A LEGAL ARSENAL

FOR THE PHILIPPINE

ENVIRONMENT

ANTONIO A. OPOSA, JR.

Published by

CENTRAL BOOK SUPPLY, INC.

927 Quezon Avenue, Quezon City
Philippines
LAND
 LAND
CHAPTER CONTENTS
PROTECTED AREAS
National Integrated Protected Areas Sys-
tem Act, 111
The Strategic Environmental Plan for
Palawan, 122
Cave Management Act, 131
Revised Forestry Code, 136
(Felipe v. Deputy)
(Minors v. DENR)
(Mustang Lumber v. CA)
(Paat v. CA)
Chainsaw Act of 2002, 194
PROTECTED SPECIES
Conservation and Protection of Wildlife
Resources, 198
Protection of the Philippine Eagle, 214
Protection of Wild Flowers, 215
Prospecting of Biological and Genetic Re-
sources, 218
Tree Planting, 225
List of Endangered Species, 228
AGRICULTURE
Agriculture and Fisheries Modernization
(RA 8435) Philippine Policy on Trans-
genics, 237, 277
High – Valued Crops, 277
Fertilizers and Pesticides, 283
Coconut Cutting, 291
Animal Welfare, 294
Regulating the Slaughter of Carabaos, 298
Plant Quarantine, 299
LAND TENURE
Property Registration Law, 306
(Cariño v. Insular Government)
(Republic v. Animas)
(Lepanto v. Dumyung)
Cases on Land Reform, 341
(Vinzons-Magana v. Estrella)
(Luz Farms v. Secretary of Agrarian
Reform)
(Maddumba v. GSIS)
(Association of Small Landowners
v. DAR)
Community Based Forest Management,
343
Allocation/Tenure Instruments in Produc-
tion Forest Lands, 347
Permits Issued for the Utilization of Forest
Resources in Production Forest Lands,
350
Agreements and Permits Involving Forest
Resources in Private Lands, 351
MINERALS
Small-Scale Mining Program, 352
People’s Small-Scale Mining, 354
Philippine Mining Act, 362
(Miners v. Factoran)
(La Bugal-B’laan Tribal v. Ramos
et. al.)
ENERGY
Department of Energy, 410
Mini-Hydroelectric Power Developers, 422
Non-Conventional Energy Resources, 427
Biofuels Act, 432
Geothermal Resources, 440
Geothermal Watersheds, 443
The Stillborn Nuclear Power Plant, 445
(Nuclear Free Philippine Coalition
v. NPC)
Oil Deregulation, 446
Legality of the Deregulation Policy, 459
(Garcia v. Corona)
Pilferage of Electricity, 460
Electric Power Industry Reform Act of
2001, 468
Implementing the Natural Gas Vehicle
Program for Public Transport, 470
Energy Conservation Program), 476
 CHAPTER II: LAND

Protected Areas

National Integrated Protected Areas System Act

(Republic Act 7586)

SECTION 1. Title.—This act shall be known and referred to as the “National

Integrated Protected Areas System Act of 1992.”
SEC. 2. Declaration of Policy—Cognizant of the profound impact of man’s activi-
ties on all components of the natural environment particularly the effect of increasing
population, resource exploitation and industrial advancement and recognizing the criti-
cal importance of protecting and maintaining the natural biological and physical of
diversities of the environment notably on areas with biologically unique features to
sustain human life and development, as well as plant and animal life, it is hereby de-
clared the policy of the State to
secure for the Filipino people of
present and future generations the
perpetual existence of all native
plants and animals through the
establishment of a comprehensive
system of integrated protected
areas within the classification of
national park as provided for in
the Constitution.
It is hereby recognized that
these areas, although distinct in
features, possess common ecologi-
cal values that may incorporated
into a holistic plan representative
of our natural heritage; that effec-
tive administration of these areas
is possible only through coopera-
“Nature knows no pause in progress and develop-
tion among national government,
ment, and attaches her curse on all inaction.”—
local government and concerned
Johann Wolfgang von Goethe
private organizations; that the use
(N. Oshima, Forest) and enjoyment of these protected
areas must be consistent with the
principles of biological diversity and sustainable development.

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To this end, there is hereby established a National Integrated Areas System (NI-
PAS), which shall encompass outstandingly remarkable areas and biologically impor-
tant public loans that are habitats of rare and endangered species of plants and ani-
mals, biogeographic zones and related ecosystems, whether terrestrial, wetlands or
marine, all of which shall be designated as “protected areas”.
SEC. 3. Categories—The following categories of protected areas are hereby es-
tablished:
a. Strict nature reserve;
b. Natural park;
c. Natural monument;
d. Wildlife sanctuary;
e. Protected landscapes and
seascapes;
f. Resource reserve;
g. Natural biotic areas; and
h. Other categories establis-
hed by law, convention or interna-
tional agreements which the Philip-
pines Government is a signatory.
SEC. 4. Definition of terms
—For purposes of this Act the follow-
ing terms shall be defined as follows: Let us beware of saying there are laws in nature.
a. “NIPAS” is the classifica- There are only necessities: There is no one to com-
tion and administration of all desig- mand, no one to obey, no one to transgress. When
nated protected areas to maintain you realize there are no goals or objectives, then
you realize, too, that, there is no chance: for only
essential ecological processes and
in a world of objectives does the word chance have
life-support systems, to preserve ge- any meaning. — Friedrich Nietzsche
netic diversity, to ensure sustainable
(G. Tapan)
use of resources found therein, and
to maintain their natural conditions to the greatest extent possible;
b. “Protected area” refers to identified portions of land and water set aside by rea-
sons of their unique physical and biological significance, managed to enhance biological
diversity and protected against destructive human exploitation;
c. “Buffer zones” are identified areas outside the boundaries of an immediately
adjacent to designated protected areas pursuant to Section 8 that need special develop-
ment control in order to avoid or minimize harm to the protected area;

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d. “Indigenous cultural community” refers to a group of people sharing common

bonds of language, customs traditions, and other distinctive cultural traits, and who
have , since time to immemorial, occupied, possessed and utilized a territory;
e. “National park” refers to a forest reservation essentially of natural wilderness
character which has been withdrawn from settlement, occupancy or any form of exploi-
tation except in conformity with approved management plan and set aside as such ex-
clusively to conserve the area or preserve the scenery, the natural and historical objects,
wild animals and plants therein to provide enjoyment of these features in such areas;
f. “Natural monument” is a relatively small area focused on protection of small
features to protect or preserve nationally significant natural features on account of their
special interest or unique characteristics;
g. “Natural biotic area” is an area set aside to allow the way of life societies living
in harmony with the environment to adopt to modern technology at their pace;
h. “Natural park” is relatively large area not materially altered by human activ-
ity where extractive resource use are not allowed and maintained to protect outstanding
natural and scenic areas of national or international significance for scientific, educa-
tion and recreational use;
i. “Protected landscapes/seascapes” are areas of national significance which are
characterized by the harmonious interaction of man and land while providing opportu-
nities for public enjoyment through recreation and tourism within the normal lifestyle
and economic activity of these areas;
j. “Resource reserve” is an extensive and relatively isolated and uninhabited nor-
mally with difficult access designated as such to protect natural resources of the area
for future use and prevent or contain development activities that could affect the re-
source pending the establishment of objectives which are based upon appropriate
knowledge and planning;
k. “Strict nature reserve” is an area possessing some outstanding ecosystem, fea-
tures and/or species of flora and fauna of national scientific importance maintained to
protect nature and maintain processes in an undisturbed state in order to have ecologi-
cally representatives examples of the natural environment available for scientific study,
environmental monitoring, education, and for the maintenance of genetic resources in a
dynamic and evolutionary state;
l. “Tenured migrant communities” are communities within protected areas which
have actually and continuously occupied such areas for five (5) years before the designa-
tion of the same as protected areas in accordance with this Act and are solely dependent
therein for subsistence; and
m. “Wildlife sanctuary” comprises an area which assures the natural conditions
necessary to protect nationally significant species, groups of species, biotic communities
or physical features of the environment where these may require specific human ma-
nipulation for their perpetuation.

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SEC. 5. Established and Extent of the System—The establishment and opera-

tionalization of the System shall involve the following:
a. Areas or islands in the Philippines proclaimed, designated or set aside, pursu-
ant to a law, presidential decree, presidential proclamation or executive order as na-
tional park, game refuge, bird and wildlife sanctuary, wilderness area, strict nature
reserve, fish sanctuary, natural and historical landmark, protected and managed land-
scape/seascape as well as identified virgin forests before the effectivity of this Act are
hereby designated as initial components of the System. The initial components of the
System shall be governed by existing laws, rules and regulations, not inconsistent with
this Act;
b. Within one (1) year from the effectivity of this Act, the DENR shall submit to
the Senate and the House of Representatives a map and legal description or natural
boundaries of each protected area initially compromising the System. Such maps and
legal descriptions shall, by virtue of this Act, constitute the official documentary repre-
sentation of the entire System, subject to such changes as Congress deems necessary;
c. All DENR records pertaining to said protected areas, including maps and legal
descriptions or natural boundaries, copies of rules and regulations governing them,
copies of public notices of, and reports submitted to Congress regarding pending addi-
tions, eliminations, or modifications shall be made available to the public. These legal
documents pertaining to protected areas shall also available to the public in the respec-
tive DENR Regional Offices, Provincial Environment and Natural Resources Offices
(PENROs) and Community Environment and Natural Resources Offices (CENROs)
where the NIPAS areas are located;
d. Within three (3) years from the effectivity of this Act, the DENR shall study
and review each area tentatively composing the System as to its suitability or non-
suitability for preservation as protected area and inclusion in the System according to
the categories established in Section 3 hereof and report its findings to the President as
soon as each study is completed. The study must include in each area:
1) A forest occupants survey;
2) An ethnographic study;
3) A protected area resource profile;
4) Land use plans done in coordination with the respective Regional Devel-
opment Councils; and
5) Such other background studies as will be sufficient bases for selection.
The DENR shall:
1) Notify the public of the proposed action through publication in a newspa-
per of general circulation, and such other means as the System deems necessary in
the area or areas in the vicinity of the affected land thirty (30) days prior to the
public hearing;

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2) Conduct public hearings at the locations nearest to the area affected;

3) At least thirty (30) days prior to the date of hearing, advice all local gov-
ernment units (LGUs) in the affected areas, national agencies concerned, peoples
organizations and non-government organizations and invite such officials to sub-
mit their views on the proposed action at the hearing not later than thirty (30)
days the following the date of the hearing; and
4) Give due consideration to the recommendations at the public hearing;
and provide sufficient explanation for his recommendations contrary to the general
sentiments expressed in the public hearing;
e. Upon receipt of the recommendations of the DENR, the President shall issue a
president proclamation designating the recommended areas as protected areas and
providing for measures for their protection until such time when Congress shall have
enacted a law finally declaring such recommended areas as part of the integrated area
systems; and
f. Thereafter, the President
shall send to the Senate and the
House of Representatives his rec-
ommendations with respect to the
designations as protected areas or
reclassification of each area on
which review has been completed,
together with maps and legal de-
scriptions of boundaries. The Presi-
dent, in his recommendation, may
propose the alteration of existing
boundaries of any or all proclaimed
protected areas, addition of any
contiguous area of public land of
predominant physical and biologi-
cal value. Nothing contained herein
shall limit the President to propose,
as part of his recommendation to
Congress, additional areas which
have been not designated, pro- “Nature…makes nothing in vain.” — Aristotle
claimed or set aside by law, presi- (Y. Lee)
dential decree or executive order as
protected area/s.
SEC. 6. Additional Areas to be Integrated to the System—Notwithstanding the
establishment of the initial component of the System, the Secretary shall propose the
inclusion in the System of additional areas with outstanding physical features, anthro-
pological significance and biological diversity in accordance with the provisions of Sec-
tion 5 (d).

