C & M Timber Corporation vs. Alcala

Timber licenses, permits and license agreements merely evidence a privilege granted by the State and do not vest a permanent or irrevocable right; they may be validly amended, modified, replaced or rescinded by the Chief Executive when national interests so require, particularly for forest conservation under the constitutional mandate to protect a balanced and healthful ecology. Applied to a licensee whose agreement had been suspended and then deemed cancelled pursuant to a presidential log ban, and who failed to seasonably seek judicial review, laches and executive prerogative over timberland utilization barred reinstatement.

C & M Timber Corporation was the holder of Timber License Agreement No. 106 covering 67,680 hectares of forest land in Dipaculao and Dinalongan, Aurora, and Maddela, Quirino. Timber licenses, permits and license agreements are the principal instruments by which the State regulates the utilization and disposition of forest resources for public welfare. Under the policy framework invoked in the decision, such instruments are treated as State privileges subject to amendment, modification, replacement or rescission by the Chief Executive when national interests so require.

C & M Timber Corporation held Timber License Agreement No. 106 issued June 30, 1972, expiring June 30, 1997, over 67,680 hectares in Dipaculao and Dinalongan, Aurora, and Maddela, Quirino. According to the DENR order of May 2, 1988 and the Office of the President decision of March 21, 1991, TLA No. 106 was suspended on June 3, 1983 for mediocre performance in reforestation. Petitioner denied receiving any such suspension order, and no copy of the June 3, 1983 order could be produced from DENR records despite efforts by the Office of the Solicitor General and petitioner's request.

Thereafter, pursuant to presidential instructions and the August 18, 1983 memorandum of Minister Teodoro Q. Peña, Bureau of Forest Development Director Edmundo V. Cortes issued a memorandum dated August 24, 1983 directing the regional director to stop all logging operations in Nueva Vizcaya and Quirino and declaring listed concessions, expressly including C & M Timber Corporation, deemed cancelled as of the previous notice. Petitioner admitted it was no longer operating at the time of the later award to another party because of a log ban, and admitted receiving Cortes' August 24, 1983 telegram directing it to stop all logging operations to conserve remaining forests, although petitioner characterized the stoppage as temporary and maintained through counsel that the ban did not cancel its agreement.

On July 20, 1984, Filipinas Loggers Development Corporation, through its president and general manager, requested from President Marcos a timber concession over the same area, alleging petitioner's agreement had been cancelled under the logging ban. President Marcos wrote Approved on the margin on August 14, 1984, and on September 21, 1984 the Ministry of Natural Resources issued TLA No. 360 to FLDC, expiring September 30, 1994, over the area of TLA No. 106. FLDC began logging in 1985. Petitioner alleged it protested through counsel Atty. Norberto J. Quisumbing in a letter dated September 24, 1984 to Minister Rodolfo del Rosario seeking nullification of FLDC's award. The DENR certified after diligent search that no such document was on file, although receiving clerk Ofelia Castro Biron certified she received the letter on September 25, 1984 and stamped petitioner's copies, and MNR and Bureau of Forest Development logbooks and memoranda referenced action on the purported letter.

Minister Ernesto M. Maceda suspended FLDC's TLA No. 360 on June 26, 1986 for gross violation of reforestation and selective logging conditions and national forest-conservation policy, then cancelled it on July 26, 1986 for continued logging despite suspension. Learning of the cancellation, petitioner requested revalidation of TLA No. 106 on October 10, 1986 and, after FLDC sought reconsideration, wrote again on February 13, 1987 alleging its area was awarded to FLDC through covetous maneuvers and unlawful machinations by persons influential with the Marcos regime, including the former President's sister Mrs. Fortuna Barba, and praying resumption of operations. Petitioner explained before the DENR that it did not pursue its protest because its president Ricardo C. Silverio had been told by President Marcos the area had been awarded to Mrs. Barba and petitioner feared opposing the former President's wishes.

The DENR denied restoration of TLA No. 106 for laches, noting petitioner opposed FLDC's license only on February 13, 1987 after nearly two years of logging, and denied FLDC's reconsideration as firmly grounded. The Office of the President affirmed, rejecting reliance on the September 24, 1984 letter as unproven and as a new matter not raised in pleadings or hearing below, and later rejected reconsideration on the ground that even assuming timely protest, petitioner failed to protect its rights for more than two years while FLDC logged without opposition.

