formed by fisherfolk organizations/cooperatives and NGOs in the locality
and be assisted by the LGUs and other government entities. Before organizing
FARMCs, the LGUs, NGOs, fisherfolk, and other concerned POs shall undergo
consultation and orientation on the formation of FARMCs.
Section 70. Creation and Composition of the National Fisheries and Aquatic
Resources Management Council (NFARMC). - There is hereby created a
National Fisheries and Aquatic Resources Management Council hereinafter referred

to as NFARMC as an advisory/recommendatory body to the Department. The


NFARMC shall be composed of fifteen (15) members consisting of:
(a) the Undersecretary of Agriculture, as Chairman;
(b) the Undersecretary of the Interior and Local Government;
(c) five (5) members representing the fisherfolk and fishworkers;
(d) five (5) members representing commercial fishing and aquaculture
operators and the processing sectors;
(e) two (2) members from the academe; and
(f) one (1) representative of NGOs involved in fisheries.
The members of the NFARMC, except for the Undersecretary of Agriculture and the
Undersecretary of the Interior and Local Government, shall be appointed by the
President upon the nomination of their respective organizations.
Section 71. Terms of Office. - The members of NFARMC, except the
Undersecretary of Agriculture and the Undersecretary of the Interior and Local
Government, shall serve for a term of three (3) years without reappointment.
Section 72. Functions of the NFARMC. - The NFARMC shall have the following
functions:
(a) assist in the formulation of national policies for the protection,
sustainable development and management of fishery and aquatic resources
for the approval of the Secretary;

(a) assist in the preparation of the Municipal Fishery Development Plan and
submit such plan to the Municipal Development Council;
(b) recommend the enactment of municipal fishery ordinances to the
sangguniang bayan/sangguniang panlungsod through its Committee on
Fisheries;
(c) assist in the enforcement of fishery laws, rules and regulations in
municipal waters;
(d) advise the sangguniang bayan/panlungsod on fishery matters through
its Committee on Fisheries, if such has been organized; and
(e) perform such other functions which may be assigned by the
sangguniang bayan/panlungsod.
Section 75. Composition of the M/CFARMC . - The regular member of the
M/CFARMCs shall be composed of:
(a) Municipal/City Planning Development Officer;
(b) Chairperson, Agriculture/Fishery Committee of the Sangguniang
Bayan/Panlungsod;
(c) representative of the Municipal/City Development Council;
(d) representative from the accredited non-government organization;
(e) representative from the private sector;
(f) representative from the Department of Agriculture; and

(b) assist the Department in the preparation of the National Fisheries and
Industry Development Plan; and
(c) perform such other functions as may be provided by law.
Section 73. The Municipal/City Fisheries and Aquatic Resources
Management Councils (M/CFARMCs). - The M/CFARMCs shall be created in each
of the municipalities and cities abutting municipal waters. However, the LGU may
create the Barangay Fisheries and Aquatic Resources Management Councils
(BFARMCs) and the Lakewide Fisheries and Aquatic Resources Management Councils
(LFARMCs) whenever necessary. Such BFARMCs and LFARMCs shall serve in an
advisory capacity to the LGUs.
Section 74. Functions of the M/CFARMCs. - The M/CFARMCs shall exercise the
following functions:

(g) at least eleven (11) fisherfolk representatives (seven (7) municipal


fisherfolk, one (1) fishworker and three (3) commercial fishers) in each
municipality/city which include representative from youth and women
sector.
The Council shall adopt rules and regulations necessary to govern its proceedings
and election.
Section 76. The Integrated Fisheries and Aquatic Resources Management
Councils (IFARMCs). - The IFARMCs shall be created in bays, gulfs, lakes and
rivers and dams bounded by two (2) or more municipalities/cities.
Section 77. Functions of the IFARMCs. - The IFARMC shall have the following
functions:

(a) assist in the preparation of the Integrated Fishery Development Plan


and submit such plan to the concerned Municipal Development Councils;
(b) recommend the enactment of integrated fishery ordinances to the
concerned sangguniang bayan/panlungsod through its Committee on
Fisheries, if such has been organized;
(c) assist in the enforcement of fishery laws, rules and regulations in
concerned municipal waters;
(d) advice the concerned sangguniang bayan/panlungsod on fishery
matters through its Committee on Fisheries, if such has been organized;
and
(e) perform such other functions which may be assigned by the concerned
sangguniang bayan/panlungsod.
Section 78. Composition of the IFARMCs. - The regular members of the
IFARMCs shall be composed of the following:
(a) the chairperson of the Committee on Agriculture/Fisheries of the
concerned sangguniang bayan/panlungsod;
(b) the Municipal/City Fisheries Officers of the concerned
municipalities/cities;
(c) the Municipal/City Development Officers of the concerned
municipalities/cities;

kilometers from shoreline as fishery reservation for the exclusive use of the
government or any of its political subdivisions, agencies or instrumentalities, for
propagation, educational, research and scientific purposes: Provided, That in
municipalities or cities, the concerned LGUs in consultation with the FARMCs may
recommend to the Department that portion of the municipal waters be declared as
fishery reserves for special or limited use, for educational, research, and/or special
management purposes. The FARMCs may recommend to the Department portions of
the municipal waters which can be declared as fisheries reserves for special or
limited use for educational, research and special management purposes.
Section 81. Fish Refuge and Sanctuaries. - The Department may establish fish
refuge and sanctuaries to be administered in the manner to be prescribed by the
BFAR at least twenty-five percent (25%) but not more than forty percent (40%) of
bays, foreshore lands, continental shelf or any fishing ground shall be set aside for
the cultivation of mangroves to strengthen the habitat and the spawning grounds of
fish. Within these areas no commercial fishing shall be allowed. All marine fishery
reserves, fish sanctuaries and mangrove swamp reservations already declared or
proclaimed by the President or legislated by the Congress of the Philippines shall be
continuously administered and supervised by the concerned agency: Provided,
however, That in municipal waters, the concerned LGU in consultation with the
FARMCs may establish fishery refuge and sanctuaries. The FARMCs may also
recommend fishery refuge and sanctuaries: Provided, further, That at least fifteen
percent (15%) where applicable of the total coastal areas in each municipality shall
be identified, based on the best available scientific data and in consultation with the
Department, and automatically designated as fish sanctuaries by the LGUs in
consultation with the concerned FARMCs.
CHAPTER V
Fisheries Research and Development

(e) one (1) representative from private sector; and

Section 82. Creation of a National Fisheries Research and Development


Institute (NFRDI). - In recognition of the important role of fisheries research in
the development, management, conservation and protection of the country's
fisheries and aquatic resources, there is hereby created a National Fisheries
Research and Development Institute (NFRDI).

(f) at least nine (9) representatives from the fisherfolk sector which include
representatives from the youth and women sector.

The Institute shall form part of the National Research and Development Network of
the Department of Science and Technology (DOST).

(d) one (1) representative from NGO;

The Council shall adopt rules and regulations necessary to govern its proceedings
and election.
Section 79. Source of Funds of the FARMCs. - A separate fund for the NFARMC,
IFARMCs and M/CFARMCs shall be established and administered by the Department
from the regular annual budgetary appropriations.
CHAPTER IV
Fishery Reserves, Refuge and Sanctuaries
Section 80. Fishing Areas Reserves for Exclusive Use of Government. - The
Department may designate area or areas in Philippine waters beyond fifteen (15)

The Institute, which shall be attached to the Department shall serve as the primary
research arm of the BFAR. The overall governance of the Institute shall be vested in
the Governing Board which shall formulate policy guidelines for its operation. The
plans, programs and operational budget shall be passed by the Board. The Board
may create such committees as it may deem necessary for the proper and effective
performance of its functions. The composition of the Governing Board shall be as
follows:
(a) Undersecretary for Fisheries - Chairman
(b) BFAR Director - Vice Chairman

(c) NFRDI Executive Director - Member


(d) PCAMRD Executive Director - Member
(e) Representative from the academe - Member
(f) four (4) representatives from the private sector who shall come from
the following subsectors: - Members

Municipal Fisherfolk
Commercial Fishing Operator
Aquaculture Operator
Post-Harvest/Processor

The NFRDI shall have a separate budget specific to its manpower requirements and
operations to ensure the independent and objective implementation of its research
activities.

(b) provide a venue for intensive training and development of human


resources in the field of fisheries, a repository of all fisheries researches
and scientific information;
(c) provide intensive training and development of human resources in the
field of fisheries for the maximum utilization of available technology;
(d) hasten the realization of the economic potential of the fisheries sector
by maximizing developmental research efforts in accordance with the
requirements of the national fisheries conservations and development
programs, also possibly through collaborative effort with international
institutions; and
(e) formally establish, strengthen and expand the network of fisheriesresearching communities through effective communication linkages
nationwide.
CHAPTER VI
Prohibitions and Penalties

Section 83. Qualification Standard. - The Institute shall be headed by an


Executive Director to be appointed by the President of the Philippines upon the
recommendation of the governing board. The Executive Director shall hold a
Doctorate degree in fisheries and/or other related disciplines. The organizational
structure and staffing pattern shall be approved by the Department: Provided,
however, That the staffing pattern and remunerations for scientific and technical
staff shall be based on the qualification standards for science and technology
personnel.

Section 86. Unauthorized Fishing or Engaging in Other Unauthorized


Fisheries Activities. - No person shall exploit, occupy, produce, breed, culture,
capture or gather fish, fry or fingerlings of any fishery species or fishery products,
or engage in any fishery activity in Philippine waters without a license, lease or
permit.

Section 84. Research and Development Objectives. - Researches to be done by


the NFRDI are expected to result in the following:

Discovery of any person in an area where he has no permit or registration papers


for a fishing vessel shall constitute a prima facie presumption that the person
and/or vessel is engaged in unauthorized fishing: Provided, That fishing for daily
food sustenance or for leisure which is not for commercial, occupation or livelihood
purposes may be allowed.

(a) To raise the income of the fisherfolk and to elevate the Philippines
among the top five (5) in the world ranking in the fish productions;
(b) to make the country's fishing industry in the high seas competitive;
(c) to conduct social research on fisherfolk families for a better
understanding of their conditions and needs; and
(d) to coordinate with the fisheries schools, LGUs and private sectors
regarding the maximum utilization of available technology, including the
transfer of such technology to the industry particularly the fisherfolk.
Section 85. Functions of the NFRDI . - As a national institute, the NFRDI shall
have the following functions:
(a) establish a national infrastructure unit complete with technologicallyadvanced features and modern scientific equipment, which shall facilitate,
monitor, and implement various research needs and activities of the
fisheries sector;

It shall be unlawful for any commercial fishing vessel to fish in bays and in such
other fishery management areas which may hereinafter be declared as overexploited.
Any commercial fishing boat captain or the three (3) highest officers of the boat
who commit any of the above prohibited acts upon conviction shall be punished by a
fine equivalent to the value of catch or Ten thousand pesos (P10,000.00) whichever
is higher, and imprisonment of six (6) months, confiscation of catch and fishing
gears, and automatic revocation of license.
It shall be unlawful for any person not listed in the registry of municipal fisherfolk to
engage in any commercial fishing activity in municipal waters. Any municipal
fisherfolk who commits such violation shall be punished by confiscation of catch and
a fine of Five hundred pesos (500.00).
Section 87. Poaching in Philippine Waters. - It shall be unlawful for any foreign
person, corporation or entity to fish or operate any fishing vessel in Philippine
waters.

The entry of any foreign fishing vessel in Philippine waters shall constitute a prima
facie evidence that the vessel is engaged in fishing in Philippine waters.
Violation of the above shall be punished by a fine of One hundred thousand U.S.
Dollars (US$100,000.00), in addition to the confiscation of its catch, fishing
equipment and fishing vessel: Provided, That the Department is empowered to
impose an administrative fine of not less than Fifty thousand U.S. Dollars
(US$50,000.00) but not more than Two hundred thousand U.S. Dollars
(US$200,000.00) or its equivalent in the Philippine Currency.
Section 88. Fishing Through Explosives, Noxious or Poisonous Substance,
and/or Electricity. (1) It shall be unlawful for any person to catch, take or gather or cause to
be caught, taken or gathered, fish or any fishery species in Philippine
waters with the use of electricity, explosives, noxious or poisonous
substance such as sodium cyanide in the Philippine fishery areas, which will
kill, stupefy, disable or render unconscious fish or fishery species: Provided,
That the Department, subject to such safeguards and conditions deemed
necessary and endorsement from the concerned LGUs, may allow, for
research, educational or scientific purposes only, the use of electricity,
poisonous or noxious substances to catch, take or gather fish or fishery
species: Provided, further, That the use of poisonous or noxious substances
to eradicate predators in fishponds in accordance with accepted scientific
practices and without causing adverse environmental impact in neighboring
waters and grounds shall not be construed as illegal fishing.
It will likewise be unlawful for any person, corporation or entity to possess,
deal in, sell or in any manner dispose of, any fish or fishery species which
have been illegally caught, taken or gathered.
The discovery of dynamite, other explosives and chemical compounds
which contain combustible elements, or noxious or poisonous substances,
or equipment or device for electro-fishing in any fishing vessel or in the
possession of any fisherfolk, operator, fishing boat official or fishworker
shall constitute prima facie evidence, that the same was used for fishing in
violation of this Code. The discovery in any fishing vessel of fish caught or
killed with the use of explosive, noxious or poisonous substances or by
electricity shall constitute prima facie evidence that the fisherfolk, operator,
boat official or fishworker is fishing with the use thereof.
(2) Mere possession of explosive, noxious or poisonous substances or
electrofishing devices for illegal fishing shall be punishable by
imprisonment ranging from six (6) months to two (2) years.
(3) Actual use of explosives, noxious or poisonous substances or
electrofishing devices for illegal fishing shall be punishable by
imprisonment ranging from five (5) years to ten (10) years without
prejudice to the filing of separate criminal cases when the use of the same
result to physical injury or loss of human life.

(4) Dealing in, selling, or in any manner disposing of, for profit, illegally
caught/gathered fisheries species shall be punished by imprisonment
ranging from six (6) months to two (2) years.
(5) In all cases enumerated above, the explosives, noxious or poisonous
substances and/or electrical devices, as well as the fishing vessels, fishing
equipment and catch shall be forfeited.
Section 89. Use of Fine Mesh Net. - It shall be unlawful to engage in fishing
using nets with mesh smaller than that which may be fixed by the Department:
Provided, That the prohibition on the use of fine mesh net shall not apply to the
gathering of fry, glass eels, elvers, tabios, and alamang and such species which by
their nature are small but already mature to be identified in the implementing rules
and regulations by the Department.
Violation of the above shall subject the offender to a fine from Two thousand pesos
(P2,000.00) to Twenty thousand pesos (P20,000.00) or imprisonment from six (6)
months to two (2) years or both such fine and imprisonment at the discretion of the
court: Provided, That if the offense is committed by a commercial fishing vessel, the
boat captain and the master fisherman shall also be subject to the penalties
provided herein: Provided, further, That the owner/operator of the commercial
fishing vessel who violates this provision shall be subjected to the same penalties
provided herein: Provided, finally, That the Department is hereby empowered to
impose upon the offender an administrative fine and/or cancel his permit or license
or both.
Section 90. Use of Active Gear in the Municipal Waters and Bays and Other
Fishery Management Areas. - It shall be unlawful to engage in fishing in
municipal waters and in all bays as well as other fishery management areas using
active fishing gears as defined in this Code.
Violators of the above prohibitions shall suffer the following penalties:
(1) The boat captain and master fisherman of the vessels who participated
in the violation shall suffer the penalty of imprisonment from two (2) years
to six (6) years;
(2) The owner/operator of the vessel shall be fined from Two thousand
pesos (P2,000.00) to Twenty thousand pesos (20,000.00) upon the
discretion of the court.
If the owner/operator is a corporation, the penalty shall be imposed on the
chief executive officer of the Corporation.
If the owner/operator is a partnership the penalty shall be imposed on the
managing partner.
(3) The catch shall be confiscated and forfeited.

Section 91. Ban on Coral Exploitation and Exportation. - It shall be unlawful


for any person or corporation to gather, possess, sell or export ordinary precious
and semi-precious corals, whether raw or in processed form, except for scientific or
research purposes.
Violations of this provision shall be punished by imprisonment from six (6) months
to two (2) years and a fine from Two thousand pesos (P2,000.00) to Twenty
thousand pesos (20,000.00), or both such fine and imprisonment, at the discretion
of the court, and forfeiture of the subject corals, including the vessel and its proper
disposition.
The confiscated corals shall either be returned to the sea or donated to schools and
museums for educational or scientific purposes or disposed through other means.
Section 92. Ban on Muro-Ami Other Methods and Gear Destructive to Coral
Reefs and Other Marine Habitat.- It shall be unlawful for any person, natural or
juridical, to fish with gear method that destroys coral reefs, seagrass beds, and
other fishery marine life habitat as may be determined by the Department. "MuroAmi" and any of its variation, and such similar gear and methods that require
diving, other physical or mechanical acts to pound the coral reefs and other habitat
to entrap, gather or catch fish and other fishery species are also prohibited.
The operator, boat captain, master fisherman, and recruiter or organizer of
fishworkers who violate this provision shall suffer a penalty of two (2) years to ten
(10) years imprisonment and a fine of not less than One hundred thousand pesos
(P100,000.00) to Five hundred thousand pesos (P500,000.00) or both such fine and
imprisonment, at the discretion of the court. The catch and gear used shall be
confiscated.
It shall likewise be unlawful for any person or corporation to gather, sell or export
white sand, silica, pebbles and any other substances which make up any marine
habitat.
The person or corporation who violates this provision shall suffer a penalty of two
(2) years to ten (10) years imprisonment and a fine of not less than One hundred
thousand pesos (P100,000.00) to Five hundred thousand pesos (P500,000.00) or
both such fine and imprisonment, at the discretion of the court. The substance
taken from its marine habitat shall be confiscated.
Section 93. Illegal Use of Superlights. - It shall be unlawful to engage in fishing
with the use of superlights in municipal waters or in violation of the rules and
regulations which may be promulgated by the Department on the use of superlights
outside municipal waters.
Violations of this provision shall be punished by imprisonment from six (6) months
to two (2) years or a fine of Five thousand pesos (P5,000.00) per superlight, or both
such fine and imprisonment at the discretion of the courts. The superlight, fishing
gears and vessel shall be confiscated.
Section 94. Conversion of Mangroves. - It shall be unlawful for any person to
convert mangroves into fishponds or for any other purposes.

Violation of the provision of this section shall be punished by imprisonment of six


(6) years and one (1) day to twelve (12) years and/or a fine of Eighty thousand
pesos (P80,000.00): Provided, That if the area requires rehabilitation or restoration
as determined by the court, the offender should also be required to restore or
compensate for the restoration of the damage.
Section 95. Fishing in Overfished Area and During Closed Season. - It shall
be unlawful to fish in overfished area and during closed season.
Violation of the provision of this section shall be punished by imprisonment of six
(6) months and one (1) day to six (6) years and/or fine of Six thousand pesos
(P6,000.00) and by forfeiture of the catch and cancellation of fishing permit or
license.
Section 96. Fishing in Fishery Reserves, Refuge and Sanctuaries. - It shall be
unlawful to fish in fishery areas declared by the Department as fishery reserves,
refuge and sanctuaries.
Violation of the provision of this section shall be punished by imprisonment of two
(2) years to six (6) years and/or fine of Two thousand pesos (P2,000.00) to Twenty
thousand pesos (P20,000.00) and by forfeiture of the catch and the cancellation of
fishing permit or license.
Section 97. Fishing Or Taking of Rare, Threatened or Endangered Species. It shall be unlawful to fish or take rare, threatened or endangered species as listed
in the CITES and as determined by the Department.
Violation of the provision of this section shall be punished by imprisonment of
twelve (12) years to twenty (20) years and/or a fine of One hundred and twenty
thousand pesos (P120,000.00) and forfeiture of the catch, and the cancellation of
fishing permit.
Section 98. Capture of Sabalo and Other Breeders/Spawners. - It shall be
unlawful for any person to catch, gather, capture or possess mature milkfish or
"sabalo" and such other breeders or spawners of other fishery species as may be
determined by the Department: Provided, That catching of "sabalo" and other
breeders/spawners for local breeding purposes or scientific or research purposes
may be allowed subject to guidelines to be promulgated by the Department.
Violation of the provision of this section shall be punished by imprisonment of six
(6) months and one (1) day to eight (8) years and/or a fine of Eighty thousand
pesos (P80,000.00) and forfeiture of the catch, and fishing equipment used and
revocation of license.
Section 99. Exportation of Breeders, Spawners, Eggs or Fry. - Exportation of
breeders, spawners, eggs or fry as prohibited in this Code shall be punished by
imprisonment of eight (8) years, confiscation of the same or a fine equivalent to
double the value of the same, and revocation of the fishing and/or export
license/permit.

Section 100. Importation or Exportation of Fish or Fishery Species. - Any


importation or exportation of fish or fisheries species in violation of this Code shall
be punished by eight (8) years of imprisonment, a fine of Eighty thousand pesos
(P80,000.00) and destruction of live fishery species or forfeiture of non-live fishery
species in favor of the department for its proper disposition: Provided, That violator
of this provision shall be banned from being members or stock holders of companies
currently engaged in fisheries or companies to be created in the future, the
guidelines for which shall be promulgated by the Department.
Section 101. Violation of Catch Ceilings. - It shall be unlawful for any person to
fish in violation of catch ceilings as determined by the Department. Violation of the
provision of this section shall be punished by imprisonment of six (6) months and
one (1) day to six (6) years and/or a fine of Fifty thousand pesos (P50,000.00) and
forfeiture of the catch, and fishing equipment used and revocation of license.
Section 102. Aquatic Pollution. - Aquatic pollution, as defined in this Code shall
be unlawful.
Violation of the provision of this section shall be punished by imprisonment of six
(6) years and one (1) day to twelve (12) years and/or a fine of Eighty thousand
pesos (P80,000.00) plus an additional fine of Eight thousand pesos (P8,000.00) per
day until such violation ceases and the fines paid.
Section 103. Other Violations. - The following fisheries activities shall also be
considered as a violation of this Code:
(a) Failure to Comply with Minimum Safety Standards. - The owner and
captain of a commercial fishing vessel engaged in fishing who, upon
demand by proper authorities, fails to exhibit or show proof of compliance
with the safety standards provided in this Code, shall be immediately
prevented from continuing with his fishing activity and escorted to the
nearest port or landing point. The license to operate the commercial fishing
vessel shall be suspended until the safety standard has been complied
with.
(b) Failure to Conduct a Yearly Report on all Fishponds, Fish Pens and Fish
Cages. - The FLA of the holder who fails to render a yearly report shall be
immediately cancelled: Provided, That if the offender be the owner of the
fishpond, fish pen or fish cage, he shall be subjected to the following
penalties: (1) first offense, a fine of Five hundred pesos (P500.00) per
unreported hectare; (2) subsequent offenses, a fine of One thousand pesos
(1,000.00) per unreported hectare.
(c) Gathering and Marketing of Shell Fishes. - It shall be unlawful for any
person to take, sell, transfer, or have in possession for any purpose any
shell fish which is sexually mature or below the minimum size or above the
maximum quantities prescribed for the particular species.
(d) Obstruction to Navigation or Flow and Ebb of Tide in any Stream, River,
Lake or Bay. - It shall be unlawful for any person who causes obstruction to
navigation or flow or ebb of tide.

(e) Construction and Operation of Fish Corrals/Traps, Fish Pens and Fish
Cages. - It shall be unlawful to construct and operate fish corrals/traps, fish
pens and fish cages without a license/permit.
Subject to the provision of subparagraph (b) of this section, violation of the aboveenumerated prohibited acts shall subject the offender to a fine ranging from Two
thousand pesos (P2,000.00) to Ten thousand pesos (P10,000.00) or imprisonment
from one (1) month and one (1) day to six (6) months, or both such fine and
imprisonment, upon the discretion of the court: Provided, That the Secretary is
hereby empowered to impose upon the offender an administrative fine of not more
than Ten thousand pesos (P10,000.00) or to cancel his permit or license, or to
impose such fine and to cancel his permit or license, in the discretion of the
Secretary: Provided, further, That the Secretary, or his duly authorized
representative, and law enforcement agents are hereby empowered to impound
with the assistance of the Philippine Coast Guard, PNP-Maritime Command:
Provided, finally, That any person who unlawfully obstructs or delays the inspection
and/or movement of fish and fishery/aquatic products when such inspection and/or
movement is authorized under this Code, shall be subject to a fine of not more than
Ten thousand pesos (P10,000.00) or imprisonment of not more than two (2) years,
or both such fine and imprisonment, upon the discretion of the court.
Every penalty imposed for the commission of an offense shall carry with it the
forfeiture of the proceeds of such offense and the instruments or tools with which it
was committed.
Such proceeds and instruments or tools shall be confiscated and forfeited in favor of
the Government, unless they be the property of a third person not liable for the
offense, but those articles which are not subject of lawful commerce shall be
destroyed.
Section 104. Commercial Fishing Vessel Operators Employing Unlicensed
Fisherfolk or Fishworker or Crew.- The owner/operator of a commercial fishing
vessel employing unlicensed fisherfolk or fishworker shall be fined Five hundred
pesos (P500.00) each for every month that the same has been employed and/or
One thousand pesos (P1,000.00) for every month for each unlicensed crew member
who has been employed.
Section 105. Obstruction of Defined Migration Paths. - Obstruction of any
defined migration paths of anadromous, catadromous and other migratory species,
in areas including, but not limited to river mouths and estuaries within a distance
determined by the concerned FARMCs shall be punished by imprisonment of seven
(7) years to twelve (12) years or a fine from Fifty thousand pesos (P50,000.00) to
One hundred thousand pesos (P100,000.00)or both imprisonment and fine at the
discretion of the court, and cancellation of permit/license, if any, and dismantling of
obstruction shall be at his own expense and confiscation of same.
Section 106. Obstruction to Fishery Law Enforcement Officer. - The boat
owner, master or operator or any person acting on his behalf of any fishing vessel
who evades, obstructs or hinders any fishery law enforcement officer of the
Department to perform his duty, shall be fined Ten thousand pesos (P10,000.00). In
addition, the registration, permit and/or license of the vessel including the license of
the master fisherman shall be canceled.

Section 107. Promulgation of Administrative Orders. - For purposes of fishery


regulation or other fishery adjustments, the Department in consultation with the
LGUs and local FARMCs, shall issue Fishery Administrative Orders or regulations for
the conservation, preservation, management and sustainable development of
fishery and aquatic resources.

Section 113. Aquaculture Investment Fund. - An Aquaculture Investment Fund


in the minimum amount of Fifty million pesos (P50,000,000.00) shall be established
for soft loans which shall be extended to municipal fisherfolk and their organization
who will engage in aquaculture, and for the development of underdeveloped or
underutilized inland fishponds.

CHAPTER VII
General Provisions

Section 114. Other Fisheries Financing Facilities. - In addition to fisheries


credit guarantee, grant and other similar facilities granted under this Code, qualified
Filipino fisherfolk and fisheries enterprises shall enjoy such other facilities granted
them under existing and/or new laws, specially as to rural credit, with preference
being given to fisheries cooperatives.

Section 108. Fisherfolk Settlement Areas. - The Department shall establish and
create fisherfolk settlement areas in coordination with concerned agencies of the
government, where certain areas of the public domain, specifically near the fishing
grounds, shall be reserved for the settlement of the municipal fisherfolk. Nothing in
this section shall be construed to vest ownership of any resettlement area to a
municipal fisherfolk for whom said areas may have been reserved for or had been
actually granted to.
Section 109. Municipal Fisheries Grant Fund. - For the development,
management and conservation of the municipal resources, there is hereby created a
Fishery Grant Fund to finance fishery projects of the LGUs primarily for the
upliftment of the municipal fisherfolk. The amount of One hundred million pesos
(P100,000,000.00) is hereby appropriated out of the Department's allocation in the
General Appropriations Act (GAA) to support the Grant Fund.
For this purpose, the Department may seek financial assistance from any source
and may receive any donation therefore.
Section 110. Fishery Loan and Guarantee Fund. - Pursuant to Section 7, Article
XIII of the Constitution, there is hereby created a Fishery Loan and Guarantee Fund
with an initial of One hundred million pesos (P100,000,000.00), which shall be
administered by the Land Bank of the Philippines. The fund shall be made available
for lending to qualified borrowers to finance the development of the fishery industry
under a program to be prescribed by the Department.
For the same purpose, the Department may seek financial assistance from any
source and may receive any donation therefrom.
Section 111. Fishing Vessels Development Fund. - There is hereby created a
Fishing Vessels Development Fund to enhance the building and/or acquisition of
fishing vessels. This shall be a long-term loan facility that shall be administered by
the Development Bank of the Philippines. The amount of Two hundred and fifty
million pesos (P250,000,000.00) per year for five (5) years is hereby appropriated
out of the Department's allocation in the GAA to support this Development Fund.
Section 112. Special Fisheries Science and Approfishtech Fund. - The
Department shall provide subsidy for full technical and financial support to the
development of appropriate technology, both in fishery and ancillary industries, that
are ecologically sound, locally source-based and labor intensive, based on the
requirement and needs of the FARMCs. An initial amount of One hundred million
pesos (100,000,000.00) shall be authorized for the purpose of a Special Fisheries
Science and Approfishtech Fund, and thereafter shall be included in the GAA.

Section 115. Professionalization of Fisheries Graduates. - There is hereby


created a Fisheries Board of Examiners in the Professional Regulation Commission to
upgrade the Fisheries Profession: Provided, however, That those who have passed
the Civil Service Examination for Fisheries shall automatically be granted eligibility
by the Fisheries Board of Examiners: Provided, further, That they have served the
industry in either public or private capacity for not less than five (5) years:
Provided, finally, That the first Board Examination for B.S. Fisheries Graduates shall
be conducted within one (1) year from the approval of this Code.
Section 116. Upgrading of State Fisheries Schools/Colleges. - The
Department, in coordination with the Commission on Higher Education (CHED),
Department of Education, Culture and Sports (DECS), and Technical Education and
Skills Development Authority (TESDA), shall upgrade State Fisheries
Schools/Colleges which provide both formal and non-formal education: Provided,
however, That the CHED shall incorporate Approfishtech in the curricula of fisheries
schools/colleges.
The Department and the CHED shall jointly formulate standards to upgrade all
fisheries schools/colleges. Fisheries schools/colleges that do not meet minimum
standards shall be closed.
Section 117. Inclusion of Fisheries Conservation Subjects in School
Curriculum. - Fisheries conservation subjects shall be incorporated in the curricula
of elementary and secondary schools both private and public.
Section 118. Educational campaign at all levels. - The Department, the CHED,
the DECS and the Philippine Information Agency shall launch and pursue a
nationwide educational campaign to:
(a) help realize the policies and implement the provisions of this Code;
(b) promote the development, management, conservation and proper use
of the environment;
(c) promote the principle of sustainable development; and
(d) promote the development of truly Filipino-oriented fishing and ancillary
industries.

Section 119. Infrastructure Support. - The Department in cooperation with


concerned agencies shall:
(a) prepare and implement a nationwide plan for the development of
municipal fishing ports and markets;
(b) prioritize the construction of farm-to-market roads linking the fisheries
production sites, coastal landing points and other post-harvest facilities to
major market and arterial roads/highways;
(c) identity community infrastructure facilities such as fish landing ports,
ice plant and cold storage facilities in consultation with fishery
cooperatives/associations and prepare plans and designs for their
construction that would be consistent with international environmental
impact;
(d) establish and maintain quality laboratories in major fish ports and
prescribe the highest standards for the operation and maintenance of such
post-harvest facilities;
(e) arrange and make representations with appropriate funding institutions
to finance such facilities for the use of the fishery
cooperatives/associations;
(f) develop and strengthen marketing facilities and promote cooperative
marketing systems; and
(g) promote and strengthen local fisheries ship-building and repair
industry.
Section 120. Extension Services. - The Department shall develop cost-effective,
practical and efficient extension services on a sustained basis, in addition to those
provided by state educational institutions, especially to municipal fisherfolk in
undeveloped areas, utilizing practicable and indigenous resources and government
agencies available, and based upon a system of self-reliance and self-help.
Section 121. Protection of Sensitive Technical Information. - The Department
shall take such measures as may be necessary in order to protect trade, industrial
and policy information of Filipino fisherfolk, fisheries owners/operators,
entrepreneurs, manufacturers and researchers, when disclosure of such information
will injure the competitiveness or viability of domestic fisheries.
Section 122. Assistance in Collecting Information. - The Department, in
coordination with other government entities concerned, may require Filipino
representatives abroad and foreign-based personnel to assist in the collection of
fisheries data and information.
Section 123. Charting of Navigational Lanes and Delineation of Municipal
Waters. - The Department shall authorize the National Mapping and Resource
Information Authority (NAMRIA) for the designation and charting of navigational

lanes in fishery areas and delineation of municipal waters. The Philippine Coast
Guard shall exercise control and supervision over such designated navigational
lanes.
Section 124. Persons and Deputies Authorized to Enforce this Code and
Other Fishery Laws, Rules and Regulations. - The law enforcement officers of
the Department, the Philippine Navy, Philippine Coast Guard, Philippine National
Police (PNP), PNP-Maritime Command, law enforcement officers of the LGUs and
other government enforcement agencies, are hereby authorized to enforce this
Code and other fishery laws, rules and regulations. Other competent government
officials and employees, punong barangays and officers and members of fisherfolk
associations who have undergone training on law enforcement may be designated in
writing by the Department as deputy fish wardens in the enforcement of this Code
and other fishery laws, rules and regulations.
Section 125. Strengthening Prosecution and Conviction of Violators of
Fishery Laws. - The Department of Justice (DOJ) shall embark on a program to
strengthen the prosecution and conviction aspects of fishery law enforcement
through augmentation of the current complement of state prosecutors and through
their continuous training and reorientation on fishery laws, rules and regulations.
Section 126. Foreign Grants and Aids. - All foreign grants, aids, exchange
programs, loans, researches and the like shall be evaluated and regulated by the
Department to ensure that such are consistent with the Filipinization,
democratization and industrialization of fishing industry and the development of the
entire country.
Section 127. Mandatory Review. - The Congress of the Philippines shall
undertake a mandatory review of this Code at least once every five (5) years and as
often as it may deem necessary, to ensure that fisheries policies and guidelines
remain responsive to changing circumstances.
CHAPTER VIII
Transitory Provisions
Section 128. Moratoria. - The Department shall, upon the recommendation of the
Bureau, have the power to declare a moratorium on the issuance of licenses for
commercial fishing vessels to operate in specified area or areas in Philippine waters
for a limited period of time if there are indications of overfishing brought about by a
decrease in the volume and sizes of fish caught therein or for conservation or
ecological purposes.
No new licenses and similar privileges on exploitation of specific fishery areas in
Philippine waters and aquaculture production areas shall be issued in accordance
with this Code. Such moratoria shall not exceed five (5) years from the effectivity of
this Code.
Section 129. Formulation of Implementing Rules and Regulations. - An
Inter-agency Committee is hereby created to formulate rules and regulations for the
full implementation of this Code within ninety (90) days of its effectivity: Provided,
however, That the formulated rules and regulations shall be submitted to both

Houses of Congress for information and guidance. Such rules and regulations shall
take effect upon publication in a newspaper of general circulation.
The Inter-agency Committee shall be composed of the following:

(q) A representative from the academe coming from the specialized


fisheries institution.
CHAPTER IX
Final Provisions

(a) Secretary of Agriculture as Chairman;


(b) Secretary of the Interior and Local Government;
(c) Secretary of Environment and Natural Resources;
(d) Secretary of Justice;
(e) Secretary of Finance;
(f) Secretary of Budget and Management;
(g) Secretary of Labor and Employment;
(h) Secretary of National Defense;
(i) Commissioner of Civil Service Commission;
(j) Director of BFAR;
(k) Executive Director of PCAMRD;
(l) General Manager of PFDA;
(m) One (1) representative from each of the following:
(a.1) The League of Provinces;
(a.2) The League of Cities;
(a.3) The League of Municipalities;
(a.4) The Liga ng mga Barangay;
(n) Representative of the municipal fisherfolk;lawphi1
(o) Representative of the commercial fishers;
(p) Representative of the non-government organizations involved in fishing
concerns; and

Section 130. Appropriation. - The sum necessary to effectively carry out the
provisions of this Act during the first year of implementation shall be sourced from
the budget of the DA/BFAR and other agencies performing fisheries-related
functions: Provided, however, That such amount as may be necessary to carry out
the provisions of Sections 79, 109, 110, 111, 112, 113 are hereby appropriated out
of the unappropriated funds of the National Treasury. The Congress of the
Philippines shall provide for the appropriations of the Department, the NFRDI and
the Fisheries Scholarship Program for the succeeding years to be included in the
annual GAA.
Section 131. Repealing Clause. - Presidential Decree No. 704, as amended by
Presidential Decree Nos. 1015 and 1058, Presidential Decree No. 977, as amended,
Executive Order No. 967, Series of 1984, Executive Order No. 116, Series of 1987,
Executive Order No. 292, Series of 1987, Executive Order No. 473, Series of 1991
and other existing laws except Republic Act No. 7611, decrees, executive orders,
and rules and regulations or parts thereof, which are inconsistent with this Code,
are hereby repealed or modified accordingly.
Section 132. Separability Clause. - If any portion or provision of this Code is
declared unconstitutional or invalid, the other portions or provisions hereof, which
are not affected thereby, shall continue in full force and effect.
Section 133. Effectivity. - This Code shall take effect fifteen (15) days after its
publication in the Official Gazette or in two (2) newspapers of general publication.
Approved: February 25, 1998lawphi1
Sec. 149, Local Government Code
SEC. 149. Fishery Rentals, Fees and Charges- (a) Municipalities shall have the
exclusive authority to grant fishery privileges in the municipal waters and impose
rentals, fees or charges therefor in accordance with the provisions of this Section.
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic
beds or bangus fry areas, within a definite zone of the municipal waters, as
determined by it: Provided, however, That duly registered organizations and
cooperatives of marginal fishermen shall have the preferential right to such fishery
privileges: Provided, further, That the sangguniang bayan may require a public
bidding in conformity with and pursuant to an ordinance for the grant of such
privileges: Provided, finally, That in the absence of such organizations and
cooperatives or their failure to exercise their preferential right, other parties may
participate in the public bidding in conformity with the above cited procedure.
(2) Grant the privilege to gather, take or catch bangus fry, prawn fry or kawagkawag or fry of other species and fish from the municipal waters by nets, traps or

other fishing gears to marginal fishermen free of any rental, fee, charge or any
other imposition whatsoever.
(3) Issue licenses for the operation of fishing vessels of three (3) tons or less for
which purpose the sangguniang bayan shall promulgate rules and regulations
regarding the issuances of such licenses to qualified applicants under existing laws.
Provided, however, That the sanggunian concerned shall, by appropriate ordinance,
penalize the use of explosives, noxious or poisonous substances, electricity, muroami, and other deleterious methods of fishing and prescribe a criminal penalty
therefor in accordance with the provisions of this Code: Provided, finally, That the
sanggunian concerned shall have the authority to prosecute any violation of the
provisions of applicable fishery laws.
Hizon vs. Court of Appeals
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 119619 December 13, 1996
RICHARD HIZON, SILVERIO GARGAR, ERNESTO ANDAYA, NEMESIO GABO,
RODRIGO ABRERA, CHEUNG TAI FOOK, SHEK CHOR LUK, EFREN DELA PENA,
JONEL AURELIO, GODOFREDO VILLAVERDE, ANGELITO DUMAYBAG,
DEOMEDES ROSIL, AMADO VILLANUEVA, FRANCISCO ESTREMOS, ANGEL
VILLAVERDE, NEMESIO CASAMPOL, RICHARD ESTREMOS, JORNIE DELA
PENA, JESUS MACTAN, MARLON CAMPORAZO, FERNANDO BIRING,
MENDRITO CARPO, LUIS DUARTE, JOSEPH AURELIO, RONNIE JUEZAN,
BERNARDO VILLACARLOS, RICARDO SALES, MARLON ABELLA, TEODORO
DELOS REYES, IGNACIO ABELLA, JOSEPH MAYONADO, JANAIRO
LANGUYOD, DODONG DELOS REYES, JOLLY CABALLERO and ROPLANDO
ARCENAS, petitioners,
vs.
HONORABLE COURT OF APPEALS and THE PEOPLE OF THE
PHILIPPINES, respondents.