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SEC. 7. Disestablishment as Protected Area—When in the opinion of the DENR

a certain protected area should be withdrawn or disestablished, or its boundaries modi-
fied as warranted by a study and sanctioned by the majority of the members of the re-
spective boards for the protected area as herein established in Section 11, it shall, in
turn, advise Congress. Disestablishment of a protected area under the System or modi-
fication of its boundary shall take effect pursuant to an act of Congress. Thereafter,
however, That after disestablishment by Congress, the Secretary may recommend the
transfer of such established area of other government agencies to serve their priority
programs of national interest.
SEC. 8. Buffer Zones—For each protected area, there shall be established pe-
ripheral buffer zones when necessary, in the same manner from activities that will
directly harm it. Such buffer zones shall be included in the individual protected area
management plan that shall be prepared for each protected area. The DENR shall exer-
cise its authority over protected areas as provided in this Act on such area designated
as buffer zones.
SEC. 9. Management Plans—There shall be a general management planning
strategy to serve as guide in formulating individual plans for each protected area. The
management planning strategy shall, at the minimum, promote the adoption and im-
plementation of innovative management techniques including, if necessary, the concept
of zoning, buffer zone management for multiple use and protection, habitat conserva-
tion and rehabilitation, diversity management, community organizing, socioeconomic
and scientific researchers, site-specific policy development, pest management, and fire
control. The management planning strategy shall also provide guidelines for the protec-
tion of indigenous cultural communities, other tenured migrant communities and sites
and for close coordination between and among local agencies of the Government as well
as the private sector.
Each component area of the System shall be planned and administered to further
protect and enhance the permanent preservation of its natural conditions. a manage-
ment manual shall be formulated and developed which must contain the following: an
individual management plan prepared by three (3) experts, basic background informa-
tion, field inventory of the resources within the area, an assessment of assets and limi-
tations, regional interrelationships, particular objectives for the managing the area,
appropriate division of the area into management zones, a review of the boundaries of
the area, and a design of the management programs.
SEC. 10. Administration and Management of the System—The National Inte-
grated Protected Areas System is hereby placed under the control and administration of
the Department of Environment and Natural Resources. For this purpose, there is
hereby created a division in the regional offices of the Department to be called the Pro-
tected Areas and Wildlife Division in regions where protected areas have been estab-
lished, which shall be under the supervision of a Regional Technical Director, and shall
include subordinate officers, clerks and employees as may be proposed by the Secretary,
duly approved by the Department of Budget and Management, and appropriated for by

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Congress. The Service thus established shall manage protected areas and promote the
permanent preservation, to the greatest extent possible of their natural conditions.
To carry out the mandate of this Act, the Secretary of the DENR is empowered to
perform any and all of the following acts:
a. To conduct studies in various characteristics features and conditions of the dif-
ferent protected areas, using commonalities in their characteristics, classify and define
them into categories and prescribe permissible or prohibited human activities in each
category in the System;
b. To adopt and enforce a
land-use scheme and zoning plan
in adjoining areas for the preser-
vation and control of activities that
may be threaten the ecological
balance in the protected areas;
c. To cause the preparation
of and exercise the power to review
all plans and proposals for the
management of protected areas;
d. To promulgate rules and
regulations necessary to carry out
the provisions of this Act;
e. To deputize field officers
and delegate any of his powers
under this Act and other laws to
expedite its implementation and
enforcement;
“The hills and the sea and the earth dance. The f. To fix and prescribe rea-
world of man dance in laughter and tears.”— Kabir sonable NIPAS fees to be collected
from government agencies or any
(N. Oshima)
person, firm or corporation deriv-
ing benefits from the protected areas;
g. To extract administrative fees and fines as authorized in Section 21 for viola-
tions of guidelines, rules and regulations of this Act as would endanger the viability of
protected areas;
h. To enter into contracts and/or agreements with private entities or public agen-
cies as may be necessary to carry out the purposes of this Act;
i. To accept in the name of the Philippine Government and in behalf of NIPAS
funds, gifts or bequests of money for immediate disbursements or other property in the
interest of the NIPAS, its activities, or its services;
j. To call on any agency or instrumentality of the Government as well as aca-
demic institutions, non-government organizations and the private sector as may be
necessary to accomplish the objectives and activities of the System;

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k. To submit an annual report to the President of the Philippines and to Congress

on the status of protected areas in the country;
l. To establish a uniform matter for the System, including an appropriate and
distinctive symbol for each category in the System, in consultation with appropriate
government agencies and public and private organizations;
m. To determine the specification of the class, type and style of buildings and
other structures to be constructed in protected areas and the materials to be used;
n. Control the construction, operation and maintenance of roads, trails, water
works, sewerage fire protection and sanitation systems and other public utilities with
the protected areas;
o. Control occupancy of suitable portions of the protected areas and resettle out-
side of said area forest occupants therein, with the extraction of the members of the
indigenous communities area; and
p. To perform such other functions as may be directed by the President of the
Philippines, and to do such acts as may be necessary or incidental to the accomplish-
ment of the purpose and objectives of the System.
SEC. 11. Protected Area Management Board—A Protected Area Management
Board for each of the established protected area shall be created and shall be composed
of the following: the Regional Executive Director under whose jurisdiction the protected
area is located ; one (1) representative from the autonomous regional government, if
applicable; the Provincial Development Officer; one (1) representative from the munici-
pal government; one (1) representative from each barangay covering the protected area;
one (1) representative from each tribal community, if applicable; and at least three (3)
representatives from non-government organizations / local community organizations,
and if necessary, one (1) representative from other departments or national government
agencies involved in protected area management.
The Board shall, by majority vote, decide the allocations for budget, approve pro-
posals for funding, decide matters relating to planning, peripheral protection and gen-
eral administration of the area in accordance with the general management strategy.
The members of the Board shall serve for a term of five (5) years without compensation,
except for actual and necessary traveling and subsistence expenses incurred in the
performance of their duties. They shall be appointed by the Secretary of the DENR as
follows:
a. A member who shall be appointed to represent each local government down to
barangay level whose territory or portion in included in the protected area. Each ap-
pointee shall be the person designated by the head of such LGU, except for the Provin-
cial Development Officer who shall serve ex officio;
b. A member from non-government organizations who shall be endorsed by heads
of organizations which are preferably based in the area or which have established and
recognized interest in protected areas;

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c. The RED/s in the region/s where such protected area lies shall sit as ex officio
member of the Board and shall serve as adviser/s in matters related to the technical
aspect of management of the area; and
d. The RED shall act as chairman of the Board. When there are two (2) or more
than REDs in the Board, the secretary shall designate one (1) of them to be the Chair-
man. Vacancies shall be filed in the same manner as the original appointment.
SEC. 12. Environmental Impact Assessment—Proposals for activities which are
outside the scope of the management plan for protected areas shall be subject to an
environmental impact assessment as required by law before they are adopted, and the
results thereof shall be taken into consideration in the decision-making process. No
actual implementation of such activities shall be allowed without the required Envi-
ronmental Compliance Certificate (ECC) under the Philippine Impact Assessment (EIA)
system. In instances where such activities are allowed to be undertaken, the proponent
shall plan and carry them out in such manners as will minimize any adverse effects and
take preventive and remedial action when appropriate. The proponent shall be liable for
any damage due to lack of caution or indiscretion.
SEC. 13. Ancestral lands and Rights Over Them—Ancestral lands and custom-
ary rights and interest arising shall be accorded due recognition. The DENR shall pre-
scribe rules and regulations to govern ancestral lands within protected areas: Provided,
however, That all rules and regulations, whether adversely affecting said communities
or not, shall be subjected to notice and hearing to be participated in by members of
concerned indigenous community.
SEC. 14. Survey for Energy Resources—Consistent with the policies declared in
Section 2 hereof, protected areas, except strict nature reserves and natural parks, may
be subjected to exploration only for the purpose of gathering information on energy
resources and only if such activity is carried out with the least damage to surrounding
areas. Surveys shall be conducted only in accordance with a program approved by the
DENR, and the result of such surveys shall be made available to the public and submit-
ted to the President for recommendation to Congress. Any exploitation and utilization of
energy resources found within NIPAS areas shall be allowed only through a law passed
by Congress.
SEC. 15. Areas Under the Management of Other Departments and Government
Instrumentalities—Should there be protected areas, or portions thereof, under the ju-
risdiction of government instrumentalities other than the DENR, such jurisdiction
shall, prior to the passage of this Act, remain in the said department or government
instrumentality: Provided, That the department or government instrumentality exercis-
ing administrative jurisdiction over said protected area or a portion thereof shall coor-
dinate with the DENR in the preparation of its management plans, upon the effectivity
of this Act.
SEC. 16. Integrated Protected Areas Fund—There is hereby established a trust
fund to be known as Integrated Protected Areas (IPAS) Fund for purposes of financing

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projects of the System. The IPAS may be solicit and receive donations, endowments,
and grants in the form of contributions, and such endowments shall be exempted from
income or gift taxes and all other taxes, charges of fees imposed by the Government or
any political subdivision or instrumentality thereof.
All incomes generated from the operation of the System or management of wild
flora and fauna shall accrue to the Fund and may be utilized directly by the DENR for
the above purpose. These incomes shall be derived from:
a. Taxes from the permitted sale and export of flora and fauna and other re-
sources from protected areas;
b. Proceeds from lease of multiple- use areas;
c. Contributions from industries and facilities directly benefiting from the pro-
tected area; and
d. Such other fees and incomes derived from the operation of the protected area.
Disbursements from the Fund shall be made solely for the protection, mainte-
nance, administration, and management of the System, and duly approved projects
endorsed by the PAMBs, in the amounts authorized by the DENR.
SEC. 17. Annual Report to Congress—At the opening of each session of Con-
gress, on the status of the System, regulation in force and other pertinent information,
together with recommendations.
SEC. 18. Field Officers—All officials, technical personnel and forest guards em-
ployed in the integrated protected area service or all persons deputized by the DENR,
upon recommendation to the Management Board shall be considered as field and make
arrests in accordance with the rules on criminal procedure for the violation of laws and
regulations relating to protected areas. Persons arrested shall be brought to the nearest
police precinct for investigation.
Nothing herein mentioned shall be construed as preventing regular law enforcers
and police officers from arresting any person in the act of violating said laws and regu-
lations in protected areas.
SEC. 19. Special Prosecutors—The Department of Justice shall designate spe-
cial prosecutors to prosecute violation of laws, rules and regulations in protected areas.
SEC. 20. Prohibited Acts—Except as may be allowed by the nature of their cate-
gories and pursuant to rules and regulations governing the same, the following acts are
prohibited within protected areas:
a. Hunting, destroying, disturbing, or mere possession of any plants or animals
or products derived therefrom without a permit from the Management Board;
b. Use of any motorized equipment without as permit from the Management
Board;

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c. Mutilating, defacing or destroying objects of natural beauty, or objects of inter-

est to cultural communities ( of scenic value );
d. Damaging and leaving roads and trails in a dam condition;
e. Squatting, mineral locating, or otherwise occupying any land;
f. Constructing and maintaining any kind of structure, fence or enclosures, con-
ducting any business exposed or unsanitary conditions refuse or debris, or depositing in
ground or in bodies of water; and
g. Altering, removing, destroying or defacing boundary mark or signs.