• Laches: Petitioner argued that laches could not be imputed because it incurred no delay in asserting its rights and, even if delay existed, no prejudice resulted to other parties, particularly FLDC, since cancellation of FLDC's TLA was attributable to FLDC's own violations.
• Suspension Order: Petitioner denied that its license had been suspended for mediocre performance in reforestation by order of then Minister Teodoro O. Peña, claiming it received no such order.
• Due Process and Prospective Policy: Petitioner claimed denial based on a new policy consideration on forest conservation and protection, implied from a handwritten presidential instruction, denied due process because there was no total log ban, Congress had yet to pronounce on the issue, notice must be stated in good form and not implied, and any new policy should apply prospectively.
• Vested Rights and Impairment: Petitioner maintained that the new policy could not affect vested rights in TLA No. 106 and that cancellation impaired the obligation of its contract.

• Validity and Prior Cancellation of TLA No. 106: Whether TLA No. 106, though expiring June 30, 1997, was already suspended and cancelled and thus properly declared of no force and effect.
• Laches: Whether petitioner was barred by laches for failing to timely protest the cancellation and the subsequent award of the same area to FLDC and to seek judicial recourse.
• Forest-Conservation Policy and Prospectivity: Whether reliance on forest conservation and protection to deny reinstatement constituted an implied new policy that must be formally enunciated and applied only prospectively.
• Nature of Timber License and Impairment: Whether cancellation of the timber license impaired contractual or vested rights under the due process and non-impairment clauses.

• Validity and Prior Cancellation of TLA No. 106: Yes. TLA No. 106 was properly treated as no longer of force and effect, having been suspended and then deemed cancelled under the 1983 log-ban directives before the 1984 award to FLDC.
• Laches: Yes. Petitioner was barred by laches, having failed to contest the 1983 suspension and cancellation and having taken no legal action beyond letters until seeking revalidation in 1986-1987.
• Forest-Conservation Policy and Prospectivity: No. No formal new retroactive policy was imposed; the action was a reiteration of the continuing constitutional policy of conservation and protection applicable to existing privileges.
• Nature of Timber License and Impairment: No impairment occurred. Timber licenses are State privileges, not contracts within the purview of due process protections against impairment, and remain subject to amendment, modification, replacement or rescission when national interests require.

• Validity and Prior Cancellation of TLA No. 106: The existence of the June 3, 1983 suspension order for mediocre performance in reforestation was presumed under regularity of official functions, as cited by both the DENR Secretary and the Executive Secretary, officials unlikely to cite a nonexistent order. The August 24, 1983 Cortes memorandum, issued following presidential instructions and Minister Peña's August 18, 1983 memorandum, expressly listed C & M Timber Corporation among concessions deemed cancelled with direction to stop operations, pull out equipment and inventory logs. Petitioner's admission of non-operation due to the ban and receipt of the stop-logging telegram negated counsel's claim that the ban did not cancel the agreement.
• Laches: Even crediting the September 24, 1984 protest letter as existing based on the clerk's certification and logbook entries, petitioner did not contest the June 3, 1983 suspension or August 24, 1983 cancellation, and except for counsel's letter to the Minister reiterated to the President, took no legal steps for restoration. Instead of filing a timely petition for certiorari within a reasonable time after adverse administrative action, petitioner waited until FLDC's 1986 cancellation to seek revalidation in October 1986 and opposed reinstatement only on February 13, 1987, while FLDC logged for nearly two years without opposition. Fear of the Marcos regime and its connections, also invoked in Felipe Ysmael, Jr. & Co. vs. Deputy Executive Secretary, did not excuse inaction, and raising the 1984 protest only on appeal contravened the rule against new issues on appeal.
• Forest-Conservation Policy and Prospectivity: The February 26, 1993 reconsideration was prompted by Secretary Alcala's concern that reinstating FLDC would negate conservation and protection efforts. That was not a new policy but a reiteration of the continuing conservation policy recognized in Felipe Ysmael, Jr. & Co. vs. Deputy Executive Secretary and embodied in the constitutional command to protect a balanced and healthful ecology. Formal enunciation beyond the executive action was therefore unnecessary, and prospectivity limitations for new policies were inapplicable.
• Nature of Timber License and Impairment: Timber licenses, permits and license agreements are principal instruments for State regulation of forest resources to promote public welfare, evidencing only a privilege without permanent or irrevocable right to the concession or products therein. Because they are not deemed contracts under Sections 3(33) and 20 of Presidential Decree No. 705, as amended, executive evaluation, cancellation and refusal to reinstate in pursuit of forest conservation did not violate due process or non-impairment guarantees, absent grave abuse of discretion warranting judicial interference where private logging interests conflict with public welfare.