PUNO, J.:p
This is a petition for review on certiorari of the decision of the Court of Appeals in
CA-G.R. CR No. 15417 affirming the decision of the Regional Trial Court, Branch 52,
Palawan in Criminal Case No. 10429 convicting petitioners of the offense of illegal
fishing with the use of obnoxious or poisonous substance penalized under
Presidential Decree (P.D.) No. 704, the Fisheries Decree of 1975.

In an Information dated October 15, 1992, petitioners were charged with a violation
of P.D. 704 committed as follows:
That on or about the 30th day of September 1992, at Brgy. San
Rafael, Puerto Princesa City, Philippines and within the jurisdiction
of this Honorable Court, the above-named accused crew members
and fishermen of F/B Robinson owned by First Fishermen Fishing
Industries, Inc., represented by Richard Hizon, a domestic
corporation duly organized under the laws of the Philippines, being
then the owner, crew members and fishermen of F/B Robinson and
with the use of said fishing boat, did then and there wilfully,
unlawfully and feloniously the said accused conspiring and
confederating together and mutually helping one another catch,
take or gather or cause to be caught, taken or gathered fish or
fishery aquatic products in the coastal waters of Puerto Princess
City, Palawan, with the use of obnoxious or poisonous substance
(sodium cyanide), of more or less one (1) ton of assorted live
fishes which were illegally caught thru the use of
obnoxious/poisonous substance (sodium cyanide). 1
The following facts were established by the prosecution: In September 1992, the
Philippine National Police (PNP) Maritime Command of Puerto Princesa City, Palawan
received reports of illegal fishing operations in the coastal waters of the city. In
response to these reports, the city mayor organized Task Force Bantay Dagat to
assist the police in the detection and apprehension of violators of the laws on
fishing.
On September 30, 1992 at about 2:00 in the afternoon, the Task Force Bantay
Dagat reported to the PNP Maritime Command that a boat and several small crafts
were fishing by "muro ami" within the shoreline of Barangay San Rafael of Puerto
Princesa. The police, headed by SPO3 Romulo Enriquez, and members of the Task
Force Bantay Dagat, headed by Benito Marcelo, Jr., immediately proceeded to the
area and found several men fishing in motorized sampans and a big fishing boat
identified as F/B Robinson within the seven-kilometer shoreline of the city. They
boarded the F/B Robinson and inspected the boat with the acquiescence of the boat
captain, Silverio Gargar. In the course of their inspection, the police saw two
foreigners in the captain's deck. SP03 Enriquez examined their passports and found
them to be mere photocopies. The police also discovered a large aquarium full of
live lapu-lapu and assorted fish weighing approximately one ton at the bottom of
the boat. 2 They checked the license of the boat and its fishermen and found them
to be in order. Nonetheless, SP03 Enriquez brought the boat captain, the crew and
the fishermen to Puerto Princesa for further investigation.
At the city harbor, members of the Maritime Command were ordered by SP03
Enriquez to guard the F/B Robinson. The boat captain and the two foreigners were
again interrogated at the PNP Maritime Command office. Thereafter, an

Inspection/Apprehension Report was prepared and the boat, its crew and fishermen
were charged with the following violations:

REMARKS:
Sodium Cyanide is a violent poison.

1. Conducting fishing operations within Puerto Princesa coastal


waters without mayor's permit;
2. Employing excess fishermen on board (Authorized 26; On
board 36);
3. Two (2) Hongkong nationals on board without original
passports. 3
The following day, October 1, 1992, SPO3 Enriquez directed the boat captain to get
random samples of fish from the fish cage of F/B Robinson for laboratory
examination. As instructed, the boat engineer, petitioner Ernesto Andaya, delivered
to the Maritime Office four (4) live lapu-lapu fish inside a plastic shopping bag filled
with water. SPO3 Enriquez received the fish and in the presence of the boat
engineer and captain, placed them inside a large transparent plastic bag without
water. He sealed the plastic with heat from a lighter. 4
The specimens were brought to the National Bureau of Investigation (NBI) suboffice in the city for examination "to determine the method of catching the same for
record or evidentiary purposes." 5 They were received at the NBI office at 8:00 in
the evening of the same day. The receiving clerk, Edna Capicio, noted that the fish
were dead and she placed the plastic bag with the fish inside the office freezer to
preserve them. Two days later, on October 3, 1992, the chief of the NBI sub-office,
Onos Mangotara, certified the specimens for laboratory examination at the NBI
Head Office in Manila. The fish samples were to be personally transported by Edna
Capicio who was then scheduled to leave for Manila for her board examination in
Criminology. 6 On October 4, 1992, Ms. Capicio, in the presence of her chief, took
the plastic with the specimens from the freezer and placed them inside two
shopping bags and sealed them with masking tape. She proceeded to her ship
where she placed the specimens in the ship's freezer.
Capicio arrived in Manila the following day, October 5, 1992 and immediately
brought the specimens to the NBI Head Office. On October 7, 1992, NBI Forensic
Chemist Emilia Rosaldes conducted two tests on the fish samples and found that
they contained sodium cyanide, thus:
FINDINGS:
Weight of Specimen. . . . . . 1.870 kilograms
Examinations made on the above-mentioned
specimen gave POSITIVE RESULTS to the
test for the presence of SODIUM CYANIDE. . . .

In light of these findings, the PNP Maritime Command of Puerto Princesa City filed
the complaint at bar against the owner and operator of the F/B Robinson, the First
Fishermen Fishing Industries, Inc., represented by herein petitioner Richard Hizon,
the boat captain, Silverio Gargar, the boat engineer, Ernesto Andaya, two other crew
members, the two Hongkong nationals and 28 fishermen of the said boat.
Petitioners were arraigned and they pled not guilty to the charge. As defense, they
claimed that they are legitimate fishermen of the First Fishermen Industries, Inc., a
domestic corporation licensed to engage in fishing. They alleged that they catch fish
by the hook and line method and that they had used this method for one month and
a half in the waters of Cuyo Island. They related that on September 30, 1992 at
about 7:00 A.M., they anchored the F/B Robinson in the east of Podiado Island in
Puerto Princesa City. The boat captain and the fishermen took out and boarded their
sampans to fish for their food. They were still fishing in their sampans at 4:00 P.M.
when a rubber boat containing members of the PNP Maritime Command and the
Task Force Bantay Dagat approached them and boarded the F/B Robinson. The
policemen were in uniform while the Bantay Dagat personnel were in civilian
clothes. They were all armed with guns. One of the Bantay Dagat personnel
introduced himself as Commander Jun Marcelo and he inspected the boat and the
boat's documents. Marcelo saw the two foreigners and asked for their passports. As
their passports were photocopies, Marcelo demanded for their original. The captain
explained that the original passports were with the company's head office in Manila.
Marcelo angrily insisted for the originals and threatened to arrest everybody. He
then ordered the captain, his crew and the fishermen to follow him to Puerto
Princesa. He held the magazine of his gun and warned the captain "Sige, huwag
kang tatakas, kung hindi babarilin ko kayo!" 8 The captain herded all his men into
the boat and followed Marcelo and the police to Puerto Princesa.
They arrived at the city harbor at 7:45 in the evening and were met by members of
the media. As instructed by Marcelo, the members of the media interviewed and
took pictures of the boat and the fishermen. 9
The following day, October 1, 1992, at 8:00 in the morning, Amado Villanueva, one
of the fishermen at the F/B Robinson, was instructed by a policeman guarding the
boat to get five (5) fish samples from the fish cage and bring them to the pier.
Villanueva inquired whether the captain knew about the order but the guard replied
he was taking responsibility for it. Villanueva scooped five pieces of lapu-lapu,
placed them inside a plastic bag filled with water and brought the bag to the pier.
The boat engineer, Ernesto Andaya, received the fish and delivered them to the PNP
Maritime Office. Nobody was in the office and Andaya waited for the apprehending
officers and the boat captain. Later, one of the policemen in the office instructed him
to leave the bag and hang it on a nail in the wall. Andaya did as he was told and
returned to the boat at 10:00 A.M. 10

In the afternoon of the same day, the boat captain arrived at the Maritime office. He
brought along a representative from their head office in Manila who showed the
police and the Bantay Dagat personnel the original passports of the Hongkong
nationals and other pertinent documents of the F/B Robinson and its crew. Finding
the documents in order, Marcelo approached the captain and whispered to him
"Tandaan mo ito, kapitan, kung makakaalis ka dito, magkikita pa rin uli tayo sa
dagat, kung hindi kayo lulubog ay palulutangin ko kayo!" It was then that SP03
Enriquez informed the captain that some members of the Maritime Command,
acting under his instructions, had just taken five (5) pieces of lapu-lapu from the
boat. SP03 Enriquez showed the captain the fish samples. Although the captain saw
only four (4) pieces of lapu-lapu, he did not utter a word of protest. 11 Under
Marcelo's threat, he signed the "Certification" that he received only four (4) pieces
of the fish. 12

Pursuant to the provisions of Article 45, in relation to the second sentence of Article
10 of the Revised Penal Code, as amended:
a) Fishing Boat (F/B) Robinson;
b) The 28 motorized fiberglass sampans; and
c) The live fishes in the fish cages installed in the F/B Robinson, all
of which have been respectively shown to be tools or instruments
and proceeds of the offense, are hereby ordered confiscated and
declared forfeited in favor of the government.
SO ORDERED.

Two weeks later, the information was filed against petitioners. The case was
prosecuted against thirty-one (31) of the thirty-five (35) accused. Richard Hizon
remained at large while the whereabouts of Richard Estremos, Marlon Camporazo
and Joseph Aurelio were unknown.

13

On appeal, the Court of Appeals affirmed the decision of the trial court. Hence, this
petition.
Petitioners contend that:

On July 9, 1993, the trial court found the thirty one (31) petitioners guilty and
sentenced them to imprisonment for a minimum of eight (8) years and one (1) day
to a maximum of nine (9) years and four (4) months. The court also ordered the
confiscation and forfeiture of the F/B Robinson, the 28 sampans and the ton of
assorted live fishes as instruments and proceeds of the offense, thus:
WHEREFORE, premises considered, judgment is hereby rendered
finding the accused SILVERIO GARGAR, ERNESTO ANDAYA,
NEMESIO GABO, RODRIGO ABRERA, CHEUNG TAI FOOK, SHEK
CHOR LUK, EFREN DELA PENA, JONEL AURELIO, GODOFREDO
VILLAVERDE, ANGELITO DUMAYBAG, DEOMEDES ROSIL, AMADO
VILLANUEVA, FRANCISCO ESTREMOS, ARNEL VILLAVERDE,
NEMESIO CASAMPOL, JORNIE DELA CRUZ, JESUS MACTAN,
FERNANDO BIRING, MENDRITO CARPO, LUIS DUARTE, RONNIE
JUEZAN, BERNARDO VLLLACARLOS, RICARDO SALES, MARLON
ABELLA, TEODORO DELOS REYES, IGNACIO ABELLA, JOSEPH
MAYONADO, JANAIRO LANGUYOD, DODONG DELOS REYES,
ROLANDO ARCENAS and JOLLY CABALLERO guilty beyond
reasonable doubt of the crime of Illegal Fishing with the use of
obnoxious or poisonous substance commonly known as sodium
cyanide, committed in violation of section 33 and penalized in
section 38 of Presidential Decree No. 704, as amended, and there
being neither mitigating nor aggravating circumstances
appreciated and applying the provisions of the Indeterminate
Sentence Law, each of the aforenamed accused is sentenced to an
indeterminate penalty of imprisonment ranging from a minimum
of EIGHT (8) YEARS and ONE (1) DAY to a maximum of NINE (9)
YEARS and FOUR (4) MONTHS and to pay the costs.

I
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
THE MERE "POSITIVE RESULTS TO THE TEST FOR THE PRESENCE
OF SODIUM CYANIDE" IN THE FISH SPECIMEN, ALBEIT ILLEGALLY
SEIZED ON THE OCCASION OF A WARRANTLESS SEARCH AND
ARREST, IS ADMISSIBLE AND SUFFICIENT BASIS FOR THE
PETITIONERS' CONVICTION OF THE CRIME OF ILLEGAL FISHING.
II
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING
THAT THE STATUTORY PRESUMPTION OF GUILT UNDER SEC. 33
OF PRESIDENTIAL DECREE NO. 704 CANNOT PREVAIL AGAINST
THE CONSTITUTIONAL PRESUMPTION OF INNOCENCE, SUCH
THAT THE GRAVAMEN OF THE OFFENSE OF ILLEGAL FISHING
MUST STILL BE PROVED BEYOND REASONABLE DOUBT.
III
THE HONORABLE COURT OF APPEALS ERRED IN NOT REVERSING
THE JUDGMENT OF THE TRIAL COURT AND ACQUITTING THE
PETITIONERS. 14
The Solicitor General submitted a "Manifestation in Lieu of Comment" praying for
petitioners' acquittal. 15

The petitioners, with the concurrence of the Solicitor General, primarily question the
admissibility of the evidence against petitioners in view of the warrantless search of
the fishing boat and the subsequent arrest of petitioners. More concretely, they
contend that the NBI finding of sodium cyanide in the fish specimens should not
have been admitted and considered by the trial court because the fish samples were
seized from the F/B Robinson without a search warrant.
Our Constitution proscribes search and seizure and the arrest of persons without a
judicial warrant. 16 As a general rule, any evidence obtained without a judicial
warrant is inadmissible for any purpose in any proceeding. The rule is, however,
subject to certain exceptions. Some of these are: 17 (1) a search incident to a lawful
of arrest; 18 (2) seizure of evidence in plain view; (3) search of a moving motor
vehicle; 19 and (4) search in violation of customs laws. 20
Search and seizure without search warrant of vessels and aircrafts for violations of
customs laws have been the traditional exception to the constitutional requirement
of a search warrant. It is rooted on the recognition that a vessel and an aircraft, like
motor vehicles, can be quickly moved out of the locality or jurisdiction in which the
search warrant must be sought and secured. Yielding to this reality, judicial
authorities have not required a search warrant of vessels and aircrafts before their
search and seizure can be constitutionally effected. 21
The same exception ought to apply to seizures of fishing vessels and boats
breaching our fishery laws. These vessels are normally powered by high-speed
motors that enable them to elude arresting ships of the Philippine Navy, the Coast
Guard and other government authorities enforcing our fishery laws. 22
We thus hold as valid the warrantless search on the F/B Robinson, a fishing boat
suspected of having engaged in illegal fishing. The fish and other evidence seized in
the course of the search were properly admitted by the trial court. Moreover,
petitioners failed to raise the issue during trial and hence, waived
their right to question any irregularity that may have attended the said search and
seizure. 23
Given the evidence admitted by the trial court, the next question now is whether
petitioners are guilty of the offense of illegal fishing with the use of poisonous
substances. Again, the petitioners, joined by the Solicitor General, submit that the
prosecution evidence cannot convict them.

products. It shall be unlawful for any person to catch, take or


gather or cause to be caught, taken or gathered fish or
fishery/aquatic products in Philippine waters with the use of
explosives, obnoxious or poisonous substance, or by the use of
electricity as defined in paragraphs (l), (m) and (d), respectively,
of section 3 hereof: Provided, That mere possession of such
explosives with intent to use the same for illegal fishing as herein
defined shall be punishable as hereinafter provided: Provided,
That the Secretary may, upon recommendation of the Director and
subject to such safeguards and conditions he deems necessary,
allow for research, educational or scientific purposes only, the use
of explosives, obnoxious or poisonous substance or electricity to
catch, take or gather fish or fishery/aquatic products in the
specified area: Provided, further, That the use of chemicals to
eradicate predators in fishponds in accordance with accepted
scientific fishery practices without causing deleterious effects in
neighboring waters shall not be construed as the use of obnoxious
or poisonous substance within the meaning of this
section: Provided, finally, That the use of mechanical bombs for
killing whales, crocodiles, sharks or other large dangerous fishes,
may be allowed, subject to the approval of the Secretary.
It shall, likewise, be unlawful for any person knowingly to possess,
deal in, sell or in any manner dispose of, for profit, any fish or
fishery/aquatic products which have been illegally caught, taken
or gathered.
The discovery of dynamite, other explosives and chemical
compounds containing combustible elements, or obnoxious or
poisonous substance, or equipment or device for electric fishing in
any fishing boat or in the possession of a fisherman shall
constitute a presumption that the same were used for fishing in
violation of this Decree, and the discovery in any fishing boat of
fish caught or killed by the use of explosives, obnoxious or
poisonous substance or by electricity shall constitute a
presumption that the owner, operator or fisherman were fishing
with the use of explosives, obnoxious or poisonous substance or
electricity.
xxx xxx xxx

We agree.
Petitioners were charged with illegal fishing penalized under sections 33 and 38 of
P.D. 704 24 which provide as follows:
Sec. 33. Illegal fishing, illegal possession of explosives intended
for illegal fishing; dealing in illegally caught fish or fishery/aquatic

Sec. 38. Penalties. (a) For illegal fishing and dealing in illegally
caught fish or fishery/aquatic products. Violation of Section 33
hereof shall be punished as follows:
xxx xxx xxx

(2) By imprisonment from eight (8) to ten (10) years, if obnoxious


or poisonous substances are used:Provided, That if the use of
such substances results 1) in physical injury to any person, the
penalty shall be imprisonment from ten (10) to twelve (12) years,
or 2) in the loss of human life, then the penalty shall be
imprisonment from twenty (20) years to life or death;
xxx xxx xxx

25

The offense of illegal fishing is committed when a person catches, takes or


gathers or causes to be caught, taken or gathered fish, fishery or aquatic
products in Philippine waters with the use of explosives, electricity,
obnoxious or poisonous substances. The law creates a presumption that
illegal fishing has been committed when: (a) explosives, obnoxious or
poisonous substances or equipment or device for electric fishing are found
in a fishing boat or in the possession of a fisherman; or (b) when fish
caught or killed with the use of explosives, obnoxious or poisonous
substances or by electricity are found in a fishing boat. Under these
instances, the boat owner, operator or fishermen are presumed to have
engaged in illegal fishing.
Petitioners contend that this presumption of guilt under the Fisheries Decree
violates the presumption of innocence guaranteed by the Constitution. 26 As early as
1916, this Court has rejected this argument by holding that: 27
In some States, as well as in England, there exist what are known
as common law offenses. In the Philippine Islands no act is a
crime unless it is made so by statute. The state having the right to
declare what acts are criminal, within certain well-defined
limitations, has the right to specify what act or acts shall
constitute a crime, as well as what proof shall constitute prima
facie evidence of guilt, and then to put upon the defendant the
burden of showing that such act or acts are innocent and are not
committed with any criminal intent or intention. 28
The validity of laws establishing presumptions in criminal cases is a settled
matter. It is generally conceded that the legislature has the power to
provide that proof of certain facts can constitute prima facie evidence of
the guilt of the accused and then shift the burden of proof to the accused
provided there is a rational connection between the facts proved and the
ultimate fact presumed. 29 To avoid any constitutional infirmity, the
inference of one from proof of the other must not be arbitrary and
unreasonable. 30 In fine, the presumption must be based on facts and
these facts must be part of the crime when committed. 31

The third paragraph of section 33 of P.D. 704 creates a presumption of guilt based
on facts proved and hence is not constitutionally impermissible. It makes the
discovery of obnoxious or poisonous substances, explosives, or devices for electric
fishing, or of fish caught or killed with the use of obnoxious and poisonous
substances, explosives or electricity in any fishing boat or in the possession of a
fisherman evidence that the owner and operator of the fishing boat or the fisherman
had used such substances in catching fish. The ultimate fact presumed is that the
owner and operator of the boat or the fisherman were engaged in illegal fishing and
this presumption was made to arise from the discovery of the substances and the
contaminated fish in the possession of the fisherman in the fishing boat. The fact
presumed is a natural inference from the fact proved. 32
We stress, however, that the statutory presumption is merely prima
facie. 33 It can not, under the guise of regulating the presentation of evidence,
operate to preclude the accused from presenting his defense to rebut the main fact
presumed. 34 At no instance can the accused be denied the right to rebut the
presumption. 35 thus:
The inference of guilt is one of fact and rests upon the common
experience of men. But the experience of men has taught them
that an apparently guilty possession may be explained so as to
rebut such an inference and an accused person may therefore put
witnesses on the stand or go on the witness stand himself to
explain his possession, and any reasonable explanation of his
possession, inconsistent with his guilty connection with the
commission of the crime, will rebut the inference as to his guilt
which the prosecution seeks to have drawn from his guilty
possession of the stolen goods. 36
We now review the evidence to determine whether petitioners have successfully
rebutted this presumption. The facts show that on November 13, 1992, after the
Information was filed in court and petitioners granted bail, petitioners moved that
the fish specimens taken from the F/B Robinson be reexamined. 37 The trial court
granted the motion. 38 As prayed for, a member of the PNP Maritime Command of
Puerto Princesa, in the presence of authorized representatives of the F/B Robinson,
the NBI and the local Fisheries Office, took at random five (5) live lapu-lapu from
the fish cage of the boat. The specimens were packed in the usual manner of
transporting live fish, taken aboard a commercial flight and delivered by the same
representatives to the NBI Head Office in Manila for chemical analysis.
On November 23, 1992, Salud Rosales, another forensic chemist of the NBI in
Manila conducted three (3) tests on the specimens and found the fish negative for
the presence of sodium cyanide, 39 thus:
Gross weight of specimen = 3.849 kg.

Examinations made on the above-mentioned specimens gave


NEGATIVE RESULTS to the tests for the presence of SODIUM
CYANIDE. 40
The Information charged petitioners with illegal fishing "with the use of obnoxious or
poisonous substance (sodium cyanide), of more or less one (1) ton of assorted live
fishes" There was more or less one ton of fishes in the F/B Robinson's fish cage. It
was from this fish cage that the four dead specimens examined on October 7, 1992
and the five specimens examined on November 23, 1992 were taken. Though all the
specimens came from the same source allegedly tainted with sodium cyanide, the
two tests resulted in conflicting findings. We note that after its apprehension, the
F/B Robinson never left the custody of the PNP Maritime Command. The fishing boat
was anchored near the city harbor and was guarded by members of the Maritime
Command. 41 It was later turned over to the custody of the Philippine Coast Guard
Commander of Puerto Princesa City. 42
The prosecution failed to explain the contradictory findings on the fish samples and
this omission raises a reasonable doubt that the one ton of fishes in the cage were
caught with the use of sodium cyanide.
The absence of cyanide in the second set of fish specimens supports petitioners'
claim that they did not use the poison in fishing. According to them, they caught the
fishes by the ordinary and legal way, i.e., by hook and line on board their sampans.
This claim is buttressed by the prosecution evidence itself. The apprehending
officers saw petitioners fishing by hook and line when they came upon them in the
waters of Barangay San Rafael. One of the apprehending officers, SPO1 Demetrio
Saballuca, testified as follows:
ATTY. TORREFRANCA ON CROSS-EXAMINATION:
Q: I get your point therefore, that the illegal
fishing supposedly conducted at San Rafael is a
moro ami type of fishing [that] occurred into
your mind and that was made to understand by
the Bantay Dagat personnel?
A: Yes, sir.
Q: Upon reaching the place, you and the
pumpboat, together with the two Bantay Dagat
personnel were SPO3 Romulo Enriquez and Mr.
Benito Marcelo and SPO1 Marzan, you did not
witness that kind of moro ami fishing, correct?

Q: In other words, there was negative activity of


moro ami type of fishing on September 30, 1992
at 4:00 in the afternoon at San Rafael?
A: Yes, sir.
Q: And what you saw were 5 motorized
sampans with fishermen each doing a hook and
line fishing type?
A: Yes, sir. More or less they were five.
Q: And despite the fact you had negative
knowledge of this moro ami type of fishing,
SP03 Enriquez together with Mr. Marcelo
boarded the vessel just the same?
A: Yes, sir.
xxx xxx xxx

The apprehending officers who boarded and searched the boat did not find any
sodium cyanide nor any poisonous or obnoxious substance. Neither did they find
any trace of the poison in the possession of the fishermen or in the fish cage itself.
An Inventory was prepared by the apprehending officers and only the following
items were found on board the boat:
ITEMS QUANTITY REMARKS
F/B Robinson (1) unit operating
engine (1) unit ICE-900-BHP
sampans 28 units fiberglass
outboard motors 28 units operating
assorted fishes more or less 1 ton live
hooks and lines assorted
xxx xxx xxx

A: None, sir.

43

44

We cannot overlook the fact that the apprehending officers found in the
boat assorted hooks and lines for catching fish. 45 For this obvious reason,
the Inspection/Apprehension Report prepared by the apprehending officers
immediately after the search did not charge petitioners with illegal fishing,
much less illegal fishing with the use of poison or any obnoxious
substance. 46

SO ORDERED.

The only basis for the charge of fishing with poisonous substance is the result of the
first NBI laboratory test on the four fish specimens. Under the circumstances of the
case, however, this finding does not warrant the infallible conclusion that the fishes
in the F/B Robinson, or even the same four specimens, were caught with the use of
sodium cyanide.
Prosecution witness SPO1 Bernardino Visto testified that for the first laboratory test,
boat engineer Ernesto Andaya did not only get four (4) samples of fish but actually
got five (5) from the fish cage of the F/B Robinson. 47 The Certification that four (4)
fish samples were taken from the boat shows on its face the number of pieces as
originally "five (5)" but this was erased with correction fluid and "four (4)" written
over it. 48 The specimens were taken, sealed inside the plastic bag and brought to
Manila by the police authorities in the absence of petitioners or their representative.
SP02 Enriquez testified that the same plastic bag containing the four specimens was
merely sealed with heat from a lighter. 49 Emilia Rosales, the NBI forensic chemist
who examined the samples, testified that when she opened the package, she found
the two ends of the same plastic bag knotted. 50 These circumstances as well as the
time interval from the taking of the fish samples and their actual examination 51 fail
to assure the impartial mind that the integrity of the specimens had been properly
safeguarded.
Apparently, the members of the PNP Maritime Command and the Task Force Bantay
Dagat were the ones engaged in an illegal fishing expedition. As sharply observed
by the Solicitor General, the report received by the Task Force Bantay Dagat was
that a fishing boat was fishing illegally through "muro ami" on the waters of San
Rafael. "Muro ami" according to SPO1 Saballuca is made with "the use of a big net
with sinkers to make the net submerge in the water with the fishermen
surround[ing] the net." 52 This method of fishing needs approximately two hundred
(200) fishermen to execute. 53 What the apprehending officers instead discovered
were twenty eight (28) fishermen in their sampans fishing by hook and line. The
authorities found nothing on the boat that would have indicated any form of illegal
fishing. All the documents of the boat and the fishermen were in order. It was only
after the fish specimens were tested, albeit under suspicious circumstances, that
petitioners were charged with illegal fishing with the use of poisonous substances.
IN VIEW WHEREOF, the petition is granted and the decision of the Court of Appeals
in CA-G.R. CR No. 15417 is reversed and set aside. Petitioners are acquitted of the
crime of illegal fishing with the use of poisonous substances defined under Section
33 of Republic Act No. 704, the Fisheries Decree of 1975. No costs.

MMDA vs. Concerned Residents of Manila Bay


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. 171947-48

February 15, 2011

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEPARTMENT OF


ENVIRONMENT AND NATURAL RESOURCES, DEPARTMENT OF EDUCATION,
CULTURE AND SPORTS,1 DEPARTMENT OF HEALTH, DEPARTMENT OF
AGRICULTURE, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
DEPARTMENT OF BUDGET AND MANAGEMENT, PHILIPPINE COAST GUARD,
PHILIPPINE NATIONAL POLICE MARITIME GROUP, and DEPARTMENT OF
THE INTERIOR AND LOCAL GOVERNMENT, Petitioners,
vs.
CONCERNED RESIDENTS OF MANILA BAY, represented and joined by
DIVINA V. ILAS, SABINIANO ALBARRACIN, MANUEL SANTOS, JR., DINAH
DELA PEA, PAUL DENNIS QUINTERO, MA. VICTORIA LLENOS, DONNA
CALOZA, FATIMA QUITAIN, VENICE SEGARRA, FRITZIE TANGKIA, SARAH
JOELLE LINTAG, HANNIBAL AUGUSTUS BOBIS, FELIMON SANTIAGUEL, and
JAIME AGUSTIN R. OPOSA,Respondents.
RESOLUTION
VELASCO, JR., J.:
On December 18, 2008, this Court rendered a Decision in G.R. Nos. 171947-48
ordering petitioners to clean up, rehabilitate and preserve Manila Bay in their
different capacities. The fallo reads:
WHEREFORE, the petition is DENIED. The September 28, 2005 Decision of the CA in
CA-G.R. CV No. 76528 and SP No. 74944 and the September 13, 2002 Decision of

the RTC in Civil Case No. 1851-99 are AFFIRMED but with MODIFICATIONS in view
of subsequent developments or supervening events in the case. The fallo of the RTC
Decision shall now read:
WHEREFORE, judgment is hereby rendered ordering the abovenamed defendantgovernment agencies to clean up, rehabilitate, and preserve Manila Bay, and restore
and maintain its waters to SB level (Class B sea waters per Water Classification
Tables under DENR Administrative Order No. 34 [1990]) to make them fit for
swimming, skin-diving, and other forms of contact recreation.
In particular:
(1) Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary
agency responsible for the conservation, management, development, and
proper use of the countrys environment and natural resources, and Sec.
19 of RA 9275, designating the DENR as the primary government agency
responsible for its enforcement and implementation, the DENR is directed
to fully implement its Operational Plan for the Manila Bay Coastal Strategy
for the rehabilitation, restoration, and conservation of the Manila Bay at the
earliest possible time. It is ordered to call regular coordination meetings
with concerned government departments and agencies to ensure the
successful implementation of the aforesaid plan of action in accordance
with its indicated completion schedules.
(2) Pursuant to Title XII (Local Government) of the Administrative Code of
1987 and Sec. 25 of the Local Government Code of 1991, the DILG, in
exercising the Presidents power of general supervision and its duty to
promulgate guidelines in establishing waste management programs under
Sec. 43 of the Philippine Environment Code (PD 1152), shall direct all LGUs
in Metro Manila, Rizal, Laguna, Cavite, Bulacan, Pampanga, and Bataan to
inspect all factories, commercial establishments, and private homes along
the banks of the major river systems in their respective areas of
jurisdiction, such as but not limited to the Pasig-Marikina-San Juan Rivers,
the NCR (Paraaque-Zapote, Las Pias) Rivers, the Navotas-MalabonTullahan-Tenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan)
Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De
Bay, and other minor rivers and waterways that eventually discharge water
into the Manila Bay; and the lands abutting the bay, to determine whether
they have wastewater treatment facilities or hygienic septic tanks as
prescribed by existing laws, ordinances, and rules and regulations. If none
be found, these LGUs shall be ordered to require non-complying
establishments and homes to set up said facilities or septic tanks within a
reasonable time to prevent industrial wastes, sewage water, and human
wastes from flowing into these rivers, waterways, esteros, and the Manila
Bay, under pain of closure or imposition of fines and other sanctions.
(3) As mandated by Sec. 8 of RA 9275, the MWSS is directed to provide,
install, operate, and maintain the necessary adequate waste water
treatment facilities in Metro Manila, Rizal, and Cavite where needed at the
earliest possible time.

(4) Pursuant to RA 9275, the LWUA, through the local water districts and in
coordination with the DENR, is ordered to provide, install, operate, and
maintain sewerage and sanitation facilities and the efficient and safe
collection, treatment, and disposal of sewage in the provinces of Laguna,
Cavite, Bulacan, Pampanga, and Bataan where needed at the earliest
possible time.
(5) Pursuant to Sec. 65 of RA 8550, the DA, through the BFAR, is ordered
to improve and restore the marine life of the Manila Bay. It is also directed
to assist the LGUs in Metro Manila, Rizal, Cavite, Laguna, Bulacan,
Pampanga, and Bataan in developing, using recognized methods, the
fisheries and aquatic resources in the Manila Bay.
(6) The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime
Group, in accordance with Sec. 124 of RA 8550, in coordination with each
other, shall apprehend violators of PD 979, RA 8550, and other existing
laws and regulations designed to prevent marine pollution in the Manila
Bay.
(7) Pursuant to Secs. 2 and 6-c of EO 513 and the International
Convention for the Prevention of Pollution from Ships, the PPA is ordered to
immediately adopt such measures to prevent the discharge and dumping of
solid and liquid wastes and other ship-generated wastes into the Manila
Bay waters from vessels docked at ports and apprehend the violators.
(8) The MMDA, as the lead agency and implementor of programs and
projects for flood control projects and drainage services in Metro Manila, in
coordination with the DPWH, DILG, affected LGUs, PNP Maritime Group,
Housing and Urban Development Coordinating Council (HUDCC), and other
agencies, shall dismantle and remove all structures, constructions, and
other encroachments established or built in violation of RA 7279, and other
applicable laws along the Pasig-Marikina-San Juan Rivers, the NCR
(Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-TullahanTenejeros Rivers, and connecting waterways and esteros in Metro Manila.
The DPWH, as the principal implementor of programs and projects for flood
control services in the rest of the country more particularly in Bulacan,
Bataan, Pampanga, Cavite, and Laguna, in coordination with the DILG,
affected LGUs, PNP Maritime Group, HUDCC, and other concerned
government agencies, shall remove and demolish all structures,
constructions, and other encroachments built in breach of RA 7279 and
other applicable laws along the Meycauayan-Marilao-Obando (Bulacan)
Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De
Bay, and other rivers, connecting waterways, and esteros that discharge
wastewater into the Manila Bay.
In addition, the MMDA is ordered to establish, operate, and maintain a
sanitary landfill, as prescribed by RA 9003, within a period of one (1) year
from finality of this Decision. On matters within its territorial jurisdiction
and in connection with the discharge of its duties on the maintenance of
sanitary landfills and like undertakings, it is also ordered to cause the
apprehension and filing of the appropriate criminal cases against violators
of the respective penal provisions of RA 9003, Sec. 27 of RA 9275 (the
Clean Water Act), and other existing laws on pollution.

(9) The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA


9275, within one (1) year from finality of this Decision, determine if all
licensed septic and sludge companies have the proper facilities for the
treatment and disposal of fecal sludge and sewage coming from septic
tanks. The DOH shall give the companies, if found to be non-complying, a
reasonable time within which to set up the necessary facilities under pain
of cancellation of its environmental sanitation clearance.
(10) Pursuant to Sec. 53 of PD 1152, Sec. 118 of RA 8550, and Sec. 56 of
RA 9003, the DepEd shall integrate lessons on pollution prevention, waste
management, environmental protection, and like subjects in the school
curricula of all levels to inculcate in the minds and hearts of students and,
through them, their parents and friends, the importance of their duty
toward achieving and maintaining a balanced and healthful ecosystem in
the Manila Bay and the entire Philippine archipelago.
(11) The DBM shall consider incorporating an adequate budget in the
General Appropriations Act of 2010 and succeeding years to cover the
expenses relating to the cleanup, restoration, and preservation of the water
quality of the Manila Bay, in line with the countrys development objective
to attain economic growth in a manner consistent with the protection,
preservation, and revival of our marine waters.
(12) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA,
DPWH, DBM, PCG, PNP Maritime Group, DILG, and also of MWSS, LWUA,
and PPA, in line with the principle of "continuing mandamus," shall, from
finality of this Decision, each submit to the Court a quarterly progressive
report of the activities undertaken in accordance with this Decision.
SO ORDERED.
The government agencies did not file any motion for reconsideration and the
Decision became final in January 2009.
The case is now in the execution phase of the final and executory December 18,
2008 Decision. The Manila Bay Advisory Committee was created to receive and
evaluate the quarterly progressive reports on the activities undertaken by the
agencies in accordance with said decision and to monitor the execution phase.
In the absence of specific completion periods, the Committee recommended that
time frames be set for the agencies to perform their assigned tasks. This may be
viewed as an encroachment over the powers and functions of the Executive Branch
headed by the President of the Philippines.
This view is misplaced.
The issuance of subsequent resolutions by the Court is simply an exercise of judicial
power under Art. VIII of the Constitution, because the execution of the Decision is
but an integral part of the adjudicative function of the Court. None of the agencies
ever questioned the power of the Court to implement the December 18, 2008

Decision nor has any of them raised the alleged encroachment by the Court over
executive functions.
While additional activities are required of the agencies like submission of plans of
action, data or status reports, these directives are but part and parcel of the
execution stage of a final decision under Rule 39 of the Rules of Court. Section 47 of
Rule 39 reads:
Section 47. Effect of judgments or final orders.The effect of a judgment or final
order rendered by a court of the Philippines, having jurisdiction to pronounce the
judgment or final order, may be as follows:
xxxx
(c) In any other litigation between the same parties of their successors in interest,
that only is deemed to have been adjudged in a former judgment or final order
which appears upon its face to have been so adjudged, or which was actually and
necessarily included therein or necessary thereto. (Emphasis supplied.)
It is clear that the final judgment includes not only what appears upon its face to
have been so adjudged but also those matters "actually and necessarily included
therein or necessary thereto." Certainly, any activity that is needed to fully
implement a final judgment is necessarily encompassed by said judgment.
Moreover, the submission of periodic reports is sanctioned by Secs. 7 and 8, Rule 8
of the Rules of Procedure for Environmental cases:
Sec. 7. Judgment.If warranted, the court shall grant the privilege of the writ of
continuing mandamus requiring respondent to perform an act or series of acts until
the judgment is fully satisfied and to grant such other reliefs as may be warranted
resulting from the wrongful or illegal acts of the respondent. The court shall require
the respondent to submit periodic reports detailing the progress and execution of
the judgment, and the court may, by itself or through a commissioner or the
appropriate government agency, evaluate and monitor compliance. The petitioner
may submit its comments or observations on the execution of the judgment.
Sec. 8. Return of the writ.The periodic reports submitted by the respondent
detailing compliance with the judgment shall be contained in partial returns of the
writ. Upon full satisfaction of the judgment, a final return of the writ shall be made
to the court by the respondent. If the court finds that the judgment has been fully
implemented, the satisfaction of judgment shall be entered in the court docket.
(Emphasis supplied.)
With the final and executory judgment in MMDA, the writ of continuing mandamus
issued in MMDA means that until petitioner-agencies have shown full compliance
with the Courts orders, the Court exercises continuing jurisdiction over them until
full execution of the judgment.
There being no encroachment over executive functions to speak of, We shall now
proceed to the recommendation of the Manila Bay Advisory Committee.