“Those who dwell, as scientists or laymen, among the beauties and mysteries of the earth
are never alone or weary of life.” — Rachel Carson
(T. Cayton)

SEC. 21. Penalties—Whoever violates this Act or any rules and regulations is-
sued by the Department pursuant to this Act or whoever is found guilty by a competent
court of justice of any of the offenses in the preceding section shall be fined in the
amount of not less than Five thousand pesos ( P5,000 ) not more than Five hundred
thousand pesos ( P500,000 ), exclusive of the value of the thing damaged or imprison-
ment for not less than one (1) year but not more than six (6) years, or both, as deter-
mined by the court; Provided, That, if the area requires rehabilitation or restoration as
determined by the court, the offender shall also be required to restore or compensate for
the restoration to the damage: Provided, further, That the court shall order the eviction
of the offender from the land and the forfeiture in the favor of the Government of all
minerals, timber or any species collected or removed including all equipment, devices
and firearms used in connection therewith, and any construction or improvement made

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thereon by the offender. If the offender is an association or corporation, the president or

manager shall be directly responsible for the act of his employees and laborers: Pro-
vided, finally, That the DENR may impose administrative fines and penalties consis-
tent with this Act.
SEC. 22. Separability Clause—If any part of section of this Act is declared un-
constitutional, such declaration shall not affect the other parts of sections of this Act.
SEC. 23. Repealing Clause—All laws, presidential decrees, executive orders,
rules and regulations inconsistent with any provisions of this Act shall be deemed re-
pealed or modified accordingly.
SEC. 24. Effectivity Clause—This Act shall take effect fifteen (15 ) days after its
complete publication in two ( 2 ) newspaper of general circulation.
Approved: June 01, 1992.

Freedom of the wilderness means many things to different

people. To really enjoy it, we must recognize our responsibil-
ity as human beings.
Freedom gives us no license to change a heritage that be-
longs to the ages.
— Sigurd Olson

The Strategic Environmental Plan for Palawan

(Republic Act 7611)

Chapter I
General Provisions

SECTION 1. Title—This Act shall be known as the “Strategic Environmental

Plan (SEP) for Palawan Act.”
SEC. 2. Declaration of Policy—It is hereby declared the policy of the State to
protect, develop and conserve its natural resources. Towards this end, it shall assist and
support the implementation of plans, programs and projects formulated to preserve and
enhance the environment, and at the same time pursue the socioeconomic development
goals of the country.

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It shall support and promote the sustainable development goals for the provinces
through proper conservation, utilization and development of natural resources to pro-
vide optimum yields on a continuing basis. With specific reference to forest resources,
the State shall pursue and implement forest conservation and protection through the
imposition of a total commercial
logging ban as hereinafter pro-
vided.
It shall also adopt the ne-
cessary measures leading to the
creation of an institutional ma-
chinery including, among others,
fiscal and financial programs to
ensure the effective and efficient
implementation of environmen-
tal plans, programs and projects.
It shall also promote and
encourage the involvement of all
sectors of society and maximize
people participation in natural
resource management, conserva-
tion and protection. “And shall not loveliness be loved forever?”—Euripedes
SEC. 3. Definition of (A. Oposa)
Terms—As used in this Act, the
following terms are defined as follows:
1. Palawan refers to the Philippine province composed of islands and islets lo-
cated 7º47’ and 12º22’ north latitude and 117º00’ and 119º51’ east longitude, generally
bounded by the South China Sea to the northwest and by the Sulu Sea to the east;
2. Sustainable development means the improvement in the quality of life of the
present and future generations through the complementation of development and envi-
ronmental protection activities;
3. Natural resources refers to life-support systems such as the sea, coral reefs,
soil, lakes, rivers, streams, and forests as well as useful products found therein such as
minerals, wildlife, trees and other plants, including the aesthetic attributes of scenic
sites that are not man-made;
4. Tribal land areas refers to the areas comprising both land and sea that are
traditionally occupied by the cultural minorities;
5. Environmentally critical areas refers to terrestrial, aquatic and marine areas
that need special protection and conservation measures as they are ecologically fragile;
6. Participatory processes means the involvement of all the key sectors of devel-
opment, from the grassroots to the policy-making bodies of the national government, in

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providing the values and ideas from which strategic development and environmental
protection action can come about;
7. Conservation refers to the
wise use of natural resources that
assures regeneration and replenish-
ment for continuous benefit;
8. Ecology refers to the life-
sustaining interrelationships and
interactions of organisms with each
other and with their physical sur-
roundings;
9. Commercial logging refers
to the cutting, felling or destruction
of trees from old growth and residual
forests for the purpose of selling or
otherwise disposing of the cut or
felled logs for profit;
10. SEP refers to the Strate-
gic Environmental Plan discussed in
Section 4 of this Act;
11. ECAN refers to the Envi-
ronmentally Critical Areas Network
as provided in Section 7 of this Act;
“He that plants trees loves others besides him-
and
self.”— Thomas Fuller
12. EMES refers to the Envi-
(A. Oposa)
ronmental Monitoring and Evalua-
tion System provided in Section 13 of this Act.

Chapter II
Strategic Environmental Plan: Adoption, Philosophy and Legal Effects

SEC. 4. Strategic Environmental Plan (SEP)—A comprehensive framework for

the sustainable development of Palawan compatible with protecting and enhancing the
natural resources and endangered environment of the province is hereby adopted. Such
framework shall be known as the Strategic Environmental Plan for Palawan, hereinaf-
ter referred to as SEP, and shall serve to guide the local government of Palawan and
the government agencies concerned in the formulation and implementation of plans,
programs and projects affecting said province.
SEC. 5. Strategic Environmental Plan Philosophy—The SEP shall have, as its
general philosophy, the sustainable development of Palawan, which is the improvement
in the quality of life of its people in the present and future generations through the use

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 THE STRATEGIC ENVIRONMENTAL PLAN FOR PALAWAN

of complementary activities of development and conservation that protect life-support

ecosystems and rehabilitate exploited areas to allow upcoming generations to sustain
development growth. It shall have the following features:
1. Ecological viability — The physical and biological cycles that maintain the pro-
ductivity of natural ecosystems must always be kept intact;
2. Social acceptability — The people themselves, through participatory processes,
should be fully committed to support sustainable development activities by fostering
equity in access to resources and the benefits derived from them; and
3. Integrated approach — This allows for a holistic view of problems and issues
obtaining in the environment as well as opportunities for coordination and sharing that
will eventually provide the resources and political will to actually implement and sus-
tain SEP activities.
SEC. 6. Legal Effects—The SEP shall serve as the framework to guide the gov-
ernment agencies concerned in the formulation and implementation of plans, programs,
and projects affecting the environment and natural resources of Palawan. It shall there-
fore be incorporated in the regional development plan of Region IV as part of said plan.
All local governments in Palawan and the concerned national and regional government
agencies operating therein shall coordinate and align their projects and the correspond-
ing budgets with the projects, programs and policies of the SEP, as administered and
implemented by an administrative machinery hereinafter created.
SEC. 7. Environmentally Critical Areas Network (ECAN)—The SEP shall estab-
lish a graded system of protection and development control over the whole of Palawan,
including its tribal lands, forests, mines, agricultural areas, settlement areas, small
islands, mangroves, coral reefs, seagrass beds and the surrounding sea. This shall be
known as the Environmentally Critical Areas Network, hereinafter referred to as
ECAN, and shall serve as the main strategy of the SEP.
The ECAN shall ensure the following:
1. Forest conservation and protection through the imposition of a total commer-
cial logging ban in all areas of maximum protection and in such other restricted use
zones as the Palawan Council for Sustainable Development as hereinafter created may
provide;
2. Protection of watersheds;
3. Preservation of biological diversity;
4. Protection of tribal people and the preservation of their culture;
5. Maintenance of maximum sustainable yield;
6. Protection of rare and endangered species and their habitat;
7. Provision of areas for environmental and ecological research, education and
training; and

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8. Provision of areas for tourist and recreation.

SEC. 8. Main Components—The areas covered by the ECAN shall be classified
into three (3) main components:
1. Terrestrial—The terrestrial component shall consist of the mountainous as
well as ecologically important low hills and lowland areas of the whole province. It may
be further subdivided into smaller management components;
2. Coastal/marine area—This area includes the whole coastline up to the open
sea. This is characterized by active fisheries and tourism activities; and
3. Tribal ancestral lands—These are the areas traditionally occupied by the cul-
tural communities.
SEC. 9. Terrestrial Component: Management Scheme and Zonation—The terres-
trial component may be further subdivided into smaller management components for a
more efficient supervision. These management components, in turn, shall each be fur-
ther subdivided into the following zones:
1. Area of maximum protection or core zone—This zone shall be fully and strictly
protected and maintained free of human disruption. Included here are all types of natu-
ral forest which include first growth forest, residual forest and edges of intact forest,
areas above one thousand (1,000) meters elevation, peaks of mountains or other areas
with very steep gradients, and endangered habitats and habitats of endangered and
rare species. Exceptions, however, may be granted to traditional uses of tribal commu-
nities of these areas for minimal and soft impact gathering of forest species for ceremo-
nial and medicinal purposes.
2. Buffer zone—This area permits regulated use and may be further subdivided
into three (3) sub-zones:
a. Restricted use area—Generally surrounds the core zone and provides a
protective barrier. Limited and non-consumptive activities may be allowed in this
area;
b. Controlled use area—Encircles and provides the outer barrier to the core
and restricted use areas. Controlled forest extraction, like the collecting of minor
forest products, and strictly controlled logging and mining may be allowed; and
c. Traditional use area—Edges of intact forests where traditional land use
is already stabilized or is being stabilized. Management and control shall be car-
ried out with the other supporting programs of the SEP.
3. Multiple/Manipulative use area—This is the area where the landscape has
been modified for different forms of land use such as intensive timber extraction, graz-
ing and pastures, agriculture and infrastructure development. Control and manage-
ment shall be strictly integrated with the other supporting programs of the SEP and
other similar programs of the government.

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 THE STRATEGIC ENVIRONMENTAL PLAN FOR PALAWAN

SEC. 10. Coastal/Marine Zone—A different and simplified scheme of manage-

ment and zonation shall be applied to this component due to its geographical character-
istics, critical nature, and patterns of resource use. Equitable access to the resource and
management responsibility by the local community shall be the underlying manage-
ment philosophy of this component.
1. Core zone—This area shall be designated free from any human activity. This
includes sanctuaries for rare and endangered species, selected coral reefs, seagrass, and
mangrove ecosystem reserves.
2. Multiple use zone—Aside from being the development area, this zone also
serves as the buffer zone where fishery, mariculture, recreation, rehabilitation of small
islands and mangrove ecosystem, education and research are allowed.

Wilderness is an area where the Earth and its community of life are untouched by
*
man, where man himself is a visitor and does not remain. — Wilderness Act of the
United States of America, Section 1131 (c)
(M. Velas)

SEC. 11. Tribal Ancestral Lands—These areas, traditionally occupied by cul-

tural minorities, comprise both land and sea areas. These shall be treated in the same
graded system of control and prohibition as in the others above-mentioned except for
stronger emphasis in cultural considerations. The SEP, therefore, shall define a special
kind of zonation to fulfill the material and cultural needs of the tribes using consulta-
tive processes and cultural mapping of the ancestral lands.

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Chapter III
Management of Resources Outside of the Ecologically Critical Areas

SEC. 12. Management of Resources Outside of the Ecologically Critical Areas —

The SEP shall provide for the management of resources outside of the ECAN and shall
include coastal resources, resources of the catchment areas, timber and mines, devel-
opment in the lowlands, and settlement areas. It shall also provide for tourism plan-
ning.

Chapter IV
Support Mechanisms

SEC. 13. Environmental Monitoring and Evaluation System (EMES) —In order
to monitor achievement of its goals, the SEP shall establish an Environmental Monitor-
ing and Evaluation System (EMES) which shall ensure a systematic and reliable means
of data generation for the various concerns of the SEP. It shall measure changes in
environmental status, identify adverse environmental trends and crisis areas, recom-
mend solutions, assess the implementation of the SEP, and suggest measures to make
the SEP more responsible to the changing needs.
SEC. 14. Environmental Research—The SEP shall provide for a system of re-
search so that additional information for accurate planning as well as data to solve new
problems in the implementation of the SEP shall be supplied. As such, the SEP’s re-
searches shall not be confined to the physical and biological features of the environ-
ment, achieved through surveys, monitoring, resource assessments and research into
processes, but shall also extend to policies and socioeconomic questions.
SEC. 15. Environmental Education and Extension—The SEP shall design an
environmental information and education designed to gradually wean the people away
from destructive practices and shall recommend practical ways as an alternative.
Training programs for the nongovernmental organizations (NGOs), business sector
representatives, and community leaders shall be organized. This may establish linkages
between the NGO’s, community leaders, sector representatives and the staff of line
agencies’ development communication or public information section and, at the same
time, be used to plan out a comprehensive public information drive.
Simultaneously, community organizing shall be enhanced to reinforce non-formal
approaches, complementing regular environment/science courses in the school.

