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High court upholds scrapping of forest management pacts

Vol. XXII, No. 40 [ BusinessWorld Online ]
Friday, September 19, 2008 | MANILA, PHILIPPINES

THE SUPREME COURT has upheld the cancellation of forest management contracts with a lumber firm in Mindanao for failure to comply with environmental protection provisions.

The Department of Environment and Natural Resources (DENR) canceled its Industrial Forest Management Agreement (IFMA) and Comprehensive Development and Management Plan (CDMP) with Pagadian City Timber Co., Inc. in Labangan, Zamboanga del Sur.

Under DENR administrative order 96-24, an IFMA is defined as a pact between a private entity and the DENR that allows the former the right to "develop, utilize and manage a small tract of forest land consistent with the principle of sustainable development."

The agreement also adopted a CDMP whereby Pagadian City Timber would implement plantation and forest fire prevention schemes.

In a 22-page decision penned by Associate Justice Antonio Eduardo B. Nachura, the high court’s third division said "private rights must yield when they come in conflict with public policy and common interest. They must give way to the police or regulatory power of the state, in this case through the DENR, to ensure that the terms and conditions of existing laws, rules and regulations are strictly and faithfully complied with."

The DENR executed an IFMA and CDMP with Pagadian City Timber on Oct. 14, 1994 covering a total of almost 2,000 hectares in Langapod, Cogonan and Datagan villages.

The agreement was reviewed after four years following complaints from the Subanen tribe living near the area.

Besides its failure to implement the IFMA provision, armed men employed by the firm also harassed and threatened the indigenous folk, court documents showed.

DENR officials affirmed the allegations, which prompted the regional executive director to recommend the IFMA’s cancellation to then Environment Secretary Antonio H. Cerilles.

Mr. Cerilles, in an order dated June 7, 1999, agreed to cancel the agreement. Pagadian City Timber filed for a motion for reconsideration and claimed it was not accorded due process. But before the motion could be acted, the firm went directly to the Office of the President.

The firm’s petitions were not acted upon, which prompted it to hale the case to the Court of Appeals. The court ruled the contracts could not be unilaterally canceled.

But the Supreme Court said the agreement was not an ordinary contract that should be protected against impairment, adding it could be withdrawn if the contracting party deemed it was exploited by the other party.

"We agree that the alleged property rights that may have arisen from it are not absolute," it said, adding the rights carry with them the duty "to refrain from impairing the government." — Ira P. Pedrasa


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