Several problems were encountered by the Manila Bay Advisory Committee. 2 An


evaluation of the quarterly progressive reports has shown that (1) there are
voluminous quarterly progressive reports that are being submitted; (2) petitioneragencies do not have a uniform manner of reporting their cleanup, rehabilitation
and preservation activities; (3) as yet no definite deadlines have been set by
petitioner DENR as to petitioner-agencies timeframe for their respective duties; (4)
as of June 2010 there has been a change in leadership in both the national and local
levels; and (5) some agencies have encountered difficulties in complying with the
Courts directives.
In order to implement the afore-quoted Decision, certain directives have to be
issued by the Court to address the said concerns.
Acting on the recommendation of the Manila Bay Advisory Committee, the Court
hereby resolves to ORDER the following:
(1) The Department of Environment and Natural Resources (DENR), as lead agency
in the Philippine Clean Water Act of 2004, shall submit to the Court on or before
June 30, 2011 the updated Operational Plan for the Manila Bay Coastal Strategy.
The DENR is ordered to submit summarized data on the overall quality of Manila Bay
waters for all four quarters of 2010 on or before June 30, 2011.
The DENR is further ordered to submit the names and addresses of persons and
companies in Metro Manila, Rizal, Laguna, Cavite, Bulacan, Pampanga and Bataan
that generate toxic and hazardous waste on or before September 30, 2011.
(2) On or before June 30, 2011, the Department of the Interior and Local
Government (DILG) shall order the Mayors of all cities in Metro Manila; the
Governors of Rizal, Laguna, Cavite, Bulacan, Pampanga and Bataan; and the Mayors
of all the cities and towns in said provinces to inspect all factories, commercial
establishments and private homes along the banks of the major river systems
such as but not limited to the Pasig-Marikina-San Juan Rivers, the National Capital
Region (Paranaque-Zapote, Las Pinas) Rivers, the Navotas-Malabon-TullahanTenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay
(Bataan) River, the Imus (Cavite) River, and the Laguna De Bayand other minor
rivers and waterways within their jurisdiction that eventually discharge water into
the Manila Bay and the lands abutting it, to determine if they have wastewater
treatment facilities and/or hygienic septic tanks, as prescribed by existing laws,
ordinances, rules and regulations. Said local government unit (LGU) officials are
given up to September 30, 2011 to finish the inspection of said establishments and
houses.
In case of non-compliance, the LGU officials shall take appropriate action to ensure
compliance by non-complying factories, commercial establishments and private
homes with said law, rules and regulations requiring the construction or installment
of wastewater treatment facilities or hygienic septic tanks.
The aforementioned governors and mayors shall submit to the DILG on or before
December 31, 2011 their respective compliance reports which will contain the
names and addresses or offices of the owners of all the non-complying factories,

commercial establishments and private homes, copy furnished the concerned


environmental agency, be it the local DENR office or the Laguna Lake Development
Authority.
The DILG is required to submit a five-year plan of action that will contain measures
intended to ensure compliance of all non-complying factories, commercial
establishments, and private homes.
On or before June 30, 2011, the DILG and the mayors of all cities in Metro Manila
shall consider providing land for the wastewater facilities of the Metropolitan
Waterworks and Sewerage System (MWSS) or its concessionaires (Maynilad and
Manila Water, Inc.) within their respective jurisdictions.
(3) The MWSS shall submit to the Court on or before June 30, 2011 the list of areas
in Metro Manila, Rizal and Cavite that do not have the necessary wastewater
treatment facilities. Within the same period, the concessionaires of the MWSS shall
submit their plans and projects for the construction of wastewater treatment
facilities in all the aforesaid areas and the completion period for said facilities, which
shall not go beyond 2037.
On or before June 30, 2011, the MWSS is further required to have its two
concessionaires submit a report on the amount collected as sewerage fees in their
respective areas of operation as of December 31, 2010.
(4) The Local Water Utilities Administration is ordered to submit on or before
September 30, 2011 its plan to provide, install, operate and maintain sewerage and
sanitation facilities in said cities and towns and the completion period for said
works, which shall be fully implemented by December 31, 2020.
(5) The Department of Agriculture (DA), through the Bureau of Fisheries and
Aquatic Resources, shall submit to the Court on or before June 30, 2011 a report on
areas in Manila Bay where marine life has to be restored or improved and the
assistance it has extended to the LGUs in Metro Manila, Rizal, Cavite, Laguna,
Bulacan, Pampanga and Bataan in developing the fisheries and aquatic resources in
Manila Bay. The report shall contain monitoring data on the marine life in said areas.
Within the same period, it shall submit its five-year plan to restore and improve the
marine life in Manila Bay, its future activities to assist the aforementioned LGUs for
that purpose, and the completion period for said undertakings.
The DA shall submit to the Court on or before September 30, 2011 the baseline
data as of September 30, 2010 on the pollution loading into the Manila Bay system
from agricultural and livestock sources.
(6) The Philippine Ports Authority (PPA) shall incorporate in its quarterly reports the
list of violators it has apprehended and the status of their cases. The PPA is further
ordered to include in its report the names, make and capacity of the ships that dock
in PPA ports. The PPA shall submit to the Court on or before June 30, 2011 the
measures it intends to undertake to implement its compliance with paragraph 7 of
the dispositive portion of the MMDA Decision and the completion dates of such
measures.

The PPA should include in its report the activities of its concessionaire that collects
and disposes of the solid and liquid wastes and other ship-generated wastes, which
shall state the names, make and capacity of the ships serviced by it since August
2003 up to the present date, the dates the ships docked at PPA ports, the number
of days the ship was at sea with the corresponding number of passengers and crew
per trip, the volume of solid, liquid and other wastes collected from said ships, the
treatment undertaken and the disposal site for said wastes.

National Capital Region


1. Navotas SLF (PhilEco), Brgy. Tanza (New Site), Navotas City
2. Payatas Controlled Dumpsite, Barangay Payatas, Quezon City
Region III

(7) The Philippine National Police (PNP) Maritime Group shall submit on or before
June 30, 2011 its five-year plan of action on the measures and activities it intends
to undertake to apprehend the violators of Republic Act No. (RA) 8550 or the
Philippine Fisheries Code of 1998 and other pertinent laws, ordinances and
regulations to prevent marine pollution in Manila Bay and to ensure the successful
prosecution of violators.

3. Sitio Coral, Brgy. Matictic, Norzagaray, Bulacan


4. Sitio Tiakad, Brgy. San Mateo, Norzagaray, Bulacan
5. Brgy. Minuyan, San Jose del Monte City, Bulacan

The Philippine Coast Guard shall likewise submit on or before June 30, 2011 its fiveyear plan of action on the measures and activities they intend to undertake to
apprehend the violators of Presidential Decree No. 979 or the Marine Pollution
Decree of 1976 and RA 9993 or the Philippine Coast Guard Law of 2009 and other
pertinent laws and regulations to prevent marine pollution in Manila Bay and to
ensure the successful prosecution of violators.

6. Brgy. Mapalad, Santa Rosa, Nueva Ecija


7. Sub-zone Kalangitan, Clark Capas, Tarlac Special Economic Zone
Region IV-A

(8) The Metropolitan Manila Development Authority (MMDA) shall submit to the
Court on or before June 30, 2011 the names and addresses of the informal settlers
in Metro Manila who, as of December 31, 2010, own and occupy houses, structures,
constructions and other encroachments established or built along the PasigMarikina-San Juan Rivers, the NCR (Paraaque-Zapote, Las Pias) Rivers, the
Navotas-Malabon-Tullahan-Tenejeros Rivers, and connecting waterways and esteros,
in violation of RA 7279 and other applicable laws. On or before June 30, 2011, the
MMDA shall submit its plan for the removal of said informal settlers and the
demolition of the aforesaid houses, structures, constructions and encroachments, as
well as the completion dates for said activities, which shall be fully implemented not
later than December 31, 2015.
The MMDA is ordered to submit a status report, within thirty (30) days from receipt
of this Resolution, on the establishment of a sanitary landfill facility for Metro Manila
in compliance with the standards under RA 9003 or the Ecological Solid Waste
Management Act.
On or before June 30, 2011, the MMDA shall submit a report of the location of open
and controlled dumps in Metro Manila whose operations are illegal after February
21, 2006,3 pursuant to Secs. 36 and 37 of RA 9003, and its plan for the closure of
these open and controlled dumps to be accomplished not later than December 31,
2012. Also, on or before June 30, 2011, the DENR Secretary, as Chairperson of the
National Solid Waste Management Commission (NSWMC), shall submit a report on
the location of all open and controlled dumps in Rizal, Cavite, Laguna, Bulacan,
Pampanga and Bataan.
On or before June 30, 2011, the DENR Secretary, in his capacity as NSWMC
Chairperson, shall submit a report on whether or not the following landfills strictly
comply with Secs. 41 and 42 of RA 9003 on the establishment and operation of
sanitary landfills, to wit:

8. Kalayaan (Longos), Laguna


9. Brgy. Sto. Nino, San Pablo City, Laguna
10. Brgy. San Antonio (Pilotage SLF), San Pedro, Laguna
11. Morong, Rizal
12. Sitio Lukutan, Brgy. San Isidro, Rodriguez (Montalban), Rizal (ISWIMS)
13. Brgy. Pintong Bukawe, San Mateo, Rizal (SMSLFDC)
On or before June 30, 2011, the MMDA and the seventeen (17) LGUs in Metro
Manila are ordered to jointly submit a report on the average amount of garbage
collected monthly per district in all the cities in Metro Manila from January 2009 up
to December 31, 2010 vis--vis the average amount of garbage disposed monthly in
landfills and dumpsites. In its quarterly report for the last quarter of 2010 and
thereafter, MMDA shall report on the apprehensions for violations of the penal
provisions of RA 9003, RA 9275 and other laws on pollution for the said period.
On or before June 30, 2011, the DPWH and the LGUs in Rizal, Laguna, Cavite,
Bulacan, Pampanga, and Bataan shall submit the names and addresses of the
informal settlers in their respective areas who, as of September 30, 2010, own or
occupy houses, structures, constructions, and other encroachments built along the
Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus
(Cavite) River, the Laguna de Bay, and other rivers, connecting waterways
and esteros that discharge wastewater into the Manila Bay, in breach of RA 7279

and other applicable laws. On or before June 30, 2011, the DPWH and the aforesaid
LGUs shall jointly submit their plan for the removal of said informal settlers and the
demolition of the aforesaid structures, constructions and encroachments, as well as
the completion dates for such activities which shall be implemented not later than
December 31, 2012.
(9) The Department of Health (DOH) shall submit to the Court on or before June 30,
2011 the names and addresses of the owners of septic and sludge companies
including those that do not have the proper facilities for the treatment and disposal
of fecal sludge and sewage coming from septic tanks.
The DOH shall implement rules and regulations on Environmental Sanitation
Clearances and shall require companies to procure a license to operate from the
DOH.
The DOH and DENR-Environmental Management Bureau shall develop a toxic and
hazardous waste management system by June 30, 2011 which will implement
segregation of hospital/toxic/hazardous wastes and prevent mixing with municipal
solid waste.
On or before June 30, 2011, the DOH shall submit a plan of action to ensure that
the said companies have proper disposal facilities and the completion dates of
compliance.1avvphi1
(10) The Department of Education (DepEd) shall submit to the Court on or before
May 31, 2011 a report on the specific subjects on pollution prevention, waste
management, environmental protection, environmental laws and the like that it has
integrated into the school curricula in all levels for the school year 2011-2012.
On or before June 30, 2011, the DepEd shall also submit its plan of action to ensure
compliance of all the schools under its supervision with respect to the integration of
the aforementioned subjects in the school curricula which shall be fully implemented
by June 30, 2012.
(11) All the agencies are required to submit their quarterly reports electronically
using the forms below. The agencies may add other key performance indicators that
they have identified.
SO ORDERED.
DISSENTING OPINION

The Department of Environment and Natural Resources (DENR), as lead agency in


the Philippine Clean Water Act of 2004, shall submit to the Court on or before June
30, 2011 the updated Operational Plan for the Manila Bay Coastal
Strategy (OPMBCS);2
The DILG is required to submit a five-year plan of action that will contain
measures intended to ensure compliance of all non-complying factories,
commercial establishments, and private homes;3
The MWSS shall submit to the Court on or before June 30, 2011 the list of areas in
Metro Manila, Rizal and Cavite that do not have the necessary wastewater treatment
facilities. Within the same period, the concessionaires of the MWSS shall
submit their plans and projects for the construction of wastewater
treatment facilities in all the aforesaid areas and the completion period for
said facilities, which shall not go beyond 2020;4
The Local Water Utilities Administration (LWUA) shall submit to the Court on or
before June 30, 2011 the list of cities and towns in Laguna, Cavite, Bulacan,
Pampanga, and Bataan that do not have sewerage and sanitation facilities. LWUA is
further ordered to submit on or before September 30, 2011 its plan to
provide, install, operate and maintain sewerage and sanitation facilities in
said cities and towns and the completion period for said works which shall
be fully implemented by December 31, 2020;5
The Department of Agriculture (DA), through the Bureau of Fisheries and Aquatic
Resources (BFAR), shall submit to the Court on or before June 30, 2011 a report on
areas in Manila Bay where marine life has to be restored or improved and the
assistance it has extended to the LGUs in Metro Manila, Rizal, Cavite, Laguna,
Bulacan, Pampanga and Bataan in developing the fisheries and aquatic resources in
Manila Bay. The report shall contain monitoring data on the marine life in said
areas. Within the same period, it shall submit its five-year plan to restore
and improve the marine life in Manila Bay, its future activities to assist the
aforementioned LGUs for that purpose, and the completion period for said
undertakings;6
The Philippine Ports Authority (PPA) shall incorporate in its quarterly reports the list
of violators it has apprehended and the status of their cases. The PPA is further
ordered to include in its report the names, make and capacity of the ships that dock
in PPA ports. The PPA shall submit to the Court on or before June 30, 2011
the measures it intends to undertake to implement its compliance with
paragraph 7 of the dispositive portion of the MMDA Decision and the
completion dates of such measures;7

The Resolution contains the proposed directives of the Manila Bay Advisory
Committee to the concerned agencies1and local government units (LGUs) for the
implementation of the 18 December 2008 Decision of the Court in this case.

The Philippine National Police (PNP) Maritime Group shall submit on or before
June 30, 2011 its five-year plan of action on the measures and activities
they intend to undertake to apprehend the violators of RA 8550 or
the Philippine Fisheries Code of 1998 and other pertinent laws, ordinances and
regulations to prevent marine pollution in Manila Bay and to ensure the successful
prosecution of violators;8

Among the directives stated in the Resolution is for the affected agencies to submit
to the Court their plans of action and status reports, thus:

The Philippine Coast Guard (PCG) shall likewise submit on or before June 30,
2011 its five-year plan of action on the measures and activities they intend

CARPIO, J.:

to undertake to apprehend the violators of Presidential Decree (PD) 979 or


the Marine Pollution Decree of 1976 and RA 9993 or the Philippine Coast Guard Law
of 2009 and other pertinent laws and regulations to prevent marine pollution in
Manila Bay and to ensure the successful prosecution of violators;9

Clearly, the Resolution constitutes an intrusion of the Judiciary into the exclusive
domain of the Executive. In the guise of implementing the 18 December 2008
Decision through the Resolution, the Court is in effect supervising and directing the
different government agencies and LGUs concerned.

The Metropolitan Manila Development Authority (MMDA) shall submit to the Court
on or before June 30, 2011 the names and addresses of the informal
settlers in Metro Manila who own and occupy houses, structures,
constructions and other encroachments established or built in violation of
RA 7279 and other applicable laws along the Pasig-Marikina-San Juan Rivers,
the NCR (Paraaque-Zapote, Las Pias) Rivers, the Navotas-Malabon-TullahanTenejeros Rivers, and connecting waterways and esteros as of December 31, 2010.
On or before the same date, the MMDA shall submit its plan for the removal of
said informal settlers and the demolition of the aforesaid houses,
structures, constructions and encroachments, as well as the completion
dates for said activities which shall be fully implemented not later than
December 31, 2015;10

In Noblejas v. Teehankee,19 it was held that the Court cannot be required to


exercise administrative functions such as supervision over executive officials. The
issue in that case was whether the Commissioner of Land Registration may only be
investigated by the Supreme Court, in view of the conferment upon him by law
(Republic Act No. 1151) of the rank and privileges of a Judge of the Court of First
Instance. The Court, answering in the negative, stated:

[T]he DPWH and the aforesaid LGUs shall jointly submit its plan for the removal
of said informal settlers and the demolition of the aforesaid structures,
constructions and encroachments, as well as the completion dates for such
activities which shall be implemented not later than December 31, 2012;11
[T]he DOH shall submit a plan of action to ensure that the said companies
have proper disposal facilities and the completion dates of compliance;12
On or before June 30, 2011, the DepEd shall also submit its plan of action to
ensure compliance of all the schools under its supervision with respect to
the integration of the aforementioned subjects in the school curricula
which shall be fully implemented by June 30, 2012;13 (Emphasis supplied)
What is the purpose of requiring these agencies to submit to the Court their plans of
action and status reports? Are these plans to be approved or disapproved by the
Court? The Court does not have the competence or even the jurisdiction to evaluate
these plans which involves technical matters 14 best left to the expertise of the
concerned agencies.
The Resolution also requires that the concerned agencies shall "submit [to the
Court] their quarterly reports electronically x x x."15 Thus, the directive for the
concerned agencies to submit to the Court their quarterly reports is a continuing
obligation which extends even beyond the year 2011.16
The Court is now arrogating unto itself two constitutional powers exclusively vested
in the President. First, the Constitution provides that "executive power shall be
vested in the President."17 This means that neither the Judiciary nor the
Legislature can exercise executive power for executive power is the exclusive
domain of the President. Second, the Constitution provides that the President shall
"have control of all the executive departments, bureaus, and
offices."18 Neither the Judiciary nor the Legislature can exercise control or even
supervision over executive departments, bureaus, and offices.

To adopt petitioner's theory, therefore, would mean placing upon the Supreme Court
the duty of investigating and disciplining all these officials whose functions are
plainly executive and the consequent curtailment by mere implication from the
Legislative grant, of the President's power to discipline and remove administrative
officials who are presidential appointees, and which the Constitution expressly place
under the President's supervision and control.
xxx
But the more fundamental objection to the stand of petitioner Noblejas is that, if the
Legislature had really intended to include in the general grant of "privileges" or
"rank and privileges of Judges of the Court of First Instance" the right to be
investigated by the Supreme Court, and to be suspended or removed only upon
recommendation of that Court, then such grant of privilege would be
unconstitutional, since it would violate the fundamental doctrine of
separation of powers, by charging this court with the administrative
function of supervisory control over executive officials, and simultaneously
reducing pro tanto the control of the Chief Executive over such
officials.20 (Boldfacing supplied)
Likewise, in this case, the directives in the Resolution are administrative in nature
and circumvent the constitutional provision which prohibits Supreme Court members
from performing quasi-judicial or administrative functions. Section 12, Article VIII of
the 1987 Constitution provides:
SEC. 12. The members of the Supreme Court and of other courts established by law
shall not be designated to any agency performing quasi-judicial or administrative
functions.
Thus, in the case of In Re: Designation of Judge Manzano as Member of the Ilocos
Norte Provincial Committee on Justice,21 the Court invalidated the designation of a
judge as member of the Ilocos Norte Provincial Committee on Justice, which was
tasked to receive complaints and to make recommendations for the speedy
disposition of cases of detainees. The Court held that the committee performs
administrative functions22 which are prohibited under Section 12, Article VIII of the
Constitution.
As early as the 1932 case of Manila Electric Co. v. Pasay Transportation Co.,23 this
Court has already emphasized that the Supreme Court should only exercise judicial

power and should not assume any duty which does not pertain to the administering
of judicial functions. In that case, a petition was filed requesting the members of the
Supreme Court, sitting as a board of arbitrators, to fix the terms and the
compensation to be paid to Manila Electric Company for the use of right of way. The
Court held that it would be improper and illegal for the members of the Supreme
Court, sitting as a board of arbitrators, whose decision of a majority shall be final, to
act on the petition of Manila Electric Company. The Court explained:
We run counter to this dilemma. Either the members of the Supreme Court, sitting
as a board of arbitrators, exercise judicial functions, or as members of the Supreme
Court, sitting as a board of arbitrators, exercise administrative orquasi judicial
functions. The first case would appear not to fall within the jurisdiction granted the
Supreme Court. Even conceding that it does, it would presuppose the right to bring
the matter in dispute before the courts, for any other construction would tend to
oust the courts of jurisdiction and render the award a nullity. But if this be the
proper construction, we would then have the anomaly of a decision by the members
of the Supreme Court, sitting as a board of arbitrators, taken therefrom to the
courts and eventually coming before the Supreme Court, where the Supreme Court
would review the decision of its members acting as arbitrators. Or in the second
case, if the functions performed by the members of the Supreme Court, sitting as a
board of arbitrators, be considered as administrative or quasi judicial in nature, that
would result in the performance of duties which the members of the Supreme Court
could not lawfully take it upon themselves to perform. The present petition also
furnishes an apt illustration of another anomaly, for we find the Supreme Court as a
court asked to determine if the members of the court may be constituted a board of
arbitrators, which is not a court at all.
The Supreme Court of the Philippine Islands represents one of the three divisions of
power in our government. It is judicial power and judicial power only which is
exercised by the Supreme Court. Just as the Supreme Court, as the guardian of
constitutional rights, should not sanction usurpations by any other department of
the government, so should it as strictly confine its own sphere of influence to the
powers expressly or by implication conferred on it by the Organic Act. The Supreme
Court and its members should not and cannot be required to exercise any power or
to perform any trust or to assume any duty not pertaining to or connected with the
administering of judicial functions.24
Furthermore, the Resolution orders some LGU officials to inspect the establishments
and houses along major river banks and to "take appropriate action to ensure
compliance by non-complying factories, commercial establishments and
private homes with said law, rules and regulations requiring the
construction or installment of wastewater treatment facilities or hygienic
septic tanks."25 The LGU officials are also directed to "submit to the DILG on or
before December 31, 2011 their respective compliance reports which shall contain
the names and addresses or offices of the owners of all the non-complying factories,
commercial establishments and private homes." 26 Furthermore, the Resolution
mandates that on or before 30 June 2011, the DILG and the mayors of all cities in
Metro Manila should "consider providing land for the wastewater facilities of the
Metropolitan Waterworks and Sewerage System (MWSS) or its concessionaires
(Maynilad and Manila Water Inc.) within their respective jurisdictions." 27 The Court
is in effect ordering these LGU officials how to do their job and even gives a
deadline for their compliance. Again, this is a usurpation of the power of the
President to supervise LGUs under the Constitution and existing laws.

Section 4, Article X of the 1987 Constitution provides that: "The President of the
Philippines shall exercise general supervision over local governments x x
x."28 Under the Local Government Code of 1991,29 the President exercises general
supervision over LGUs, thus:
SECTION 25. National Supervision over Local Government Units. (a) Consistent
with the basic policy on local autonomy, the President shall exercise general
supervision over local government units to ensure that their acts are within
the scope of their prescribed powers and functions.
The President shall exercise supervisory authority directly over provinces, highly
urbanized cities and independent component cities; through the province with
respect to component cities and municipalities; and through the city and
municipality with respect to barangays. (Emphasis supplied)
The Resolution constitutes judicial overreach by usurping and performing
executive functions. The Court must refrain from overstepping its boundaries by
taking over the functions of an equal branch of the government the Executive. The
Court should abstain from exercising any function which is not strictly judicial in
character and is not clearly conferred on it by the Constitution. 30 Indeed, as stated
by Justice J.B.L. Reyes in Noblejas v. Teehankee,31 "the Supreme Court of the
Philippines and its members should not and can not be required to exercise any
power or to perform any trust or to assume any duty not pertaining to or connected
with the administration of judicial functions."32
The directives in the Resolution constitute a judicial encroachment of an executive
function which clearly violates the system of separation of powers that inheres in
our democratic republican government. The principle of separation of powers
between the Executive, Legislative, and Judicial branches of government is part of
the basic structure of the Philippine Constitution. Thus, the 1987 Constitution
provides that: (a) the legislative power shall be vested in the Congress of the
Philippines;33 (b) the executive power shall be vested in the President of the
Philippines;34 and (c) the judicial power shall be vested in one Supreme Court and in
such lower courts as may be established.35
Since the Supreme Court is only granted judicial power, it should not attempt to
assume or be compelled to perform non-judicial functions. 36 Judicial power is
defined under Section 1, Article VIII of the 1987 Constitution as that which "includes
the duty of the courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the government." The Resolution contains
directives which are outside the ambit of the Court's judicial functions.
The principle of separation of powers is explained by the Court in the leading case
of Angara v. Electoral Commission:37
The separation of powers is a fundamental principle in our system of government. It
obtains not through express provision but by actual division in our Constitution.
Each department of the government has exclusive cognizance of matters within its
jurisdiction, and is supreme within its own sphere. But it does not follow from the
fact that the three powers are to be kept separate and distinct that the Constitution

intended them to be absolutely unrestrained and independent of each other. The


Constitution has provided for an elaborate system of checks and balances to secure
coordination in the workings of the various departments of the government. x x x
And the judiciary in turn, with the Supreme Court as the final arbiter, effectively
checks the other department in its exercise of its power to determine the law, and
hence to declare executive and legislative acts void if violative of the Constitution. 38
Even the ponente is passionate about according respect to the system of separation
of powers between the three equal branches of the government. In his dissenting
opinion in the 2008 case of Province of North Cotabato v. Government of the
Republic of the Philippines Peace Panel on Ancestral Domain (GRP),39 Justice Velasco
emphatically stated:
Separation of Powers to be Guarded
Over and above the foregoing considerations, however, is the matter of separation
of powers which would likely be disturbed should the Court meander into alien
territory of the executive and dictate how the final shape of the peace agreement
with the MILF should look like. The system of separation of powers
contemplates the division of the functions of government into its three (3)
branches: the legislative which is empowered to make laws; the executive
which is required to carry out the law; and the judiciary which is charged
with interpreting the law. Consequent to actual delineation of power, each
branch of government is entitled to be left alone to discharge its duties as
it sees fit. Being one such branch, the judiciary, as Justice Laurel asserted
in Planas v. Gil, "will neither direct nor restrain executive [or legislative
action]." Expressed in another perspective, the system of separated
powers is designed to restrain one branch from inappropriate interference
in the business, or intruding upon the central prerogatives, of another
branch; it is a blend of courtesy and caution, "a self-executing safeguard
against the encroachment or aggrandizement of one branch at the expense
of the other." x x x
Under our constitutional set up, there cannot be any serious dispute that the
maintenance of the peace, insuring domestic tranquility and the suppression of
violence are the domain and responsibility of the executive. Now then, if it be
important to restrict the great departments of government to the exercise
of their appointed powers, it follows, as a logical corollary, equally
important, that one branch should be left completely independent of the
others, independent not in the sense that the three shall not cooperate in
the common end of carrying into effect the purposes of the constitution,
but in the sense that the acts of each shall never be controlled by or
subjected to the influence of either of the branches.40 (Emphasis supplied)
Indeed, adherence to the principle of separation of powers which is enshrined in our
Constitution is essential to prevent tyranny by prohibiting the concentration of the
sovereign powers of state in one body.41 Considering that executive power
is exclusively vested in the President of the Philippines, the Judiciary should
neither undermine such exercise of executive power by the President nor arrogate
executive power unto itself. The Judiciary must confine itself to the exercise of
judicial functions and not encroach upon the functions of the other branches of the
government.

ACCORDINGLY, I vote against the approval of the Resolution.


ANTONIO T. CARPIO
Associate Justice
DISSENTING OPINION
SERENO, J.:
"The judicial whistle needs to be blown for a purpose and with caution. It needs to
be remembered that the Court cannot run the government. The Court has the duty
of implementing constitutional safeguards that protect individual rights but they
cannot push back the limits of the Constitution to accommodate the challenged
violation."1
These are the words of Justice Anand of the Supreme Court of India, from which
court the idea of a continuing mandatory injunction for environmental cases was
drawn by the Philippine Supreme Court. These words express alarm that the Indian
judiciary has already taken on the role of running the government in environmental
cases. A similar situation would result in the Philippines were the majority
Resolution to be adopted. Despite having the best of intentions to ensure
compliance by petitioners with their corresponding statutory mandates in an urgent
manner, this Court has unfortunately encroached upon prerogatives solely to be
exercised by the President and by Congress.
On 18 December 2008, the Court promulgated its decision in MMDA v. Concerned
Residents of Manila Bay, G.R. Nos. 171947-48, denying the petition of the
government agencies, defendants in Civil Case No. 1851-99. It held that the Court
of Appeals, subject to some modifications, was correct in affirming the 13
September 2002 Decision of the Regional Trial Court in Civil Case No. 1851-99. It
ordered "the abovenamed defendant-government agencies to clean up, rehabilitate,
and preserve Manila Bay, and restore and maintain its waters to SB level (Class B
sea waters per Water Classification Tables under DENR Administrative Order No. 34
[1990]) to make them fit for swimming, skin-diving, and other forms of contact
recreation."
The Court further issued each of the aforementioned agencies specific orders to
comply with their statutory mandate.2 Pursuant to the judgment above, the Court
established its own Manila Bay Advisory Committee. Upon the recommendations of
the said Committee, the present Resolution was issued. It encompasses several of
the specific instructions laid out by the court in the original case, but also goes
further by requiring reports and updates from the said government agencies, and
setting deadlines for the submission thereof.
I find these directives in the Majority Resolution patently irreconcilable with basic
constitutional doctrines and with the legislative mechanisms already in place, such
as the Administrative Code and the Local Government Code, which explicitly grant
control and supervision over these agencies to the President alone, and to no one
else. For these reasons, I respectfully dissent from the Majority Resolution.

In issuing these directives, the Court has encroached upon the exclusive authority
of the Executive Department and violated the doctrine of Separation of Powers
The Resolution assigned the Department of Natural Resources as the primary
agency for environment protection and required the implementation of its
Operational Plan for the Manila Bay Coastal Strategy. It ordered the DENR to submit
the updated operational plan directly to the Court; to summarize data on the quality
of Manila Bay waters; and to "submit the names and addresses of persons and
companiesthat generate toxic or hazardous waste on or before September 30,
2011."
The Department of the Interior and Local Government is directed to "order the
Mayors of all cities in Metro Manila; the Governors of Rizal, Laguna, Cavite, Bulacan,
Pampanga and Bataan; and the Mayors of all the cities and towns in said provinces
to inspect all factories, commercial establishments and private homes along the
banks of the major river systems" to determine if they have wastewater treatment
facilities, on or before 30 June 2011. The LGUs are given a deadline of 30
September 2011 to finish the inspection. In cooperation with the Department of
Public Works and Highways (DPWH), these local governments are required to submit
their plan for the removal of informal settlers and encroachments which are in
violation of Republic Act No. 7279. The said demolition must take place not later
than 31 December 2012.
The Metropolitan Waterworks and Sewerage System (MWSS) is required to submit
its plans for the construction of wastewater treatment facilities in areas where
needed, the completion period for which shall not go beyond the year 2020. On or
before 30 June 2011, the MWSS is further required to have its two concessionaires
submit a report on the amount collected as sewerage fees. The Local Water Utilities
Administration (LWUA) is ordered to submit on or before 30 September 2011 its
plan to install and operate sewerage and sanitation facilities in the towns and cities
where needed, which must be fully implemented by 31 December 2020.
The Department of Agriculture and the Bureau of Aquatic Fisheries and Resources
are ordered to submit on or before 30 June 2011 a list of areas where marine life in
Manila Bay has improved, and the assistance extended to different Local
Government Units in this regard. The Philippine Ports Authority (PPA) is ordered to
report the names, make, and capacity of each ship that would dock in PPA ports;
the days they docked and the days they were at sea; the activities of the
concessionaire that would collect solid and liquid ship-generated waste, the volume,
treatment and disposal sites for such wastes; and the violators that PPA has
apprehended.
The Department of Health (DOH) is required to submit the names and addresses of
septic and sludge companies that have no treatment facilities. The said agency must
also require companies to procure a "license to operate" issued by the DOH. The
Metropolitan Manila Development Authority (MMDA) and the seventeen (17) LGUs in
Metro Manila must submit a report on the "amount of garbage collected per
districtvis--vis the average amount of garbage disposed monthly in landfills and
dumpsites." MMDA must also submit a plan for the removal of informal settlers and
encroachments along NCR Rivers which violate R.A. No. 7279.

Clearly, the Court has no authority to issue these directives. They fall squarely
under the domain of the executive branch of the state. The issuance of specific
instructions to subordinate agencies in the implementation of policy mandates in all
laws, not just those that protect the environment, is an exercise of the power of
supervision and control the sole province of the Office of the President.
Both the 1987 Constitution and Executive Order No. 292, or the Administrative Code
of the Philippines, state:
Exercise of Executive Power. - The Executive power shall be vested in the President. 3
Power of Control.- The President shall have control of all the executive departments,
bureaus, and offices. He shall ensure that the laws be faithfully executed. 4
In Anak Mindanao Party-list Group v. Executive Secretary,5 this Court has already
asserted that the enforcement of all laws is the sole domain of the Executive. The
Court pronounced that the express constitutional grant of authority to the Executive
is broad and encompassing, such that it justifies reorganization measures 6 initiated
by the President. The Court said:
While Congress is vested with the power to enact laws, the President executes the
laws. The executive power is vested in the President. It is generally defined as the
power to enforce and administer the laws. It is the power of carrying the laws into
practical operation and enforcing their due observance.
As head of the Executive Department, the President is the Chief Executive. He
represents the government as a whole and sees to it that all laws are enforced by
the officials and employees of his department. He has control over the executive
department, bureaus and offices. This means that he has the authority to assume
directly the functions of the executive department, bureau and office, or interfere
with the discretion of its officials. Corollary to the power of control, the President
also has the duty of supervising and enforcement of laws for the maintenance of
general peace and public order. Thus, he is granted administrative power over
bureaus and offices under his control to enable him to discharge his duties
effectively.
To herein petitioner agencies impleaded below, this Court has given very specific
instructions to report the progress and status of their operations directly to the
latter. The Court also required the agencies to apprise it of any noncompliance with
the standards set forth by different laws as to environment protection. This move is
tantamount to making these agencies accountable to the Court instead of the
President. The very occupation streamlined especially for the technical and practical
expertise of the Executive Branch is being usurped without regard for the
delineations of power in the Constitution. In fact, the issuance of the Resolution
itself is in direct contravention of the Presidents exclusive power to issue
administrative orders, as shown thus:
Administrative Orders. - Acts of the President which relate to particular aspect of
governmental operations in pursuance of his duties as administrative head shall be
promulgated in administrative orders.7

The Courts discussion in Ople v. Torres8 pertaining to the extent and breadth of
administrative power bestowed upon the President is apt:
Administrative power is concerned with the work of applying policies and enforcing
orders as determined by proper governmental organs. It enables the President to fix
a uniform standard of administrative efficiency and check the official conduct of his
agents. To this end, he can issue administrative orders, rules and regulations.

An administrative order is an ordinance issued by the President which relates to


specific aspects in the administrative operation of government. It must be in
harmony with the law and should be for the sole purpose of implementing the law
and carrying out the legislative policy.
The implementation of the policy laid out by the legislature in the Philippine Clean
Water Act of 2004, the Toxic and Hazardous Waste Act or Republic Act 6969, the
Environment Code, and other laws geared towards environment protection is
under the competence of the President. Achieved thereby is a uniform standard of
administrative efficiency. And since it is through administrative orders promulgated
by the President that specific operational aspects for these policies are laid out, the
Resolution of this Court overlaps with the Presidents administrative power. No
matter how urgent and laudatory the cause of environment protection has become,
it cannot but yield to the higher mandate of separation of powers and the
mechanisms laid out by the people through the Constitution.
One of the directives is that which requires local governments to conduct inspection
of homes and establishments along the riverbanks, and to submit a plan for the
removal of certain informal settlers. Not content with arrogating unto itself the
powers of "control" and "supervision" granted by the Administrative Code to the
President over said petitioner administrative agencies, the Court is also violating the
latters general supervisory authority over local governments:
Sec. 18. General Supervision Over Local Governments. - The President shall
exercise general supervision over local governments.9
Sec. 25. National Supervision over Local Government Units.(a) Consistent with
the basic policy on local autonomy, the President shall exercise general supervision
over local government units to ensure that their acts are within the scope of their
prescribed powers and functions.10
The powers expressly vested in any branch of the Government shall not be
exercised by, nor delegated to, any other branch of the Government, except to the
extent authorized by the Constitution. 11
As has often been repeated by this Court, the doctrine of separation of powers is
the very wellspring from which the Court draws its legitimacy. Former Chief Justice
Reynato S. Puno has traced its origin and rationale as inhering in the republican
system of government:

The principle of separation of powers prevents the concentration of legislative,


executive, and judicial powers to a single branch of government by deftly allocating
their exercise to the three branches of government...
In his famed treatise, The Spirit of the Laws, Montesquieu authoritatively
analyzed the nature of executive, legislative and judicial powers and with a
formidable foresight counselled that any combination of these powers would create
a system with an inherent tendency towards tyrannical actions
Again, there is no liberty, if the judiciary power be not separated from the legislative
and the executive. Were it joined with the legislative, the life and liberty of the
subject would be exposed to arbitrary control; for the judge would be then the
legislator. Were it joined to the executive power, the judge might behave with
violence and oppression.
There would be an end of everything, were the same man or the same body,
whether of the nobles or of the people, to exercise those three powers, that of
enacting laws, that of executing the public resolutions, and that of trying the causes
of individuals. 12
Nor is there merit in the contention that these directives will speed up the
rehabilitation of Manila Bay better than if said rehabilitation were left to the
appropriate agencies. Expediency is never a reason to abandon legitimacy. "The
Separation of Powers often impairs efficiency, in terms of dispatch and the
immediate functioning of government. It is the long-term staying power of
government that is enhanced by the mutual accommodation required by the
separation of powers."13
Mandamus does not lie to compel a discretionary act.
In G.R. Nos. 171947-48, the Court explicitly admitted that "[w]hile the
implementation of the MMDAs mandated tasks may entail a decision-making
process, the enforcement of the law or the very act of doing what the law exacts to
be done is ministerial in nature and may be compelled by mandamus." 14 In denying
the appeal of petitioners and affirming the Decision of the RTC, the Court of Appeals
stressed that the trial courts Decision did not require petitioners to do tasks outside
of their usual basic functions under existing laws.15
In its revised Resolution, the Court is now setting deadlines for the implementation
of policy formulations which require decision-making by the agencies. It has
confused an order enjoining a duty, with an order outlining specific technical rules
on how to perform such a duty. Assuming without conceding that mandamus were
availing under Rule 65, the Court can only require a particular action, but it cannot
provide for the means to accomplish such action. It is at this point where the
demarcation of the general act of "cleaning up the Manila Bay" has become blurred,
so much so that the Court now engages in the slippery slope of overseeing technical
details.
In Sps. Abaga v. Sps. Panes16 the Court said:

From the foregoing Rule, there are two situations when a writ of mandamus may
issue: (1) when any tribunal, corporation, board, officer or person unlawfully
neglects the performance of an act which the law specifically enjoins as a
duty resulting from an office, trust, or station; or (2) when any tribunal,
corporation, board, officer or person unlawfully excludes another from the use and
enjoyment of a right or office to which the other is entitled. The "duty" mentioned in
the first situation is a ministerial duty, not a discretionary duty, requiring the
exercise of judgmentIn short, for mandamus to lie, the duty sought to be
compelled to be performed must be a ministerial duty, not a discretionary duty,
and the petitioner must show that he has a well-defined, clear and certain right.
Discretion, on the other hand, is a faculty conferred upon a court or official by which
he may decide the question either way and still be right. 17
The duty being enjoined in mandamus must be one according to the terms defined
in the law itself. Thus, the recognized rule is that, in the performance of an official
duty or act involving discretion, the corresponding official can only be directed by
mandamus to act, but not to act one way or the other. This is the end of any
participation by the Court, if it is authorized to participate at all.
In setting a deadline for the accomplishment of these directives, not only has the
Court provided the means of accomplishing the task required, it has actually gone
beyond the standards set by the law. There is nothing in the Environment Code, the
Administrative Code, or the Constitution which grants this authority to the judiciary.
It is already settled that, "If the law imposes a duty upon a public officer and gives
him the right to decide when and how the duty shall be performed, such duty is not
ministerial."18
In Alvarez v. PICOP Resources,19 the Court ruled that,
As an extraordinary writ, the remedy of mandamus lies only to compel an officer to
perform a ministerial duty, not a discretionary one; mandamus will not issue to
control the exercise of discretion of a public officer where the law imposes upon him
the duty to exercise his judgment in reference to any manner in which he is
required to act, because it is his judgment that is to be exercised and not that of the
court.
The Constitution does not authorize the courts to "monitor" the execution of their
decisions.
It is an oft-repeated rule that the Court has no power to issue advisory opinions,
much less "directives" requiring progress reports from the parties respecting the
execution of its decisions. The requirements of "actual case or controversy" and
"justiciability" have long been established in order to limit the exercise of judicial
review. While its dedication to the implementation of the fallo in G.R. 171947-48 is
admirable, the Courts power cannot spill over to actual encroachment upon both
the "control" and police powers of the State under the guise of a "continuing
mandamus."
In G.R. 171947-48, the Court said: "Under what other judicial discipline describes
as continuing mandamus, the Court may, under extraordinary circumstances, issue

directives with the end in view of ensuring that its decision would not be set to
naught by administrative inaction or indifference."
Needless to say, the "continuing mandamus" in this case runs counter to principles
of "actual case or controversy" and other requisites for judicial review. In fact, the
Supreme Court is in danger of acting as a "super-administrator" 20 the scenario
presently unfolding in India where the supposed remedy originated. There the
remedy was first used in Vineet Narain and Others v. Union of India, 21 a public
interest case for corruption filed against high-level officials. Since then, the remedy
has been applied to environmental cases as an oversight and control power by
which the Supreme Court of India has created committees (i.e. the Environment
Pollution Authority and the Central Empowered Committee in forest cases) and
allowed these committees to act as the policing agencies. 22 But the most significant
judicial intervention in this regard was the series of orders promulgated by the
Court in T.N. Godavarman v. Union of India.23
Although the Writ Petition filed by Godavarman was an attempt to seek directions
from the Court regarding curbing the illegal felling of trees, the Supreme Court went
further to make policy determinations in an attempt to improve the countrys
forests. The Court Order suspending felling of trees that did not adhere to state
government working plans resulted in effectively freezing the countrys timber
industry. The Supreme Court completely banned tree felling in certain north-eastern
states to any part of the country. The courts role was even more pronounced in its
later directions. While maintaining the ban on felling of trees in the seven northeast
states, the court directed the state governments to gather, process, sell, and
otherwise manage the already felled timber in the manner its specified the Supreme
Court became the supervisor of all forest issues, ranging from controlling, pricing
and transport of timber to management of forest revenue, as well as
implementation of its orders.24
Thus, while it was originally intended to assert public rights in the face of
government inaction and neglect, the remedy is now facing serious criticism as it
has spiraled out of control.25 In fact, even Justice J. S. Verma, who penned the
majority opinion in Vineet Narain in which continuing mandamus first made its
appearance, subsequently pronounced that "judicial activism should be neither
judicial ad hocism nor judicial tyranny." 26 Justice B.N. Srikrishna observed that
judges now seem to want to engage themselves with boundless enthusiasm in
complex socio-economic issues raising myriads of facts and ideological issues that
cannot be managed by "judicially manageable standards." 27 Even Former Chief
Justice A. S. Anand, a known defender of judicial activism, has warned against the
tendency towards "judicial adventurism," reiterating the principle that "the role of
the judge is that of a referee. I can blow my judicial whistle when the ball goes out
of play; but when the game restarts I must neither take part in it nor tell the
players how to play."28
Unless our own Supreme Court learns to curb its excesses and apply to this case the
standards for judicial review it has developed over the years and applied to co-equal
branches, the scenario in India could very well play out in the Philippines. The Court
must try to maintain a healthy balance between the departments, precisely as the
Constitution mandates, by delineating its "deft strokes and bold lines," 29 ever so
conscious of the requirements of actual case and controversy. While, admittedly,
there are certain flaws in the operation and implementation of the laws, the
judiciary cannot take the initiative to compensate for such perceived inaction.