Chapter V
Administrative Machinery for the Implementation of the SEP

SEC. 16. Palawan Council for Sustainable Development—The governance, im-

plementation and policy direction of the Strategic Environmental Plan shall be exer-

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 THE STRATEGIC ENVIRONMENTAL PLAN FOR PALAWAN

cised by the herein created Palawan Council for Sustainable Development (PCSD),
hereinafter referred to as the Council, which shall be under the Office of the President.
It shall be composed of the Members of the House of Representatives representing the
Province of Palawan, the Deputy Director General of the National Economic and Devel-
opment Authority, the Undersecretary of Environment and Natural Resources, the
Undersecretary for Special Concerns of the Department of Agriculture, the Governor of
Palawan, the Mayor of Puerto Princesa City, the President of the Mayor’s League of
Palawan, the President of the Provincial Chapter of the Liga ng mga Barangay, the
Executive Director of the Palawan Council for Sustainable Development Staff as pro-
vided in Section 20 of this Act, and such other members from the public or private sec-
tors as the majority of the Council may deem necessary.
The Council shall elect, from among its members, a Chairman and a Vice-
Chairman.
SEC. 17. Quorum—A majority of the members of the Council shall constitute a
quorum for the conduct of business.
SEC. 18. Compensation—The members of the Council shall be entitled to per di-
ems and allowances in accordance with existing laws in the performance of their duties
and in carrying out the business of the Council. The per diems shall be in the amount of
Five Hundred Pesos (P500) for every meeting; Provided, That the per diems collected do
not exceed the equivalent of per diems for four (4) meetings in a month.
SEC. 19. Powers and Functions—In order to successfully implement the provi-
sions of this Act, the Council is hereby vested with the following powers and functions:
1. Formulate plans and policies as may be necessary to carry out the provisions
of this Act;
2. Coordinate with the local governments to ensure that the latter’s plans, pro-
grams and projects are aligned with the plans, programs and policies of the SEP;
3. Call on any department, bureau, office, agency or instrumentality of the gov-
ernment, and on private entities and organizations for cooperation and assistance in the
performance of its functions;
4. Arrange, negotiate for, and accept donations, grants, gifts, loans, and other
fundings from domestic and foreign sources to carry out the activities and purposes of
the SEP;
5. Recommend to the Congress of the Philippines such matters that may require
legislation in support of the objectives of the SEP;
6. Delegate any or all of its powers and functions to its support staff, as hereinaf-
ter provided, except those which by provisions of law cannot be delegated;
7. Establish policies and guidelines for employment on the basis of merit, techni-
cal competence and moral character and prescribe a compensation and staffing pattern;

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8. Adopt, amend and rescind such rules and regulations and impose penalties
therefore for the effective implementation of the SEP and the other provisions of this
Act;
9. Enforce the provisions of this Act and other existing laws, rules and regula-
tions similar to or complementary with this Act;
10. Perform related functions which shall promote the development, conserva-
tion, management, protection, and utilization of the natural resources of Palawan; and
11. Perform such other powers and functions as may be necessary in carrying out
its functions, powers, and the provisions of this Act.
SEC. 20. Conversion of Palawan Integrated Area Development Project Office (PI-
ADPO) to the Palawan Council for Sustainable Development Staff—The Palawan Inte-
grated Area Development Project Office, hereinafter referred to as PIADPO, is hereby
converted to the Palawan Council for Sustainable Development Staff which shall serve
as the regular professional support staff of the Council and shall provide the machinery
to coordinate the policy and functions, implement programs, and organize such services
as may be required by the Council in the exercise of its functions. It shall be independ-
ent of any other department or agency of the Government other than the herein pro-
vided Council. All the applicable powers, functions, personnel, complement, staff, ap-
propriations, records, equipment, property, funds, and other assets of the PIADPO, as
well as all its obligations and liabilities, are hereby transferred to the Palawan Council
1
for Sustainable Development Staff.
The incumbent director of the PIADPO shall be the Executive Director of the
Palawan Council for Sustainable Development Staff and shall lead all its operation.
Thereafter, the Executive Director shall be appointed by the members of the Council.
He shall also be ex officio member of the Council.

Chapter VI
Appropriations and Final Provisions

SEC. 21. Appropriations—The amount necessary to carry out the provisions of

this Act shall be charged to the current fiscal year appropriations of the PIADPO.
Thereafter, such sums as may be necessary shall be included in the annual General
Appropriations Act.
SEC. 22. Separability Clause—If any of the provisions of this Act shall be de-
clared unconstitutional, the other provisions of this Act shall remain valid.
SEC. 23. Repealing Clause—All laws, decrees, orders, rules and regulations or
parts thereof contrary to or inconsistent with the provisions of this Act are hereby re-
pealed or modified accordingly.
_______________________
1
See also Sec. 16.

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 CAVE MANAGEMENT ACT

SEC. 24. Effectivity Clause—This Act shall take effect upon its approval.
Approved: June 19, 1992.

Cave Management Act (Republic Act 9072)

SECTION 1. Title—This Act shall be known as the “National Caves and Cave
Resources Management and Protection Act.”

Sto. Niño Cave, Tami-aw, Somewhere in the Visayan Sea.

(A. Oposa)

SEC. 2. Declaration of Policy. — It is hereby declared the policy of the State to

conserve, protect and manage caves and cave resources as part of the country’s natural
wealth. Towards this end, the State shall strengthen cooperation and exchange of in-
formation between governmental authorities and people who utilize caves and cave
resources for scientific, educational, recreational, tourism and other purposes.
SEC. 3. Definition of Terms. —
For purposes of this Act, the following terms shall be defined as follows:
a. “Cave” means any naturally occurring void, cavity, recess or system of inter-
connected passages beneath the surface of the earth or within a cliff or ledge and which
is large enough to permit an individual to enter, whether or not the entrance, located
either in private or public land, is naturally formed or man-made. It shall include any

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natural pit, sinkhole or other feature which is an extension of the entrance. The term
also includes cave resources therein, but not any vug, mine tunnel, aqueduct or other
man-made excavation.
b. “Cave resources” includes any material or substance occurring naturally in
caves, such as animal life, plant life, including paleontological and archaeological depos-
its, cultural artifacts or products of human activities, sediments, minerals, speleogems
and speleothems.
c. “Secretary” means the Secretary of the Department of Environment and Natu-
ral Resources (DENR).
d. “Speleogem” means relief features on the walls, ceilings and floor of any cave
or lava tube which are part of the surrounding bedrock, including but not limited to
anastomoses, scallops, meander niches, petromorphs and rock pendants in solution
caves and similar features unique to volcanic caves.
e. “Speleothem” means any natural mineral formation or deposit occurring in a
cave or lava tube, including but not limited to any stalactite, stalagmite, helictite, cave
flower, flowstone, concretion, drapery, rimstone or formation of clay or mud.
f. “Significant cave” refers to a cave which contains materials or possesses fea-
tures that have archaeological, cultural, ecological, historical or scientific value as de-
termined by the DENR in coordination with the scientific community and the academe.
SEC. 4. Implementing Agency—The DENR shall be the lead agency tasked to
implement the provisions of this Act in coordination with the Department of Tourism
(DOT), the National Museum, the National Historical Institute and concerned local
government unit (LGUs) for specific caves, except that in the Province of Palawan, the
Palawan Council for Sustainable Development shall be the lead implementing agency
pursuant to Republic Act No. 7611 or the Strategic Environmental Plan for Palawan
Act.
SEC. 5. Powers and Functions of the Department of Environment and Natural
Resources (DENR)—In the implementation of this Act, the DENR shall exercise the
following powers and functions:
a. Formulate, develop and implement a national program for the management,
protection and conservation of caves and cave resources;
b. Disseminate information and conduct educational campaign on the need to
conserve, protect and manage our caves and cave resources;
c. Issue permits for the collection and removal of guano and other cave resources
which shall be determined in coordination with the DOT, the National Museum, con-
cerned LGUs, the scientific community and the academe, with regard to specific caves
taking into consideration bio-diversity as well as the aesthetic and archaeological value
of the cave: Provided, That the permittee shall be required to post a bond to ensure
compliance with the provisions of any permit: Provided, further, That any permit issued

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 CAVE MANAGEMENT ACT

under this Section shall be revoked by the Secretary when the permittee violates any
provision of this Act or fails to comply with any other condition upon which the permit
was issued: Provided, furthermore, That the Secretary cannot issue permits for the
removal of stalactites and stalagmites, and when it is established that the removal of
the resources will adversely affect the value of a significant cave: Provided, finally, That
caves located within a protested area shall be subject to the provisions of Republic Act
No. 7586 or the National Integrated Protected Areas System Act of 1992;
d. Call on any local government unit, bureau, agency, state university or college
and other instrumentalities of the government for assistance as the need arises in the
discharge of its functions;
e. Enter into a memorandum of agreement with any local government unit (LGU)
for the preservation, development and management of cave or caves located in their
respective territorial jurisdiction;
f. Tap the cooperation of people’s and nongovernmental organizations as active
partners in the conservation and protection of our caves and cave resources; and
g. Exercise other powers and perform other functions as may be necessary to im-
plement the provisions of this Act.
SEC. 6. Information Concerning the Nature and Location of Significant Caves—
Information concerning the nature and specific location of a potentially significant cave
shall not be made available to the public within one (1) year after its discovery by the
DENR, during which time the DENR, in coordination with the DOT, the National Mu-
seum, the National Historical Institute, concerned LGUs, the scientific community and
the academe, shall assess its archaeological, cultural, ecological, historical and scientific
value, unless a written request is made and the Secretary determines that disclosure of
such information will further the purpose of this Act and will not create a substantial
risk of harm, theft or destruction on such cave.
The written request shall contain, among others, the following:
a. a description of the geographic site for which the information is sought;
b. an explanation of the purpose for which the information is sought; and
c. an assurance or undertaking satisfactory to the Secretary that adequate meas-
ures are to be taken to protect the
d. confidentiality of such information and to ensure the protection of the cave
from destruction by vandalism and unauthorized use.
SEC. 7. Prohibited Acts—The following shall be considered prohibited acts:
a. Knowingly destroying, disturbing, defacing, marring, altering, removing or
harming the speleogem or speleothem of any cave or altering the free movement of any
animal or plant life into or out of any cave;

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b. Gathering, collecting, possessing, consuming, selling, bartering or exchanging

or offering for sale without authority any cave resource; and
c. Counselling, procuring,
soliciting or employing any other
person to violate any provision of
this Section.
SEC. 8. Penalties—Any
person found guilty of any of the
offenses enumerated under Sec-
tion 7 hereof shall be punished
by imprisonment from two (2)
years to six (6) years or a fine
ranging from Twenty thousand
pesos (P20,000.00) to Five
hundred thousand pesos
(P500,000.00) or both, at the dis-
cretion of the Court: Provided,
That the person furnishing the
capital to accomplish the acts
punishable herein shall be pun-
ished by imprisonment from six
(6) years and one (1) day to eight
(8) years or by a fine ranging
from Five hundred thousand The best remedy for those who are afraid, lonely or
pesos (P500,000.00) to One unhappy is to go utside, somewhere where they can be
million pesos (P1,000,000.00) or quiet, alone with the heavens, nature and God. Because
both, at the discretion of the only then does one feel that all is as it should be and
Court: Provided, further, That if that God wishes to see people happy, amidst the simple
the area requires rehabilitation beauty of nature.—Anne Frank
or restoration as determined by (G. Tapan, Callao Cave)
the Court, the offender shall also
be required to restore the same, whenever practicable, or compensate for the damage:
Provided, finally, That if the offender is a government employee, he or she shall like-
wise be removed from office.
SEC. 9. Administrative Confiscation and Conveyance—The Secretary shall order
the confiscation, in favor of the government of the cave resources gathered, collected,
removed, possessed or sold including the conveyances and equipment used in violation
of Section 7 hereof.
SEC. 10. Fees—Any money collected by the DENR as permit fees for collection
and removal of cave resources, as a result of the forfeiture of a bond or other security by a
permittee who does not comply with the requirements of such permit issued under this
Act or by way of fines for violations of this Act shall be remitted to the National Treasury.