• Timber licenses as State privilege, not contract — Timber licenses, permits and license agreements are principal instruments by which the State regulates utilization and disposition of forest resources to promote public welfare; they evidence only a privilege and vest no permanent or irrevocable right to the concession area or forest products, and may be validly amended, modified, replaced or rescinded by the Chief Executive when national interests so require. Applied here to reject claims of vested rights, due process violation and impairment upon cancellation and denial of restoration of TLA No. 106 for conservation reasons.
• Executive prerogative over timberland utilization and limited judicial review — Evaluation of timber licenses and their cancellation in formulating utilization policies is an executive prerogative; courts will stand clear absent grave abuse of discretion, especially where private logging interests are pitted against the public interest in forest conservation amid global concern over despoliation and ecological imbalance. Applied to sustain DENR and Office of the President cancellations and refusal to reinstate.
• Laches in administrative license disputes — Failure to seasonably seek judicial review by certiorari within a reasonable time of adverse administrative cancellation and subsequent award to another, and delay of years while the awardee operates without opposition, bars later reinstatement notwithstanding letters of protest. Applied to petitioner's delay from 1983-1984 until 1986-1987 and failure to file court action, rendering the 1983 cancellation final and executory.
• Presumption of regularity of official acts — Official acts are presumed regularly performed. Applied to presume existence of the June 3, 1983 suspension order cited in both the DENR order and Office of the President decision despite loss of the copy from records.
• Issues not raised below cannot be raised on appeal — Issues neither averred in pleadings nor raised during proceedings below, and positions inconsistent with those sustained below, need not be considered by a reviewing authority. Applied to reject petitioner's appellate reliance on the alleged September 24, 1984 protest not mentioned in pleadings filed before the office a quo or at the hearing.

• "Timber licenses, permits and license agreements are the principal instruments by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted." — States the doctrinal premise for treating petitioner's TLA as a regulatory privilege rather than property or contract.
• "They may be validly amended, modified, replaced or rescinded by the Chief Executive when national interests so require." — Supplies the operative rule sustaining executive cancellation and denial of reinstatement for conservation reasons.
• "to protect and promote the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature." — Quotes the constitutional policy in Art. II, Sec. 16 invoked to reject the claim that forest-conservation considerations constituted an improper retroactive new policy.
• "The legitimacy of such concern can hardly be disputed, most especially in this country." — Contextualizes deference to ongoing administrative reassessment of timber agreements in response to global and domestic concern over forest despoliation.

• Felipe Ysmael, Jr. & Co. vs. Deputy Executive Secretary, 190 SCRA 673 (1990) — Controlling precedent followed; governed denial where a 1983 Bureau of Forest Development cancellation became final, judicial recourse was not seasonably pursued, laches applied, and executive timber-license evaluation for conservation was upheld against contract-impairment claims.
• Tan vs. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302 — Cited as authority for the proposition that timber licenses are not deemed contracts within the due process clause.
• City of Manila vs. Ebay, 1 SCRA 1086, 1089 — Cited by the Office of the President for the rule that issues not averred in pleadings nor raised below cannot be raised for the first time on appeal, supporting rejection of the late-invoked 1984 protest.
• Santos vs. Intermediate Appellate Court, 145 SCRA 592, 595 — Cited for the rule that factual issues not adequately brought to the trial court's attention need not be considered on review.
• People vs. Archilla, 1 SCRA 698, 700-701 — Cited for the rule that parties may not adopt on appeal a position inconsistent with that sustained below.

• Section 16, Article II, Constitution — Commands the State to protect and promote the right to a balanced and healthful ecology in accord with the rhythm and harmony of nature; relied upon to sustain denial of reinstatement on forest conservation and protection grounds rather than treating it as an invalid retroactive new policy.
• Sections 3(33) and 20, Presidential Decree No. 705, as amended — Define the regulatory character of timber licenses and support the holding that such licenses are not contracts within the purview of the due process clause and may be amended, modified, replaced or rescinded in the national interest.

Regalado, J., Romero, J., Puno, J., Torres, Jr., J.