The Court stated in Tolentino v. Secretary of Finance: 30


Disregard of the essential limits imposed by the case and controversy requirement
can in the long run only result in undermining our authority as a court of law. For, as
judges, what we are called upon to render is judgment according to law, not
according to what may appear to be the opinion of the day
Hence, "over nothing but cases and controversies can courts exercise jurisdiction,
and it is to make the exercise of that jurisdiction effective that they are allowed to
pass upon constitutional questions."31 Admirable though the sentiments of the Court
may be, it must act within jurisdictional limits. These limits are founded upon the
traditional requirement of a cause of action: "the act or omission by which a party
violates a right of another."32 In constitutional cases, for every writ or remedy, there
must be a clear pronouncement of the corresponding right which has been
infringed. Only then can there surface that "clear concreteness provided when a
question emerges precisely framed and necessary for decision from a clash of
adversary argument exploring every aspect of a multifaceted situation embracing
conflicting and demanding interests."33
Unfortunately, the Court fails to distinguish between a pronouncement on violation
of rights on one hand, and non-performance of duties vis--vis operational
instructions, on the other. Moreover, it also dabbles in an interpretation of
constitutional rights in a manner that is dangerously pre-emptive of legally available
remedies.
The "continuing mandamus" palpably overlaps with the power of congressional
oversight.
Article 6, Section 22 of the 1987 Constitution states:
The heads of department may upon their own initiative, with the consent of the
President, or upon the request of either House, or as the rules of each House shall
provide, appear before and be heard by such House on any matter pertaining to
their departments. Written questions shall be submitted to the President of the
Senate or the Speaker of the House of Representatives at least three days before
their scheduled appearance. Interpellations shall not be limited to written questions,
but may cover matters related thereto. When the security of the state or the public
interest so requires and the President so states in writing, the appearance shall be
conducted in executive session.
This provision pertains to the power to conduct a question hour, the objective of
which is to obtain information in pursuit of Congress oversight function. Macalintal
v. Comelec34 discussed the scope of congressional oversight in full. Oversight refers
to the power of the legislative department to check, monitor and ensure that the
laws it has enacted are enforced:
The power of Congress does not end with the finished task of
legislation. Concomitant with its principal power to legislate is the auxiliary
power to ensure that the laws it enacts are faithfully executed. As well
stressed by one scholar, the legislature "fixes the main lines of substantive policy
and is entitled to see that administrative policy is in harmony with it; it establishes

the volume and purpose of public expenditures and ensures their legality and
propriety; it must be satisfied that internal administrative controls are operating to
secure economy and efficiency; and it informs itself of the conditions of
administration of remedial measure.

Clearly, oversight concerns post-enactment measures undertaken by Congress:


(a) to monitor bureaucratic compliance with program objectives, (b) to determine
whether agencies are properly administered, (c) to eliminate executive waste and
dishonesty, (d) to prevent executive usurpation of legislative authority, and (d) to
assess executive conformity with the congressional perception of public interest.

Congress, thus, uses its oversight power to make sure that the
administrative agencies perform their functions within the authority
delegated to them.
Macalintal v. Comelec further discusses that legislative supervision under the
oversight power connotes a continuing and informed awareness on the part of
Congress regarding executive operations in a given administrative area. Because the
power to legislate includes the power to ensure that the laws are enforced, this
monitoring power has been granted by the Constitution to the legislature. In cases
of executive non-implementation of statutes, the courts cannot justify the use of
"continuing mandamus," as it would by its very definition overlap with the
monitoring power under congressional oversight. The Resolution does not only
encroach upon the general supervisory function of the Executive, it also diminished
and arrogated unto itself the power of congressional oversight.
Conclusion
This Court cannot nobly defend the environmental rights of generations of Filipinos
enshrined in the Constitution while in the same breath eroding the foundations of
that very instrument from which it draws its power. While the remedy of "continuing
mandamus" has evolved out of a Third World jurisdiction similar to ours, we cannot
overstep the boundaries laid down by the rule of law. Otherwise, this Court would
rush recklessly beyond the delimitations precisely put in place to safeguard excesses
of power. The tribunal, considered by many citizens as the last guardian of
fundamental rights, would then resemble nothing more than an idol with feet of
clay: strong in appearance, but weak in foundation.
The Court becomes a conscience by acting to remind us of limitation on power,
even judicial power, and the interrelation of good purposes with good means.
Morality is not an end dissociated from means. There is a morality of morality, which
respects the limitation of office and the fallibility of the human mindself-limitation
is the first mark of the master. That, too is part of the role of the conscience. 35
The majority Resolution would, at the same time, cast the light of scrutiny more
harshly on judicial action in which the Courts timely exercise of its powers is called
for as in the cases of prisoners languishing in jail whose cases await speedy

resolution by this Court. There would then be nothing to stop the executive and the
legislative departments from considering as fair game the judiciarys own
accountability in its clearly delineated department.
MARIA LOURDES P. A. SERENO
Associate Justice

MINING AND QUARYING


Philippine Mining Act of 1995
AN ACT INSTITUTING A NEW SYSTEM OF MINERAL RESOURCES
EXPLORATION, DEVELOPMENT, UTILIZATION, AND CONSERVATION
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

CHAPTER I
INTRODUCTORY PROVISIONS
Section 1
Title
This Act shall be known as the "Philippine Mining Act of 1995."
Section 2
Declaration of Policy
All mineral resources in public and private lands within the territory and exclusive
economic zone of the Republic of the Philippines are owned by the State. It shall be
the responsibility of the State to promote their rational exploration, development,
utilization and conservation through the combined efforts of government and the
private sector in order to enhance national growth in a way that effectively
safeguards the environment and protect the rights of affected communities.
Section 3
Definition of Terms

As used in and for purposes of this Act, the following terms, whether in singular or
plural, shall mean:
a. Ancestral lands refers to all lands exclusively and actually possessed,
occupied, or utilized by indigenous cultural communities by themselves or
through their ancestors in accordance with their customs and traditions
since time immemorial, and as may be defined and delineated by law.
b. Block or meridional block means an area bounded by one-half (1/2)
minute of latitude and one-half (1/2) minute of longitude, containing
approximately eighty-one hectares (81 has.).
c. Bureau means the Mines and Geosciences Bureau under the Department
of Environment and Natural Resources.
d. Carrying capacity refers to the capacity of natural and human
environments to accommodate and absorb change without experiencing
conditions of instability and attendant degradation.
e. Contiguous zone refers to water, sea bottom and substratum measured
twenty-four nautical miles (24 n.m.) seaward from the base line of the
Philippine archipelago.
f. Contract area means land or body of water delineated for purposes of
exploration, development, or utilization of the minerals found therein.
g. Contractor means a qualified person acting alone or in consortium who is
a party to a mineral agreement or to a financial or technical assistance
agreement.
h. Co-production agreement (CA) means an agreement entered into
between the Government and one or more contractors in accordance with
Section 26(b) hereof.
i. Department means the Department of Environment and Natural
Resources.
j. Development means the work undertaken to explore and prepare an ore
body or a mineral deposit for mining, including the construction of
necessary infrastructure and related facilities.

under consideration will not bring about an unacceptable environmental


impact and that the proponent has complied with the requirements of the
environmental impact statement system.
n. Environmental impact statement (EIS) is the document which aims to
identify, predict, interpret, and communicate information regarding
changes in environmental quality associated with a proposed project and
which examines the range of alternatives for the objectives of the proposal
and their impact on the environment.
o. Exclusive economic zone means the water, sea bottom and subsurface
measured from the baseline of the Philippine archipelago up to two
hundred nautical miles (200 n.m.) offshore.
p. Existing mining/quarrying right means a valid and subsisting mining
claim or permit or quarry permit or any mining lease contract or agreement
covering a mineralized area granted/issued under pertinent mining laws.
q. Exploration means the searching or prospecting for mineral resources by
geological, geochemical or geophysical surveys, remote sensing, test
pitting, trenching, drilling, shaft sinking, tunneling or any other means for
the purpose of determining the existence, extent, quantity and quality
thereof and the feasibility of mining them for profit.
r. Financial or technical assistance agreement means a contract involving
financial or technical assistance for large-scale exploration, development,
and utilization of mineral resources.
s. Force majeure means acts or circumstances beyond the reasonable
control of contractor including, but not limited to, war, rebellion,
insurrection, riots, civil disturbance, blockade, sabotage, embargo, strike,
lockout, any dispute with surface owners and other labor disputes,
epidemic, earthquake, storm, flood or other adverse weather conditions,
explosion, fire, adverse action by government or by any instrumentality or
subdivision thereof, act of God or any public enemy and any cause that
herein describe over which the affected party has no reasonable control.
t. Foreign-owned corporation means any corporation, partnership,
association, or cooperative duly registered in accordance with law in which
less than fifty per centum (50%) of the capital is owned by Filipino citizens.
u. Government means the government of the Republic of the Philippines.

k. Director means the Director of the Mines and Geosciences Bureau.


l. Ecological profile or eco-profile refers to geographic-based instruments
for planners and decision-makers which presents an evaluation of the
environmental quality and carrying capacity of an area.
m. Environmental compliance certificate (ECC) refers to the document
issued by the government agency concerned certifying that the project

v. Gross output means the actual market value of minerals or mineral


products from its mining area as defined in the National Internal Revenue
Code.
w. Indigenous cultural community means a group or tribe of indigenous
Filipinos who have continuously lived as communities on communallybounded and defined land since time immemorial and have succeeded in
preserving, maintaining, and sharing common bonds of languages,

customs, traditions, and other distinctive cultural traits, and as may be


defined and delineated by law.

aj. Onshore means the landward side from the mean tide elevation,
including submerged lands in lakes, rivers and creeks.

x. Joint venture agreement (JVA) means an agreement entered into


between the Government and one or more contractors in accordance with
Section 26(c) hereof.

ak. Ore means a naturally occurring substance or material from which a


mineral or element can be mined and/or processed for profit.

y. Mineral processing means the milling, beneficiation or upgrading of ores


or minerals and rocks or by similar means to convert the same into
marketable products.
z. Mine wastes and tailings shall mean soil and rock materials from surface
or underground mining and milling operations with no economic value to
the generator of the same.

al. Permittee means the holder of an exploration permit.


am. Pollution control and infrastructure devices refers to infrastructure,
machinery, equipment and/or improvements used for impounding, treating
or neutralizing, precipitating, filtering, conveying and cleansing mine
industrial waste and tailings as well as eliminating or reducing hazardous
effects of solid particles, chemicals, liquids or other harmful byproducts and
gases emitted from any facility utilized in mining operations for their
disposal.

aa. Minerals refers to all naturally occurring inorganic substance in solid,


gas, liquid, or any intermediate state excluding energy materials such as
coal, petroleum, natural gas, radioactive materials, and geothermal energy.

an. President means the President of the Republic of the Philippines.

ab. Mineral agreement means a contract between the government and a


contractor, involving mineral production-sharing agreement, co-production
agreement, or joint-venture agreement.

ao. Private land refers to any land belonging to any private person which
includes alienable and disposable land being claimed by a holder, claimant,
or occupant who has already acquired a vested right thereto under the law,
although the corresponding certificate or evidence of title or patent has not
been actually issued.

ac. Mineral land means any area where mineral resources are found.
ad. Mineral resource means any concentration of minerals/rocks with
potential economic value.
ae. Mining area means a portion of the contract area identified by the
contractor for purposes of development, mining, utilization, and sites for
support facilities or in the immediate vicinity of the mining operations.
af. Mining operation means mining activities involving exploration,
feasibility, development, utilization, and processing.
ag. Non-governmental organization (NGO) includes nonstock, nonprofit
organizations involved in activities dealing with resource and environmental
conservation, management and protection.
ah. Net assets refers to the property, plant and equipment as reflected in
the audited financial statement of the contractor net of depreciation, as
computed for tax purposes, excluding appraisal increase and construction
in progress.
ai. Offshore means the water, sea bottom and subsurface from the shore or
coastline reckoned from the mean low tide level up to the two hundred
nautical miles (200 n.m.) exclusive economic zone including the
archipelagic sea and contiguous zone.

ap. Public land refers to lands of the public domain which have been
classified as agricultural lands and subject to management and disposition
or concession under existing laws.
aq. Qualified person means any citizen of the Philippines with capacity to
contract, or a corporation, partnership, association, or cooperative
organized or authorized for the purpose of engaging in miring, with
technical and financial capability to undertake mineral resources
development and duly registered in accordance with law at least sixty per
centum (60%) of the capital of which is owned by citizens of the
Philippines: Provided, That a legally organized foreign-owned corporation
shall be deemed a qualified person for purposes of granting an exploration
permit, financial or technical assistance agreement or mineral processing
permit.
ar. Quarrying means the process of extracting, removing and disposing
quarry resources found on or underneath the surface of private or public
land.
as. Quarry permit means a document granted to a qualified person for the
extraction and utilization of quarry resources on public or private lands.
at. Quarry resources refers to any common rock or other mineral
substances as the Director of Mines and Geosciences Bureau may declare
to be quarry resources such as, but not limited to, andesite, basalt,
conglomerate, coral sand, diatomaceous earth, diorite, decorative stones,
gabbro, granite, limestone, marble, marl, red burning clays for potteries

and bricks, rhyolite, rock phosphate, sandstone, serpentine, shale, tuff,


volcanic cinders, and volcanic glass: Provided, That such quarry resources
do not contain metals or metallic constituents and/or other valuable
minerals in economically workable quantities: Provided, further, That nonmetallic minerals such as kaolin, feldspar, bull quartz, quartz or silica, sand
and pebbles, bentonite, talc, asbestos, barite, gypsum, bauxite, magnesite,
dolomite, mica, precious and semi-precious stones, and other non-metallic
minerals that may later be discovered and which the: Director declares the
same to be of economically workable quantities, shall not be classified
under the category of quarry resources.
au. Regional director means the regional director of any mines regional
office under the Department of Environment and Natural Resources.
av. Regional office means any of the mines regional offices of the
Department of Environment and Natural Resources.
aw. Secretary means the Secretary of the Department of Environment and
Natural Resources.
ax. Special allowance refers to payment to the claim-owners or surface
right-owners particularly during the transition period from Presidential
Decree No. 463 and Executive Order No. 279, series of 1987.
ay. State means the Republic of the Philippines.
az. Utilization means the extraction or disposition of minerals.

CHAPTER II
GOVERNMENT MANAGEMENT
Section 4
Ownership of Mineral Resources
Mineral resources are owned by the State and the exploration, development,
utilization, and processing thereof shall be under its full control and supervision. The
State may directly undertake such activities or it may enter into mineral agreements
with contractors.
The State shall recognize and protect the rights of the indigenous cultural
communities to their ancestral lands as provided for by the Constitution.
Section 5
Mineral Reservations

When the national interest so requires, such as when there is a need to preserve
strategic raw materials for industries critical to national development, or certain
minerals for scientific, cultural or ecological value, the President may establish
mineral reservations upon the recommendation of the Director through the
Secretary. Mining operations in existing mineral reservations and such other
reservations as may thereafter be established, shall be undertaken by the
Department or through a contractor: Provided, That a small scale-mining
cooperative covered by Republic Act No. 7076 shall be given preferential right to
apply for a small-scale mining agreement for a maximum aggregate area of twentyfive percent (25%) of such mineral reservation, subject to valid existing
mining/quarrying rights as provided under Section 112 Chapter XX hereof. All
submerged lands within the contiguous zone and in the exclusive economic zone of
the Philippines are hereby declared to be mineral reservations.
A ten per centum (10%) share of all royalties and revenues to be derived by the
government from the development and utilization of the mineral resources within
mineral reservations as provided under this Act shall accrue to the Mines and
Geosciences Bureau to be allotted for special projects and other administrative
expenses related to the exploration and development of other mineral reservations
mentioned in Section 6 hereof.
Section 6
Other Reservations
Mining operations in reserved lands other than mineral reservations may be
undertaken by the Department, subject to limitations as herein provided. In the
event that the Department cannot undertake such activities, they may be
undertaken by a qualified person in accordance with the rules and regulations
promulgated by the Secretary. The right to develop and utilize the minerals found
therein shall be awarded by the President under such terms and conditions as
recommended by the Director and approved by the Secretary: Provided, That the
party who undertook the exploration of said reservation shall be given priority. The
mineral land so awarded shall be automatically excluded from the reservation during
the term of the agreement: Provided, further, That the right of the lessee of a valid
mining contract existing within the reservation at the time of its establishment shall
not be prejudiced or impaired.
Section 7
Periodic Review of Existing Mineral Reservations
The Secretary shall periodically review existing mineral reservations for the purpose
of determining whether their continued existence is consistent with the national
interest, and upon his recommendation, the President may, by proclamation, alter
or modify the boundaries thereof or revert the same to the public domain without
prejudice to prior existing rights.
Section 8
Authority of the Department
The Department shall be the primary government agency responsible for the
conservation, management, development, and proper use of the State's mineral
resources including those in reservations, watershed areas, and lands of the public

domain. The Secretary shall have the authority to enter into mineral agreements on
behalf of the Government upon the recommendation of the Director, promulgate
such rules and regulations as may be necessary to implement the intent and
provisions of this Act.
Section 9
Authority of the Bureau
The Bureau shall have direct charge in the administration and disposition of mineral
lands and mineral resources and shall undertake geological, mining, metallurgical,
chemical, and other researches as well as geological and mineral exploration
surveys. The Director shall recommend to the Secretary the granting of mineral
agreements to duly qualified persons and shall monitor the compliance by the
contractor of the terms and conditions of the mineral agreements. The Bureau may
confiscate surety, performance and guaranty bonds posted through an order to be
promulgated by the Director. The Director may deputize, when necessary, any
member or unit of the Philippine National Police, barangay, duly registered nongovernmental organization (NGO) or any qualified person to police all mining
activities.
Section 10
Regional Offices
There shall be as many regional offices in the country as may be established by the
Secretary, upon the recommendation of the Director.
Section 11
Processing of Applications
The system of processing applications for mining rights shall be prescribed in the
rules and regulations of this Act.
Section 12
Survey, Charting and Delineation of Mining Areas
A sketch plan or map of the contract or mining area prepared by a deputized
geodetic engineer suitable for publication purposes shall be required during the
filing of a mineral agreement or financial or technical assistance agreement
application. Thereafter, the contract or mining area shall be surveyed and
monumented by a deputized geodetic engineer or bureau geodetic engineer and the
survey plan shall be approved by the Director before the approval of the mining
feasibility.
Section 13
Meridional Blocks
For purposes of the delineation of the contract or mining areas under this Act, the
Philippine territory and its exclusive economic zone shall be divided into meridional
blocks of one-half (1/2) minute of latitude and one-half (1/2) minute of longitude.

Section 14
Recording System
There shall be established a national and regional filing and recording system. A
mineral resource database system shall be set up in the Bureau which shall include,
among others, a mineral rights management system. The Bureau shall publish at
least annually, a mineral gazette of nationwide circulation containing among others,
a current list of mineral rights, their location in the map, mining rules and
regulations, other official acts affecting mining, and other information relevant to
mineral resources development. A system and publication fund shall be included in
the regular budget of the Bureau.

CHAPTER III
SCOPE OF APPLICATION
Section 15
Scope of Application
This Act shall govern the exploration, development, utilization and processing of all
mineral resources.
Section 16
Opening of Ancestral Lands for Mining Operations
No ancestral land shall be opened for mining-operations without prior consent of the
indigenous cultural community concerned.
Section 17
Royalty Payments for Indigenous Cultural Communities
In the event of an agreement with an indigenous cultural community pursuant to
the preceding section, the royalty payment, upon utilization of the minerals shall be
agreed upon by the parties. The said royalty shall form part of a trust fund for the
socioeconomic well-being of the indigenous cultural community.
Section 18
Areas Open to Mining Operations
Subject to any existing rights or reservations and prior agreements of all parties, all
mineral resources in public or private lands, including timber or forestlands as
defined in existing laws, shall be open to mineral agreements or financial or
technical assistance agreement applications. Any conflict that may arise under this
provision shall be heard and resolved by the panel of arbitrators.
Section 19
Areas Closed to Mining Applications

Mineral agreement or financial or technical assistance agreement applications shall


not be allowed:
a. In military and other government reservations, except upon prior written
clearance by the government agency concerned;

Section 22
Maximum Areas for Exploration Permit
The maximum area that a qualified person may hold at any one time shall be:
a. Onshore, in any one province

b. Near or under public or private buildings, cemeteries, archeological and


historic sites, bridges, highways, waterways, railroads, reservoirs, dams or
other infrastructure projects, public or private works including plantations
or valuable crops, except upon written consent of the government agency
or private entity concerned;
c. In areas covered by valid and existing mining rights;
d. In areas expressedly prohibited by law;
e. In areas covered by small-scale miners as defined by law unless with
prior consent of the small-scale miners, in which case a royalty payment
upon the utilization of minerals shall be agreed upon by the parties, said
royalty forming a trust fund for the socioeconomic development of the
community concerned; and
f. Old growth or virgin forests, proclaimed watershed forest reserves,
wilderness areas, mangrove forests, mossy forests, national parks
provincial/municipal forests, parks, greenbelts, game refuge and bird
sanctuaries as defined by law and in areas expressly prohibited under the
National Integrated Protected Areas System (NIPAS) under Republic Act
No. 7586, Department Administrative Order No. 25, series of 1992 and
other laws.

1. for individuals, twenty (20) blocks: and


2. for partnerships, corporations, cooperatives, or associations,
two hundred (200) blocks.
b. Onshore, in the entire Philippines
1. for individuals, forty (40) blocks; and
2. for partnerships, corporations, cooperatives, or associations,
four hundred (400) blocks.
c. Offshore, beyond five hundred meters (500m) from the mean low tide
level:
1. for individuals, one hundred (100) blocks; and
2. for partnerships, corporations, cooperatives, or associations,
one thousand (1,000) blocks.
Section 23
Rights and Obligations of the Permittee

CHAPTER IV
EXPLORATION PERMIT
Section 20
Exploration Permit
An exploration permit grants the right to conduct exploration for all minerals in
specified areas. The Bureau shall have the authority to grant an exploration Permit
to a qualified person.
Section 21
Terms and Conditions of the Exploration Permit
An exploration permit shall be for a period of two (2) years, subject to annual
review and relinquishment or renewal upon the recommendation of the Director.

An exploration permit shall grant to the permittee, his heirs or successors-ininterest, the right to enter, occupy and explore the area: Provided, That if private or
other parties are affected, the permittee shall first discuss with the said parties the
extent, necessity, and manner of his entry, occupation and exploration and in case
of disagreement, a panel of arbitrators shall resolve the conflict or disagreement.
The permittee shall undertake an exploration work on the area as specified by its
permit based on an approved work program.
Any expenditure in excess of the yearly budget of the approved work program may
be carried forward and credited to the succeeding years covering the duration of the
permit. The Secretary, through the Director, shall promulgate rules and regulations
governing the terms and conditions of the permit.
The permittee may apply for a mineral production sharing agreement, joint venture
agreement, co-production agreement or financial or technical assistance agreement
over the permit area, which application shall be granted if the permittee meets the
necessary qualifications and the terms and conditions of any such agreement:

Provided, That the exploration period covered by the exploration permit shall be
included as part of the exploration period of the mineral agreement or financial or
technical assistance agreement.
Section 24
Declaration of Mining Project Feasibility
A holder of an exploration permit who determines the commercial viability of a
project covering a mining area may, within the term of the permit, file with the
Bureau a declaration of mining project feasibility accompanied by a work program
for development. The approval of the mining project feasibility and compliance with
other requirements provided in this Act shall entitle the holder to an exclusive right
to a mineral production sharing agreement or other mineral agreements or financial
or technical assistance agreement.
Section 25
Transfer or Assignment
An exploration permit may be transferred or assigned to a qualified person subject
to the approval of the Secretary upon the recommendation of the Director.

A mineral agreement shall grant to the contractor the exclusive right to conduct
mining operations and to extract all mineral resources found in the contract area. In
addition, the contractor may be allowed to convert his agreement into any of the
modes of mineral agreements or financial or technical assistance agreement
covering the remaining period of the original agreement subject to the approval of
the Secretary.
Section 27
Eligibility
A qualified person may enter into any of the three (3) modes of mineral agreement
with the government for the exploration, development and utilization of mineral
resources: Provided, That in case the applicant has been in the mining industry for
any length of time, he should possess a satisfactory environmental track record as
determined by the Mines and Geosciences Bureau and in consultation with the
Environmental Management Bureau of the Department.
Section 28
Maximum Areas for Mineral Agreement
The maximum area that a qualified person may hold at any time under a mineral
agreement shall be:
a. Onshore, in any one province

CHAPTER V
MINERAL AGREEMENTS
Section 26
Modes of Mineral Agreement
For purposes of mining operations, a mineral agreement may take the following
forms as herein defined:

1. for individuals, ten (10) blocks; and


2. for partnerships, cooperatives, associations, or corporations,
one hundred (100) blocks.
b. Onshore, in the entire Philippines
1. for individuals, twenty (20) blocks; and

a. Mineral production sharing agreement is an agreement where the


Government grants to the contractor the exclusive right to conduct mining
operations within a contract area and shares in the gross output. The
contractor shall provide the financing, technology, management and
personnel necessary for the implementation of this agreement.
b. Co-production agreement is an agreement between the Government and
the contractor wherein the Government shall provide inputs to the mining
operations other than the mineral resource.
c. Joint venture agreement is an agreement where a joint-venture
company is organized by the Government and the contractor with both
parties having equity shares. Aside from earnings in equity, the
Government shall be entitled to a share in the gross output.

2. for partnerships, cooperatives, associations, or corporations,


two hundred (200) blocks.
c. Offshore, in the entire Philippines
1. for individuals fifty (50) blocks;
2. for partnerships, cooperatives, associations, or corporations,
five hundred (500) blocks; and
3. for the exclusive economic zone, a larger area to be determined
by the Secretary.

The maximum areas mentioned above that a contractor may hold under a mineral
agreement shall not include mining/quarry areas under operating agreements
between the contractor and a claimowner/lessee/permittee/licensee entered into
under Presidential Decree No. 463.
Section 29
Filing and Approval of Mineral Agreements
All proposed mineral agreements shall be filed in the region where the areas of
interest are located, except in mineral reservations which shall be filed with the
Bureau.
The filing of a proposal for a mineral agreement shall give the proponent the prior
right to areas covered by the same. The proposed mineral agreement will be
approved by the Secretary and copies thereof shall be submitted to the President.
Thereafter, the President shall provide a list to Congress of every approved mineral
agreement within thirty (30) days from its approval by the Secretary.
Section 30
Assignment/Transfer
Any assignment or transfer of rights and obligations under any mineral agreement
except a financial or technical assistance agreement shall be subject to the prior
approval of the Secretary. Such assignment or transfer shall be deemed
automatically approved if not acted upon by the Secretary within thirty (30) working
days from official receipt thereof, unless patently unconstitutional or illegal.
Section 31
Withdrawal from Mineral Agreements
The contractor may, by giving due notice at any time during the term of the
agreement, apply for the cancellation of the mineral agreement due to causes
which, in the opinion of the contractor, make continued mining operations no longer
feasible or viable. The Secretary shall consider the notice and issue its decision
within a period of thirty (30) days: Provided, That the contractor has met all its
financial, fiscal and legal obligations.
Section 32
Terms
Mineral agreements shall have a term not exceeding twenty-five (25) years to start
from the date of execution thereof, and renewable for another term not exceeding
twenty-five (25) years under the same terms and conditions thereof, without
prejudice to changes mutually agreed upon by the parties. After the renewal period,
the operation of the mine may be undertaken by the Government or through a
contractor. The contract for the operation of a mine shall be awarded to the highest
bidder in a public bidding after due publication of the notice thereof: Provided, That
the contractor shall have the right to equal the highest bid upon reimbursement of
all reasonable expenses of the highest bidder.

CHAPTER VI
FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT
Section 33
Eligibility
Any qualified person with technical and financial capability to undertake large-scale
exploration, development, and utilization of mineral resources in the Philippines may
enter into a financial or technical assistance agreement directly with the
Government through the Department.
Section 34
Maximum Contract Area
The maximum contract area that may be granted per qualified person, subject to
relinquishment shall be:
a. 1,000 meridional blocks onshore;
b. 4,000 meridional blocks offshore; or
c. Combinations of a and b provided that it shall not exceed the maximum
limits for onshore and offshore areas.
Section 35
Terms and Conditions
The following terms, conditions, and warranties shall be incorporated in the financial
or technical assistance agreement, to wit:
a. A firm commitment in the form of a sworn statement, of an amount
corresponding to the expenditure obligation that will be invested in the
contract area: Provided, That such amount shall be subject to changes as
may be provided for in the rules and regulations of this Act;
b. A financial guarantee bond shall be posted in favor of the Government in
an amount equivalent to the expenditure obligation of the applicant for any
year;
c. Submission of proof of technical competence, such as, but not limited to,
its track record in mineral resource exploration, development, and
utilization; details of technology to be employed in the proposed operation;
and details of technical personnel to undertake the operation;

d. Representations and warranties that the applicant has all the


qualifications and none of the disqualifications for entering into the
agreement;
e. Representations and warranties that the contractor has or has access to
all the financing, managerial and technical expertise and, if circumstances
demand, the technology required to promptly and effectively carry out the
objectives of the agreement with the understanding to timely deploy these
resources under its supervision pursuant to the periodic work programs
and related budgets, when proper, providing an exploration period up to
two (2) years, extendible for another two (2) years but subject to annual
review by the Secretary in accordance with the implementing rules and
regulations of this Act, and further, subject to the relinquishment
obligations;
f. Representations and warranties that, except for payments for
dispositions for its equity, foreign investments in local enterprises which are
qualified for repatriation, and local supplier's credits and such other
generally accepted and permissible financial schemes for raising funds for
valid business purposes, the contractor shall not raise any form of financing
from domestic sources of funds, whether in Philippine or foreign currency,
for conducting its mining operations for and in the contract area;
g. The mining operations shall be conducted in accordance with the
provisions of this Act and its implementing rules and regulations;
h. Work programs and minimum expenditures commitments;
i. Preferential use of local goods and services to the maximum extent
practicable;
j. A stipulation that the contractors are obligated to give preference to
Filipinos in all types of mining employment for which they are qualified and
that technology shall be transferred to the same;
k. Requiring the proponent to effectively use appropriate anti-pollution
technology and facilities to protect the environment and to restore or
rehabilitate mined out areas and other areas affected by mine tailings and
other forms of pollution or destruction;
l. The contractors shall furnish the Government records of geologic,
accounting, and other relevant data for its mining operations, and that
book of accounts and records shall be open for inspection by the
government;
m. Requiring the proponent to dispose of the minerals and byproducts
produced under a financial or technical assistance agreement at the highest
price and more advantageous terms and conditions as provided for under
the rules and regulations of this Act;

n. Provide for consultation and arbitration with respect to the interpretation


and implementation of the terms and conditions of the agreements; and
o. Such other terms and conditions consistent with the Constitution and
with this Act as the Secretary may deem to be for the best interest of the
State and the welfare of the Filipino people.
Section 36
Negotiations
A financial or technical assistance agreement shall be negotiated by the Department
and executed and approved by the President. The President shall notify Congress of
all financial or technical assistance agreements within thirty (30) days from
execution and approval thereof.
Section 37
Filing and Evaluation of Financial or Technical Assistance Agreement
Proposals
All financial or technical assistance agreement proposals shall be filed with the
Bureau after payment of the required processing fees. If the proposal is found to be
sufficient and meritorious in form and substance after evaluation, it shall be
recorded with the appropriate government agency to give the proponent the prior
right to the area covered by such proposal: Provided, That existing mineral
agreements, financial or technical assistance agreements and other mining rights
are not impaired or prejudiced thereby. The Secretary shall recommend its approval
to the President.
Section 38
Term of Financial or Technical Assistance Agreement
A financial or technical assistance agreement shall have a term not exceeding
twenty-five (25) years to start from the execution thereof, renewable for not more
than twenty-five (25) years under such terms and conditions as may be provided by
law.
Section 39
Option to Convert into a Mineral Agreement
The contractor has the option to convert the financial or technical assistance
agreement to a mineral agreement at any time during the term of the agreement, if
the economic viability of the contract area is found to be inadequate to justify largescale mining operations, after proper notice to the Secretary as provided for under
the implementing rules and regulations: Provided, That the mineral agreement shall
only be for the remaining period of the original agreement.
In the case of a foreign contractor, it shall reduce its equity to forty percent (40%)
in the corporation, partnership, association, or cooperative. Upon compliance with
this requirement by the contractor, the Secretary shall approve the conversion and
execute the mineral production-sharing agreement.

Section 40
Assignment/Transfer
A financial or technical assistance agreement may be assigned or transferred, in
whole or in part, to a qualified person subject to the prior approval of the President:
Provided, That the President shall notify Congress of every financial or technical
assistance agreement assigned or converted in accordance with this provision within
thirty (30) days from the date of the approval thereof.
Section 41
Withdrawal from Financial or Technical Assistance Agreement
The contractor shall manifest in writing to the Secretary his intention to withdraw
from the agreement, if in his judgment the mining project is no longer economically
feasible, even after he has exerted reasonable diligence to remedy the cause or the
situation. The Secretary may accept the withdrawal: Provided, That the contractor
has complied or satisfied all his financial, fiscal or legal obligations.

CHAPTER VII
SMALL-SCALE MINING
Section 42
Small-scale Mining
Small-scale mining shall continue to be governed by Republic Act No. 7076 and
other pertinent laws.

CHAPTER VIII
QUARRY RESOURCES
Section 43
Quarry Permit
Any qualified person may apply to the provincial/city mining regulatory board for a
quarry permit on privately-owned lands and/or public lands for building and
construction materials such as marble, basalt, andesite, conglomerate, tuff, adobe,
granite, gabbro, serpentine, inset filling materials, clay for ceramic tiles and building
bricks, pumice, perlite and other similar materials that are extracted by quarrying
from the ground. The provincial governor shall grant the permit after the applicant
has complied with all the requirements as prescribed by the rules and regulations.
The maximum area which a qualified person may hold at any one time shall be five
hectares (5 has.): Provided, That in large-scale quarry operations involving cement

raw materials, marble, granite, sand and gravel and construction aggregates, a
qualified person and the government may enter into a mineral agreement as defined
herein.
A quarry permit shall have a term of five (5) years, renewable for like periods but
not to exceed a total term of twenty-five (25) years. No quarry permit shall be
issued or granted on any area covered by a mineral agreement or financial or
technical assistance agreement.
Section 44
Quarry Fee and Taxes
A permittee shall, during the term of his permit, pay a quarry fee as provided for
under the implementing rules and regulations. The permittee shall also pay the
excise tax as provided by pertinent laws.
Section 45
Cancellation of Quarry Permit
A quarry permit may be cancelled by the provincial governor for violations of the
provisions of this Act or its implementing rules and regulations or the terms and
conditions of said permit: Provided, That before the cancellation of such permit, the
holder thereof shall be given the opportunity to be heard in an investigation
conducted for the purpose.
Section 46
Commercial Sand and Gravel Permit
Any qualified person may be granted a permit by the provincial governor to extract
and remove sand and gravel or other loose or unconsolidated materials which are
used in their natural state, without undergoing processing from an area of not more
than five hectares (5 has.) and in such quantities as may be specified in the permit.
Section 47
Industrial Sand and Gravel Permit
Any qualified person may be granted an industrial sand and gravel permit by the
Bureau for the extraction of sand and gravel and other loose or unconsolidated
materials that necessitate the use of mechanical processing covering an area of
more than five hectares (5 has.) at any one time. The permit shall have a term of
five (5) years, renewable for a like period but not to exceed a total term of twentyfive (25) years.
Section 48
Exclusive Sand and Gravel Permit
Any qualified person may be granted an exclusive sand and gravel permit by the
provincial governor to quarry and utilize sand and gravel or other loose or
unconsolidated materials from public lands for his own use, provided that there will
be no commercial disposition thereof.

A mineral agreement or a financial technical assistance agreement contractor shall,


however, have the right to extract and remove sand and gravel and other loose
unconsolidated materials without need of a permit within the area covered by the
mining agreement for the exclusive use in the mining operations: Provided, That
monthly reports of the quantity of materials extracted therefrom shall be submitted
to the mines regional office concerned: Provided, further, That said right shall be
coterminous with the expiration of the agreement.
Holders of existing mining leases shall likewise have the same rights as that of a
contractor: Provided, That said right shall be coterminous with the expiry dates of
the lease.
Section 49
Government Gratuitous Permit
Any government entity or instrumentality may be granted a gratuitous permit by
the provincial governor to extract sand and gravel, quarry or loose unconsolidated
materials needed in the construction of building and/or infrastructure for public use
or other purposes over an area of not more than two hectares (2 has.) for a period
coterminous with said construction.
Section 50
Private Gratuitous Permit
Any owner of land may be granted a private gratuitous permit by the provincial
governor.
Section 51
Guano Permit
Any qualified person may be granted a guano permit by the provincial governor to
extract and utilize loose unconsolidated guano and other organic fertilizer materials
in any portion of a municipality where he has established domicile. The permit shall
be for specific caves and/or for confined sites with locations verified by the
Department's field officer in accordance with existing rules and regulations.
Section 52
Gemstone Gathering Permit
Any qualified person may be granted a non-exclusive gemstone gathering permit by
the provincial governor to gather loose stones useful as gemstones in rivers and
other locations.