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 CAVE MANAGEMENT ACT

SEC. 11. Implementing Rules and Regulations—The DENR shall, within six (6)
months from the effectivity of this Act, issue rules and regulations necessary to imple-
ment the provisions hereof.
SEC. 12. Appropriations—The amount necessary to carry out the provisions of
this Act shall be included in the General Appropriations Act of the year following its
enactment into law and thereafter.
SEC. 13. Separability Clause—If any provision of this Act is subsequently de-
clared unconstitutional, the remaining provisions shall remain in full force and effect.
SEC. 14. Repealing Clause—Presidential Decree No. 1726-A is hereby modified.
Treasure hunting in caves shall be governed by the provisions of this Act. Except Presi-
dential Decree No. 412 and Republic Act No. 4846, all other laws, decrees, orders and
regulations, or parts thereof, which are inconsistent with any of the provisions of this
Act are hereby repealed or amended accordingly.
SEC. 15. Effectivity—This Act shall take effect fifteen (15) days following its
publication in two (2) national newspapers of general circulation.
Approved: April 8, 2001.

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Revised Forestry Code

(Presidential Decree 705)
Whereas, proper classification, management, and utilization of the lands of the
public domain to maximize their productivity to meet the demands of our increasing
population is urgently needed;
Whereas, to achieve the above
purpose, it is necessary to reassess
the multiple uses of forest lands and
resources before allowing any utili-
zation thereof to optimize the bene-
fits that can be derived therefrom;
Whereas, it is also imperative
to place emphasis not only on the
utilization thereof but more so on
the protection, rehabilitation and
development of forest lands, in order
to ensure the continuity of their
productive condition;
Whereas, the present laws and
regulations governing forest lands
are not responsive enough to support
reoriented government programs,
projects, and efforts on the proper
classification and delimitation of the
lands of the public domain, and the
management, utilization, protection,
rehabilitation, and development of
forest lands; “If a man walks in the woods for love of them half
Now, Therefore, I, Ferdinand of each day, he is in danger of being regarded as
E. Marcos, President of the a loafer. But if he spends his days as a specula-
tor, shearing off those woods and making the
Philippines, by virtue of the powers
earth bald before her time, he is deemed an in-
in me vested by the Constitution, do dustrious and enterprising citizen.” — Henry
hereby revise Presidential Decree David Thoreau
No. 389 to read as follows: (N. Oshima)
SECTION 1. Title—This
decree shall be known as the “Revised Forestry Code of the Philippines.”
SEC. 2. Policies—The State hereby adopts the following policies:
a. The multiple uses of forest lands shall be oriented to the development and pro-
gress requirements of the country, the advancement of science and technology, and the
public welfare;

136
 REVISED FORESTRY CODE

b. Land classification and survey shall be systematized and hastened;

c. The establishment of wood-processing plants shall be encouraged and rational-
ized; and
d. The protection, development and rehabilitation of forest lands shall be empha-
sized so as to ensure their continuity in productive condition.
2
SEC. 3. Definition —
a. Public forest is the mass of lands of the public domain which has not been sub-
ject to the present system of classification for the determination of which lands are
needed for forest purposes and which are not.
b. Permanent forest or forest reserves refers to those lands of the public domain
which have been the subject of the present system of classification and declared as not
needed for forest purposes.
c. Alienable or disposable lands refers to those lands of the public domain which
have been the subject of the present system of classification and declared as not needed
for forest purposes.
d. Forest land includes the public forest, the permanent forest or forest reserves,
and forest reservations.
e. Grazing land refers to that portion of the public domain which has been set
aside, in view of the suitability of its topography and vegetation, for the raising of live-
stock.
f. Mineral lands refers to those lands of the public domain which have been clas-
3
sified as such by the Secretary of Natural Resources in accordance with prescribed and
approved criteria, guidelines and procedure.
g. Forest reservations refer to forest lands which have been reserved by the
President of the Philippines for any specific purpose or purposes.
4
h. National park refers to a forest land reservation essentially of primitive or
wilderness character which has been withdrawn from settlement or occupancy and set
aside as such exclusively to preserve the scenery, the natural and historic objects and
the wild animals or plants therein, and to provide enjoyment of these features in such a
manner as will leave them unimpaired for future generations.
i. Game refuge or bird sanctuary refers to a forest land designated for the protec-
tion of game animals, birds and fish and closed to hunting and fishing in order that the
excess population may flow and restock surrounding areas.

_______________________
2
As amended by Sec. 1, P.D. No. 1559, 11 June 1978.
3
Now the Secretary of Environment and Natural Resources.
4
National Parks are now more extensively treated in the National Integrated Protected Ar-
eas Systems (NIPAS), Rep. Act No. 7586 (1992).

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LAND

j. Marine park refers to

any public offshore area delimi-
ted as habitat of rare and unique
species of marine flora and
fauna.
k. Seashore park refers to
any public shore area delimited
for outdoor recreation, sports
fishing, water skiing and related
healthful activities.
l. Watershed reservation is
a forest land reservation estab-
lished to protect or improve the
conditions of the water yield
thereof or reduce sedimentation.
m. Watershed is a land
area drained by a stream or
fixed body of water and its tribu-
taries having a common outlet
for surface runoff.
n. Critical watershed is a
drainage area of a river system
supporting existing and proposed
hydroelectric power, irrigation
works or domestic water facilities “A man does not plant a tree for himself; he plants it
needing immediate protection or for posterity.” — Alexander Smith
rehabilitation. (N. Oshima)
o. Mangrove is a term applied to the type of forest occurring on tidal flat along
the sea coast, extending along stream where the water is brackish.
p. Kaingin refers to a portion of the forest land which is subjected to shifting
and/or permanent slash-and-burn cultivation.
q. Forest product means timber, pulpwood, firewood, bark, tree top, resin, gum,
wood, oil, honey, beeswax, nipa, rattan, or other forest growth such as grass, shrub, and
flowering plant, the associated water, fish, game, scenic, historical, recreational and
geologic resources in forest lands.
r. Dipterocarp forest is a forest dominated by trees of the dipterocarp species,
such as red lauan, tanguile, tiaong, white lauan, almon, bagtikan, and mayapis of the
Philippine mahogany group, apitong and the yakals.
s. Pine forest is a forest type predominantly of pine trees.

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 REVISED FORESTRY CODE

t. Industrial tree plantation refers to any forest land extensively planted to tree
crops primarily to supply raw material requirements of existing or proposed wood proc-
essing plants and related industries.
u. Tree farm refers to any small forest land or tract of land purposely planted to
tree crops.
v. Agro-forestry is a sustainable management for land which increases overall
production, combines agriculture crops, tree crops and forest plants and/or animals
simultaneously or sequentially, and applies management practices which are compati-
ble with the cultural patterns of the local population.
w. Multiple-use is the harmonized utilization of the land, soil, water, wildlife, rec-
reation value, grass and timber of forest lands.
x. Selective logging is the systematic removal of the mature, over-mature and de-
fective trees in such manner as to leave adequate number and volume of healthy resid-
ual trees of the desired species necessary to assure a future crop of timber, and forest
cover for the protection and conservation of soil, water and wildlife.
y. Seed tree system is a silvicultural system characterized by partial clearcutting
leaving seed-trees to regenerate the area.
z. Healthy residual refers to a sound or slightly injured tree of the commercial
species left after logging.
aa. Sustained-yield management implies continuous or periodic production of for-
est products in a working unit for the purpose of achieving at the earliest practicable
time an approximate balance between growth and harvest or use. This is generally
applied to the commercial timber resources and is also applicable to the water, grass,
wildlife, and other renewable resources of the forest.
bb. Processing plant is any mechanical setup, device, machine or combination of
machines used for the conversion of logs and other forest raw materials into lumber,
veneer, plywood, fiberboard, blockboard, paper board, pulp, paper or other finished
wood products.
cc. Lease is a privilege granted by the State to a person to occupy and possess, in
consideration of specified rental, any forest land of the public domain in order to under-
take any authorized activity therein.
dd. License is a privilege granted by the State to a person to utilize forest re-
sources within any forest land, without any right of occupation and possession over the
same, to the exclusion of others, or establish and operate a wood-processing plant, or
conduct any activity involving the utilization of any forest resources.
ee. License agreement is a privilege granted by the State to a person to utilize for-
est resources within any forest land with the right of possession and occupation thereof
to the exclusion of others, except the government, but with the corresponding obligation
to develop, protect and rehabilitate the same in accordance with the terms and condi-
tions set forth in said agreement.

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ff. Permit is short-term privilege or authority granted by the State to a person to

utilize any limited forest resources or undertake a limited activity within any forest
land without any right of occupation and possession therein.
gg. Annual allowable cut is the volume of materials, whether of wood or other
forest products, that is authorized to be cut yearly from a forest.
hh. Cutting cycle is the number of years between two major harvests in the same
working unit and/or region.
ii. Forest ecosystem refers to the living and non-living components of a forest and
their interaction.
jj. Silviculture is the establishment, development, reproduction and care of forest
trees.
kk. Rationalization is the organization of a business or industry using manage-
ment principles, systems and procedures to attain stability, efficiency and profitability
of operation.
ll. Forest officer means any official or employee of the Bureau who has been ap-
pointed or delegated by law or by competent authority to execute, implement or enforce
the provisions of this Code, other related laws, as well as their implementing regulations.
mm. Private right means or refers to titled rights of ownership under existing
laws, and in the case of national minority to rights of possession existing at the time a
license is granted under this Code, which possession may include places of abode and
worship, burial grounds, and old clearings, but exclude productive forest inclusive of
logged-over areas, commercial forests and established plantations of forest trees and
trees of economic values.
nn. Person includes natural as well as juridical person.

Chapter I
Organization and Jurisdiction of the Bureau

SEC. 4. Creation of, and Merger of All Forestry Agencies into the Bureau of For-
est Development—For the purpose of implementing the provisions of this Code, the
Bureau of Forestry, the Reforestation Administration, the Southern Cebu Reforestation
Development Project, and the Parks and Wildlife Office, including applicable appropria-
tions, records, equipment, property and such personnel as may be necessary, are hereby
5
merged into a single agency to be known as the Bureau of Forest Development, herein-
after referred to as the Bureau.

_______________________
5
With the reorganization of the DENR by Executive Order No. 192 (1987), the Bureau of
Forest Development (BFD) has been renamed “Forest Management Bureau (FMB) and with the
functional shift from a line to a staff bureau. Enforcement and implementation of the line func-
tions are now delegated to the Regional Offices of the DENR.