CHAPTER IX
TRANSPORT, SALE AND PROCESSING OF MINERALS

Section 53
Ore Transport Permit
A permit specifying the origin and quantity of non-processed mineral ores or
minerals shall be required for their transport. Transport permits shall be issued by
the mines regional director who has jurisdiction over the area where the ores were
extracted. In the case of mineral ores or minerals being transported from the smallscale mining areas to the custom mills or processing plants, the Provincial Mining
Regulatory Board (PMRB) concerned shall formulate their own policies to govern
such transport of ores produced by small-scale miners. The absence of a permit
shall be considered as prima facie evidence of illegal mining and shall be sufficient
cause for the Government to confiscate the ores or minerals being transported, the
tools and equipment utilized, and the vehicle containing the same. Ore samples not
exceeding two metric tons (2 m.t.) to be used exclusively for assay or pilot test
purposes shall be exempted from such requirement.
Section 54
Mineral Trading Registration
No person shall engage in the trading of mineral products, either locally or
internationally, unless registered with the Department of Trade and Industry and
accredited by the Department, with a copy of said registration submitted to the
Bureau.
Section 55
Minerals Processing Permit
No person shall engage in the processing of minerals without first securing a
minerals processing permit from the Secretary. Minerals processing permit shall be
for a period of five (5) years renewable for like periods but not to exceed a total
term of twenty-five (25) years. In the case of mineral ores or minerals produced by
the small-scale miners, the processing thereof as well as the licensing of their
custom mills, or processing plants shall continue to be governed by the provisions of
Republic Act No. 7076.
Section 56
Eligibility of Foreign-owned/-controlled Corporation
A foreign-owned/-controlled corporation may be granted a mineral processing
permit.

CHAPTER X
DEVELOPMENT OF MINING COMMUNITIES, SCIENCE AND MINING
TECHNOLOGY

Section 57
Expenditure for Community Development and Science and Mining
Technology
A contractor shall assist in the development of its mining community, the promotion
of the general welfare of its inhabitants, and the development of science and mining
technology.
Section 58
Credited Activities
Activities that may be credited as expenditures for development of mining
communities, and science and mining technology are the following:
a. Any activity or expenditure intended to enhance the development of the
mining and neighboring communities of a mining operation other than
those required or provided for under existing laws, or collective bargaining
agreements, and the like; and
b. Any activity or expenditure directed towards the development of
geosciences and mining technology such as, but not limited to, institutional
and manpower development, and basic and applied researches.
Appropriate supervision and control mechanisms shall be prescribed in the
implementing rules and regulations of this Act.
Section 59
Training and Development

and facilities are continuously maintained and utilized by the host and neighboring
communities.
Section 62
Employment of Filipinos
A contractor shall give preference to Filipino citizens in all types of mining
employment within the country insofar as such citizens are qualified to perform the
corresponding work with reasonable efficiency and without hazard to the safety of
the operations. The contractor, however, shall not be hindered from hiring
employees of his own selection, subject to the provisions of Commonwealth Act No.
613, as amended, for technical and specialized work which, in his judgment and
with the approval of the Director, requires highly-specialized training or long
experience in exploration, development or utilization of mineral resources: Provided,
That in no case shall each employment exceed five (5) years or the payback period
as represented in original project study, whichever is longer: Provided, further, That
each foreigner employed as mine manager, vice-president for operations or in an
equivalent managerial position in charge of mining, milling, quarrying or drilling
operation shall:
a. Present evidence of his qualification and work experience; or
b. Shall pass the appropriate government licensure examination; or
c. In special cases, may be permitted to work by the Director for a period
not exceeding one (1) year: Provided, however, That if reciprocal privileges
are extended to Filipino nationals in the country of domicile, the Director
may grant waivers or exemptions.

A contractor shall maintain an effective program of manpower training and


development throughout the term of the mineral agreement and shall encourage
and train Filipinos to participate in all aspects of the mining operations, including the
management thereof. For highly-technical and specialized mining operations, the
contractor may, subject to the necessary government clearances, employ qualified
foreigners.

CHAPTER XI
SAFETY AND ENVIRONMENTAL PROTECTION

Section 60
Use of Indigenous Goods, Services and Technologies

Section 63
Mines Safety and Environmental Protection

A contractor shall give preference to the use of local goods, services and scientific
and technical resources in the mining operations, where the same are of equivalent
quality, and are available on equivalent terms as their imported counterparts.
Section 61
Donations/Turn Over of Facilities
Prior to cessation of mining operations occasioned by abandonment or withdrawal of
operations, on public lands by the contractor, the latter shall have a period of one
(1) year therefrom within which to remove his improvements; otherwise, all the
social infrastructure and facilities shall be turned over or donated tax-free to the
proper government authorities, national or local, to ensure that said infrastructure

All contractors and permittees shall strictly comply with all the mines safety rules
and regulations as may be promulgated by the Secretary concerning the safe and
sanitary upkeep of the mining operations and achieve waste-free and efficient mine
development. Personnel of the Department involved in the implementation of mines
safety, health and environmental rules and regulations shall be covered under
Republic Act No. 7305.
Section 64
Mine Labor

No person under sixteen (16) years of age shall be employed in any phase of mining
operations and no person under eighteen (18) years of age shall be employed
underground in a mine.
Section 65
Mine Supervision
All mining and quarrying operations that employ more than fifty (50) workers shall
have at least one (1) licensed mining engineer with at least five (5) years of
experience in mining operations, and one (1) registered foreman.
Section 66
Mine Inspection
The regional director shall have exclusive jurisdiction over the safety inspection of
all installations, surface or underground, in mining operations at reasonable hours of
the day or night and as much as possible in a manner that will not impede or
obstruct work in progress of a contractor or permittee.
Section 67
Power to Issue Orders
The mines regional director shall, in consultation with the Environmental
Management Bureau, forthwith or within such time as specified in his order, require
the contractor to remedy any practice connected with mining or quarrying
operations, which is not in accordance with safety and anti-pollution laws and
regulations. In case of imminent danger to life or property, the mines regional
director may summarily suspend the mining or quarrying operations until the
danger is removed, or appropriate measures are taken by the contractor or
permittee.

and tailings covered areas, aquaculture, watershed development and water


conservation; and socioeconomic development.
Section 70
Environmental Impact Assessment (EIA)
Except during the exploration period of a mineral agreement or financial or technical
assistance agreement or an exploration permit, an environmental clearance
certificate shall be required based on an environmental impact assessment and
procedures under the Philippine Environmental Impact Assessment System including
Sections 26 and 27 of the Local Government Code of 1991 which require national
government agencies to maintain ecological balance, and prior consultation with the
local government units, non-governmental and people's organizations and other
concerned sectors of the community: Provided, That a completed ecological profile
of the proposed mining area shall also constitute part of the environmental impact
assessment. People's organizations and non-governmental organizations shall be
allowed and encouraged to participate in ensuring that contractors/permittees shall
observe all the requirements of environmental protection.
Section 71
Rehabilitation
Contractors and permittees shall technically and biologically rehabilitate the
excavated, mined-out, tailings covered and disturbed areas to the condition of
environmental safety, as may be provided in the implementing rules and regulations
of this Act. A mine rehabilitation fund shall be created, based on the contractor's
approved work program, and shall be deposited as a trust fund in a government
depository bank and used for physical and social rehabilitation of areas and
communities affected by mining activities and for research on the social, technical
and preventive aspects of rehabilitation. Failure to fulfill the above obligation shall
mean immediate suspension or closure of the mining activities of the
contractor/permittee concerned.

Section 68
Report of Accidents
In case of any incident or accident, causing or creating the danger of loss of life or
serious physical injuries, the person in charge of operations shall immediately report
the same to the regional office where the operations are situated. Failure to report
the same without justifiable reason shall be a cause for the imposition of
administrative sanctions prescribed in the rules and regulations implementing this
Act.
Section 69
Environmental Protection
Every contractor shall undertake an environmental protection and enhancement
program covering the period of the mineral agreement or permit. Such
environmental program shall be incorporated in the work program which the
contractor or permittee shall submit as an accompanying document to the
application for a mineral agreement or permit. The work program shall include not
only plans relative to mining operations but also to rehabilitation, regeneration,
revegetation and reforestation of mineralized areas, slope stabilization of mined-out

CHAPTER XII
AUXILIARY MINING RIGHTS
Section 72
Timber Rights
Any provision of law to the contrary notwithstanding, a contractor may be granted a
right to cut trees or timber within his mining area as may be necessary for his
mining operations subject to forestry laws, rules and regulations: Provided, That if
the land covered by the mining area is already covered by existing timber
concessions, the volume of timber needed and the manner of cutting and removal
thereof shall be determined by the mines regional director, upon consultation with
the contractor, the timber concessionaire/permittee and the Forest Management
Bureau of the Department: Provided, further, That in case of disagreement between
the contractor and the timber concessionaire, the matter shall be submitted to the

Secretary whose decision shall be final. The contractor shall perform reforestation
work within his mining area in accordance with forestry laws, rules and regulations.
Section 73
Water Rights

CHAPTER XIII
SETTLEMENT OF CONFLICTS

A contractor shall have water rights for mining operations upon approval of
application with the appropriate government agency in accordance with existing
water laws, rules and regulations promulgated thereunder: Provided, That water
rights already granted or vested through long use, recognized and acknowledged by
local customs, laws, and decisions of courts shall not thereby be impaired: Provided,
further, That the Government reserves the right to regulate water rights and the
reasonable and equitable distribution of water supply so as to prevent the monopoly
of the use thereof.

Section 77
Panel of Arbitrators

Section 74
Right to Possess Explosives
A contractor/exploration permittee shall have the right to possess and use
explosives within his contract/permit area as may be necessary for his mining
operations upon approval of application with the appropriate government agency in
accordance with existing laws, rules and regulations promulgated thereunder:
Provided, That the Government reserves the right to regulate and control the
explosive accessories to ensure safe mining operations.

There shall be a panel of arbitrators in the regional office of the Department


composed of three (3) members, two (2) of whom must be members of the
Philippine Bar in good standing and one a licensed mining engineer or a professional
in a related field, and duly designated by the Secretary as recommended by the
Mines and Geosciences Bureau Director. Those designated as members of the panel
shall serve as such in addition to their work in the Department without receiving any
additional compensation As much as practicable, said members shall come from the
different bureaus of the Department in the region. The presiding officer thereof shall
be selected by the drawing of lots. His tenure as presiding officer shall be on a
yearly basis. The members of the panel shall perform their duties and obligations in
hearing and deciding cases until their designation is withdrawn or revoked by the
Secretary. Within thirty (30) working days, after the submission of the case by the
parties for decision, the panel shall have exclusive and original jurisdiction to hear
and decide on the following:
a. Disputes involving rights to mining areas;

Section 75
Easement Rights
When mining areas are so situated that for purposes of more convenient mining
operations it is necessary to build, construct or install on the mining areas or lands
owned, occupied or leased by other persons, such infrastructure as roads, railroads,
mills, waste dump sites, tailings ponds, warehouses, staging or storage areas and
port facilities, tramways, runways, airports, electric transmission, telephone or
telegraph lines, dams and their normal flood and catchment areas, sites for water
wells, ditches, canals, new river beds, pipelines, flumes, cuts, shafts, tunnels, or
mills, the contractor, upon payment of just compensation, shall be entitled to enter
and occupy said mining areas or lands.
Section 76
Entry into Private Lands and Concession Areas
Subject to prior notification, holders of mining rights shall not be prevented from
entry into private lands and concession areas by surface owners, occupants, or
concessionaires when conducting mining operations therein: Provided, That any
damage done to the property of the surface owner, occupant, or concessionaire as a
consequence of such operations shall be properly compensated as may be provided
for in the implementing rules and regulations: Provided, further, That to guarantee
such compensation, the person authorized to conduct mining operation shall, prior
thereto, post a bond with the regional director based on the type of properties, the
prevailing prices in and around the area where the mining operations are to be
conducted, with surety or sureties satisfactory to the regional director.

b. Disputes involving mineral agreements or permits;


c. Disputes involving surface owners, occupants and
claimholders/concessionaires; and
d. Disputes pending before the Bureau and the Department at the date of
the effectivity of this Act.
Section 78
Appellate Jurisdiction
The decision or order of the panel of arbitrators may be appealed by the party not
satisfied thereto to the Mines Adjudication Board within fifteen (15) days from
receipt thereof which must decide the case within thirty (30) days from submission
thereof for decision.
Section 79
Mines Adjudication Board
The Mines Adjudication Board shall be composed of three (3) members. The
Secretary shall be the chairman with the Director of the Mines and Geosciences
Bureau and the Undersecretary for Operations of the Department as members
thereof. The Board shall have the following powers and functions:

a. To promulgate rules and regulations governing the hearing and


disposition of cases before it, as well as those pertaining to its internal
functions, and such rules and regulations as may be necessary to carry out
its functions;
b. To administer oaths, summon the parties to a controversy, issue
subpoenas requiring the attendance and testimony of witnesses or the
production of such books, papers, contracts, records, statement of
accounts, agreements, and other documents as may be material to a just
determination of the matter under investigation, and to testify in any
investigation or hearing conducted in pursuance of this Act;
c. To conduct hearings on all matters within its jurisdiction, proceed to hear
and determine the disputes in the absence of any party thereto who has
been summoned or served with notice to appear, conduct its proceedings
or any part thereof in public or in private, adjourn its hearings at any time
and place, refer technical matters or accounts to an expert and to accept
his report as evidence after hearing of the parties upon due notice, direct
parties to be joined in or excluded from the proceedings, correct, amend,
or waive any error, defect or irregularity, whether in substance or in form,
give all such directions as it may deem necessary or expedient in the
determination of the dispute before it, and dismiss the mining dispute as
part thereof, where it is trivial or where further proceedings by the Board
are not necessary or desirable:
1. To hold any person in contempt, directly or indirectly, and
impose appropriate penalties therefor; and
2. To enjoin any or all acts involving or arising from any case
pending before it which, if not restrained forthwith, may cause
grave or irreparable damage to any of the parties to the case or
seriously affect social and economic stability.
In any proceeding before the Board, the rules of evidence prevailing in courts of law
or equity shall not be controlling and it is the spirit and intention of this Act that
shall govern. The Board shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard to technicalities of
law or procedure, all in the interest of due process. In any proceeding before the
Board, the parties may be represented by legal counsel. The findings of fact of the
Board shall be conclusive and binding on the parties and its decision or order shall
be final and executory.
A petition for review by certiorari and question of law may be filed by the aggrieved
party with the Supreme Court within thirty (30) days from receipt of the order or
decision of the Board.

CHAPTER XIV
GOVERNMENT SHARE

Section 80
Government Share in Mineral Production Sharing Agreement
The total government share in a mineral production sharing agreement shall be the
excise tax on mineral products as provided in Republic Act No. 7729, amending
Section 151(a) of the National Internal Revenue Code, as amended.
Section 81
Government Share in Other Mineral Agreements
The share of the Government in co-production and joint-venture agreements shall
be negotiated by the Government and the contractor taking into consideration the:
a. capital investment of the project;
b. risks involved;
c. contribution of the project to the economy; and
d. other factors that will provide for a fair and equitable sharing between
the Government and the contractor.
The Government shall also be entitled to compensations for its other contributions
which shall be agreed upon by the parties, and shall consist, among other things,
the contractor's income tax, excise tax, special allowance, withholding tax due from
the contractor's foreign stockholders arising from dividend or interest payments to
the said foreign stockholders, in case of a foreign national, and all such other taxes,
duties and fees as provided for under existing laws.
The Government share in financial or technical assistance agreement shall consist
of, among other things, the contractor's corporate income tax, excise tax, special
allowance, withholding tax due from the contractor's foreign stockholders arising
from dividend or interest payments to the said foreign stockholder in case of a
foreign national and all such other taxes, duties and fees as provided for under
existing laws.
The collection of Government share in financial or technical assistance agreement
shall commence after the financial or technical assistance agreement contractor has
fully recovered its pre-operating expenses, exploration, and development
expenditures, inclusive.
Section 82
Allocation of Government Share
The Government share as referred to in the preceding sections shall be shared and
allocated in accordance with Sections 290 and 292 of Republic Act No. 7160
otherwise known as the Local Government Code of 1991. In case the development
and utilization of mineral resources is undertaken by a government-owned or
-controlled corporation, the sharing and allocation shall be in accordance with
Sections 291 and 292 of the said Code.

There shall be collected from any holder of a mineral agreement, financial or


technical assistance agreement or exploration permit on public or private lands, an
annual occupation fee in accordance with the following schedule:
CHAPTER XV
TAXES AND FEES
Section 83
Income Taxes
After the lapse of the income tax holiday as provided for in the Omnibus
Investments Code, the contractor shall be liable to pay income tax as provided in
the National Internal Revenue Code, as amended.
Section 84
Excise Tax on Mineral Products
The contractor shall be liable to pay the excise tax on mineral products as provided
for under Section 151 of the National Internal Revenue Code: Provided, however,
That with respect to a mineral production sharing agreement, the excise tax on
mineral products shall be the government share under said agreement.
Section 85
Mine Wastes and Tailings Fees
A semi-annual fee to be known as mine wastes and tailings fee is hereby imposed
on all operating mining companies in accordance with the implementing rules and
regulations. The mine wastes and tailings fee shall accrue to a reserve fund to be
used exclusively for payment for damages to:
a. Lives and personal safety;
b. Lands, agricultural crops and forest products, marine life and aquatic
resources, cultural resources; and
c. Infrastructure and the revegetation and rehabilitation of silted farm
lands and other areas devoted to agriculture and fishing caused by mining
pollution.
This is in addition to the suspension or closure of the activities of the contractor at
any time and the penal sanctions imposed upon the same.

a. For exploration permit - Five pesos (P5.00) per hectare or fraction


thereof per annum;
b. For mineral agreements and financial or technical assistance agreements
- Fifty pesos (P50.00) per hectare or fraction thereof per annum; and
c. For mineral reservation - One hundred pesos (P100.00) per hectare or
fraction thereof per annum.
The Secretary is authorized to increase the occupation fees provided herein when
the public interest so requires, upon recommendation of the Bureau Director.
Section 87
Manner of Payment of Fees
The fees shall be paid on the date the mining agreement is registered with the
appropriate office and on the same date every year thereafter. It shall be paid to the
treasurer of the municipality or city where the onshore mining areas are located, or
to the Director in case of offshore mining areas. For this purpose, the appropriate
officer shall submit to the treasurer of the municipality or city where the onshore
mining area is located, a complete list of all onshore mining rights registered with
his office, indicating therein the names of the holders, area in hectares, location,
and date registered. If the fee is not paid on the date specified, it shall be increased
by twenty-five per centum (25%).
Section 88
Allocation of Occupation Fees
Thirty per centum (30%) of all occupational fees collected from holders of mining
rights in onshore mining areas shall accrue to the province and seventy per centum
(70%) to the municipality in which the onshore mining areas are located. In a
chartered city, the full amount shall accrue to the city concerned.
Section 89
Filing Fees and Other Charges
The Secretary is authorized to charge reasonable filing fees and other charges as he
may prescribe in accordance with the implementing rules and regulations.

The Secretary is authorized to increase mine wastes and tailings fees, when public
interest so requires, upon the recommendation of the Director.
Section 86
Occupation Fees

CHAPTER XVI
INCENTIVES

Section 90
Incentives
The contractors in mineral agreements, and financial or technical assistance
agreements shall be entitled to the applicable fiscal and non-fiscal incentives as
provided for under Executive Order No. 226, otherwise known as the Omnibus
Investments Code of 1987. Provided, That holders of exploration permits may
register with the Board of Investments and be entitled to the fiscal incentives
granted under the said Code for the duration of the permits or extensions thereof:
Provided, further, That mining activities shall always be included in the investment
priorities plan.
Section 91
Incentives for Pollution Control Devices
Pollution control devices acquired, constructed or installed by contractors shall not
be considered as improvements on the land or building where they are placed, and
shall not be subject to real property and other taxes or assessments: Provided,
however, That payment of mine wastes and tailings fees is not exempted.
Section 92
Income Tax-Carry Forward of Losses
A net operating loss without the benefit of incentives incurred in any of the first ten
(10) years of operations may be carried over as a deduction from taxable income
for the next five (5) years immediately following the year of such loss. The entire
amount of the loss shall be carried over to the first of the five (5) taxable years
following the loss, and any portion of such loss which exceeds the taxable income of
such first year shall be deducted in like manner from the taxable income of the next
remaining four (4) years.
Section 93
Income Tax-Accelerated Depreciation
Fixed assets may be depreciated as follows:
a. To the extent of not more than twice as fast as the normal rate of
depreciation or depreciated at normal rate of depreciation if the expected
life is ten (10) years or less; or
b. Depreciated over any number of years between five (5) years and the
expected life if the latter is more than ten (10) years, and the depreciation
thereon allowed as deduction from taxable income: Provided, That the
contractor notifies the Bureau of Internal Revenue at the beginning of the
depreciation period which depreciation rate allowed by this section will be
used.
In computing for taxable income, unless otherwise provided in this Act, the
contractor may, at his option, deduct exploration and development expenditures
accumulated at cost as of the date of the prospecting or exploration and
development expenditures paid or incurred during the taxable year: Provided, That

the total amount deductible for exploration and development expenditures shall not
exceed twenty-five per centum (25%) of the net income from mining operations.
The actual exploration and development expenditures minus the twenty-five per
centum (25%) net income from mining shall be carried forward to the succeeding
years until fully deducted.
Net income from mining operation is defined as gross income from operations less
allowable deductions which are necessary or related to mining operations. Allowable
deductions shall include mining, milling and marketing expenses, depreciation of
properties directly used in the mining operations. This paragraph shall not apply to
expenditures for the acquisition or improvement of property of a character which is
subject to the allowances for depreciation.
Section 94
Investment Guarantees
The contractor shall be entitled to the basic rights and guarantees provided in the
Constitution and such other rights recognized by the government as enumerated
hereunder:
a. Repatriation of investments. The right to repatriate the entire proceeds
of the liquidation of the foreign investment in the currency in which the
investment was originally made and at the exchange rate prevailing at the
time of repatriation.
b. Remittance of earnings. The right to remit earnings from the investment
in the currency in which the foreign investment was originally made and at
the exchange rate prevailing at the time of remittance.
c. Foreign loans and contracts. The right to remit at the exchange rate
prevailing at the time of remittance such sums as may be necessary to
meet the payments of interest and principal on foreign loans and foreign
obligations arising from financial or technical assistance contracts.
d. Freedom from expropriation. The right to be free from expropriation by
the Government of the property represented by investments or loans, or of
the property of the enterprise except for public use or in the interest of
national welfare or defense and upon payment of just compensation. In
such cases, foreign investors or enterprises shall have the right to remit
sums received as compensation for the expropriated property in the
currency in which the investment was originally made and at the exchange
rate prevailing at the time of remittance.
e. Requisition of investment. The right to be free from requisition of the
property represented by the investment or of the property of the
enterprises except in case of war or national emergency and only for the
duration thereof. Just compensation shall be determined and paid either at
the time or immediately after cessation of the state of war or national
emergency. Payments received as compensation for the requisitioned
property may be remitted in the currency in which the investments were

originally made and at the exchange rate prevailing at the time of


remittance.
f. Confidentiality. Any confidential information supplied by the contractor
pursuant to this Act and its implementing rules and regulations shall be
treated as such by the Department and the Government, and during the
term of the project to which it relates.

CHAPTER XVII
GROUND FOR CANCELLATION, REVOCATION, AND TERMINATION
Section 95
Late or Non-filing of Requirements

the revocation and termination of the exploration permit, mining agreement and
financial or technical assistance agreement.

CHAPTER XVIII
ORGANIZATIONAL AND INSTITUTIONAL ARRANGEMENTS
Section 100
From Staff Bureau to Line Bureau
The Mines and Geosciences Bureau is hereby transformed into a line bureau
consistent with Section 9 of this Act: Provided, That under the Mines and
Geosciences Bureau shall be the necessary mines regional, district and other
pertinent offices - the number and specific functions of which shall be provided in
the implementing rules and regulations of this Act.

Failure of the permittee or contractor to comply with any of the requirements


provided in this Act or in its implementing rules and regulations, without a valid
reason, shall be sufficient ground for the suspension of any permit or agreement
provided under this Act.
Section 96
Violation of the Terms and Conditions of Permits or Agreements
Violation of the terms and conditions of the permits or agreements shall be a
sufficient ground for cancellation of the same.
Section 97
Non-Payment of Taxes and Fees
Failure to pay the taxes and fees due the Government for two (2) consecutive years
shall cause the cancellation of the exploration permit, mineral agreement, financial
or technical assistance agreement and other agreements and the re-opening of the
area subject thereof to new applicants.
Section 98
Suspension or Cancellation of Tar Incentives and Credits
Failure to abide by the terms and conditions of tax incentive and credits shall cause
the suspension or cancellation of said incentives and credits.
Section 99
Falsehood or Omission of Facts in the Statement
All statements made in the exploration permit, mining agreement and financial or
technical assistance agreement shall be considered as conditions and essential parts
thereof and any falsehood in said statements or omission of facts therein which may
alter, change or affect substantially the facts set forth in said statements may cause

CHAPTER XIX
PENAL PROVISIONS
Section 101
False Statements
Any person who knowingly presents any false application, declaration, or evidence
to the Government or publishes or causes to be published any prospectus or other
information containing any false statement relating to mines, mining operations or
mineral agreements, financial or technical assistance agreements and permits shall,
upon conviction, be penalized by a fine of not exceeding Ten thousand pesos
(P10,000.00).
Section 102
Illegal Exploration
Any person undertaking exploration work without the necessary exploration permit
shall, upon conviction, be penalized by a fine of not exceeding Fifty thousand pesos
(P50,000.00).
Section 103
Theft of Minerals
Any person extracting minerals and disposing the same without a mining
agreement, lease, permit, license, or steals minerals or ores or the products thereof
from mines or mills or processing plants shall, upon conviction, be imprisoned from
six (6) months to six (6) years or pay a fine from Ten thousand pesos (P10,000.00)
to Twenty thousand pesos (P20,000.00) or both, at the discretion of the appropriate

court. In addition, he shall be liable to pay damages and compensation for the
minerals removed, extracted, and disposed of. In the case of associations,
partnerships, or corporations, the president and each of the directors thereof shall
be responsible for the acts committed by such association, corporation, or
partnership.
Section 104
Destruction of Mining Structures
Any person who willfully destroys or damages structures in or on the mining area or
on the mill sites shall, upon conviction, be imprisoned for a period not to exceed five
(5) years and shall, in addition, pay compensation for the damages which may have
been caused thereby.
Section 105
Mines Arson
Any person who willfully sets fire to any mineral stockpile, mine or workings, fittings
or a mine, shall be guilty of arson and shall be punished, upon conviction, by the
appropriate court in accordance with the provisions of the Revised Penal Code and
shall, in addition, pay compensation for the damages caused hereby.
Section 106
Willful Damage to a Mine
Any person who willfully damages a mine, unlawfully causes water to run into a
mine, or obstructs any shaft or passage to a mine, or renders useless, damages or
destroys any machine, appliance, apparatus, rope, chain, tackle, or any other things
used in a mine, shall be punished, upon conviction, by the appropriate court, by
imprisonment not exceeding a period of five (5) years and shall, in addition, pay
compensation for the damages caused thereby.
Section 107
Illegal Obstruction to Permittees or Contractors
Any person who, without justifiable cause, prevents or obstructs the holder of any
permit, agreement or lease from undertaking his mining operations shall be
punished, upon conviction by the appropriate court, by a fine not exceeding Five
thousand pesos (P5,000.00) or imprisonment not exceeding one (1) year, or both,
at the discretion of the court.
Section 108
Violation of the Terms and Conditions of the Environmental Compliance
Certificate
Any person who willfully violates or grossly neglects to abide by the terms and
conditions of the environmental compliance certificate issued to said person and
which causes environmental damage through pollution shall suffer the penalty of
imprisonment of six (6) months to six (6) years or a fine of Fifty thousand pesos
(P50,000.00) to Two hundred thousand pesos (P200,000.00), or both, at the
discretion of the court.

Section 109
Illegal Obstruction to Government Officials
Any person who illegally prevents or obstructs the Secretary, the Director or any of
their representatives in the performance of their duties under the provisions of this
Act and of the regulations promulgated hereunder shall be punished upon
conviction, by the appropriate court, by a fine not exceeding Five thousand pesos
(P5,000.00) or by imprisonment not exceeding one (1) year, or both, at the
discretion of the court.
Section 110
Other Violations
Any other violation of this Act and its implementing rules and regulations shall
constitute an offense punishable with a fine not exceeding Five thousand pesos
(P5,000.00).
Section 111
Fines
The Secretary is authorized to charge fines for late or non-submission of reports in
accordance with the implementing rules and regulations of this Act.

CHAPTER XX
TRANSITORY AND MISCELLANEOUS PROVISIONS
Section 112
Non-Impairment of Existing Mining/Quarrying Rights
All valid and existing mining lease contracts, permits/licenses, leases pending
renewal, mineral production-sharing agreements granted under Executive Order No.
279, at the date of effectivity of this Act, shall remain valid, shall not be impaired,
and shall be recognized by the Government: Provided, That the provisions of
Chapter XIV on government share in mineral production-sharing agreement and of
Chapter XVI on incentives of this Act shall immediately govern and apply to a
mining lessee or contractor unless the mining lessee or contractor indicates his
intention to the secretary, in writing, not to avail of said provisions: Provided,
further, That no renewal of mining lease contracts shall be made after the expiration
of its term: Provided, finally, That such leases, production-sharing agreements,
financial or technical assistance agreements shall comply with the applicable
provisions of this Act and its implementing rules and regulations.
Section 113
Recognition of Valid and Existing Mining Claims and Lease/Quarry
Applications

Holders of valid and existing mining claims, lease/quarry applications shall be given
preferential rights to enter into any mode of mineral agreement with the
government within two (2) years from the promulgation of the rules and regulations
implementing this Act.
Section 114
Separability Clause
If any of the provision of this Act is held or declared to be unconstitutional or invalid
by a competent court, the other provisions hereof shall continue to be in force as if
the provision so annulled or voided had never been incorporated in this Act.
Section 115
Repealing and Amending Clause
All laws, executive orders, presidential decrees, rules and regulations or parts
thereof which are inconsistent with any of the provisions of this Act are hereby
repealed or amended accordingly.
Section 116
Effectivity Clause
This Act shall take effect thirty (30) days following its complete publication in two
(2) newspapers of general circulation in the Philippines.
Peoples Small-Scale Mining Act of 1991
Republic of the Philippines
Congress of the Philippines
Metro Manila

Section 2. Declaration of Policy. It is hereby declared of the State to promote,


develop, protect and rationalize viable small-scale mining activities in order to
generate more employment opportunities and provide an equitable sharing of the
nation's wealth and natural resources, giving due regard to existing rights as herein
provided.
Section 3. Definitions. For purposes of this Act, the following terms shall be
defined as follows:
(a) "Mineralized areas" refer to areas with naturally occurring mineral
deposits of gold, silver, chromite, kaolin, silica, marble, gravel, clay and like
mineral resources;
(b) "Small-scale mining" refers to mining activities which rely heavily on
manual labor using simple implement and methods and do not use
explosives or heavy mining equipment;
(c) "Small-scale miners" refer to Filipino citizens who, individually or in the
company of other Filipino citizens, voluntarily form a cooperative duly
licensed by the Department of Environment and Natural Resources to
engage, under the terms and conditions of a contract, in the extraction or
removal of minerals or ore-bearing materials from the ground;
(d) "Small-scale mining contract" refers to co-production, joint venture or
mineral production sharing agreement between the State and a small-scale
mining contractor for the small-scale utilization of a plot of mineral land;
(e) "Small-scale mining contractor" refers to an individual or a cooperative
of small-scale miners, registered with the Securities and Exchange
Commission or other appropriate government agency, which has entered
into an agreement with the State for the small-scale utilization of a plot of
mineral land within a people's small-scale mining area;

Eighth Congress

Republic Act No. 7076

June 27, 1991

AN ACT CREATING A PEOPLE'S SMALL-SCALE MINING PROGRAM AND FOR


OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled::
Section 1. Title. This Act shall be known as the "People's Small-scale Mining
Act of 1991."

(f) "Active mining area" refers to areas under actual exploration,


development, exploitation or commercial production as determined by the
Secretary after the necessary field investigation or verification including
contiguous and geologically related areas belonging to the same
claimowner and/or under contract with an operator, but in no case to
exceed the maximum area allowed by law;
(g) "Existing mining right" refers to perfected and subsisting claim, lease,
license or permit covering a mineralized area prior to its declaration as a
people's small-scale mining area;
(h) "Claimowner" refers to a holder of an existing mining right;
(i) "Processor" refers to a person issued a license to engage in the
treatment of minerals or ore-bearing materials such as by gravity
concentration, leaching benefication, cyanidation, cutting, sizing, polishing
and other similar activities;

(j) "License" refers to the privilege granted to a person to legitimately


pursue his occupation as a small-scale miner or processor under this Act;
(k) "Mining plan" refers to a two-year program of activities and
methodologies employed in the extraction and production of minerals or
ore-bearing materials, including the financial plan and other resources in
support thereof;
(l) "Director" refers to the regional executive director of the Department of
Environment and Natural Resources; and
(m) "Secretary" refers to the Secretary of the Department of Environment
and Natural Resources.
Section 4. People's Small-scale Mining Program. For the purpose of carrying
out the declared policy provided in Section 2 hereof, there is hereby established a
People's Small-scale Mining Program to be implemented by the Secretary of the
Department of Environment and Natural Resources, hereinafter called the
Department, in coordination with other concerned government agencies, designed
to achieve an orderly, systematic and rational scheme for the small-scale
development and utilization of mineral resources in certain mineral areas in order to
address the social, economic, technical, and environmental connected with smallscale mining activities.
The People's Small-scale Mining Program shall include the following features:
(a) The identification, segregation and reservation of certain mineral lands
as people's small-scale mining areas;
(b) The recognition of prior existing rights and productivity;
(c) The encouragement of the formation of cooperatives;
(d) The extension of technical and financial assistance, and other social
services;
(e) The extension of assistance in processing and marketing;
(f) The generation of ancillary livelihood activities;
(g) The regulation of the small-scale mining industry with the view to
encourage growth and productivity; and
(h) The efficient collection of government revenue.
Section 5. Declaration of People's Small-scale Mining Areas. The Board is
hereby authorized to declare and set aside people's small-scale mining areas in sites
onshore suitable for small-scale mining, subject to review by the Secretary,
immediately giving priority to areas already occupied and actively mined by small-

scale miners before August 1, 1987: provided, that such areas are not considered
as active mining areas: provided, further, that the minerals found therein are
technically and commercially suitable for small-scale mining activities: provided,
finally, that the areas are not covered by existing forest rights or reservations and
have not been declared as tourist or marine reserved, parks and wildlife
reservations, unless their status as such is withdrawn by competent authority.
Section 6. Future People's Small-scale Mining Areas. The following lands,
when suitable for small-scale mining, may be declared by the Board as people's
small scale mining areas:
(a) Public lands not subject to any existing right;
(b) Public lands covered by existing mining rights which are not active
mining areas; and
(c) Private lands, subject to certain rights and conditions, except those with
substantial improvements or in bona fide and regular use as a yard,
stockyard, garden, plant nursery, plantation, cemetery or burial site, or
land situated within one hundred meters (100 m.) from such cemetery or
burial site, water reservoir or a separate parcel of land with an area of ten
thousand square meters (10,000 sq. m.) or less.
Section 7. Ancestral Lands. No ancestral land may be declared as a people's
small-scale mining area without the prior consent of the cultural communities
concerned: provided, that, if ancestral lands are declared as people's small-scale
mining areas, the members of the cultural communities therein shall be given
priority in the awarding of small-scale mining contracts.
Section 8. Registration of Small-scale Miners. All persons undertaking smallscale mining activities shall register as miners with the Board and may organize
themselves into cooperatives in order to qualify for the awarding of a people's
small-scale mining contract.
Section 9. Award of People's Small-scale Mining Contracts. A people's
small-scale mining contract may be awarded by the Board to small-scale miners
who have voluntarily organized and have duly registered with the appropriate
government agency as an individual miner or cooperative; Provided, that only one
(1) people's small-scale mining contract may be awarded at any one time to a
small-scale mining operations within one (1) year from the date of award: provided,
further, that priority shall be given or city where the small-scale mining area is
located.
Applications for a contract shall be subject to a reasonable fee to be paid to the
Department of Environment and Natural Resources regional office having jurisdiction
over the area.
Section 10. Extent of Contract Area. The Board shall determine the reasonable
size and shape of the contract area following the meridional block system
established under Presidential Decree No. 463, as amended, otherwise known as
the Mineral Resources Development Decree of 1974, but in no case shall the area

exceed twenty hectares (20 has.) per contractor and the depth or length of the
tunnel or adit not exceeding that recommended by the director taking into account
the following circumstances:
(a) Size of membership and capitalization of the cooperative;
(b) Size of mineralized area;

(e) Comply with pertinent rules and regulations on environmental


protection and conservation, particularly those on tree-cutting mineralprocessing and pollution control;
(f) File under oath at the end of each month a detailed production and
financial report to the Board; and
(g) Assume responsibility for the safety of persons working in the mines.

(c) Quantity of mineral deposits;


(d) Safety of miners;
(e) Environmental impact and other considerations; and

Section 14. Rights of Claimowners. In case a site declared and set aside as a
people's-scale mining area is covered by an existing mining right, the claimowner
and the small-scale miners therein are encouraged to enter into a voluntary and
acceptable contractual agreement with respect to the small-scale utilization of the
mineral values from the area under claim. In case of disagreement, the claimowner
shall be entitled to the following rights and privileges:

(f) Other related circumstances.


Section 11. Easement Rights. Upon the declaration of a people's small-scale
mining area, the director, in consultation with the operator, claimowner, landowner
or lessor of an affected area, shall determine the right of the small scale miners to
existing facilities such as mining and logging roads, private roads, port and
communication facilities, processing plants which are necessary for the effective
implementation of the People's Small-scale Mining Program, subject to payment of
reasonable fees to the operator, claimowner, landowner or lessor.
Section 12. Rights Under a People's Small-scale Mining Contract. A
people's small-scale mining contract entitles the small-scale mining contractor to
the right to mine, extract and dispose of mineral ores for commercial purposes. In
no case shall a small-scale mining contract be subcontracted, assigned or otherwise
transferred.
Section 13. Terms and Conditions of the Contract. A contract shall have a
term of two (2) years, renewable subject to verification by the Board for like periods
as long as the contractor complies with the provisions set forth in this Act, and
confers upon the contractor the right to mine within the contract area: provided,
that the holder of a small-scale mining contract shall have the following duties and
obligations:
(a) Undertake mining activities only in accordance with a mining plan duly
approved by the Board;
(b) Abide by the Mines and Geosciences Bureau and the small-scale Mining
Safety Rules and Regulations;
(c) Comply with his obligations to the holder of an existing mining right;
(d) Pay all taxes, royalties or government production share as are now or
may hereafter be provided by law;

(a) Exemption from the performance of annual work obligations and


payment of occupation fees, rental, and real property taxes;
(b) Subject to the approval of the Board, free access to the contract area
to conduct metallurgical tests, explorations and other activities, provided
such activities do not unduly interfere with the operations of the smallscale miners; and
(c) Royalty equivalent to one and one half percent (1 1/2%) of the gross
value of the metallic mineral output or one percent (1%) of the gross value
of the nonmetallic mineral output to be paid to the claimowner: provided,
that such rights and privileges shall be available only if he is not delinquent
and other performance of his annual work obligations and other
requirements for the last two (2) years prior to the effectivity of this Act.
Section 15. Rights of Private Landowners. The private landowner or lawful
possessor shall be notified of any plan or petition to declare his land as a people's
small-scale mining area. Said landowner may oppose such plan or petition in an
appropriate proceeding and hearing conducted before the Board.
If a private land is declared as a people's small-scale mining area, the owner and
the small-scale mining contractors are encouraged to enter into a voluntary and
acceptable contractual agreement for the small-scale utilization of the mineral
values from the private land: provided, that the owner shall in all cases be entitled
to the payment of actual damages which he may suffer as a result of such
declaration: provided, further, that royalties paid to the owner shall in no case
exceed one percent (1%) of the gross value of the minerals recovered as royalty.
Section 16. Ownership of Milllings. The small-scale mining contractor shall be
the owner of all milllings produced from the contract area. He may sell thelings or
have them processed in any custom mill in the area: provided, that, if the smallscale mining contractor decide to sell its milllings, the claimowner shall have a
preemptive right to purchase said milllings at the prevailing market price.

Section 17. Sale of Gold. All gold produced by small-scale miners in any mineral
area shall be sold to the Central Bank, or its duly authorized representatives, which
shall buy it at prices competitive with those prevailing in the world market
regardless of volume or weight.
The Central Bank shall establish as many buying stations in gold-rush areas to fully
service the requirements of the small-scale minerals thereat.
Section 18. Custom Mills. The establishment and operation of safe and efficient
customs mills to process minerals or ore-bearing materials shall be limited to
mineral processing zones duly designated by the local government unit concerned
upon recommendation of the Board.
In mining areas where the private sector is unable to establish custom mills, the
Government shall construct such custom mills upon the recommendation of the
Board based on the viability of the project.
The Board shall issue licenses for the operation of custom mills and other processing
plants subject to pollution control and safety standards.

Section 22. Reversion of People's Small-scale Mining Areas. The Secretary,


upon recommendation of the director, shall withdraw the status of the people's
small-scale mining area when it can no longer feasibly operated on a small-scale
mining basis or when the safety, health and environmental conditions warrant that
the same shall revert to the State for proper disposition.
Section 23. Actual Occupation by Small-scale Miners. Small-scale miners
who have been in actual operation of mineral lands on or before August 1, 1987 as
determined by the Board shall not be dispossessed, ejected or removed from said
areas: provided, that they comply with the provisions of this Act.
Section 24. Provincial/City Mining Regulatory Board. There is hereby
created under the direct supervision and control of the Secretary a provincial/city
mining regulatory board, herein called the Board, which shall be the implementing
agency of the Department, and shall exercise the following powers and functions,
subject to review by the Secretary:
(a) Declare and segregate existing gold-rush areas for small-scale mining;
(b) Reserve future gold and other mining areas for small-scale mining;

The Department shall establish assay laboratories to cross-check the integrity of


custom mills and to render metallurgical and laboratory services to mines.

(c) Award contracts to small-scale miners;

Custom mills shall be constituted as withholding agents for the royalties, production
share or other taxes due the Government.

(d) Formulate and implement rules and regulations related to small-scale


mining;

Section 19. Government Share and Allotment. The revenue to be derived by


the Government from the operation of the mining program herein established shall
be subject to the sharing provided in the Local Government Code.

(e) Settle disputes, conflicts or litigations over conflicting claims within a


people's small-scale mining area, an area that is declared a small-mining;
and

Section 20. People's Small-scale Mining Protection Fund. There is hereby


created a People's Small-scale Mining Protection Fund which shall be fifteen percent
(15%) of the national government's share due the Government which shall be used
primarily for information dissemination and training of small-scale miners on safety,
health and environmental protection, and the establishment of mine rescue and
recovery teams including the procurement of rescue equipment necessary in cases
of emergencies such as landslides, tunnel collapse, or the like.

(f) Perform such other functions as may be necessary to achieve the goals
and objectives of this Act.

The fund shall also be made available to address the needs of the small-scale
miners brought about by accidents and/or fortuitous events.
Section 21. Rescission of Contracts and Administrative Fines. The
noncompliance with the terms and conditions of the contract or violation of the rules
and regulations issued by the Secretary pursuant to this Act, as well as the
abandonment of the mining site by the contractor, shall constitute a ground for the
cancellation of the contracts and the ejectment from the people's small-scale mining
area of the contractor. In addition, the Secretary may impose fines against the
violator in an amount of not less than Twenty thousand pesos (P20,000.00) and not
more than One hundred thousand pesos (P100,000.00). Nonpayment of the fine
imposed shall render the small-scale mining contractor ineligible for other smallscale mining contracts.

Section 25. Composition of the Provincial/City Mining Regulatory Board.


The Board shall be composed of the Department of Environment and Natural
Resources representative as Chairman; and the representative of the governor or
city mayor, as the representative of the governor or city mayor, as the case may be,
one (1) small scale mining representative, one (1) big-scale mining representative,
and the representative from a nongovernment organization who shall come from an
environmental group, as members.
The representatives from the private sector shall be nominated by their respective
organizations and appointed by the Department regional director. The Department
shall provide the staff support to the Board.
Section 26. Administrative Supervision over the People's Small-scale
Mining Program. The Secretary through his representative shall exercise direct
supervision and control over the program and activities of the small-scale miners
within the people's small-scale mining area.

The Secretary shall within ninety (90) days from the effectivity of this Act
promulgate rules and regulations to effectively implement the provisions of the
same. Priority shall be given to such rules and regulations that will ensure the least
disruption in the operations of the small-scale miners.
Section 27. Penal Sanctions. Violations of the provisions of this Act or of the
rules and regulations issued pursuant hereto shall be penalized with imprisonment
of not less than six (6) months nor more than six (6) years and shall include the
confiscation and seizure of equipment, tools and instruments.
Section 28. Repealing Clause. All laws, decrees, letters of instruction, executive
orders, rules and regulations, and other issuances, or parts thereof, in conflict or
inconsistent with this Act are hereby repealed or modified accordingly.
Section 29. Separability Clause. Any section or provision of this Act which may
be declared unconstitutional shall not affect the other sections or provisions hereof.

(a) One percent (1%) of the gross sales or receipts of the preceding
calendar year; or
(b) Forty percent (40%) of the mining taxes, royalties, forestry and fishery
charges and such other taxes, fees or charges, including related
surcharges, interests, or fines the government agency or government
owned or controlled corporation would have paid if it were not otherwise
exempt.
Section 292. Allocation of Shares. - The share in the preceding Section shall be
distributed in the following manner:
(a) Where the natural resources are located in the province:
(1) Province - Twenty percent (20%);

Section 30. Effectivity. This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a national newspaper of general circulation.

(2) Component City/Municipality - Forty-five percent (45%); and

Approved: June 27, 1991.

(3) Barangay - Thirty-five percent (35%)

Secs. 289-292, Local Government Code of 1991


CHAPTER II
Share of Local Government Units in the National Wealth
Section 289. Share in the Proceeds from the Development and Utilization of the
National Wealth. - Local government units shall have an equitable share in the
proceeds derived from the utilization and development of the national wealth within
their respective areas, including sharing the same with the inhabitants by way of
direct benefits.
Section 290. Amount of Share of Local Government Units. - Local government
units shall, in addition to the internal revenue allotment, have a share of forty
percent (40%) of the gross collection derived by the national government from the
preceding fiscal year from mining taxes, royalties, forestry and fishery charges, and
such other taxes, fees, or charges, including related surcharges, interests, or fines,
and from its share in any co-production, joint venture or production sharing
agreement in the utilization and development of the national wealth within their
territorial jurisdiction.
Section 291. Share of the Local Governments from any Government Agency or
Owned or Controlled Corporation. - Local government units shall have a share based
on the preceding fiscal year from the proceeds derived by any government agency
or government-owned or controlled corporation engaged in the utilization and
development of the national wealth based on the following formula whichever will
produce a higher share for the local government unit:

Provided, however, That where the natural resources are located in two (2)
or more provinces, or in two (2) or more component cities or municipalities
or in two (2) or more barangays, their respective shares shall be computed
on the basis of:
(1) Population - Seventy percent (70%); and
(2) Land area - Thirty percent (30%)
(b) Where the natural resources are located in a highly urbanized or
independent component city:
(1) City - Sixty-five percent (65%); and
(2) Barangay - Thirty-five percent (35%)
Provided, however, That where the natural resources are located in such
two (2) or more cities, the allocation of shares shall be based on the
formula on population and land area as specified in paragraph (a) of this
Section.
La Bugal Blaan vs. Sec. DENR, et. Al

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. 127882

January 27, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., represented by its


Chairman F'LONG MIGUEL M. LUMAYONG, WIGBERTO E. TAADA,
PONCIANO BENNAGEN, JAIME TADEO, RENATO R. CONSTANTINO, JR.,
F'LONG AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIM L. DABIE, SIMEON
H. DOLOJO, IMELDA M. GANDON, LENY B. GUSANAN, MARCELO L.
GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D. LAWAY, BENITA P.
TACUAYAN, minors JOLY L. BUGOY, represented by his father UNDERO D.
BUGOY, ROGER M. DADING, represented by his father ANTONIO L. DADING,
ROMY M. LAGARO, represented by his father TOTING A. LAGARO, MIKENY
JONG B. LUMAYONG, represented by his father MIGUEL M. LUMAYONG,
RENE T. MIGUEL, represented by his mother EDITHA T. MIGUEL, ALDEMAR
L. SAL, represented by his father DANNY M. SAL, DAISY RECARSE,
represented by her mother LYDIA S. SANTOS, EDWARD M. EMUY, ALAN P.
MAMPARAIR, MARIO L. MANGCAL, ALDEN S. TUSAN, AMPARO S. YAP,
VIRGILIO CULAR, MARVIC M.V.F. LEONEN, JULIA REGINA CULAR, GIAN
CARLO CULAR, VIRGILIO CULAR, JR., represented by their father VIRGILIO
CULAR, PAUL ANTONIO P. VILLAMOR, represented by his parents JOSE
VILLAMOR and ELIZABETH PUA-VILLAMOR, ANA GININA R. TALJA,
represented by her father MARIO JOSE B. TALJA, SHARMAINE R. CUNANAN,
represented by her father ALFREDO M. CUNANAN, ANTONIO JOSE A. VITUG
III, represented by his mother ANNALIZA A. VITUG, LEAN D. NARVADEZ,
represented by his father MANUEL E. NARVADEZ, JR., ROSERIO MARALAG
LINGATING, represented by her father RIO OLIMPIO A. LINGATING, MARIO
JOSE B. TALJA, DAVID E. DE VERA, MARIA MILAGROS L. SAN JOSE, SR.,
SUSAN O. BOLANIO, OND, LOLITA G. DEMONTEVERDE, BENJIE L.
NEQUINTO,1 ROSE LILIA S. ROMANO, ROBERTO S. VERZOLA, EDUARDO
AURELIO C. REYES, LEAN LOUEL A. PERIA, represented by his father
ELPIDIO V. PERIA,2 GREEN FORUM PHILIPPINES, GREEN FORUM WESTERN
VISAYAS, (GF-WV), ENVIRONMETAL LEGAL ASSISTANCE CENTER (ELAC),
PHILIPPINE KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT
REPORMANG PANSAKAHAN (KAISAHAN),3 KAISAHAN TUNGO SA
KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN),
PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT
SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP FOR THE
DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC.
(PHILDHRRA), WOMEN'S LEGAL BUREAU (WLB), CENTER FOR
ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI), UPLAND
DEVELOPMENT INSTITUTE (UDI), KINAIYAHAN FOUNDATION, INC.,
SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN), LEGAL
RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners,
vs.
VICTOR O. RAMOS, SECRETARY, DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES (DENR), HORACIO RAMOS, DIRECTOR, MINES AND
GEOSCIENCES BUREAU (MGB-DENR), RUBEN TORRES, EXECUTIVE
SECRETARY, and WMC (PHILIPPINES), INC.4 respondents.

DECISION
CARPIO-MORALES, J.:
The present petition for mandamus and prohibition assails the constitutionality of
Republic Act No. 7942,5 otherwise known as the PHILIPPINE MINING ACT OF 1995,
along with the Implementing Rules and Regulations issued pursuant thereto,
Department of Environment and Natural Resources (DENR) Administrative Order 9640, and of the Financial and Technical Assistance Agreement (FTAA) entered into on
March 30, 1995 by the Republic of the Philippines and WMC (Philippines), Inc.
(WMCP), a corporation organized under Philippine laws.
On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.)
No. 2796 authorizing the DENR Secretary to accept, consider and evaluate proposals
from foreign-owned corporations or foreign investors for contracts or agreements
involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, which, upon appropriate recommendation
of the Secretary, the President may execute with the foreign proponent. In entering
into such proposals, the President shall consider the real contributions to the
economic growth and general welfare of the country that will be realized, as well as
the development and use of local scientific and technical resources that will be
promoted by the proposed contract or agreement. Until Congress shall determine
otherwise, large-scale mining, for purpose of this Section, shall mean those
proposals for contracts or agreements for mineral resources exploration,
development, and utilization involving a committed capital investment in a single
mining unit project of at least Fifty Million Dollars in United States Currency (US
$50,000,000.00).7
On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to
"govern the exploration, development, utilization and processing of all mineral
resources."8 R.A. No. 7942 defines the modes of mineral agreements for mining
operations,9 outlines the procedure for their filing and
approval,10 assignment/transfer11 and withdrawal,12and fixes their terms.13 Similar
provisions govern financial or technical assistance agreements. 14
The law prescribes the qualifications of contractors 15 and grants them certain rights,
including timber,16 water17 and easement18 rights, and the right to possess
explosives.19 Surface owners, occupants, or concessionaires are forbidden from
preventing holders of mining rights from entering private lands and concession
areas.20 A procedure for the settlement of conflicts is likewise provided for.21
The Act restricts the conditions for exploration,22 quarry23 and other24 permits. It
regulates the transport, sale and processing of minerals, 25 and promotes the
development of mining communities, science and mining technology,26and safety
and environmental protection.27
The government's share in the agreements is spelled out and allocated, 28 taxes and
fees are imposed,29 incentives granted.30 Aside from penalizing certain acts,31 the
law likewise specifies grounds for the cancellation, revocation and termination of
agreements and permits.32

On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and
Manila Times, two newspapers of general circulation, R.A. No. 7942 took
effect.33 Shortly before the effectivity of R.A. No. 7942, however, or on March 30,
1995, the President entered into an FTAA with WMCP covering 99,387 hectares of
land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. 34
On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR
Administrative Order (DAO) No. 95-23, s. 1995, otherwise known as the
Implementing Rules and Regulations of R.A. No. 7942. This was later repealed by
DAO No. 96-40, s. 1996 which was adopted on December 20, 1996.
On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary
demanding that the DENR stop the implementation of R.A. No. 7942 and DAO No.
96-40,35 giving the DENR fifteen days from receipt36 to act thereon. The DENR,
however, has yet to respond or act on petitioners' letter.37
Petitioners thus filed the present petition for prohibition and mandamus, with a
prayer for a temporary restraining order. They allege that at the time of the filing of
the petition, 100 FTAA applications had already been filed, covering an area of 8.4
million hectares,38 64 of which applications are by fully foreign-owned corporations
covering a total of 5.8 million hectares, and at least one by a fully foreign-owned
mining company over offshore areas.39
Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:
I
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows fully foreign owned corporations to explore, develop, utilize and exploit
mineral resources in a manner contrary to Section 2, paragraph 4, Article XII of the
Constitution;
II
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows the taking of private property without the determination of public use and for
just compensation;
III
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
violates Sec. 1, Art. III of the Constitution;
IV
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it

allows enjoyment by foreign citizens as well as fully foreign owned corporations of


the nation's marine wealth contrary to Section 2, paragraph 2 of Article XII of the
Constitution;
V
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows priority to foreign and fully foreign owned corporations in the exploration,
development and utilization of mineral resources contrary to Article XII of the
Constitution;
VI
x x x in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows the inequitable sharing of wealth contrary to Sections [sic] 1, paragraph 1,
and Section 2, paragraph 4[,] [Article XII] of the Constitution;
VII
x x x in recommending approval of and implementing the Financial and Technical
Assistance Agreement between the President of the Republic of the Philippines and
Western Mining Corporation Philippines Inc. because the same is illegal and
unconstitutional.40
They pray that the Court issue an order:
(a) Permanently enjoining respondents from acting on any application for
Financial or Technical Assistance Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as
unconstitutional and null and void;
(c) Declaring the Implementing Rules and Regulations of the Philippine
Mining Act contained in DENR Administrative Order No. 96-40 and all other
similar administrative issuances as unconstitutional and null and void; and
(d) Cancelling the Financial and Technical Assistance Agreement issued to
Western Mining Philippines, Inc. as unconstitutional, illegal and null and
void.41
Impleaded as public respondents are Ruben Torres, the then Executive Secretary,
Victor O. Ramos, the then DENR Secretary, and Horacio Ramos, Director of the
Mines and Geosciences Bureau of the DENR. Also impleaded is private respondent
WMCP, which entered into the assailed FTAA with the Philippine Government. WMCP
is owned by WMC Resources International Pty., Ltd. (WMC), "a wholly owned
subsidiary of Western Mining Corporation Holdings Limited, a publicly listed major
Australian mining and exploration company." 42 By WMCP's information, "it is a 100%
owned subsidiary of WMC LIMITED."43

Respondents, aside from meeting petitioners' contentions, argue that the requisites
for judicial inquiry have not been met and that the petition does not comply with the
criteria for prohibition and mandamus. Additionally, respondent WMCP argues that
there has been a violation of the rule on hierarchy of courts.
After petitioners filed their reply, this Court granted due course to the petition. The
parties have since filed their respective memoranda.
WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that
on January 23, 2001, WMC sold all its shares in WMCP to Sagittarius Mines, Inc.
(Sagittarius), a corporation organized under Philippine laws.44WMCP was
subsequently renamed "Tampakan Mineral Resources Corporation." 45 WMCP claims
that at least 60% of the equity of Sagittarius is owned by Filipinos and/or Filipinoowned corporations while about 40% is owned by Indophil Resources NL, an
Australian company.46 It further claims that by such sale and transfer of shares,
"WMCP has ceased to be connected in any way with WMC." 47
By virtue of such sale and transfer, the DENR Secretary, by Order of December 18,
2001,48 approved the transfer and registration of the subject FTAA from WMCP to
Sagittarius. Said Order, however, was appealed by Lepanto Consolidated Mining Co.
(Lepanto) to the Office of the President which upheld it by Decision of July 23,
2002.49 Its motion for reconsideration having been denied by the Office of the
President by Resolution of November 12, 2002,50 Lepanto filed a petition for
review51 before the Court of Appeals. Incidentally, two other petitions for review
related to the approval of the transfer and registration of the FTAA to Sagittarius
were recently resolved by this Court.52
It bears stressing that this case has not been rendered moot either by the transfer
and registration of the FTAA to a Filipino-owned corporation or by the non-issuance
of a temporary restraining order or a preliminary injunction to stay the above-said
July 23, 2002 decision of the Office of the President.53 The validity of the transfer
remains in dispute and awaits final judicial determination. This assumes, of course,
that such transfer cures the FTAA's alleged unconstitutionality, on which question
judgment is reserved.
WMCP also points out that the original claimowners of the major mineralized areas
included in the WMCP FTAA, namely, Sagittarius, Tampakan Mining Corporation, and
Southcot Mining Corporation, are all Filipino-owned corporations,54 each of which
was a holder of an approved Mineral Production Sharing Agreement awarded in
1994, albeit their respective mineral claims were subsumed in the WMCP
FTAA;55 and that these three companies are the same companies that consolidated
their interests in Sagittarius to whom WMC sold its 100% equity in WMCP.56 WMCP
concludes that in the event that the FTAA is invalidated, the MPSAs of the three
corporations would be revived and the mineral claims would revert to their original
claimants.57

dwell only insofar as it questions the effectivity of E. O. No. 279 by virtue of which
order the questioned FTAA was forged.
I
Before going into the substantive issues, the procedural questions posed by
respondents shall first be tackled.
REQUISITES FOR JUDICIAL REVIEW
When an issue of constitutionality is raised, this Court can exercise its power of
judicial review only if the following requisites are present:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the
constitutional question;
(3) The exercise of judicial review is pleaded at the earliest opportunity;
and
(4) The constitutional question is the lis mota of the case.

58

Respondents claim that the first three requisites are not present.
Section 1, Article VIII of the Constitution states that "(j)udicial power includes the
duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable." The power of judicial review, therefore, is
limited to the determination of actual cases and controversies. 59
An actual case or controversy means an existing case or controversy that is
appropriate or ripe for determination, not conjectural or anticipatory,60 lest the
decision of the court would amount to an advisory opinion.61 The power does not
extend to hypothetical questions62 since any attempt at abstraction could only lead
to dialectics and barren legal questions and to sterile conclusions unrelated to
actualities.63

These circumstances, while informative, are hardly significant in the resolution of


this case, it involving the validity of the FTAA, not the possible consequences of its
invalidation.

"Legal standing" or locus standi has been defined as a personal and substantial
interest in the case such that the party has sustained or will sustain direct injury as
a result of the governmental act that is being challenged,64alleging more than a
generalized grievance.65 The gist of the question of standing is whether a party
alleges "such personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon which the
court depends for illumination of difficult constitutional questions." 66 Unless a person
is injuriously affected in any of his constitutional rights by the operation of statute
or ordinance, he has no standing.67

Of the above-enumerated seven grounds cited by petitioners, as will be shown later,


only the first and the last need be delved into; in the latter, the discussion shall

Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan Tribal
Association, Inc., a farmers and indigenous people's cooperative organized under

Philippine laws representing a community actually affected by the mining activities


of WMCP, members of said cooperative,68 as well as other residents of areas also
affected by the mining activities of WMCP.69 These petitioners have standing to raise
the constitutionality of the questioned FTAA as they allege a personal and
substantial injury. They claim that they would suffer "irremediable
displacement"70 as a result of the implementation of the FTAA allowing WMCP to
conduct mining activities in their area of residence. They thus meet the appropriate
case requirement as they assert an interest adverse to that of respondents who, on
the other hand, insist on the FTAA's validity.

The WMCP FTAA provides:

In view of the alleged impending injury, petitioners also have standing to assail the
validity of E.O. No. 279, by authority of which the FTAA was executed.

It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are
more favorable to WMCP, hence, these laws, to the extent that they are favorable to
WMCP, govern the FTAA.

Public respondents maintain that petitioners, being strangers to the FTAA, cannot
sue either or both contracting parties to annul it.71 In other words, they contend
that petitioners are not real parties in interest in an action for the annulment of
contract.

In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing
agreements.

Public respondents' contention fails. The present action is not merely one for
annulment of contract but for prohibition and mandamus. Petitioners allege that
public respondents acted without or in excess of jurisdiction in implementing the
FTAA, which they submit is unconstitutional. As the case involves constitutional
questions, this Court is not concerned with whether petitioners are real parties in
interest, but with whether they have legal standing. As held in Kilosbayan v.
Morato:72

14.3 Future Legislation


Any term and condition more favourable to Financial &Technical Assistance
Agreement contractors resulting from repeal or amendment of any existing law or
regulation or from the enactment of a law, regulation or administrative order shall
be considered a part of this Agreement.

SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. x x x That the


provisions of Chapter XIV on government share in mineral production-sharing
agreement and of Chapter XVI on incentives of this Act shall immediately govern
and apply to a mining lessee or contractor unless the mining lessee or contractor
indicates his intention to the secretary, in writing, not to avail of said provisions x x
x Provided, finally, That such leases, production-sharing agreements, financial or
technical assistance agreements shall comply with the applicable provisions of this
Act and its implementing rules and regulations.

x x x. "It is important to note . . . that standing because of its constitutional and


public policy underpinnings, is very different from questions relating to whether a
particular plaintiff is the real party in interest or has capacity to sue. Although all
three requirements are directed towards ensuring that only certain parties can
maintain an action, standing restrictions require a partial consideration of the
merits, as well as broader policy concerns relating to the proper role of the judiciary
in certain areas.["] (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328
[1985])

As there is no suggestion that WMCP has indicated its intention not to avail of the
provisions of Chapter XVI of R.A. No. 7942, it can safely be presumed that they
apply to the WMCP FTAA.

Standing is a special concern in constitutional law because in some cases suits are
brought not by parties who have been personally injured by the operation of a law
or by official action taken, but by concerned citizens, taxpayers or voters who
actually sue in the public interest. Hence, the question in standing is whether such
parties have "alleged such a personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult constitutional
questions." (Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)

The third requisite should not be taken to mean that the question of
constitutionality must be raised immediately after the execution of the state action
complained of. That the question of constitutionality has not been raised before is
not a valid reason for refusing to allow it to be raised later.73 A contrary rule would
mean that a law, otherwise unconstitutional, would lapse into constitutionality by
the mere failure of the proper party to promptly file a case to challenge the same.

As earlier stated, petitioners meet this requirement.


The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40
likewise fulfills the requisites of justiciability. Although these laws were not in force
when the subject FTAA was entered into, the question as to their validity is ripe for
adjudication.

Misconstruing the application of the third requisite for judicial review that the
exercise of the review is pleaded at the earliest opportunity WMCP points out that
the petition was filed only almost two years after the execution of the FTAA, hence,
not raised at the earliest opportunity.

PROPRIETY OF PROHIBITION AND MANDAMUS


Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2
of Rule 65 read:
SEC. 2. Petition for prohibition. When the proceedings of any tribunal, corporation,
board, or person, whether exercising functions judicial or ministerial, are without or
in excess of its or his jurisdiction, or with grave abuse of discretion, and there is no
appeal or any other plain, speedy, and adequate remedy in the ordinary course of

law, a person aggrieved thereby may file a verified petition in the proper court
alleging the facts with certainty and praying that judgment be rendered
commanding the defendant to desist from further proceeding in the action or matter
specified therein.
Prohibition is a preventive remedy.74 It seeks a judgment ordering the defendant to
desist from continuing with the commission of an act perceived to be illegal. 75
The petition for prohibition at bar is thus an appropriate remedy. While the
execution of the contract itself may be fait accompli, its implementation is not.
Public respondents, in behalf of the Government, have obligations to fulfill under
said contract. Petitioners seek to prevent them from fulfilling such obligations on the
theory that the contract is unconstitutional and, therefore, void.
The propriety of a petition for prohibition being upheld, discussion of the propriety
of the mandamus aspect of the petition is rendered unnecessary.
HIERARCHY OF COURTS
The contention that the filing of this petition violated the rule on hierarchy of courts
does not likewise lie. The rule has been explained thus:
Between two courts of concurrent original jurisdiction, it is the lower court that
should initially pass upon the issues of a case. That way, as a particular case goes
through the hierarchy of courts, it is shorn of all but the important legal issues or
those of first impression, which are the proper subject of attention of the appellate
court. This is a procedural rule borne of experience and adopted to improve the
administration of justice.
This Court has consistently enjoined litigants to respect the hierarchy of courts.
Although this Court has concurrent jurisdiction with the Regional Trial Courts and
the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, such concurrence does not give a party
unrestricted freedom of choice of court forum. The resort to this Court's primary
jurisdiction to issue said writs shall be allowed only where the redress desired
cannot be obtained in the appropriate courts or where exceptional and compelling
circumstances justify such invocation. We held in People v. Cuaresma that:
A becoming regard for judicial hierarchy most certainly indicates that petitions for
the issuance of extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter, with the Court of
Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue
these writs should be allowed only where there are special and important reasons
therefor, clearly and specifically set out in the petition. This is established policy. It
is a policy necessary to prevent inordinate demands upon the Court's time and
attention which are better devoted to those matters within its exclusive jurisdiction,
and to prevent further over-crowding of the Court's docket x x x.76 [Emphasis
supplied.]

The repercussions of the issues in this case on the Philippine mining industry, if not
the national economy, as well as the novelty thereof, constitute exceptional and
compelling circumstances to justify resort to this Court in the first instance.
In all events, this Court has the discretion to take cognizance of a suit which does
not satisfy the requirements of an actual case or legal standing when paramount
public interest is involved.77 When the issues raised are of paramount importance to
the public, this Court may brush aside technicalities of procedure. 78
II
Petitioners contend that E.O. No. 279 did not take effect because its supposed date
of effectivity came after President Aquino had already lost her legislative powers
under the Provisional Constitution.
And they likewise claim that the WMC FTAA, which was entered into pursuant to
E.O. No. 279, violates Section 2, Article XII of the Constitution because, among
other reasons:
(1) It allows foreign-owned companies to extend more than mere financial
or technical assistance to the State in the exploitation, development, and
utilization of minerals, petroleum, and other mineral oils, and even permits
foreign owned companies to "operate and manage mining activities."
(2) It allows foreign-owned companies to extend both technical and
financial assistance, instead of "either technical or financial assistance."
To appreciate the import of these issues, a visit to the history of the pertinent
constitutional provision, the concepts contained therein, and the laws enacted
pursuant thereto, is in order.
Section 2, Article XII reads in full:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the State. With the exception
of agricultural lands, all other natural resources shall not be alienated. The
exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. The State may directly undertake such
activities or it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be provided by law. In cases of
water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the
grant.
The State shall protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by


Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic
growth and general welfare of the country. In such agreements, the State shall
promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance
with this provision, within thirty days from its execution.
THE SPANISH REGIME AND THE REGALIAN DOCTRINE
The first sentence of Section 2 embodies the Regalian doctrine or jura regalia.
Introduced by Spain into these Islands, this feudal concept is based on the State's
power of dominium, which is the capacity of the State to own or acquire property.79
In its broad sense, the term "jura regalia" refers to royal rights, or those rights
which the King has by virtue of his prerogatives. In Spanish law, it refers to a right
which the sovereign has over anything in which a subject has a right of property or
propriedad. These were rights enjoyed during feudal times by the king as the
sovereign.
The theory of the feudal system was that title to all lands was originally held by the
King, and while the use of lands was granted out to others who were permitted to
hold them under certain conditions, the King theoretically retained the title. By
fiction of law, the King was regarded as the original proprietor of all lands, and the
true and only source of title, and from him all lands were held. The theory of jura
regalia was therefore nothing more than a natural fruit of conquest. 80
The Philippines having passed to Spain by virtue of discovery and conquest, 81 earlier
Spanish decrees declared that "all lands were held from the Crown." 82
The Regalian doctrine extends not only to land but also to "all natural wealth that
may be found in the bowels of the earth."83 Spain, in particular, recognized the
unique value of natural resources, viewing them, especially minerals, as an
abundant source of revenue to finance its wars against other nations.84 Mining laws
during the Spanish regime reflected this perspective. 85
THE AMERICAN OCCUPATION AND THE CONCESSION REGIME
By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago known
as the Philippine Islands" to the United States. The Philippines was hence governed
by means of organic acts that were in the nature of charters serving as a
Constitution of the occupied territory from 1900 to 1935.86 Among the principal
organic acts of the Philippines was the Act of Congress of July 1, 1902, more
commonly known as the Philippine Bill of 1902, through which the United States
Congress assumed the administration of the Philippine Islands. 87 Section 20 of said

Bill reserved the disposition of mineral lands of the public domain from sale. Section
21 thereof allowed the free and open exploration, occupation and purchase of
mineral deposits not only to citizens of the Philippine Islands but to those of the
United States as well:
Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands,
both surveyed and unsurveyed, are hereby declared to be free and open to
exploration, occupation and purchase, and the land in which they are found, to
occupation and purchase, by citizens of the United States or of said Islands:
Provided, That when on any lands in said Islands entered and occupied as
agricultural lands under the provisions of this Act, but not patented, mineral
deposits have been found, the working of such mineral deposits is forbidden until
the person, association, or corporation who or which has entered and is occupying
such lands shall have paid to the Government of said Islands such additional sum or
sums as will make the total amount paid for the mineral claim or claims in which
said deposits are located equal to the amount charged by the Government for the
same as mineral claims.
Unlike Spain, the United States considered natural resources as a source of wealth
for its nationals and saw fit to allow both Filipino and American citizens to explore
and exploit minerals in public lands, and to grant patents to private mineral
lands.88 A person who acquired ownership over a parcel of private mineral land
pursuant to the laws then prevailing could exclude other persons, even the State,
from exploiting minerals within his property.89 Thus, earlier jurisprudence90 held
that:
A valid and subsisting location of mineral land, made and kept up in accordance with
the provisions of the statutes of the United States, has the effect of a grant by the
United States of the present and exclusive possession of the lands located, and this
exclusive right of possession and enjoyment continues during the entire life of the
location. x x x.
x x x.
The discovery of minerals in the ground by one who has a valid mineral location
perfects his claim and his location not only against third persons, but also against
the Government. x x x. [Italics in the original.]
The Regalian doctrine and the American system, therefore, differ in one essential
respect. Under the Regalian theory, mineral rights are not included in a grant of land
by the state; under the American doctrine, mineral rights are included in a grant of
land by the government.91
Section 21 also made possible the concession (frequently styled "permit", license"
or "lease")92 system.93 This was the traditional regime imposed by the colonial
administrators for the exploitation of natural resources in the extractive sector
(petroleum, hard minerals, timber, etc.).94
Under the concession system, the concessionaire makes a direct equity investment
for the purpose of exploiting a particular natural resource within a given
area.95 Thus, the concession amounts to complete control by the concessionaire

over the country's natural resource, for it is given exclusive and plenary rights to
exploit a particular resource at the point of extraction. 96 In consideration for the
right to exploit a natural resource, the concessionaire either pays rent or royalty,
which is a fixed percentage of the gross proceeds.97
Later statutory enactments by the legislative bodies set up in the Philippines
adopted the contractual framework of the concession.98 For instance, Act No.
2932,99 approved on August 31, 1920, which provided for the exploration, location,
and lease of lands containing petroleum and other mineral oils and gas in the
Philippines, and Act No. 2719,100 approved on May 14, 1917, which provided for the
leasing and development of coal lands in the Philippines, both utilized the
concession system.101
THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL
RESOURCES
By the Act of United States Congress of March 24, 1934, popularly known as the
Tydings-McDuffie Law, the People of the Philippine Islands were authorized to adopt
a constitution.102 On July 30, 1934, the Constitutional Convention met for the
purpose of drafting a constitution, and the Constitution subsequently drafted was
approved by the Convention on February 8, 1935.103 The Constitution was submitted
to the President of the United States on March 18, 1935.104 On March 23, 1935, the
President of the United States certified that the Constitution conformed substantially
with the provisions of the Act of Congress approved on March 24, 1934.105 On May
14, 1935, the Constitution was ratified by the Filipino people. 106
The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources
of the Philippines, including mineral lands and minerals, to be property belonging to
the State.107 As adopted in a republican system, the medieval concept of jura regalia
is stripped of royal overtones and ownership of the land is vested in the State. 108
Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the
1935 Constitution provided:
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 corporations 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, 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.