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 REVISED FORESTRY CODE

SEC. 5. Jurisdiction of Bureau—The Bureau shall have jurisdiction and author-

ity over all forest land, grazing lands, and all forest reservations including watershed
reservations presently administered by other government agencies or instrumentalities.
It shall be responsible for the protection, development, management, regeneration,
and reforestation of forest lands; the regulation and supervision of the operation of
licensees, lessees, and permittees for the taking or use of forest products therefrom or
the occupancy or use thereof; the implementation of multiple use and sustained yield
management in forest lands; the protection, development and preservation of national
parks, marine parks, game refuges and wildlife; the implementation of measures and
programs to prevent kaingin and managed occupancy of forest and grazing lands; in
collaboration with other bureaus, the effective, efficient and economic classification of
lands of the public domain; and the enforcement of forestry, reforestation, parks, game
and wildlife laws, rules, and regulations.
The Bureau shall regulate the establishment and operation of sawmills, veneer
and plywood mills and other wood processing plants and conduct studies of domestic
and world markets of forest products.
SEC. 6. Director and Assistant Director and Their Qualifications — The Bureau
shall be headed by a Director, who shall be assisted by one or more Assistant Directors.
The Director and Assistant Directors shall be appointed by the President.
No person shall be appointed Director or Assistant Director of the Bureau unless
he is a natural born citizen of the Philippines, at least 30 years of age, a holder of at
least a Bachelor’s Degree in Forestry or its equivalent, and a registered forester.
SEC. 7. Supervision and Control —The Bureau shall be directly under the con-
trol and supervision of the Secretary of the Department of Natural Resources,’ hereinaf-
ter referred to as the Department Head.
SEC. 8. Review — All actions and decisions of the Director are subject to review,
motu proprio or upon appeal of any person aggrieved thereby, by the Department Head
whose decision shall be final and executory after the lapse of thirty (30) days from re-
ceipt by the aggrieved party of said decision, unless appealed to the President in accor-
dance with the Executive Order No. 19, series of 1966. The decision of the Department
Head may not be reviewed by the courts except through a special civil action for certio-
rari or prohibition.
SEC. 9. Rules and Regulations — The Department Head, upon the recommen-
dation of the Director of Forest Development, shall promulgate the rules and regula-
tions necessary to implement effectively the provisions of this Code.
7
SEC. 10. Creation of Functional Divisions and Regional and District Offices —
All positions in the merged agencies are considered vacant. Present occupants may be
appointed in accordance with a staffing pattern or plan of organization to be prepared
_______________________
7
This section has been rendered generally irrelevant with the reorganization of the
DENR/FMB by E.O. No. 192, s. 1987.

141
LAND

by the Director and approved by the Department Head. Any appointee who fails to
report for duty in accordance with the approved plan within thirty (30) days upon re-
ceipt of notification shall be deemed to have declined the appointment, in which case
the position may be filled by any other qualified applicant. For the efficient and effec-
tive implementation of the program of the Bureau, the following divisions and sections
are hereby created, to wit:

Divisions Sections
Planning and Program Planning;
Evaluation Division Performance Evaluation;
Forest Economics;
Management Analysi
Data and Information.
Administrative Division Personnel; Budget;
Accounting; Information;
General Services.
Legal Division
Reforestation and Cooperative Planting;
Afforestation Planting Stock Production;
Division Plantation Management.
Timber Management Forest Surveys, Data, and
Division Mapping; Silviculture;
Timber Inventory and
Photo-Interpretation;
Timber Management
Plans; Land Classification.
Utilization Division Timber Operations; Land
Uses; Utilization.
Forest Protection Forest Protection;
and Infrastructure Forest Occupancy
Management Watershed Management
Infrastructure
Parks, Range and Wildlife Parks Management;
Division Recreation Management;
Wildlife Management;
Range Management.
Security and Intelligence Division
Forest Development Technical Training
Training Center Non-Technical Training

142
 REVISED FORESTRY CODE

The Department Head may, upon recommendation of the Director, reorganize or

create such other divisions, sections or units as may be deemed necessary and to ap-
point the personnel thereto: Provided, That an employee appointed or designated as
officer-in-charge of a newly created division, section or unit, or to an existing vacant
position with a higher salary, shall receive, from the date of such appointment or desig-
nation until he is replaced or reverted to his original position, the salary corresponding
to the position temporarily held by him.
There shall be created at least eleven (11) regional offices. In each region, there
shall be as many forest districts as may be necessary, in accordance with the extent of
forest area, established work loads, need for forest protection, fire prevention and other
factors, the provisions of any law to the contrary notwithstanding: Provided, That the
boundaries of such districts shall follow, whenever possible, natural boundaries of wa-
tersheds under the river-basin concept of management.
8
SEC. 11. Manpower and Policy Development—The Bureau shall establish and
operate an in-service training center for the purpose of upgrading and training its per-
sonnel and new employees.
The Bureau shall also set aside adequate funds to enable personnel to obtain spe-
cialized education and training in local or foreign colleges or institutions.
There shall be established in the College of Forestry, University of the Philippines
at Los Baños, in coordination with the Department of Natural Resources and the wood
industry, a Forestry Development Center which shall conduct basic policy researches in
forestry and develop or help develop an effective machinery for forestry policy formula-
tion and implementation. To help defray the cost of operating said Center, it is author-
ized to receive assistance from the wood industry and other sources.
SEC. 12. Performance Evaluation—The Bureau shall devise a system, to be ap-
proved by the Department Head, to evaluate the performance of its employees. The
system shall measure accomplishment in quantity and quality of performance as re-
lated to the funded program of work assigned to each organizational unit. There shall
be included a system of periodic inspection of district offices by the regional offices and
the regional and district offices by the Central Office in both functional fields and in the
overall assessment of how each administrative unit has implemented the laws, regula-
tions, policies, programs, and practices relevant to such unit. The evaluation system
shall provide the information necessary for annual progress reports and determination
of employee training, civil service awards and transfer or disciplinary action.

_______________________
8
As amended by Sec. 1, P.D. No. 1559, 11 June 1978.

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LAND

Chapter II
Classification and Survey

SEC. 13. System of Land Classification—The department head shall study, de-
vise, determine, and prescribe the criteria, guidelines, and methods for the proper and
accurate classification and sur-
vey of all lands of the public do-
main into agricultural, indus-
trial or commercial, residential,
resettlement, mineral, timber or
forest, and grazing lands, and
into such other classes as now or
may hereafter be provided by
law, rules and regulations.
In the meantime, the de-
partment head shall simplify
through inter-bureau action the
present system of determining
which of the unclassified lands of
the public domain are needed for
forest purposes and declare them
as permanent forest to form part
of the forest reserves. He shall
declare those classified and de-
termined not to be needed for
forest purposes as alienable and
disposable lands, the adminis-
trative jurisdiction and manage-
ment of which shall be trans-
“Climb the mountains and get their good tidings. ferred to the Bureau of Lands:
Nature’s peace will flow into you as sunshine flows into Provided, That mangrove and
trees. The winds will blow their own freshness into other swamps not needed for
you...while cares will drop off like autumn leaves.”— shore protection and suitable for
John Muir fishpond purposes shall be
(N. Oshima) released to, and be placed under
the administrative jurisdiction and management of, the Bureau of Fisheries and
Aquatic Resources. Those still to be classified under the present system shall continue
to remain as part of the public forest.
9
SEC. 14. Existing Pasture Leases in Forest Lands.—Forest lands which are not
reservations and which are the subject of pasture leases shall be classified as grazing
_______________________
9
As amended by Sec. 1, P.D. No. 1559, 11 June 1978.

144
 REVISED FORESTRY CODE

lands and areas covered by pasture permits shall remain forest lands until otherwise
classified under the criteria, guidelines and methods of classification to be prescribed by
the department head: Provided, That the administration, management, and disposition
of grazing lands shall remain under
the Bureau.
SEC. 15. Topography.—No
land of the public domain eighteen
percent (18%) in slope or over shall
be classified as alienable and dis-
posable, nor any forest land fifty
percent (50%) in slope or over, as
grazing land.
Lands eighteen percent (18%) in
slope or over which have already
been declared as alienable and dis-
posable shall be reverted to the clas-
sification of forestlands by the de-
partment head, to form part of the
forest reserves, unless they are al-
ready covered by existing titles or
approved public land application, or
actually occupied openly, continu-
ously, adversely and publicly for a
period of not less than thirty (30)
years as of the effectivity of this
Code, where the occupant is quali- “There is a way that nature speaks, that land
fied for a free patent under the speaks. Most of the time we are simply not patient
Public Land Act: Provided, That said enough, quiet enough, to pay attention to the
lands, which are not yet part of a story.” — Linda Hogan
well-established community, shall be (N. Oshima)
kept in a vegetative condition sufficient to prevent erosion and adverse effects on the
lowlands and streams: Provided, further, that when public interest so requires, steps
shall be taken to expropriate, cancel defective titles, reject public land application, or
eject occupants thereof.
SEC. 16. Areas Needed for Forest Purpose.—The following lands, even if they are
below eighteen percent (18%) in slope, are needed for forest purposes, and may not,
therefore, be classified as alienable and disposable land, to wit:
1. Areas less than 250 hectares which are far from, or are not contiguous with,
any certified alienable and disposable land;
2. Isolated patches of forest of at least five (5) hectares with rocky terrain, or
which protect a spring for communal use;

145
LAND

3. Areas which have already been reforested;

4. Areas within forest concessions which are timbered or have good residual
stocking to support an existing, or approved to be established, wood- processing plant;
5. Ridge tops and plateaus regardless of size found within, or surrounded wholly
or partly by, forest lands where headwaters emanate;
6. Appropriately located road rights-of-way;
7. Twenty-meter strips of land along the edge of the normal high waterline of
rivers and streams with channels of at least five (5) meters wide;
8. Strips of mangrove or swamplands at least twenty (20) meters wide, along
shorelines facing oceans, lakes, and other bodies of water, and strips of land at least
twenty (20) meters wide facing lakes;
9. Areas needed for other purposes, such as national parks, national historical
sites, game refuges and wildlife sanctuaries, forest station sites, and others of public
interest;
10. and Areas previously proclaimed by the President as forest reserves, national
parks, game refuge, bird sanctuaries, national shrines, national historic sites.
Provided, That in case an area falling under any of the foregoing categories shall
have been titled in favor of any person, steps shall be taken, if public interest so re-
quires, to have said title cancelled or amended, or the titled area expropriated.
10
SEC. 17. Establishment of Boundaries of Forest Lands.—All boundaries be-
tween permanent forests and alienable or disposable lands shall be clearly marked and
maintained on the ground, with infrastructure or roads, or concrete monuments at
intervals of not more than five hundred (500) meters in accordance with established
procedures and standards, or any other visible and practicable signs to ensure protec-
tion of the forest.
In all cases of boundary conflicts, reference shall be made to the Philippine Coast
and Geodetic Survey Topo map.
SEC. 18. Reservations in Forest Lands and Offshore Areas.—The President of
the Philippines may establish within any lands of the public domain, forest reserve and
forest reservation for the national park system, for preservation as critical watersheds,
or for any other purpose, and modify boundaries of existing ones. The department head
may reserve and establish any portion of the public forest or forest reserve as site or
experimental forest for use of the Forest Research Institute. When public interest re-
quires, offshore areas needed for the preservation and protection of educational, scien-
tific, historical, ecological and recreational values, including the marine life found
therein, shall be established as marine parks.

_______________________
10
As amended by Sec. 1, P.D. No. 1559, 11 June 1978.

146
 REVISED FORESTRY CODE

Chapter III
Utilization and Management
11
SEC. 19. Multiple Use.—The numerous beneficial uses of the timber, land,
soil, water, wildlife, grass and recreation or aesthetic value of forest lands and grazing
lands shall be evaluated and weighted before allowing their utilization, exploitation,
occupation or possession thereof, or the conduct of any activity therein.
Only the utilization, exploitation, occupation or possession of any forest lands and
grazing lands, or any activity therein, involving one or more of its resources, which will
produce the optimum benefits to the development and progress of the country and the
public welfare, without impairment or with the least injury to its other resources, shall
be allowed.
All forest reservations may be open to development or uses not inconsistent with
the principal objectives of the reservation; Provided, That critical watersheds, national
parks and established experimental forests shall not be subject to commercial logging or
grazing operations, and game refuges, bird sanctuaries, marine and seashore parks
shall not be subject to hunting or fishing and other activities of commercial nature.
12
SEC. 20. License Agreement, License, Lease, or Permit.—No person may util-
ize, exploit, occupy, possess or conduct any activity within any forest and grazing land,
or establish, install, add and operate any wood or forest products processing plant,
unless he had been authorized to do so under a license agreement, license, lease or
permit: Provided, That when the national interest so requires, the President may
amend, modify, replace, or rescind any contract, concession, permit, license, or any
other form of privilege granted herein: Provided, further, That upon the recommenda-
tion of the appropriate government agency, the President may, pending the conduct of
appropriate hearing, order the summary suspension of any such contract, concession,
license, permit, lease or privilege granted under this decree for violation of any of the
conditions therein such as those pertaining but not limited to reforestation, pollution,
environmental protection, export limitation or such conditions as are prescribed by the
Secretary of Environment and Natural Resources in daily issued regulations.
SEC. 21. Sustained Yield.—All measures shall be taken to achieve an approxi-
mate balance between growth and harvest or use of forest products in forest lands.