The nationalization and conservation of the natural resources of the country was
one of the fixed and dominating objectives of the 1935 Constitutional
Convention.109 One delegate relates:
There was an overwhelming sentiment in the Convention in favor of the principle of
state ownership of natural resources and the adoption of the Regalian doctrine.
State ownership of natural resources was seen as a necessary starting point to
secure recognition of the state's power to control their disposition, exploitation,
development, or utilization. The delegates of the Constitutional Convention very well
knew that the concept of State ownership of land and natural resources was
introduced by the Spaniards, however, they were not certain whether it was
continued and applied by the Americans. To remove all doubts, the Convention
approved the provision in the Constitution affirming the Regalian doctrine.
The adoption of the principle of state ownership of the natural resources and of the
Regalian doctrine was considered to be a necessary starting point for the plan of
nationalizing and conserving the natural resources of the country. For with the
establishment of the principle of state ownership of the natural resources, it would
not be hard to secure the recognition of the power of the State to control their
disposition, exploitation, development or utilization.110
The nationalization of the natural resources was intended (1) to insure their
conservation for Filipino posterity; (2) to serve as an instrument of national
defense, helping prevent the extension to the country of foreign control through
peaceful economic penetration; and (3) to avoid making the Philippines a source of
international conflicts with the consequent danger to its internal security and
independence.111
The same Section 1, Article XIII also adopted the concession system, expressly
permitting the State to grant licenses, concessions, or leases for the exploitation,
development, or utilization of any of the natural resources. Grants, however, were
limited to Filipinos or entities at least 60% of the capital of which is owned by
Filipinos.lawph!l.ne+
The swell of nationalism that suffused the 1935 Constitution was radically diluted
when on November 1946, the Parity Amendment, which came in the form of an
"Ordinance Appended to the Constitution," was ratified in a plebiscite. 112 The
Amendment extended, from July 4, 1946 to July 3, 1974, the right to utilize and
exploit our natural resources to citizens of the United States and business
enterprises owned or controlled, directly or indirectly, by citizens of the United
States:113
Notwithstanding the provision of section one, Article Thirteen, and section eight,
Article Fourteen, of the foregoing Constitution, during the effectivity of the Executive
Agreement entered into by the President of the Philippines with the President of the
United States on the fourth of July, nineteen hundred and forty-six, pursuant to the
provisions of Commonwealth Act Numbered Seven hundred and thirty-three, but in
no case to extend beyond the third of July, nineteen hundred and seventy-four, the
disposition, exploitation, development, and utilization of all agricultural, timber, and
mineral lands of the public domain, waters, minerals, coals, petroleum, and other
mineral oils, all forces and sources of potential energy, and other natural resources
of the Philippines, and the operation of public utilities, shall, if open to any person,

be open to citizens of the United States and to all forms of business enterprise
owned or controlled, directly or indirectly, by citizens of the United States in the
same manner as to, and under the same conditions imposed upon, citizens of the
Philippines or corporations or associations owned or controlled by citizens of the
Philippines.
The Parity Amendment was subsequently modified by the 1954 Revised Trade
Agreement, also known as the Laurel-Langley Agreement, embodied in Republic Act
No. 1355.114
THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM
In the meantime, Republic Act No. 387,115 also known as the Petroleum Act of 1949,
was approved on June 18, 1949.
The Petroleum Act of 1949 employed the concession system for the exploitation of
the nation's petroleum resources. Among the kinds of concessions it sanctioned
were exploration and exploitation concessions, which respectively granted to the
concessionaire the exclusive right to explore for116 or develop117 petroleum within
specified areas.
Concessions may be granted only to duly qualified persons 118 who have sufficient
finances, organization, resources, technical competence, and skills necessary to
conduct the operations to be undertaken. 119
Nevertheless, the Government reserved the right to undertake such work
itself.120 This proceeded from the theory that all natural deposits or occurrences of
petroleum or natural gas in public and/or private lands in the Philippines belong to
the State.121 Exploration and exploitation concessions did not confer upon the
concessionaire ownership over the petroleum lands and petroleum
deposits.122 However, they did grant concessionaires the right to explore, develop,
exploit, and utilize them for the period and under the conditions determined by the
law.123
Concessions were granted at the complete risk of the concessionaire; the
Government did not guarantee the existence of petroleum or undertake, in any
case, title warranty.124
Concessionaires were required to submit information as maybe required by the
Secretary of Agriculture and Natural Resources, including reports of geological and
geophysical examinations, as well as production reports. 125Exploration126 and
exploitation127 concessionaires were also required to submit work
programs.lavvphi1.net
Exploitation concessionaires, in particular, were obliged to pay an annual
exploitation tax,128 the object of which is to induce the concessionaire to actually
produce petroleum, and not simply to sit on the concession without developing or
exploiting it.129 These concessionaires were also bound to pay the Government
royalty, which was not less than 12% of the petroleum produced and saved, less
that consumed in the operations of the concessionaire.130 Under Article 66, R.A. No.
387, the exploitation tax may be credited against the royalties so that if the

concessionaire shall be actually producing enough oil, it would not actually be


paying the exploitation tax.131
Failure to pay the annual exploitation tax for two consecutive years,132 or the royalty
due to the Government within one year from the date it becomes due, 133 constituted
grounds for the cancellation of the concession. In case of delay in the payment of
the taxes or royalty imposed by the law or by the concession, a surcharge of 1% per
month is exacted until the same are paid.134
As a rule, title rights to all equipment and structures that the concessionaire placed
on the land belong to the exploration or exploitation concessionaire. 135 Upon
termination of such concession, the concessionaire had a right to remove the
same.136
The Secretary of Agriculture and Natural Resources was tasked with carrying out the
provisions of the law, through the Director of Mines, who acted under the
Secretary's immediate supervision and control. 137 The Act granted the Secretary the
authority to inspect any operation of the concessionaire and to examine all the
books and accounts pertaining to operations or conditions related to payment of
taxes and royalties.138
The same law authorized the Secretary to create an Administration Unit and a
Technical Board.139 The Administration Unit was charged, inter alia, with the
enforcement of the provisions of the law.140 The Technical Board had, among other
functions, the duty to check on the performance of concessionaires and to
determine whether the obligations imposed by the Act and its implementing
regulations were being complied with.141
Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy
Development, analyzed the benefits and drawbacks of the concession system
insofar as it applied to the petroleum industry:
Advantages of Concession. Whether it emphasizes income tax or royalty, the most
positive aspect of the concession system is that the State's financial involvement is
virtually risk free and administration is simple and comparatively low in cost.
Furthermore, if there is a competitive allocation of the resource leading to
substantial bonuses and/or greater royalty coupled with a relatively high level of
taxation, revenue accruing to the State under the concession system may compare
favorably with other financial arrangements.
Disadvantages of Concession. There are, however, major negative aspects to this
system. Because the Government's role in the traditional concession is passive, it is
at a distinct disadvantage in managing and developing policy for the nation's
petroleum resource. This is true for several reasons. First, even though most
concession agreements contain covenants requiring diligence in operations and
production, this establishes only an indirect and passive control of the host country
in resource development. Second, and more importantly, the fact that the host
country does not directly participate in resource management decisions inhibits its
ability to train and employ its nationals in petroleum development. This factor could
delay or prevent the country from effectively engaging in the development of its
resources. Lastly, a direct role in management is usually necessary in order to

obtain a knowledge of the international petroleum industry which is important to an


appreciation of the host country's resources in relation to those of other countries. 142
Other liabilities of the system have also been noted:
x x x there are functional implications which give the concessionaire great economic
power arising from its exclusive equity holding. This includes, first, appropriation of
the returns of the undertaking, subject to a modest royalty; second, exclusive
management of the project; third, control of production of the natural resource,
such as volume of production, expansion, research and development; and fourth,
exclusive responsibility for downstream operations, like processing, marketing, and
distribution. In short, even if nominally, the state is the sovereign and owner of the
natural resource being exploited, it has been shorn of all elements of control over
such natural resource because of the exclusive nature of the contractual regime of
the concession. The concession system, investing as it does ownership of natural
resources, constitutes a consistent inconsistency with the principle embodied in our
Constitution that natural resources belong to the state and shall not be alienated,
not to mention the fact that the concession was the bedrock of the colonial system
in the exploitation of natural resources.143
Eventually, the concession system failed for reasons explained by Dimagiba:
Notwithstanding the good intentions of the Petroleum Act of 1949, the concession
system could not have properly spurred sustained oil exploration activities in the
country, since it assumed that such a capital-intensive, high risk venture could be
successfully undertaken by a single individual or a small company. In effect,
concessionaires' funds were easily exhausted. Moreover, since the concession
system practically closed its doors to interested foreign investors, local capital was
stretched to the limits. The old system also failed to consider the highly
sophisticated technology and expertise required, which would be available only to
multinational companies.144
A shift to a new regime for the development of natural resources thus seemed
imminent.
PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE
SERVICE CONTRACT SYSTEM
The promulgation on December 31, 1972 of Presidential Decree No. 87, 145 otherwise
known as The Oil Exploration and Development Act of 1972 signaled such a
transformation. P.D. No. 87 permitted the government to explore for and produce
indigenous petroleum through "service contracts." 146
"Service contracts" is a term that assumes varying meanings to different people,
and it has carried many names in different countries, like "work contracts" in
Indonesia, "concession agreements" in Africa, "production-sharing agreements" in
the Middle East, and "participation agreements" in Latin America. 147 A functional
definition of "service contracts" in the Philippines is provided as follows:
A service contract is a contractual arrangement for engaging in the exploitation and
development of petroleum, mineral, energy, land and other natural resources by

which a government or its agency, or a private person granted a right or privilege


by the government authorizes the other party (service contractor) to engage or
participate in the exercise of such right or the enjoyment of the privilege, in that the
latter provides financial or technical resources, undertakes the exploitation or
production of a given resource, or directly manages the productive enterprise,
operations of the exploration and exploitation of the resources or the disposition of
marketing or resources.148
In a service contract under P.D. No. 87, service and technology are furnished by the
service contractor for which it shall be entitled to the stipulated service fee. 149 The
contractor must be technically competent and financially capable to undertake the
operations required in the contract.150
Financing is supposed to be provided by the Government to which all petroleum
produced belongs.151 In case the Government is unable to finance petroleum
exploration operations, the contractor may furnish services, technology and
financing, and the proceeds of sale of the petroleum produced under the contract
shall be the source of funds for payment of the service fee and the operating
expenses due the contractor.152 The contractor shall undertake, manage and execute
petroleum operations, subject to the government overseeing the management of
the operations.153 The contractor provides all necessary services and technology and
the requisite financing, performs the exploration work obligations, and assumes all
exploration risks such that if no petroleum is produced, it will not be entitled to
reimbursement.154 Once petroleum in commercial quantity is discovered, the
contractor shall operate the field on behalf of the government. 155
P.D. No. 87 prescribed minimum terms and conditions for every service
contract.156 It also granted the contractor certain privileges, including exemption
from taxes and payment of tariff duties,157 and permitted the repatriation of capital
and retention of profits abroad.158
Ostensibly, the service contract system had certain advantages over the concession
regime.159 It has been opined, though, that, in the Philippines, our concept of a
service contract, at least in the petroleum industry, was basically a concession
regime with a production-sharing element.160
On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification
of a new Constitution.161Article XIV on the National Economy and Patrimony
contained provisions similar to the 1935 Constitution with regard to Filipino
participation in the nation's natural resources. Section 8, Article XIV thereof
provides:
Sec. 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.

While Section 9 of the same Article maintained the Filipino-only policy in the
enjoyment of natural resources, it also allowed Filipinos, upon authority of the
Batasang Pambansa, to enter into service contracts with any person or entity for the
exploration or utilization of natural resources.
Sec. 9. The disposition, exploration, development, exploitation, or utilization of any
of the natural resources of the Philippines shall be limited to citizens, or to
corporations or associations at least sixty per centum of which is owned by such
citizens. The Batasang Pambansa, in the national interest, may allow such citizens,
corporations or associations to enter into service contracts for financial, technical,
management, or other forms of assistance with any person or entity for the
exploration, or utilization of any of the natural resources. Existing valid and binding
service contracts for financial, technical, management, or other forms of assistance
are hereby recognized as such. [Emphasis supplied.]
The concept of service contracts, according to one delegate, was borrowed from the
methods followed by India, Pakistan and especially Indonesia in the exploration of
petroleum and mineral oils.162 The provision allowing such contracts, according to
another, was intended to "enhance the proper development of our natural resources
since Filipino citizens lack the needed capital and technical know-how which are
essential in the proper exploration, development and exploitation of the natural
resources of the country."163
The original idea was to authorize the government, not private entities, to enter into
service contracts with foreign entities.164 As finally approved, however, a citizen or
private entity could be allowed by the National Assembly to enter into such service
contract.165 The prior approval of the National Assembly was deemed sufficient to
protect the national interest.166 Notably, none of the laws allowing service contracts
were passed by the Batasang Pambansa. Indeed, all of them were enacted by
presidential decree.
On March 13, 1973, shortly after the ratification of the new Constitution, the
President promulgated Presidential Decree No. 151.167 The law allowed Filipino
citizens or entities which have acquired lands of the public domain or which own,
hold or control such lands to enter into service contracts for financial, technical,
management or other forms of assistance with any foreign persons or entity for the
exploration, development, exploitation or utilization of said lands. 168
Presidential Decree No. 463,169 also known as The Mineral Resources Development
Decree of 1974, was enacted on May 17, 1974. Section 44 of the decree, as
amended, provided that a lessee of a mining claim may enter into a service contract
with a qualified domestic or foreign contractor for the exploration, development and
exploitation of his claims and the processing and marketing of the product thereof.
Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on May 16,
1975, allowed Filipinos engaged in commercial fishing to enter into contracts for
financial, technical or other forms of assistance with any foreign person, corporation
or entity for the production, storage, marketing and processing of fish and
fishery/aquatic products.171
Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines),
approved on May 19, 1975, allowed "forest products licensees, lessees, or

permitees to enter into service contracts for financial, technical, management, or


other forms of assistance . . . with any foreign person or entity for the exploration,
development, exploitation or utilization of the forest resources." 173
Yet another law allowing service contracts, this time for geothermal resources, was
Presidential Decree No. 1442,174 which was signed into law on June 11, 1978.
Section 1 thereof authorized the Government to enter into service contracts for the
exploration, exploitation and development of geothermal resources with a foreign
contractor who must be technically and financially capable of undertaking the
operations required in the service contract.
Thus, virtually the entire range of the country's natural resources from petroleum
and minerals to geothermal energy, from public lands and forest resources to
fishery products was well covered by apparent legal authority to engage in the
direct participation or involvement of foreign persons or corporations (otherwise
disqualified) in the exploration and utilization of natural resources through service
contracts.175
THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE
AGREEMENTS
After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power
under a revolutionary government. On March 25, 1986, President Aquino issued
Proclamation No. 3,176 promulgating the Provisional Constitution, more popularly
referred to as the Freedom Constitution. By authority of the same Proclamation, the
President created a Constitutional Commission (CONCOM) to draft a new
constitution, which took effect on the date of its ratification on February 2, 1987. 177
The 1987 Constitution retained the Regalian doctrine. The first sentence of Section
2, Article XII states: "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."
Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second
sentence of the same provision, prohibits the alienation of natural resources, except
agricultural lands.
The third sentence of the same paragraph is new: "The exploration, development
and utilization of natural resources shall be under the full control and supervision of
the State." The constitutional policy of the State's "full control and supervision" over
natural resources proceeds from the concept of jura regalia, 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.178 Under this provision, the State assumes "a more dynamic role" in the
exploration, development and utilization of natural resources. 179
Conspicuously absent in Section 2 is the provision in the 1935 and 1973
Constitutions authorizing the State to grant licenses, concessions, or leases for the
exploration, exploitation, development, or utilization of natural resources. By such

omission, the utilization of inalienable lands of public domain through "license,


concession or lease" is no longer allowed under the 1987 Constitution. 180
Having omitted the provision on the concession system, Section 2 proceeded to
introduce "unfamiliar language":181
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.
Consonant with the State's "full supervision and control" over natural resources,
Section 2 offers the State two "options."182 One, the State may directly undertake
these activities itself; or two, it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or entities at least 60% of
whose capital is owned by such citizens.
A third option is found in the third paragraph of the same section:
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays, and lagoons.
While the second and third options are limited only to Filipino citizens or, in the case
of the former, to corporations or associations at least 60% of the capital of which is
owned by Filipinos, a fourth allows the participation of foreign-owned corporations.
The fourth and fifth paragraphs of Section 2 provide:
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.
Although Section 2 sanctions the participation of foreign-owned corporations in the
exploration, development, and utilization of natural resources, it imposes certain
limitations or conditions to agreements with such corporations.
First, the parties to FTAAs. Only the President, in behalf of the State, may
enter into these agreements, and only with corporations. By contrast,
under the 1973 Constitution, a Filipino citizen, corporation or association
may enter into a service contract with a "foreign person or entity."
Second, the size of the activities: only large-scale exploration,
development, and utilization is allowed. The term "large-scale usually
refers to very capital-intensive activities."183

Third, the natural resources subject of the activities is restricted to


minerals, petroleum and other mineral oils, the intent being to limit service
contracts to those areas where Filipino capital may not be sufficient. 184
Fourth, consistency with the provisions of statute. The agreements must be
in accordance with the terms and conditions provided by law.
Fifth, Section 2 prescribes certain standards for entering into such
agreements. The agreements must be based on real contributions to
economic growth and general welfare of the country.
Sixth, the agreements must contain rudimentary stipulations for the
promotion of the development and use of local scientific and technical
resources.
Seventh, the notification requirement. The President shall notify Congress
of every financial or technical assistance agreement entered into within
thirty days from its execution.
Finally, the scope of the agreements. While the 1973 Constitution referred
to "service contracts for financial, technical, management, or other forms
of assistance" the 1987 Constitution provides for "agreements. . . involving
either financial or technical assistance." It bears noting that the phrases
"service contracts" and "management or other forms of assistance" in the
earlier constitution have been omitted.
By virtue of her legislative powers under the Provisional Constitution, 185 President
Aquino, on July 10, 1987, signed into law E.O. No. 211 prescribing the interim
procedures in the processing and approval of applications for the exploration,
development and utilization of minerals. The omission in the 1987 Constitution of
the term "service contracts" notwithstanding, the said E.O. still referred to them in
Section 2 thereof:
Sec. 2. Applications for the exploration, development and utilization of mineral
resources, including renewal applications and applications for approval of operating
agreements and mining service contracts, shall be accepted and processed and may
be approved x x x. [Emphasis supplied.]
The same law provided in its Section 3 that the "processing, evaluation and
approval of all mining applications . . . operating agreements and service contracts .
. . shall be governed by Presidential Decree No. 463, as amended, other existing
mining laws, and their implementing rules and regulations. . . ."
As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279
by authority of which the subject WMCP FTAA was executed on March 30, 1995.
On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15
thereof declares that the Act "shall govern the exploration, development, utilization,
and processing of all mineral resources." Such declaration notwithstanding, R.A. No.
7942 does not actually cover all the modes through which the State may undertake
the exploration, development, and utilization of natural resources.

The State, being the owner of the natural resources, is accorded the primary power
and responsibility in the exploration, development and utilization thereof. As such, it
may undertake these activities through four modes:

income tax, excise tax, special allowance, withholding tax due from the contractor's
foreign stockholders arising from dividend or interest payments to the said foreign
stockholders, in case of a foreign national and all such other taxes, duties and fees
as provided for under existing laws.

The State may directly undertake such activities.


(2) The State may enter into co-production, joint venture or productionsharing agreements with Filipino citizens or qualified corporations.
(3) Congress may, by law, allow small-scale utilization of natural resources
by Filipino citizens.
(4) For the large-scale exploration, development and utilization of minerals,
petroleum and other mineral oils, the President may enter into agreements
with foreign-owned corporations involving technical or financial
assistance.186
Except to charge the Mines and Geosciences Bureau of the DENR with performing
researches and surveys,187 and a passing mention of government-owned or
controlled corporations,188 R.A. No. 7942 does not specify how the State should go
about the first mode. The third mode, on the other hand, is governed by Republic
Act No. 7076189(the People's Small-Scale Mining Act of 1991) and other pertinent
laws.190 R.A. No. 7942 primarily concerns itself with the second and fourth modes.
Mineral production sharing, co-production and joint venture agreements are
collectively classified by R.A. No. 7942 as "mineral agreements." 191 The Government
participates the least in a mineral production sharing agreement (MPSA). In an
MPSA, the Government grants the contractor192 the exclusive right to conduct
mining operations within a contract area193 and shares in the gross output.194 The
MPSA contractor provides the financing, technology, management and personnel
necessary for the agreement's implementation.195 The total government share in an
MPSA is the excise tax on mineral products under Republic Act No.
7729,196 amending Section 151(a) of the National Internal Revenue Code, as
amended.197
In a co-production agreement (CA),198 the Government provides inputs to the
mining operations other than the mineral resource,199 while in a joint venture
agreement (JVA), where the Government enjoys the greatest participation, the
Government and the JVA contractor organize a company with both parties having
equity shares.200 Aside from earnings in equity, the Government in a JVA is also
entitled to a share in the gross output.201The Government may enter into a CA202 or
JVA203 with one or more contractors. The Government's share in a CA or JVA is set
out in Section 81 of the law:
The share of the Government in co-production and joint venture agreements shall
be negotiated by the Government and the contractor taking into consideration the:
(a) capital investment of the project, (b) the risks involved, (c) contribution of the
project to the economy, and (d) other factors that will provide for a fair and
equitable sharing between the Government and the contractor. The Government
shall also be entitled to compensations for its other contributions which shall be
agreed upon by the parties, and shall consist, among other things, the contractor's

All mineral agreements grant the respective contractors the exclusive right to
conduct mining operations and to extract all mineral resources found in the contract
area.204 A "qualified person" may enter into any of the mineral agreements with the
Government.205 A "qualified person" is
any citizen of the Philippines with capacity to contract, or a corporation, partnership,
association, or cooperative organized or authorized for the purpose of engaging in
mining, with technical and financial capability to undertake mineral resources
development and duly registered in accordance with law at least sixty per centum
(60%) of the capital of which is owned by citizens of the Philippines x x x. 206
The fourth mode involves "financial or technical assistance agreements." An FTAA is
defined as "a contract involving financial or technical assistance for large-scale
exploration, development, and utilization of natural resources." 207 Any qualified
person with technical and financial capability to undertake large-scale exploration,
development, and utilization of natural resources in the Philippines may enter into
such agreement directly with the Government through the DENR. 208 For the purpose
of granting an FTAA, a legally organized foreign-owned corporation (any
corporation, partnership, association, or cooperative duly registered in accordance
with law in which less than 50% of the capital is owned by Filipino citizens) 209 is
deemed a "qualified person."210
Other than the difference in contractors' qualifications, the principal distinction
between mineral agreements and FTAAs is the maximum contract area to which a
qualified person may hold or be granted.211 "Large-scale" under R.A. No. 7942 is
determined by the size of the contract area, as opposed to the amount invested (US
$50,000,000.00), which was the standard under E.O. 279.
Like a CA or a JVA, an FTAA is subject to negotiation.212 The Government's
contributions, in the form of taxes, in an FTAA is identical to its contributions in the
two mineral agreements, save that in an FTAA:
The collection of Government share in financial or technical assistance agreement
shall commence after the financial or technical assistance agreement contractor has
fully recovered its pre-operating expenses, exploration, and development
expenditures, inclusive.213
III
Having examined the history of the constitutional provision and statutes enacted
pursuant thereto, a consideration of the substantive issues presented by the petition
is now in order.
THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279

Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was
executed, did not come into effect.
E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two
days before the opening of Congress on July 27, 1987.214 Section 8 of the E.O.
states that the same "shall take effect immediately." This provision, according to
petitioners, runs counter to Section 1 of E.O. No. 200,215 which provides:
SECTION 1. Laws shall take effect after fifteen days following the completion of their
publication either in the Official Gazette or in a newspaper of general circulation in
the Philippines, unless it is otherwise provided.216 [Emphasis supplied.]
On that premise, petitioners contend that E.O. No. 279 could have only taken effect
fifteen days after its publication at which time Congress had already convened and
the President's power to legislate had ceased.
Respondents, on the other hand, counter that the validity of E.O. No. 279 was
settled in Miners Association of the Philippines v. Factoran, supra. This is of course
incorrect for the issue in Miners Association was not the validity of E.O. No. 279 but
that of DAO Nos. 57 and 82 which were issued pursuant thereto.
Nevertheless, petitioners' contentions have no merit.
It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking
effect on a date other than even before the 15-day period after its publication.
Where a law provides for its own date of effectivity, such date prevails over that
prescribed by E.O. No. 200. Indeed, this is the very essence of the phrase "unless it
is otherwise provided" in Section 1 thereof. Section 1, E.O. No. 200, therefore,
applies only when a statute does not provide for its own date of effectivity.
What is mandatory under E.O. No. 200, and what due process requires, as this
Court held in Taada v. Tuvera,217is the publication of the law for without such notice
and publication, there would be no basis for the application of the maxim
"ignorantia legis n[eminem] excusat." It would be the height of injustice to punish
or otherwise burden a citizen for the transgression of a law of which he had no
notice whatsoever, not even a constructive one.
While the effectivity clause of E.O. No. 279 does not require its publication, it is not
a ground for its invalidation since the Constitution, being "the fundamental,
paramount and supreme law of the nation," is deemed written in the law.218 Hence,
the due process clause,219 which, so Taada held, mandates the publication of
statutes, is read into Section 8 of E.O. No. 279. Additionally, Section 1 of E.O. No.
200 which provides for publication "either in the Official Gazette or in a newspaper
of general circulation in the Philippines," finds suppletory application. It is significant
to note that E.O. No. 279 was actually published in the Official Gazette 220 on August
3, 1987.
From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and
Taada v. Tuvera, this Court holds that E.O. No. 279 became effective immediately
upon its publication in the Official Gazette on August 3, 1987.

That such effectivity took place after the convening of the first Congress is
irrelevant. At the time President Aquino issued E.O. No. 279 on July 25, 1987, she
was still validly exercising legislative powers under the Provisional
Constitution.221 Article XVIII (Transitory Provisions) of the 1987 Constitution
explicitly states:
Sec. 6. The incumbent President shall continue to exercise legislative powers until
the first Congress is convened.
The convening of the first Congress merely precluded the exercise of legislative
powers by President Aquino; it did not prevent the effectivity of laws she had
previously enacted.
There can be no question, therefore, that E.O. No. 279 is an effective, and a validly
enacted, statute.
THE CONSTITUTIONALITY OF THE WMCP FTAA
Petitioners submit that, in accordance with the text of Section 2, Article XII of the
Constitution, FTAAs should be limited to "technical or financial assistance" only.
They observe, however, that, contrary to the language of the Constitution, the
WMCP FTAA allows WMCP, a fully foreign-owned mining corporation, to extend more
than mere financial or technical assistance to the State, for it permits WMCP to
manage and operate every aspect of the mining activity. 222
Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of
constitutions that the instrument must be so construed as to give effect to the
intention of the people who adopted it. 223 This intention is to be sought in the
constitution itself, and the apparent meaning of the words is to be taken as
expressing it, except in cases where that assumption would lead to absurdity,
ambiguity, or contradiction.224 What the Constitution says according to the text of
the provision, therefore, compels acceptance and negates the power of the courts to
alter it, based on the postulate that the framers and the people mean what they
say.225 Accordingly, following the literal text of the Constitution, assistance accorded
by foreign-owned corporations in the large-scale exploration, development, and
utilization of petroleum, minerals and mineral oils should be limited to "technical" or
"financial" assistance only.
WMCP nevertheless submits that the word "technical" in the fourth paragraph of
Section 2 of E.O. No. 279 encompasses a "broad number of possible services,"
perhaps, "scientific and/or technological in basis." 226 It thus posits that it may also
well include "the area of management or operations . . . so long as such assistance
requires specialized knowledge or skills, and are related to the exploration,
development and utilization of mineral resources."227
This Court is not persuaded. As priorly pointed out, the phrase "management or
other forms of assistance" in the 1973 Constitution was deleted in the 1987
Constitution, which allows only "technical or financial assistance." Casus omisus pro
omisso habendus est. A person, object or thing omitted from an enumeration must
be held to have been omitted intentionally.228 As will be shown later, the
management or operation of mining activities by foreign contractors, which is the

primary feature of service contracts, was precisely the evil that the drafters of the
1987 Constitution sought to eradicate.
Respondents insist that "agreements involving technical or financial assistance" is
just another term for service contracts. They contend that the proceedings of the
CONCOM indicate "that although the terminology 'service contract' was avoided [by
the Constitution], the concept it represented was not." They add that "[t]he concept
is embodied in the phrase 'agreements involving financial or technical
assistance.'"229 And point out how members of the CONCOM referred to these
agreements as "service contracts." For instance:
SR. TAN. Am I correct in thinking that the only difference between these
future service contracts and the past service contracts under Mr. Marcos is
the general law to be enacted by the legislature and the notification of
Congress by the President? That is the only difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards[?]
MR. VILLEGAS. Yes. There was no law at all governing service contracts
before.
SR. TAN. Thank you, Madam President.230 [Emphasis supplied.]
WMCP also cites the following statements of Commissioners Gascon,
Garcia, Nolledo and Tadeo who alluded to service contracts as they
explained their respective votes in the approval of the draft Article:
MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two
reasons: One, the provision on service contracts. I felt that if we would
constitutionalize any provision on service contracts, this should always be
with the concurrence of Congress and not guided only by a general law to
be promulgated by Congress. x x x. 231 [Emphasis supplied.]
x x x.
MR. GARCIA. Thank you.
I vote no. x x x.
Service contracts are given constitutional legitimization in Section 3, even
when they have been proven to be inimical to the interests of the nation,
providing as they do the legal loophole for the exploitation of our natural
resources for the benefit of foreign interests. They constitute a serious
negation of Filipino control on the use and disposition of the nation's
natural resources, especially with regard to those which are
nonrenewable.232[Emphasis supplied.]

xxx
MR. NOLLEDO. While there are objectionable provisions in the Article on
National Economy and Patrimony, going over said provisions meticulously,
setting aside prejudice and personalities will reveal that the article contains
a balanced set of provisions. I hope the forthcoming Congress will
implement such provisions taking into account that Filipinos should have
real control over our economy and patrimony, and if foreign equity is
permitted, the same must be subordinated to the imperative demands of
the national interest.
x x x.
It is also my understanding that service contracts involving foreign
corporations or entities are resorted to only when no Filipino enterprise or
Filipino-controlled enterprise could possibly undertake the exploration or
exploitation of our natural resources and that compensation under such
contracts cannot and should not equal what should pertain to ownership of
capital. In other words, the service contract should not be an instrument to
circumvent the basic provision, that the exploration and exploitation of
natural resources should be truly for the benefit of Filipinos.
Thank you, and I vote yes.233 [Emphasis supplied.]
x x x.
MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.
Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin,
pangunahin ang salitang "imperyalismo." Ang ibig sabihin nito ay ang
sistema ng lipunang pinaghaharian ng iilang monopolyong kapitalista at
ang salitang "imperyalismo" ay buhay na buhay sa National Economy and
Patrimony na nating ginawa. Sa pamamagitan ng salitang "based on,"
naroroon na ang free trade sapagkat tayo ay mananatiling tagapagluwas
ng hilaw na sangkap at tagaangkat ng yaring produkto. Pangalawa,
naroroon pa rin ang parity rights, ang service contract, ang 60-40 equity sa
natural resources. Habang naghihirap ang sambayanang Pilipino,
ginagalugad naman ng mga dayuhan ang ating likas na yaman. Kailan man
ang Article on National Economy and Patrimony ay hindi nagpaalis sa
pagkaalipin ng ating ekonomiya sa kamay ng mga dayuhan. Ang solusyon
sa suliranin ng bansa ay dalawa lamang: ang pagpapatupad ng tunay na
reporma sa lupa at ang national industrialization. Ito ang tinatawag naming
pagsikat ng araw sa Silangan. Ngunit ang mga landlords and big
businessmen at ang mga komprador ay nagsasabi na ang free trade na ito,
ang kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw
ay sisikat sa Kanluran. Kailan man hindi puwedeng sumikat ang araw sa
Kanluran. I vote no.234 [Emphasis supplied.]
This Court is likewise not persuaded.

As earlier noted, the phrase "service contracts" has been deleted in the 1987
Constitution's Article on National Economy and Patrimony. If the CONCOM intended
to retain the concept of service contracts under the 1973 Constitution, it could have
simply adopted the old terminology ("service contracts") instead of employing new
and unfamiliar terms ("agreements . . . involving either technical or financial
assistance"). Such a difference between the language of a provision in a revised
constitution and that of a similar provision in the preceding constitution is viewed as
indicative of a difference in purpose.235 If, as respondents suggest, the concept of
"technical or financial assistance" agreements is identical to that of "service
contracts," the CONCOM would not have bothered to fit the same dog with a new
collar. To uphold respondents' theory would reduce the first to a mere euphemism
for the second and render the change in phraseology meaningless.
An examination of the reason behind the change confirms that technical or financial
assistance agreements are not synonymous to service contracts.

control and supervision of the State." Was the concept changed so that
these particular resources would be limited to citizens of the Philippines? Or
would these resources only be under the full control and supervision of the
State; meaning, noncitizens would have access to these natural resources?
Is that the understanding?
MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next
sentence, it states:
Such activities may be directly undertaken by the State, or it may enter into coproduction, joint venture, production-sharing agreements with Filipino citizens.
So we are still limiting it only to Filipino citizens.
x x x.

[T]he Court in construing a Constitution should bear in mind the object sought to be
accomplished by its adoption, and the evils, if any, sought to be prevented or
remedied. A doubtful provision will be examined in light of the history of the times,
and the condition and circumstances under which the Constitution was framed. The
object is to ascertain the reason which induced the framers of the Constitution to
enact the particular provision and the purpose sought to be accomplished thereby,
in order to construe the whole as to make the words consonant to that reason and
calculated to effect that purpose.236
As the following question of Commissioner Quesada and Commissioner Villegas'
answer shows the drafters intended to do away with service contracts which were
used to circumvent the capitalization (60%-40%) requirement:
MS. QUESADA. The 1973 Constitution used the words "service contracts."
In this particular Section 3, is there a safeguard against the possible
control of foreign interests if the Filipinos go into coproduction with them?
MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service contracts"
was our first attempt to avoid some of the abuses in the past regime in the
use of service contracts to go around the 60-40 arrangement. The
safeguard that has been introduced and this, of course can be refined
is found in Section 3, lines 25 to 30, where Congress will have to concur
with the President on any agreement entered into between a foreignowned corporation and the government involving technical or financial
assistance for large-scale exploration, development and utilization of
natural resources.237 [Emphasis supplied.]
In a subsequent discussion, Commissioner Villegas allayed the fears of
Commissioner Quesada regarding the participation of foreign interests in
Philippine natural resources, which was supposed to be restricted to
Filipinos.
MS. QUESADA. Another point of clarification is the phrase "and utilization of
natural resources shall be under the full control and supervision of the
State." In the 1973 Constitution, this was limited to citizens of the
Philippines; but it was removed and substituted by "shall be under the full

MS. QUESADA. Going back to Section 3, the section suggests that:


The exploration, development, and utilization of natural resources may be directly
undertaken by the State, or it may enter into co-production, joint venture or
production-sharing agreement with . . . corporations or associations at least sixty
per cent of whose voting stock or controlling interest is owned by such citizens.
Lines 25 to 30, on the other hand, suggest that in the large-scale exploration,
development and utilization of natural resources, the President with the concurrence
of Congress may enter into agreements with foreign-owned corporations even for
technical or financial assistance.
I wonder if this part of Section 3 contradicts the second part. I am raising this point
for fear that foreign investors will use their enormous capital resources to facilitate
the actual exploitation or exploration, development and effective disposition of our
natural resources to the detriment of Filipino investors. I am not saying that we
should not consider borrowing money from foreign sources. What I refer to is that
foreign interest should be allowed to participate only to the extent that they lend us
money and give us technical assistance with the appropriate government permit. In
this way, we can insure the enjoyment of our natural resources by our own people.
MR. VILLEGAS. Actually, the second provision about the President does not permit
foreign investors to participate. It is only technical or financial assistance they do
not own anything but on conditions that have to be determined by law with the
concurrence of Congress. So, it is very restrictive.
If the Commissioner will remember, this removes the possibility for service contracts
which we said yesterday were avenues used in the previous regime to go around
the 60-40 requirement.238 [Emphasis supplied.]
The present Chief Justice, then a member of the CONCOM, also referred to this
limitation in scope in proposing an amendment to the 60-40 requirement:
MR. DAVIDE. May I be allowed to explain the proposal?

MR. MAAMBONG. Subject to the three-minute rule, Madam President.


MR. DAVIDE. It will not take three minutes.
The Commission had just approved the Preamble. In the Preamble we clearly stated
that the Filipino people are sovereign and that one of the objectives for the creation
or establishment of a government is to conserve and develop the national
patrimony. The implication is that the national patrimony or our natural resources
are exclusively reserved for the Filipino people. No alien must be allowed to enjoy,
exploit and develop our natural resources. As a matter of fact, that principle
proceeds from the fact that our natural resources are gifts from God to the Filipino
people and it would be a breach of that special blessing from God if we will allow
aliens to exploit our natural resources.
I voted in favor of the Jamir proposal because it is not really exploitation that we
granted to the alien corporations but only for them to render financial or technical
assistance. It is not for them to enjoy our natural resources. Madam President, our
natural resources are depleting; our population is increasing by leaps and bounds.
Fifty years from now, if we will allow these aliens to exploit our natural resources,
there will be no more natural resources for the next generations of Filipinos. It may
last long if we will begin now. Since 1935 the aliens have been allowed to enjoy to a
certain extent the exploitation of our natural resources, and we became victims of
foreign dominance and control. The aliens are interested in coming to the
Philippines because they would like to enjoy the bounty of nature exclusively
intended for Filipinos by God.
And so I appeal to all, for the sake of the future generations, that if we have to pray
in the Preamble "to preserve and develop the national patrimony for the sovereign
Filipino people and for the generations to come," we must at this time decide once
and for all that our natural resources must be reserved only to Filipino citizens.
Thank you.239 [Emphasis supplied.]
The opinion of another member of the CONCOM is persuasive240 and leaves no doubt
as to the intention of the framers to eliminate service contracts altogether. He
writes:
Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological
undertakings for which the President may enter into contracts with foreign-owned
corporations, and enunciates strict conditions that should govern such contracts. x x
x.
This provision balances the need for foreign capital and technology with the need to
maintain the national sovereignty. It recognizes the fact that as long as Filipinos can
formulate their own terms in their own territory, there is no danger of relinquishing
sovereignty to foreign interests.
Are service contracts allowed under the new Constitution? No. Under the new
Constitution, foreign investors (fully alien-owned) can NOT participate in Filipino
enterprises except to provide: (1) Technical Assistance for highly technical
enterprises; and (2) Financial Assistance for large-scale enterprises.

The intent of this provision, as well as other provisions on foreign investments, is to


prevent the practice (prevalent in the Marcos government) of skirting the 60/40
equation using the cover of service contracts. 241 [Emphasis supplied.]
Furthermore, it appears that Proposed Resolution No. 496, 242 which was the draft
Article on National Economy and Patrimony, adopted the concept of
"agreements . . . involving either technical or financial assistance" contained in the
"Draft of the 1986 U.P. Law Constitution Project" (U.P. Law draft) which was taken
into consideration during the deliberation of the CONCOM. 243 The former, as well as
Article XII, as adopted, employed the same terminology, as the comparative table
below shows:

DRAFT OF THE UP
LAW CONSTITUTION
PROJECT

PROPOSED
RESOLUTION NO.
496 OF THE
CONSTITUTIONAL
COMMISSION

ARTICLE XII OF THE


1987
CONSTITUTION

Sec. 1. All lands of


the public domain,
waters, minerals,
coal, petroleum and
other mineral oils,
all forces of
potential energy,
fisheries, flora and
fauna and other
natural resources of
the Philippines 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. Such
activities may be
directly undertaken
by the state, or it
may enter into co-

Sec. 3. All lands of


the public domain,
waters, minerals,
coal, petroleum and
other mineral oils,
all forces of
potential energy,
fisheries, forests,
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. Such
activities may be
directly undertaken
by the State, or it
may enter into co-

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

production, joint
venture, production
sharing agreements
with Filipino citizens
or corporations or
associations sixty
per cent of whose
voting stock or
controlling interest
is owned by such
citizens for a period
of not more than
twenty-five years,
renewable for not
more than twentyfive years and under
such terms and
conditions as may
be provided by law.
In case as to 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 National
Assembly may by
law allow small scale
utilization of natural
resources by Filipino
citizens.
The National
Assembly, may, by
two-thirds vote of all
its members by
special law provide
the terms and
conditions under
which a foreignowned corporation
may enter into
agreements with the
government

production, joint
venture, productionsharing agreements
with Filipino citizens
or corporations or
associations at least
sixty per cent of
whose voting stock
or controlling
interest is owned by
such citizens. Such
agreements shall be
for a period of
twenty-five years,
renewable for not
more than twentyfive years, and
under such term
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 for
water power,
beneficial use may
be the measure and
limit of the grant.
The Congress may
by law allow smallscale utilization of
natural resources by
Filipino citizens, as
well as cooperative
fish farming in
rivers, lakes, bays,
and lagoons.
The President with
the concurrence of
Congress, by special
law, shall provide
the terms and
conditions under
which a foreignowned corporation

enter into coproduction, 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 twentyfive years,
renewable for not
more than twentyfive years, and
under such terms
and conditions as
may be provided by
law. In case 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 smallscale utilization of
natural resources by

involving either
technical or
financial
assistance for
large-scale
exploration,
development, or
utilization of natural
resources.
[Emphasis
supplied.]

may enter into


agreements with the
government
involving either
technical or
financial
assistance for
large-scale
exploration,
development, and
utilization of natural
resources.
[Emphasis
supplied.]

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.
[Emphasis
supplied.]
The President shall
notify the Congress
of every contract
entered into in
accordance with this
provision, within
thirty days from its

execution.

The insights of the proponents of the U.P. Law draft are, therefore, instructive in
interpreting the phrase "technical or financial assistance."
In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor
Pacifico A. Agabin, who was a member of the working group that prepared the U.P.
Law draft, criticized service contracts for they "lodge exclusive management and
control of the enterprise to the service contractor, which is reminiscent of the old
concession regime. Thus, notwithstanding the provision of the Constitution that
natural resources belong to the State, and that these shall not be alienated, the
service contract system renders nugatory the constitutional provisions cited." 244 He
elaborates:
Looking at the Philippine model, we can discern the following vestiges of the
concession regime, thus:
1. Bidding of a selected area, or leasing the choice of the area to the
interested party and then negotiating the terms and conditions of the
contract; (Sec. 5, P.D. 87)
2. Management of the enterprise vested on the contractor, including
operation of the field if petroleum is discovered; (Sec. 8, P.D. 87)
3. Control of production and other matters such as expansion and
development; (Sec. 8)
4. Responsibility for downstream operations marketing, distribution, and
processing may be with the contractor (Sec. 8);
5. Ownership of equipment, machinery, fixed assets, and other properties
remain with contractor (Sec. 12, P.D. 87);
6. Repatriation of capital and retention of profits abroad guaranteed to the
contractor (Sec. 13, P.D. 87); and
7. While title to the petroleum discovered may nominally be in the name of
the government, the contractor has almost unfettered control over its
disposition and sale, and even the domestic requirements of the country is
relegated to a pro rata basis (Sec. 8).
In short, our version of the service contract is just a rehash of the old concession
regime x x x. Some people have pulled an old rabbit out of a magician's hat, and
foisted it upon us as a new and different animal.