A. Timber
13
SEC. 22. Silvicultural and Harvesting System—In any logging operation in
production forests within forest lands, the proper silvicultural and harvesting system
that will promote optimum sustained yield shall be practiced, to wit:
_______________________
11
As amended by Sec. 1, P.D. No. 1559, 11 June 1978.
12
As amended by Sec. 1, P.D. No. 1559, 11 June 1978.
13
As amended by Sec. 1, P.D. No. 1559, 11 June 1978.

147
LAND

a. For dipterocarp forest, selective logging with enrichment or supplemental

planting when necessary.
b. For pine mangrove forest, the seed tree system with planting when necessary.
Provided, That subject to
the approval of the Department
Head, upon recommendation of
the Director, any silvicultural
and harvesting system that may
be found suitable as a result of
research may be adopted: Provi-
ded, further, That no authorized
person shall cut, harvest or gat-
her any timber, pulpwood, or
other products of logging unless
he plants three times of the
same variety for every tree cut
or destroyed by such logging or
removal of logs. Any violation of
this provision shall be sufficient
ground for the immediate cancel-
lation of the license, agreement,
lease or permit.
SEC. 23. Timber Inven- “On every stem, on every leaf... and at the root of everything
tory—The Bureau shall conduct that grew, was a professional specialist in the shape of grub,
caterpillar, aphis, or other expert, whose business it was to
a program of progressive inven- devour that particular part.”—Oliver Wendell Holmes
tories of the harvestable timber
(Digital Vision)
and young trees in all forest
lands, whether covered by any license agreement, license, lease or permit, or not, until a
one hundred percent (100%) timber inventory thereon has been achieved.
SEC. 24. Required Inventory Prior to Timber Utilization in Forest Lands—No
harvest of timber in any forest land shall be allowed unless it has been the subject of at
least a five percent (5%) timber inventory, or any statistically sound timber estimate,
made not earlier than five (5) years prior to the issuance of a license agreement or li-
cense allowing such utilization.
SEC. 25. Cutting Cycle—The Bureau shall apply scientific cutting cycle and ro-
tation in all forest lands, giving particular consideration to the age, volume and kind of
healthy residual trees which may be left undisturbed and undamaged for future harvest
and forest cover indipterocarp area, and seed trees and reproduction in pine area.
14
SEC. 26. Annual Allowable Cut—The annual allowable cut or harvest of any
particular forest land under a license agreement, license, lease or permit shall be de-
_______________________
14
As amended by Sec. 1, P.D. No. 1559, 11 June 1978.

148
 REVISED FORESTRY CODE

termined on the basis of the size of the area, the volume and kind of harvestable timber
or, forest products and healthy residuals, seed trees and reproduction found therein,
and the established cutting cycle and rotation thereof.
No person shall cut, harvest, and gather any particular timber, pulpwood, fire-
wood, and other forest products unless he has been authorized under Section 20 hereof
to do so and the particular annual allowable cut thereof has been granted.
In the public interest and in
accordance with Section 21 hereof,
the Department Head shall review
all existing annual allowable cut
and thereupon shall prescribe the
level of annual allowable cut for
the common dipterocarp timber,
softwood and hardwood timber
cutting of which is not prohibited,
pulpwood, firewood and other for-
est products using as bases the
factors as well as the updated
aerial photographs and field inven-
tories of such forest land: Provided,
That pending the completion of
such review and appropriate
amendment of the annual allow-
able cut in existing license agree-
ment, license, lease or permit,
existing annual allowable cut that
not sufficiently supports wood or
forest products processing expan-
sion program or new processing
plant or that will support duly
approved processing projects may
be allowed to continue without
change: Provided, further, That no
additional or adjustment in annual
allowable cut shall be made until
after such a review has been made.
“The supernatural is the natural not yet under- SEC. 27. Duration of Li-
stood.” — Elbert Hubbard cense Agreement or License to Har-
(N. Oshima) vest Timber in Forest Lands.—The
duration of the privilege to harvest
timber in any particular forest land under a license agreement or license shall be fixed
and determined in accordance with the annual allowable cut therein, the established

149
LAND

cutting cycle thereof, the yield capacity of harvestable timber, and the capacity of
healthy residuals for second growth.
The privilege shall automatically terminate, even before the expiration of the li-
cense agreement or license, the moment the harvestable timber has been utilized with-
out leaving any logged-over area capable of commercial utilization.
The maximum period of any privilege to harvest timber is twenty-five (25) years,
renewable for a period, not exceeding twenty-five (25) years, necessary to utilize all the
remaining commercial quantity or harvestable timber either from the unlogged or
logged-over area.
It shall be a condition for the continued privilege to harvest timber under any li-
cense or license agreement that the licensee shall reforest all the areas which shall be
determined by the Bureau.
SEC. 28. Size of Forest Concessions—Forest lands shall not be held in perpetuity.
The size of the forest lands which may be the subject of timber utilization shall be
limited to that which a person may effectively utilize and develop for a period of fifty
(50) years, considering the cutting cycle, the past performance of the applicant and his
capacity not only to utilize but, more importantly, to protect and manage the whole
area, and the requirements of processing plants existing or to be installed in the region.
Forest concessions which have been the subject of consolidations shall be reviewed
and re-evaluated for the effective implementation of protection, reforestation and man-
agement thereof under the multiple use and sustained yield concepts, and for the proc-
essing locally of the timber resources therefrom.

B. Wood Processing

SEC. 29. Incentives to the Wood Industry.—The Department Head, in collabora-

tion with other government agencies and the wood industry associations and other
private entities in the country, shall evolve incentives for the establishment of an inte-
grated wood industry in designated wood industry centers and/or economic area.
The President of the Philippines, upon the recommendations of the National Eco-
nomic Development Authority and the Department Head, may establish wood industry
import-export centers in selected locations: Provided, That logs imported for such cen-
ters shall be subject to such precaution as may be imposed by the Bureau, in collabora-
tion with proper government agencies, to prevent the introduction of pests, insects
and/or diseases detrimental to the forests.
15
SEC. 30. Rationalization of the Wood or Forest Products Industry.—While the
expansion and integration of existing wood or forest products processing plants, as well
as the establishment of new processing plants shall be encouraged, their locations and
operations shall be regulated in order to rationalize the whole industry.
_______________________
15
As amended by Sec. 1, P.D. No. 1559, 11 June 1978.

150
 REVISED FORESTRY CODE

No expansion or integration of an existing processing plant nor establishment of a

new processing plant shall be allowed unless environmental considerations are taken
into account and adequate raw material supply on a sustained-yield basis is assured.
A long-term assurance of raw material source from forest concessions and/or from
industrial tree plantations, tree farms or agro-forest farms whose annual allowable cut
and/or whose harvest is deemed sufficient to meet the requirement of such processing
plant shall govern, among others, the grant of the privilege to establish, install addi-
tional capacity or operate a processing plant.
Henceforth within one year from the date of this law, as a condition to the exercise
of the privileges granted them under a license agreement, license, lease or permit, wood
or forest products processors without forest concessions or areas that may be developed
into industrial tree plantations, tree farms or agro-forest farms and licensees, lessees or
permittees without processing plants shall jointly adopt any feasible scheme or
schemes, other than log supply contract, for the approval of the Department Head: Pro-
vided, That no license agreement, license, lease, or permit, including processing plant
permit, shall be granted or renewed unless said scheme or schemes are submitted to,
and approved by the Department Head.
All processing plants existing, to be expanded, to be integrated, or to be estab-
lished shall obtain operating permits, licenses, and/or approval from the Bureau or the
Department, as the case may be, and shall submit themselves to other regulations re-
lated to their operation.
The Department Head may cancel, suspend, or phase out all inefficient, wasteful,
uneconomical, or perennially short in raw material wood or forest products processing
plants which are not responsible to the rationalization program of the government.
SEC. 31. Wood Wastes, Weed Trees, and Residues—Timber licensees shall be en-
couraged and assisted to gather and save the wood wastes and weed trees in their con-
cessions, and those with processing plants, the wood residues thereof, for utilization and
conversion into wood by-products and derivatives.
16 17
SEC. 32. Log Production and Processing —Unless otherwise directed by the
President, upon recommendation of the Department Head, the entire production of logs
by all timber licensees shall, beginning January 1, 1976 be processed locally: Provided,
That the following conditions must be complied with by those who apply for them to be
allowed to export a portion of their log production to be determined by the Department
Head such that the total log export of these timber licensees shall not exceed twenty-
five percent (25%) of the total national allowable cut:

_______________________
16
Amended by P.D. No. 865, 29 December 1975 and further amended by Sec. 2, P.D. No.
1559, 11 June 1978.
17
The export of new logs has been prohibited since 6 May 1988, by virtue of DAO 33-88
(1988). Likewise, the export of lumber is prohibited by DENR A.O. 19-89, 17 March 1989. In 1998,
attempt, DAO-98-11 (attempted), to lift the ban on the export of lumber. It was met with such
public outcry that the President of the Philippines had to suspend its effectivity indefinitely.

151
LAND

1. Timber licensees with existing viable processing plants or

2. Timber licensees with processing projects duly approved by the Department
Head or
3. Timber licensees who have acquired viable processing machinery and equip-
ment which will be installed and will become operational in accordance with the sched-
ule approved by the Department Head; and
4. Timber licensees whose log export support is in line with government-
approved trade agreement:
Provided, further, that no person
shall be given a permit to export if he has
not complied with the requirements on
replanting and reforestation. Provided,
That the President may, upon re-
commendation of the Department Head,
whenever the export price of logs falls to
unreasonably low level or whenever pub-
lic interest so requires, cancel log expor-
tation or reduce the maximum allowable
proportion for log exports.
All timber licensees who have no
processing plant and who have no plan to
establish the same shall, jointly with
wood processors, adopt a scheme or sche-
mes for the processing of the log pro-
duction in accordance with Section 30
hereof.

C. Reforestation

“The more we exploit nature, The more our 18

SEC. 33. Lands to Be Reforested
options are reduced, until we have only one:
to fight for survival.”— Morris K. Udall and/or Afforested.—Lands to be
reforested and/or afforested are as
(A. Oposa)
follows:
1. Public forest lands
a. Bare or grass-covered tracts of forest lands;
b. Brushlands or tracts of forest lands generally covered with brush, which
need to be developed to increase their productivity;
c. Open tracts of forest lands interspersed with patches of forest;
_______________________
18
As amended by Sec. 3, P.D. No. 1559, 11 June 1978.