The service contract as we know it here is antithetical to the principle of sovereignty


over our natural resources restated in the same article of the [1973] Constitution
containing the provision for service contracts. If the service contractor happens to
be a foreign corporation, the contract would also run counter to the constitutional
provision on nationalization or Filipinization, of the exploitation of our natural
resources.245 [Emphasis supplied. Underscoring in the original.]
Professor Merlin M. Magallona, also a member of the working group, was harsher in
his reproach of the system:
x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the
[1973] Charter, but the essence of nationalism was reduced to hollow rhetoric. The
1973 Charter still provided that the exploitation or development of the country's
natural resources be limited to Filipino citizens or corporations owned or controlled
by them. However, the martial-law Constitution allowed them, once these resources
are in their name, to enter into service contracts with foreign investors for financial,
technical, management, or other forms of assistance. Since foreign investors have
the capital resources, the actual exploitation and development, as well as the
effective disposition, of the country's natural resources, would be under their
direction, and control, relegating the Filipino investors to the role of second-rate
partners in joint ventures.
Through the instrumentality of the service contract, the 1973 Constitution had
legitimized at the highest level of state policy that which was prohibited under the
1973 Constitution, namely: the exploitation of the country's natural resources by
foreign nationals. The drastic impact of [this] constitutional change becomes more
pronounced when it is considered that the active party to any service contract may
be a corporation wholly owned by foreign interests. In such a case, the citizenship
requirement is completely set aside, permitting foreign corporations to obtain actual
possession, control, and [enjoyment] of the country's natural
resources.246 [Emphasis supplied.]
Accordingly, Professor Agabin recommends that:
Recognizing the service contract for what it is, we have to expunge it from the
Constitution and reaffirm ownership over our natural resources. That is the only way
we can exercise effective control over our natural resources.
This should not mean complete isolation of the country's natural resources from
foreign investment. Other contract forms which are less derogatory to our
sovereignty and control over natural resources like technical assistance
agreements, financial assistance [agreements], co-production agreements, joint
ventures, production-sharing could still be utilized and adopted without violating
constitutional provisions. In other words, we can adopt contract forms which
recognize and assert our sovereignty and ownership over natural resources, and
where the foreign entity is just a pure contractor instead of the beneficial owner of
our economic resources.247 [Emphasis supplied.]
Still another member of the working group, Professor Eduardo Labitag, proposed
that:

2. Service contracts as practiced under the 1973 Constitution should be


discouraged, instead the government may be allowed, subject to authorization by
special law passed by an extraordinary majority to enter into either technical or
financial assistance. This is justified by the fact that as presently worded in the 1973
Constitution, a service contract gives full control over the contract area to the
service contractor, for him to work, manage and dispose of the proceeds or
production. It was a subterfuge to get around the nationality requirement of the
constitution.248[Emphasis supplied.]

scarcity. Hence, they recommended a compromise to reconcile the nationalistic


provisions dating back to the 1935 Constitution, which reserved all natural
resources exclusively to Filipinos, and the more liberal 1973 Constitution, which
allowed foreigners to participate in these resources through service contracts. Such
a compromise called for the adoption of a new system in the exploration,
development, and utilization of natural resources in the form of technical
agreements or financial agreements which, necessarily, are distinct concepts from
service contracts.

In the annotations on the proposed Article on National Economy and Patrimony, the
U.P. Law draft summarized the rationale therefor, thus:

The replacement of "service contracts" with "agreements involving either technical


or financial assistance," as well as the deletion of the phrase "management or other
forms of assistance," assumes greater significance when note is taken that the U.P.
Law draft proposed other equally crucial changes that were obviously heeded by the
CONCOM. These include the abrogation of the concession system and the adoption
of new "options" for the State in the exploration, development, and utilization of
natural resources. The proponents deemed these changes to be more consistent
with the State's ownership of, and its "full control and supervision" (a phrase also
employed by the framers) over, such resources. The Project explained:

5. The last paragraph is a modification of the service contract provision found in


Section 9, Article XIV of the 1973 Constitution as amended. This 1973 provision
shattered the framework of nationalism in our fundamental law (see Magallona,
"Nationalism and its Subversion in the Constitution"). Through the service contract,
the 1973 Constitution had legitimized that which was prohibited under the 1935
constitutionthe exploitation of the country's natural resources by foreign nationals.
Through the service contract, acts prohibited by the Anti-Dummy Law were
recognized as legitimate arrangements. Service contracts lodge exclusive
management and control of the enterprise to the service contractor, not unlike the
old concession regime where the concessionaire had complete control over the
country's natural resources, having been given exclusive and plenary rights to
exploit a particular resource and, in effect, having been assured of ownership of that
resource at the point of extraction (see Agabin, "Service Contracts: Old Wine in New
Bottles"). Service contracts, hence, are antithetical to the principle of sovereignty
over our natural resources, as well as the constitutional provision on nationalization
or Filipinization of the exploitation of our natural resources.
Under the proposed provision, only technical assistance or financial assistance
agreements may be entered into, and only for large-scale activities. These are
contract forms which recognize and assert our sovereignty and ownership over
natural resources since the foreign entity is just a pure contractor and not a
beneficial owner of our economic resources. The proposal recognizes the need for
capital and technology to develop our natural resources without sacrificing our
sovereignty and control over such resources by the safeguard of a special law which
requires two-thirds vote of all the members of the Legislature. This will ensure that
such agreements will be debated upon exhaustively and thoroughly in the National
Assembly to avert prejudice to the nation.249 [Emphasis supplied.]
The U.P. Law draft proponents viewed service contracts under the 1973 Constitution
as grants of beneficial ownership of the country's natural resources to foreign owned
corporations. While, in theory, the State owns these natural resources and Filipino
citizens, their beneficiaries service contracts actually vested foreigners with the
right to dispose, explore for, develop, exploit, and utilize the same. Foreigners, not
Filipinos, became the beneficiaries of Philippine natural resources. This arrangement
is clearly incompatible with the constitutional ideal of nationalization of natural
resources, with the Regalian doctrine, and on a broader perspective, with Philippine
sovereignty.
The proponents nevertheless acknowledged the need for capital and technical knowhow in the large-scale exploitation, development and utilization of natural resources
the second paragraph of the proposed draft itself being an admission of such

3. In line with the State ownership of natural resources, the State should take a
more active role in the exploration, development, and utilization of natural
resources, than the present practice of granting licenses, concessions, or leases
hence the provision that said activities shall be under the full control and
supervision of the State. There are three major schemes by which the State could
undertake these activities: first, directly by itself; second, by virtue of coproduction, joint venture, production sharing agreements with Filipino citizens or
corporations or associations sixty per cent (60%) of the voting stock or controlling
interests of which are owned by such citizens; or third, with a foreign-owned
corporation, in cases of large-scale exploration, development, or utilization of
natural resources through agreements involving either technical or financial
assistance only. x x x.
At present, under the licensing concession or lease schemes, the government
benefits from such benefits only through fees, charges, ad valorem taxes and
income taxes of the exploiters of our natural resources. Such benefits are very
minimal compared with the enormous profits reaped by theses licensees, grantees,
concessionaires. Moreover, some of them disregard the conservation of natural
resources and do not protect the environment from degradation. The proposed role
of the State will enable it to a greater share in the profits it can also actively
husband its natural resources and engage in developmental programs that will be
beneficial to them.
4. Aside from the three major schemes for the exploration, development, and
utilization of our natural resources, the State may, by law, allow Filipino citizens to
explore, develop, utilize natural resources in small-scale. This is in recognition of the
plight of marginal fishermen, forest dwellers, gold panners, and others similarly
situated who exploit our natural resources for their daily sustenance and survival. 250
Professor Agabin, in particular, after taking pains to illustrate the similarities
between the two systems, concluded that the service contract regime was but a
"rehash" of the concession system. "Old wine in new bottles," as he put it. The
rejection of the service contract regime, therefore, is in consonance with the
abolition of the concession system.

In light of the deliberations of the CONCOM, the text of the Constitution, and the
adoption of other proposed changes, there is no doubt that the framers considered
and shared the intent of the U.P. Law proponents in employing the phrase
"agreements . . . involving either technical or financial assistance."
While certain commissioners may have mentioned the term "service contracts"
during the CONCOM deliberations, they may not have been necessarily referring to
the concept of service contracts under the 1973 Constitution. As noted earlier,
"service contracts" is a term that assumes different meanings to different
people.251 The commissioners may have been using the term loosely, and not in its
technical and legal sense, to refer, in general, to agreements concerning natural
resources entered into by the Government with foreign corporations. These loose
statements do not necessarily translate to the adoption of the 1973 Constitution
provision allowing service contracts.
It is true that, as shown in the earlier quoted portions of the proceedings in
CONCOM, in response to Sr. Tan's question, Commissioner Villegas commented that,
other than congressional notification, the only difference between "future" and
"past" "service contracts" is the requirement of a general law as there were no laws
previously authorizing the same.252 However, such remark is far outweighed by his
more categorical statement in his exchange with Commissioner Quesada that the
draft article "does not permit foreign investors to participate" in the nation's natural
resources which was exactly what service contracts did except to provide
"technical or financial assistance."253
In the case of the other commissioners, Commissioner Nolledo himself clarified in
his work that the present charter prohibits service contracts. 254 Commissioner
Gascon was not totally averse to foreign participation, but favored stricter
restrictions in the form of majority congressional concurrence.255 On the other hand,
Commissioners Garcia and Tadeo may have veered to the extreme side of the
spectrum and their objections may be interpreted as votes against any foreign
participation in our natural resources whatsoever.
WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the
Secretary of Justice, expressing the view that a financial or technical assistance
agreement "is no different in concept" from the service contract allowed under the
1973 Constitution. This Court is not, however, bound by this interpretation. When an
administrative or executive agency renders an opinion or issues a statement of
policy, it merely interprets a pre-existing law; and the administrative interpretation
of the law is at best advisory, for it is the courts that finally determine what the law
means.258

In any case, the constitutional provision allowing the President to enter into FTAAs
with foreign-owned corporations is an exception to the rule that participation in the
nation's natural resources is reserved exclusively to Filipinos. Accordingly, such
provision must be construed strictly against their enjoyment by non-Filipinos. As
Commissioner Villegas emphasized, the provision is "very
restrictive."259 Commissioner Nolledo also remarked that "entering into service
contracts is an exception to the rule on protection of natural resources for the
interest of the nation and, therefore, being an exception, it should be subject,
whenever possible, to stringent rules."260 Indeed, exceptions should be strictly but
reasonably construed; they extend only so far as their language fairly warrants and
all doubts should be resolved in favor of the general provision rather than the
exception.261
With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid
insofar as said Act authorizes service contracts. Although the statute employs the
phrase "financial and technical agreements" in accordance with the 1987
Constitution, it actually treats these agreements as service contracts that grant
beneficial ownership to foreign contractors contrary to the fundamental law.
Section 33, which is found under Chapter VI (Financial or Technical Assistance
Agreement) of R.A. No. 7942 states:
SEC. 33. Eligibility.Any qualified person with technical and financial capability to
undertake large-scale exploration, development, and utilization of mineral resources
in the Philippines may enter into a financial or technical assistance agreement
directly with the Government through the Department. [Emphasis supplied.]
"Exploration," as defined by R.A. No. 7942,
means the searching or prospecting for mineral resources by geological,
geochemical or geophysical surveys, remote sensing, test pitting, trending, drilling,
shaft sinking, tunneling or any other means for the purpose of determining the
existence, extent, quantity and quality thereof and the feasibility of mining them for
profit.262
A legally organized foreign-owned corporation may be granted an exploration
permit,263 which vests it with the right to conduct exploration for all minerals in
specified areas,264 i.e., to enter, occupy and explore the same.265Eventually, the
foreign-owned corporation, as such permittee, may apply for a financial and
technical assistance agreement.266
"Development" is the work undertaken to explore and prepare an ore body or a
mineral deposit for mining, including the construction of necessary infrastructure
and related facilities.267
"Utilization" "means the extraction or disposition of minerals." 268 A stipulation that
the proponent shall dispose of the minerals and byproducts produced at the highest
price and more advantageous terms and conditions as provided for under the
implementing rules and regulations is required to be incorporated in every FTAA. 269

A foreign-owned/-controlled corporation may likewise be granted a mineral


processing permit.270 "Mineral processing" is the milling, beneficiation or upgrading
of ores or minerals and rocks or by similar means to convert the same into
marketable products.271
An FTAA contractor makes a warranty that the mining operations shall be conducted
in accordance with the provisions of R.A. No. 7942 and its implementing rules 272 and
for work programs and minimum expenditures and commitments. 273 And it obliges
itself to furnish the Government records of geologic, accounting, and other relevant
data for its mining operation.274
"Mining operation," as the law defines it, means mining activities involving
exploration, feasibility, development, utilization, and processing. 275
The underlying assumption in all these provisions is that the foreign contractor
manages the mineral resources, just like the foreign contractor in a service contract.
Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same
auxiliary mining rights that it grants contractors in mineral agreements (MPSA, CA
and JV).276 Parenthetically, Sections 72 to 75 use the term "contractor," without
distinguishing between FTAA and mineral agreement contractors. And so does
"holders of mining rights" in Section 76. A foreign contractor may even convert its
FTAA into a mineral agreement if the economic viability of the contract area is found
to be inadequate to justify large-scale mining operations, 277 provided that it reduces
its equity in the corporation, partnership, association or cooperative to forty percent
(40%).278
Finally, under the Act, an FTAA contractor warrants that it "has or has access to all
the financing, managerial, and technical expertise. . . ." 279 This suggests that an
FTAA contractor is bound to provide some management assistance a form of
assistance that has been eliminated and, therefore, proscribed by the present
Charter.
By allowing foreign contractors to manage or operate all the aspects of the mining
operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed
beneficial ownership over the nation's mineral resources to these contractors,
leaving the State with nothing but bare title thereto.
Moreover, the same provisions, whether by design or inadvertence, permit a
circumvention of the constitutionally ordained 60%-40% capitalization requirement
for corporations or associations engaged in the exploitation, development and
utilization of Philippine natural resources.
In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of
Section 2, Article XII of the Constitution:
(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:
Provided, That a legally organized foreign-owned corporation shall be
deemed a qualified person for purposes of granting an exploration permit,
financial or technical assistance agreement or mineral processing permit.

(2) Section 23,280 which specifies the rights and obligations of an


exploration permittee, insofar as said section applies to a financial or
technical assistance agreement,
(3) Section 33, which prescribes the eligibility of a contractor in a financial
or technical assistance agreement;
(4) Section 35,281 which enumerates the terms and conditions for every
financial or technical assistance agreement;
(5) Section 39,282 which allows the contractor in a financial and technical
assistance agreement to convert the same into a mineral productionsharing agreement;
(6) Section 56,283 which authorizes the issuance of a mineral processing
permit to a contractor in a financial and technical assistance agreement;
The following provisions of the same Act are likewise void as they are dependent on
the foregoing provisions and cannot stand on their own:
(1) Section 3 (g),284 which defines the term "contractor," insofar as it
applies to a financial or technical assistance agreement.
Section 34,285 which prescribes the maximum contract area in a financial or
technical assistance agreements;
Section 36,286 which allows negotiations for financial or technical assistance
agreements;
Section 37,287 which prescribes the procedure for filing and evaluation of
financial or technical assistance agreement proposals;
Section 38,288 which limits the term of financial or technical assistance
agreements;
Section 40,289 which allows the assignment or transfer of financial or
technical assistance agreements;
Section 41,290 which allows the withdrawal of the contractor in an FTAA;
The second and third paragraphs of Section 81,291 which provide for the
Government's share in a financial and technical assistance agreement; and
Section 90,292 which provides for incentives to contractors in FTAAs insofar
as it applies to said contractors;
When the parts of the statute are so mutually dependent and connected as
conditions, considerations, inducements, or compensations for each other, as to

warrant a belief that the legislature intended them as a whole, and that if all could
not be carried into effect, the legislature would not pass the residue independently,
then, if some parts are unconstitutional, all the provisions which are thus
dependent, conditional, or connected, must fall with them. 293
There can be little doubt that the WMCP FTAA itself is a service contract.
Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit,
utilise[,] process and dispose of all Minerals products and by-products thereof that
may be produced from the Contract Area."294 The FTAA also imbues WMCP with the
following rights:
(b) to extract and carry away any Mineral samples from the Contract area
for the purpose of conducting tests and studies in respect thereof;
(c) to determine the mining and treatment processes to be utilised during
the Development/Operating Period and the project facilities to be
constructed during the Development and Construction Period;
(d) have the right of possession of the Contract Area, with full right of
ingress and egress and the right to occupy the same, subject to the
provisions of Presidential Decree No. 512 (if applicable) and not be
prevented from entry into private ands by surface owners and/or occupants
thereof when prospecting, exploring and exploiting for minerals therein;
xxx
(f) to construct roadways, mining, drainage, power generation and
transmission facilities and all other types of works on the Contract Area;
(g) to erect, install or place any type of improvements, supplies, machinery
and other equipment relating to the Mining Operations and to use, sell or
otherwise dispose of, modify, remove or diminish any and all parts thereof;
(h) enjoy, subject to pertinent laws, rules and regulations and the rights of
third Parties, easement rights and the use of timber, sand, clay, stone,
water and other natural resources in the Contract Area without cost for the
purposes of the Mining Operations;
xxx
(i) have the right to mortgage, charge or encumber all or part of its
interest and obligations under this Agreement, the plant, equipment and
infrastructure and the Minerals produced from the Mining Operations;
x x x.

295

All materials, equipment, plant and other installations erected or placed on the
Contract Area remain the property of WMCP, which has the right to deal with and
remove such items within twelve months from the termination of the FTAA. 296
Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing,
technology, management and personnel necessary for the Mining Operations." The
mining company binds itself to "perform all Mining Operations . . . providing all
necessary services, technology and financing in connection therewith," 297 and to
"furnish all materials, labour, equipment and other installations that may be
required for carrying on all Mining Operations."298> WMCP may make expansions,
improvements and replacements of the mining facilities and may add such new
facilities as it considers necessary for the mining operations. 299
These contractual stipulations, taken together, grant WMCP beneficial ownership
over natural resources that properly belong to the State and are intended for the
benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution.
They are precisely the vices that the fundamental law seeks to avoid, the evils that
it aims to suppress. Consequently, the contract from which they spring must be
struck down.
In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the
Promotion and Protection of Investments between the Philippine and Australian
Governments, which was signed in Manila on January 25, 1995 and which entered
into force on December 8, 1995.
x x x. Article 2 (1) of said treaty states that it applies to investments whenever
made and thus the fact that [WMCP's] FTAA was entered into prior to the entry into
force of the treaty does not preclude the Philippine Government from protecting
[WMCP's] investment in [that] FTAA. Likewise, Article 3 (1) of the treaty provides
that "Each Party shall encourage and promote investments in its area by investors
of the other Party and shall [admit] such investments in accordance with its
Constitution, Laws, regulations and investment policies" and in Article 3 (2), it
states that "Each Party shall ensure that investments are accorded fair and
equitable treatment." The latter stipulation indicates that it was intended to impose
an obligation upon a Party to afford fair and equitable treatment to the investments
of the other Party and that a failure to provide such treatment by or under the laws
of the Party may constitute a breach of the treaty. Simply stated, the Philippines
could not, under said treaty, rely upon the inadequacies of its own laws to deprive
an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating
[WMCP's] FTAA without likewise nullifying the service contracts entered into before
the enactment of RA 7942 such as those mentioned in PD 87 or EO 279.
This becomes more significant in the light of the fact that [WMCP's] FTAA was
executed not by a mere Filipino citizen, but by the Philippine Government itself,
through its President no less, which, in entering into said treaty is assumed to be
aware of the existing Philippine laws on service contracts over the exploration,
development and utilization of natural resources. The execution of the FTAA by the
Philippine Government assures the Australian Government that the FTAA is in
accordance with existing Philippine laws.300 [Emphasis and italics by private
respondents.]

The invalidation of the subject FTAA, it is argued, would constitute a breach of said
treaty which, in turn, would amount to a violation of Section 3, Article II of the
Constitution adopting the generally accepted principles of international law as part
of the law of the land. One of these generally accepted principles is pacta sunt
servanda, which requires the performance in good faith of treaty obligations.
Even assuming arguendo that WMCP is correct in its interpretation of the treaty and
its assertion that "the Philippines could not . . . deprive an Australian investor (like
[WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without
likewise nullifying the service contracts entered into before the enactment of RA
7942 . . .," the annulment of the FTAA would not constitute a breach of the treaty
invoked. For this decision herein invalidating the subject FTAA forms part of the
legal system of the Philippines.301 The equal protection clause302 guarantees that
such decision shall apply to all contracts belonging to the same class, hence,
upholding rather than violating, the "fair and equitable treatment" stipulation in said
treaty.
One other matter requires clarification. Petitioners contend that, consistent with the
provisions of Section 2, Article XII of the Constitution, the President may enter into
agreements involving "either technical or financial assistance" only. The agreement
in question, however, is a technical and financial assistance agreement.
Petitioners' contention does not lie. To adhere to the literal language of the
Constitution would lead to absurd consequences.303 As WMCP correctly put it:
x x x such a theory of petitioners would compel the government (through the
President) to enter into contract with two (2) foreign-owned corporations, one for
financial assistance agreement and with the other, for technical assistance over one
and the same mining area or land; or to execute two (2) contracts with
only one foreign-owned corporation which has the capability to provide both
financial and technical assistance, one for financial assistance and another for
technical assistance, over the same mining area. Such an absurd result is definitely
not sanctioned under the canons of constitutional construction.304 [Underscoring in
the original.]
Surely, the framers of the 1987 Charter did not contemplate such an absurd result
from their use of "either/or." A constitution is not to be interpreted as demanding
the impossible or the impracticable; and unreasonable or absurd consequences, if
possible, should be avoided.305 Courts are not to give words a meaning that would
lead to absurd or unreasonable consequences and a literal interpretation is to be
rejected if it would be unjust or lead to absurd results.306 That is a strong argument
against its adoption.307 Accordingly, petitioners' interpretation must be rejected.
The foregoing discussion has rendered unnecessary the resolution of the other
issues raised by the petition.

(a) The proviso in Section 3 (aq),


(b) Section 23,
(c) Section 33 to 41,
(d) Section 56,
(e) The second and third paragraphs of Section 81, and
(f) Section 90.
(2) All provisions of Department of Environment and Natural Resources
Administrative Order 96-40, s. 1996 which are not in conformity with this
Decision, and
(3) The Financial and Technical Assistance Agreement between the
Government of the Republic of the Philippines and WMC Philippines, Inc.
SO ORDERED.

Southeast Mindanao Gold Mining Corp vs. Balite Portal Mining Coop
Republic of the Philippines
SUPREME COURT
Baguio City
FIRST DIVISION
G.R. No. 135190

April 3, 2002

SOUTHEAST MINDANAO GOLD MINING CORPORATION, petitioner,


vs.
BALITE PORTAL MINING COOPERATIVE and others similarly situated; and THE
HONORABLE ANTONIO CERILLES, in his capacity as Secretary of the Department
of Environment and Natural Resources (DENR),PROVINCIAL MINING
REGULATORY BOARD OF DAVAO (PMRB-Davao), respondents.
YNARES-SANTIAGO, J.:

WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional


and void:
(1) The following provisions of Republic Act No. 7942:

This is a petition for review of the March 19, 1998 decision of the Court of Appeals
in CA-G.R. SP No. 44693, dismissing the special civil action for certiorari,
prohibition and mandamus, and the resolution dated August 19, 1998 denying
petitioner's motion for reconsideration.

The instant case involves a rich tract of mineral land situated in the Agusan-DavaoSurigao Forest Reserve known as the "Diwalwal Gold Rush Area." Located at Mt.
Diwata in the municipalities of Monkayo and Cateel in Davao Del Norte, the land has
been embroiled in controversy since the mid-80's due to the scramble over gold
deposits found within its bowels.
From 1985 to 1991, thousands of people flocked to Diwalwal to stake their
respective claims. Peace and order deteriorated rapidly, with hundreds of people
perishing in mine accidents, man-made or otherwise, brought about by unregulated
mining activities. The multifarious problems spawned by the gold rush assumed
gargantuan proportions, such that finding a "win-win" solution became a veritable
needle in a haystack.
On March 10, 1988, Marcopper Mining Corporation (Marcopper) was granted
Exploration Permit No. 133 (EP No. 133) over 4,491 hectares of land, which included
the hotly-contested Diwalwal area.1 Marcopper's acquisition of mining rights over
Diwalwal under its EP No. 133 was subsequently challenged before this Court
in "Apex Mining Co., Inc., et al. v. Hon. Cancio C. Garcia, et al.," 2 where
Marcopper's claim was sustained over that of another mining firm, Apex Mining
Corporation (Apex). The Court found that Apex did not comply with the procedural
requisites for acquiring mining rights within forest reserves.
Not long thereafter, Congress enacted on June 27, 1991 Republic Act No. 7076, or
the People's Small-Scale Mining Act. The law established a People's Small-Scale
Mining Program to be implemented by the Secretary of the DENR 3and created the
Provincial Mining Regulatory Board (PMRB) under the DENR Secretary's direct
supervision and control.4 The statute also authorized the PMRB to declare and set
aside small-scale mining areas subject to review by the DENR Secretary 5 and award
mining contracts to small-scale miners under certain conditions. 6

In due time, the Mines and Geosciences Bureau Regional Office No. XI in Davao City
(MGB-XI) accepted and registered the integrated MPSA application of petitioner.
After publication of the application, the following filed their oppositions:
a) MAC Case No. 004(XI) - JB Management Mining Corporation;
b) MAC Case No. 005(XI) - Davao United Miners Cooperative;
c) MAC Case No. 006(XI) - Balite Integrated Small Scale Miner's
Cooperative;
d) MAC Case No. 007(XI) - Monkayo Integrated Small Scale Miner's
Association, Inc.;
e) MAC Case No. 008(XI) - Paper Industries Corporation of the Philippines;
f) MAC Case No. 009(XI) - Rosendo Villaflor, et al.;
g) MAC Case No. 010(XI) - Antonio Dacudao;
h) MAC Case No. 011(XI) - Atty. Jose T. Amacio;
i) MAC Case No. 012(XI) - Puting-Bato Gold Miners Cooperative;
j) MAC Case No. 016(XI) - Balite Communal Portal Mining Cooperative; and
k) MAC Case No. 97-01(XI) - Romeo Altamera, et al.

On December 21, 1991, DENR Secretary Fulgencio S. Factoran issued Department


Administrative Order (DAO) No. 66, declaring 729 hectares of the Diwalwal area as
non-forest land open to small-scale mining.7 The issuance was made pursuant to the
powers vested in the DENR Secretary by Proclamation No. 369, which established
the Agusan-Davao-Surigao Forest Reserve.

In the meantime, on March 3, 1995, Republic Act No. 7942, the Philippine Mining
Act, was enacted. Pursuant to this statute, the above-enumerated MAC cases were
referred to a Regional Panel of Arbitrators (RPA) tasked to resolve disputes involving
conflicting mining rights. The RPA subsequently took cognizance of the RED Mines
case, which was consolidated with the MAC cases.

Subsequently, a petition for the cancellation of EP No. 133 and the admission of a
Mineral Production Sharing Arrangement (MPSA) proposal over Diwalwal was filed
before the DENR Regional Executive Director, docketed as RED Mines Case No. 8-894 entitled, "Rosendo Villaflor, et al. v. Marcopper Mining Corporation."

On April 1, 1997, Provincial Mining Regulatory Board of Davao passed Resolution


No. 26, Series of 1997, authorizing the issuance of ore transport permits (OTPs) to
small-scale miners operating in the Diwalwal mines.

On February 16, 1994, while the RED Mines case was pending, Marcopper assigned
its EP No. 133 to petitioner Southeast Mindanao Gold Mining Corporation
(SEM),8 which in turn applied for an integrated MPSA over the land covered by the
permit.

Thus, on May 30, 1997, petitioner filed a complaint for damages before the Regional
Trial Court of Makati City, Branch 61, against the DENR Secretary and PMRB-Davao.
SEM alleged that the illegal issuance of the OTPs allowed the extraction and hauling
of P60,000.00 worth of gold ore per truckload from SEM's mining claim.

Meanwhile, on June 13, 1997, the RPA resolved the Consolidated Mines cases and
decreed in an Omnibus Resolution as follows:
VIEWED IN THE LIGHT OF THE FOREGOING, the validity of Exploration
Permit No. 133 is hereby reiterated and all the adverse claims against
MPSAA No. 128 are DISMISSED.9
On June 24, 1997, the DENR Secretary issued Memorandum Order No. 970310 which provided, among others, that:
1. The DENR shall study thoroughly and exhaustively the option of direct
state utilization of the mineral resources in the Diwalwal Gold-Rush
Area. Such study shall include, but shall not be limited to, studying
andweighing the feasibility of entering into management agreements or
operating agreements, or both, with the appropriate government
instrumentalities or private entities, or both, in carrying out the declared
policy of rationalizing the mining operations in the Diwalwal Gold Rush
Area; such agreements shall include provisions for profit-sharing between
the state and the said parties, including profit-sharing arrangements with
small-scale miners, as well as the payment of royalties to indigenous
cultural communities, among others. The Undersecretary for Field
Operations, as well as the Undersecretary for Legal and Legislative Affairs
and Attached Agencies, and the Director of the Mines and Geo-sciences
Bureau are hereby ordered to undertake such studies. x x x11
On July 16, 1997, petitioner filed a special civil action for certiorari,
prohibition and mandamus before the Court of Appeals against PMRB-Davao, the
DENR Secretary and Balite Communal Portal Mining Cooperative (BCPMC), which
represented all the OTP grantees. It prayed for the nullification of the above-quoted
Memorandum Order No. 97-03 on the ground that the "direct state utilization"
espoused therein would effectively impair its vested rights under EP No. 133; that
the DENR Secretary unduly usurped and interfered with the jurisdiction of the RPA
which had dismissed all adverse claims against SEM in the Consolidated Mines
cases; and that the memorandum order arbitrarily imposed the unwarranted
condition that certain studies be conducted before mining and environmental laws
are enforced by the DENR.
Meanwhile, on January 6, 1998, the MAB rendered a decision in the Consolidated
Mines cases, setting aside the judgment of the RPA.12 This MAB decision was then
elevated to this Court by way of a consolidated petition, docketed as G.R. Nos.
132475 and 132528.1wphi1.nt
On March 19, 1998, the Court of Appeals, through a division of five members voting
3-2,13 dismissed the petition in CA-G.R. SP No. 44693. It ruled that the DENR
Secretary did not abuse his discretion in issuing Memorandum Order No. 97-03
since the same was merely a directive to conduct studies on the various options

available to the government for solving the Diwalwal conflict. The assailed
memorandum did not conclusively adopt "direct state utilization" as official
government policy on the matter, but was simply a manifestation of the DENR's
intent to consider it as one of its options, after determining its feasibility through
studies. MO 97-03 was only the initial step in the ladder of administrative process
and did not, as yet, fix any obligation, legal relationship or right. It was thus
premature for petitioner to claim that its "constitutionally-protected rights" under EP
No. 133 have been encroached upon, much less, violated by its issuance.
Additionally, the appellate court pointed out that petitioner's rights under EP No.
133 are not inviolable, sacrosanct or immutable. Being in the nature of a privilege
granted by the State, the permit can be revoked, amended or modified by the Chief
Executive when the national interest so requires. The Court of Appeals, however,
declined to rule on the validity of the OTPs, reasoning that said issue was within the
exclusive jurisdiction of the RPA.
Petitioner filed a motion for reconsideration of the above decision, which was denied
for lack of merit on August 19, 1998.14
Hence this petition, raising the following errors:
I. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR,
AND HAS DECIDED A QUESTION OF SUBSTANCE NOT THERETOFORE
DETERMINED BY THIS HONORABLE SUPREME COURT, OR HAS DECIDED IT
IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE
DECISIONS OF THIS HONORABLE COURT IN UPHOLDING THE
QUESTIONED ACTS OF RESPONDENT DENR SECRETARY WHICH ARE IN
VIOLATION OF MINING LAWS AND IN DEROGATION OF PETITIONER'S
VESTED RIGHTS OVER THE AREA COVERED BY ITS EP NO. 133;
II. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR
IN HOLDING THAT AN ACTION ON THE VALIDITY OF ORE TRANSPORT
PERMIT (OTP) IS VESTED IN THE REGIONAL PANEL OF ARBITRATORS.15
In a resolution dated September 11, 2000, the appealed Consolidated Mines cases,
docketed as G.R. Nos. 132475 and 132528, were referred to the Court of Appeals
for proper disposition pursuant to Rule 43 of the 1997 Rules of Civil
Procedure.16 These cases, which were docketed as CA-G.R. SP Nos. 61215 and
61216, are still pending before the Court of Appeals.
In the first assigned error, petitioner insists that the Court of Appeals erred when it
concluded that the assailed memorandum order did not adopt the "direct state
utilization scheme" in resolving the Diwalwal dispute. On the contrary, petitioner
submits, said memorandum order dictated the said recourse and, in effect, granted
management or operating agreements as well as provided for profit sharing
arrangements to illegal small-scale miners.

According to petitioner, MO 97-03 was issued to preempt the resolution of the


Consolidated Mines cases. The "direct state utilization scheme" espoused in the
challenged memorandum is nothing but a legal shortcut, designed to divest
petitioner of its vested right to the gold rush area under its EP No. 133.

actually has a vested right over Diwalwal under EP No. 133 is still an indefinite and
unsettled matter. And until a positive pronouncement is made by the appellate court
in the Consolidated Mines cases, EP No. 133 cannot be deemed as a source of any
conclusive rights that can be impaired by the issuance of MO 97-03.

We are not persuaded.

Similarly, there is no merit in petitioner's assertion that MO 97-03 sanctions


violation of mining laws by allowingillegal miners to enter into mining agreements
with the State. Again, whether or not respondent BCMC and the other mining
entities it represents are conducting illegal mining activities is a factual matter that
has yet to be finally determined in the Consolidated Mines cases. We cannot
rightfully conclude at this point that respondent BCMC and the other mining firms
are illegitimate mining operators. Otherwise, we would be preempting the resolution
of the cases which are still pending before the Court of Appeals. 19

We agree with the Court of Appeals' ruling that the challenged MO 97-03 did not
conclusively adopt "direct state utilization" as a policy in resolving the Diwalwal
dispute. The terms of the memorandum clearly indicate that what was directed
thereunder was merely a study of this option and nothing else. Contrary to
petitioner's contention, it did not grant any management/operating or profit-sharing
agreement to small-scale miners or to any party, for that matter, but simply
instructed the DENR officials concerned to undertake studies to determine its
feasibility. As the Court of Appeals extensively discussed in its decision:
x x x under the Memorandum Order, the State still had to study prudently
and exhaustively the various options available to it in rationalizing the
explosive and ever perilous situation in the area, the debilitating adverse
effects of mining in the community and at the same time, preserve and
enhance the safety of the mining operations and ensure revenues due to
the government from the development of the mineral resources and the
exploitation thereof. The government was still in earnest search of better
options that would be fair and just to all parties concerned, including,
notably, the Petitioner. The direct state utilization of the mineral resources
in the area was only one of the options of the State. Indeed, it is too plain
to see, x x x that before the State will settle on an option, x x x an
extensive and intensive study of all the facets of a direct state exploitation
was directed by the Public Respondent DENR Secretary. And even if direct
state exploitation was opted by the government, the DENR still had to
promulgate rules and regulations to implement the same x x x, in
coordination with the other concerned agencies of the government. 17
Consequently, the petition was premature. The said memorandum order did not
impose any obligation on the claimants or fix any legal relation whatsoever between
and among the parties to the dispute. At this stage, petitioner can show no more
than a mere apprehension that the State, through the DENR, would directly take
over the mines after studies point to its viability. But until the DENR actually does so
and petitioner's fears turn into reality, no valid objection can be entertained against
MO 97-03 on grounds which are purely speculative and anticipatory.18
With respect to the alleged "vested rights" claimed by petitioner, it is well to note
that the same is invariably based on EP No. 133, whose validity is still being
disputed in the Consolidated Mines cases. A reading of the appealed MAB decision
reveals that the continued efficacy of EP No. 133 is one of the issues raised in said
cases, with respondents therein asserting that Marcopper cannot legally assign the
permit which purportedly had expired. In other words, whether or not petitioner

Petitioner's reliance on the Apex Mining case to justify its rights under E.P. No. 133
is misplaced. For one, the said case was litigated solely between Marcopper and
Apex Mining Corporation and cannot thus be deemed binding and conclusive on
respondent BCMC and the other mining entities presently involved. While petitioner
may be regarded as Marcopper's successor to EP No. 133 and therefore bound by
the judgment rendered in the Apex Mining case, the same cannot be said of
respondent BCMC and the other oppositor mining firms, who were not impleaded as
parties therein.
Neither can the Apex Mining case foreclose any question pertaining to the
continuing validity of EP No. 133 on grounds which arose after the judgment in said
case was promulgated. While it is true that the Apex Mining case settled the issue of
who between Apex and Marcopper validly acquired mining rights over the disputed
area by availing of the proper procedural requisites mandated by law, it certainly did
not deal with the question raised by the oppositors in the Consolidated Mines
cases, i.e. whether EP No. 133 had already expired and remained validsubsequent
to its transfer by Marcopper to petitioner. Besides, as clarified in our decision in
the Apex Mining case:
x x x is conclusive only between the parties with respect to the particular
issue herein raised and under the set of circumstances herein prevailing. In
no case should the decision be considered as a precedent to resolve or
settle claims of persons/entities not parties hereto. Neither is it intended to
unsettle rights of persons/entities which have been acquired or which may
have accrued upon reliance on laws passed by appropriate agencies. 20
Clearly then, the Apex Mining case did not invest petitioner with any definite right to
the Diwalwal mines which it could now set up against respondent BCMC and the
other mining groups.
Incidentally, it must likewise be pointed out that under no circumstances may
petitioner's rights under EP No. 133 be regarded as total and absolute. As correctly

held by the Court of Appeals in its challenged decision, EP No. 133 merely evidences
a privilege granted by the State, which may be amended, modified or rescinded
when the national interest so requires. This is necessarily so since the exploration,
development and utilization of the country's natural mineral resources are matters
impressed with great public interest. Like timber permits, mining exploration
permits do not vest in the grantee any permanent or irrevocable right within the
purview of the non-impairment of contract and due process clauses of the
Constitution,21 since the State, under its all-encompassing police power, may alter,
modify or amend the same, in accordance with the demands of the general
welfare.22

Thus, the State may pursue the constitutional policy of full control and supervision
of the exploration, development and utilization of the country's natural mineral
resources, by either directly undertaking the same or by entering into agreements
with qualified entities. The DENR Secretary acted within his authority when he
ordered a study of the first option, which may be undertaken consistently in
accordance with the constitutional policy enunciated above. Obviously, the State
may not be precluded from considering a direct takeover of the mines, if it is the
only plausible remedy in sight to the gnawing complexities generated by the gold
rush. As implied earlier, the State need be guided only by the demands of public
interest in settling for this option, as well as its material and logistic feasibility.

Additionally, there can be no valid opposition raised against a mere study of an


alternative which the State, through the DENR, is authorized to undertake in the
first place. Worth noting is Article XII, Section 2, of the 1987 Constitution, which
specifically provides:

In this regard, petitioner's imputation of bad faith on the part of the DENR Secretary
when the latter issued MO 97-03 is not well-taken. The avowed rationale of the
memorandum order is clearly and plainly stated in its "whereas" clauses. 23 In the
absence of any concrete evidence that the DENR Secretary violated the law or
abused his discretion, as in this case, he is presumed to have regularly issued the
memorandum with a lawful intent and pursuant to his official functions.1wphi1.nt

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. Theexploration, 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. (Underscoring ours)
Likewise, Section 4, Chapter II of the Philippine Mining Act of 1995 states:
SEC. 4. Ownership of Mineral Resources. - Mineral Resources are owned by
the State and the exploration, development, utilization, and processing
thereof shall be under its full control and supervision. The State may
directly undertake such activities or it may enter into mineral agreements
with contractors. (Underscoring ours)

Given these considerations, petitioner's first assigned error is baseless and premised
on tentative assumptions. Petitioner cannot claim any absolute right to the Diwalwal
mines pending resolution of the Consolidated Mines cases, much less ask us to
assume, at this point, that respondent BCMC and the other mining firms are illegal
miners. These factual issues are to be properly threshed out in CA G.R. SP Nos.
61215 and 61216, which have yet to be decided by the Court of Appeals. Any
objection raised against MO 97-03 is likewise premature at this point, inasmuch as it
merely ordered a study of an option which the State is authorized by law to
undertake.
We see no need to rule on the matter of the OTPs, considering that the grounds
invoked by petitioner for invalidating the same are inextricably linked to the issues
raised in the Consolidated Mines cases.
WHEREFORE, in view of the foregoing, the instant petition is DENIED. The
decision of the Court of Appeals in CA-G.R. SP No. 44693 is AFFIRMED.
SO ORDERED.