152
 REVISED FORESTRY CODE

d. Denuded or inadequately timbered areas proclaimed by the President as

forest reserves and reservations as critical watersheds, national parks, game ref-
uge, bird sanctuaries, national shrines, national historic sites;
e. Inadequately stocked forest lands within forest concessions;
f. Portions of areas covered by pasture leases or permits needing immediate
reforestation;
g. River banks, easements, road rights-of-way, deltas, swamps, former river
beds, and beaches.
2. Private Lands
a. Portions of private lands required to be reforested or planted to trees
19
pursuant to Presidential Decree Nos. 953 and 1153 and other existing laws.
20
SEC. 34. Industrial Tree Plantations, Tree Farms, and Agro-Forestry Farms.—
A lease for a period of fifty (50) years for the establishment of an industrial tree planta-
tion, tree farm or agro-forestry farm, may be granted by the Department Head, upon
recommendation of the Director, to any person qualified to develop and exploit natural
resources, over timber or forest lands of the public domain categorized in Section 33 (1)
hereof except those under paragraphs (d) and (g) with a minimum area of one hundred
(100) hectares for industrial tree plantations and agro-forestry farms and ten (10) hec-
tares for tree farms: Provided, That the size of the area that may be granted under each
category shall, in each case, depend upon the capability of the lessee to develop or con-
vert the area into productive condition within the term of the lease.
The lease may be granted under such terms and conditions as the Department
Head may prescribe, taking into account, among others, the raw material needs of for-
est based and other industries and the maintenance of a wholesome ecological balance.
Trees and other products raised within the industrial tree plantation, tree farm, or
agro-forestry farm belong to the lessee who shall have the right to sell, contract, convey,
or dispose of said planted trees and other products in any manner he sees fit, in accor-
dance with existing laws, rules and regulations.
Reforestation projects of the government, or portions thereof, which, upon field
evaluation, are found to be more suitable for, or can better be developed as industrial
tree plantations, tree farms or agro-forestry farms, in terms of benefits to the Govern-
ment and the general surrounding area, may be the subject of a lease under this sec-
tion.
21
SEC. 35. Priority.—Over any suitable area covered by a timber license agree-
ment or permit, the priority to establish industrial a tree plantation, tree farm, or agro-

_______________________
19
P.D. 1153 was repealed by E.O. No. 287, s. 1987.
20
As amended by Sec. 3, P.D. No. 1559, 11 June 1978.
21
As amended by Sec.3, P.D. No. 1559, 11 June 1978.

153
LAND

forestry farm shall be given to the holder thereof after the Bureau has determined the
suitability of such and has set aside the same for the purpose.
The priority herein granted must, however, be availed of within a reasonable pe-
riod otherwise the area shall be declared open to any qualified person and consequently
segregated from the licensee’s or permittee’s area.
Priority shall also be given to the establishment of communal industrial tree plan-
tations by barangays, municipalities or cities and provinces.
22
SEC. 36. Incentives.—To encourage qualified persons to engage in industrial
tree plantation, tree farm, and/or agro-forest farm, the following incentives are granted:
a. Payment of a nominal filing fee of fifty centavos (P0.50) per hectare.
b. No rental shall be collected during the first five (5) years from the date of the
lease; from the sixth year to the tenth year, the annual rental shall be Fifty Centavos
(P0.50) per hectare; and thereafter, the annual rental shall be One Peso (P1.00) per
hectare: Provided, That lessees of areas long denuded, as certified by the director and
approved by the department head, shall be exempted from the payment of rental for the
full term of the lease which shall not exceed twenty-five (25) years; for the first five (5)
years following the renewal of the lease, the annual rental shall be Fifty Centavos
(P0.50) per hectare; and thereafter, the annual rental shall be One Peso (P1.00) per
hectare: Provided, further, That notwithstanding the foregoing, no rental shall be col-
lected from a lessee who, upon verification by the Bureau, substantially meets the
schedule of development of the industrial tree plantation, the tree farm, or agro-forestry
farm, as the case may be, as prescribed in the development plan submitted to and ap-
proved by the Ministry Head, upon recommendation of the director;
c. The forest charges payable by a lessee on the timber and other forest products
grown and cut or gathered in an industrial tree plantation, tree farm, or agro-forestry
farm shall only be twenty-five percent (25%) of the regular forest charges prescribed in
23
the National Internal Revenue Code;
d. Exemption from the payment of the percentage tax levied in Title V of the Na-
tional Internal Revenue Code when the timber and
Woodman spare that tree!
forest products are sold, bartered or exchanged by
Touch not a single bough!
the lessee, whether in their original state or not, as In youth it sheltered me,
well as exemption from all forms of sales tax, local And I’ll protect it now.
and municipal taxes, and from the real property tax
George Pope Morris
under the provisions of Presidential Decree No. 853;
e. A lessee shall not be subject to any obligation prescribed in, or arising out of,
the provisions of the National Internal Revenue Code on withholding of tax at source
upon interest paid on borrowings incurred for development and operation of the indus-
trial tree plantation, tree farm, or agro-forestry farm;
_______________________
22
As amended by Sec. 3, P.D. No. 1559, 11 June 1978.
23
See Secs. 68-77 of this revised Forestry Code.

154
 REVISED FORESTRY CODE

f. Except when public interest demands, the boundaries of an area covered by an

industrial tree plantation, tree farm, or agro-forestry farm lease, once established on
the ground, shall not be altered or modified;
g. Amounts expended by a lessee in the development and operation of an indus-
trial tree plantation, tree farm, or agro-forestry farm prior to the time when the produc-
tion state is reached, may, at the option of the lessee, be regarded as ordinary and nec-
essary business expenses or as capital expenditures;
h. The Board of Investments shall, notwithstanding its nationality requirement
on projects involving natural resources, classify industrial tree plantations, tree farms,
and agro-forestry farms as pioneer areas of investment under its annual priority plan,
to be governed by the rules and regulations of said Board;
In addition to the incentives under this Section, private landowners who engage in
tree farming on areas fifty hectares or below by planting their lands with ipil-ipil and
other fast growing trees shall be exempt from the inventory requirement and other
requirements before harvest as provided in this Decree for lessees of forest lands of the
public domain: Provided, That the transport of trees cut shall be accompanied by the
24
corresponding certificate of origin duly issued by the authorized forest officer.
i. Approved industrial tree plantations, tree farms, and agro-forestry farms shall
be given priority in securing credit assistance from the government and government-
supported financing institutions which shall set aside adequate funds for lending to the
lessee and/or investor at reasonable interest rates;
j. The lessee and its field employees and workers shall be exempted from the pro-
25
visions of Presidential Decree No.1153;
k. Government institutions administering or financing programs and projects re-
quiring wood materials shall specify the purchase of, or utilize, manufactured products
derived from trees grown and harvested from industrial tree plantations, tree farms, or
agro-forestry farms, whenever possible;
l. No wood, wood products, or wood-derivated products including pulp, paper, and
paperboard shall be imported if the same are available in required quantities and rea-
sonable prices, as may be certified by the Department Head, from artificial or man-
made forests, or local processing plants manufacturing the same;
m. No processing plant of whatever nature or type, made of, or utilizing, wood as
primary materials shall be allowed to be established, expanded or integrated, and oper-
ated without a long-term assurance of raw material source from forest concessions
and/or from industrial tree plantations, tree farms or agro-forestry farms in accordance
with Section 30 hereof;

_______________________
24
As added by B.P. Blg. 701, 5 April 1984.
25
P.D. No. 1153 was repealed by B.P. Blg. 701, 5 April 1984.

155
LAND

n. Timber grown and harvested from industrial tree plantations, tree and agro-
forestry farms may be exported without restriction in quantity or volume, and if the
exporter is the same person or firm qualified and allowed to export logs under the pro-
visions of this Decree, such
timber from plantations/farms
may be exported exclusive of
the quantity or volume autho-
rized under Section 32 hereof:
Provided, That the rentals on
the forest land and the forest
charges on the plantation
timber shall have been paid:
Provided, further, That the ex-
port of the plantation timber
shall be covered by a certifi-
cate to export issued by the
Department Head on a yearly
basis; Provided, finally, That
the Department Head may at
any time review the expor-
tation of timber harvested
from the plantations/farms
and either reduce or totally
suspend the export of such
plantation timber whenever
public interest so requires; and
o. Free technical advice
from government foresters and “Never does nature say one thing and wisdom another.”
farm technicians. — Juvenal, Satires
(G. Tapan)
The Department Head
may provide other incentives in addition to those hereinabove granted to promote in-
dustrial tree plantations, tree farms and agro-forestry farms in special areas such as,
but not limited to, those where there are no roads or where roads are inadequate, or
areas with rough topography and remote areas far from processing plants.

D. Forest Protection

SEC. 37. Protection of All Resources.—All measures shall be taken to protect the
forest resources from destruction, impairment, and depletion.
SEC. 38. Control of Concession Area—In order to achieve the effective protection
of the forest lands and the resources thereof from illegal entry, unlawful occupation,
kaingin, fire, insect infestation, theft, and other forms of forest destruction, the utiliza-
tion of timber therein shall not be allowed except through license agreements under

156
 REVISED FORESTRY CODE

which the holders thereof shall have the exclusive privilege to cut all the allowable
harvestable timber in their respective concessions, and the additional right of occupa-
tion, possession, and control over the same, to the exclusive of all others, except the
government, but with the corresponding obligation to adopt all the protection and con-
servation measures to ensure the continuity of the productive condition of said areas,
conformably with multiple use and sustained yield management.
If the holder of a license agreement over a forest area expressly or impliedly
waives the privilege to utilize any softwood, hardwood or mangrove species therein, a
license may be issued to another person for the harvest thereof without any right of
possession or occupation over the areas where they are found, but he shall, likewise,
adopt protection and conservation measures consistent with those adopted by the li-
cense agreement holder in the said areas.
SEC. 39. Regulation of Timber Utilization in All Other Classes of Lands and of
Wood-Processing Plants.—The utilization of timber in alienable and disposable lands,
private lands, civil reservations, and all lands containing standing or felled timber,
including those under the jurisdiction of other government agencies, and the establish-
ment and operation of sawmills and other wood-processing plants, shall be regulated in
order to prevent them from being used as shelters for excessive and unauthorized har-
vests in forest lands, and shall not therefore be allowed except through a license agree-
ment, license, lease, or permit.
SEC. 40. Timber Inventory in Other Lands Containing Standing or Felled Tim-
ber.—The Bureau shall conduct a one hundred percent (100%) timber inventory in
alienable and disposable lands and civil reservations immediately upon classification or
reservation thereof.
No harvest of standing or felled timber in alienable and disposable lands, private
lands, civil reservation, and all other lands, including those under the jurisdiction of
other government agencies, shall be allowed unless a one hundred percent (100%) tim-
ber inventory has been conducted thereon.
SEC. 41. Sworn Timber Inventory Reports.—All reports on timber inventories of
forest lands, alienable and disposable lands, private lands, civil reservations, and all
lands containing standing or felled timber must be subscribed and sworn to by all the
forest officers who conducted the same.
SEC. 42. Participation in the Development of Alienable and Disposable Lands
and Civil Reservations—The privilege to harvest timber in alienable and disposable
lands and civil reservations shall be given to those who can best help in the delineation
and development of such areas in accordance with the management plan of the appro-
priate government exercising jurisdiction over the same.
The extent of participation shall be based on the amount of timber which may be
harvested therefrom.

157
LAND

SEC. 43. Swamplands and Mangrove Forests.—Strips of mangrove forest bor-

dering numerous islands which protect the shoreline, the shoreline roads, and even
coastal communities from the destructive force of the sea during high winds and ty-
phoons, shall be maintained and shall not be alienated. Such strips must be kept free
from artificial obstruction so that flood water will flow unimpeded to the sea to avoid
flooding or inundation of cultivated areas in the upstream.
All mangrove swamps set aside for coast-protection purposes shall not be subject
to clear-cutting operation.
Mangrove and other swamps released to the Bureau of Fisheries and Aquatic Re-
sources for fishpond purposes which are not utilized, or which have been abandoned for
five (5) years from the date of such release shall revert to the category of forest land.
SEC. 44. Visitorial Power.—The Department Head may, by himself or through
the Director or any qualified person duly designated by the Department Head, investi-
gate, inspect and examine records, books and other documents relating to the operation
of any holder of a license agreement, license, lease, or permit, and its subsidiary or
affiliated companies, to determine compliance with the terms and conditions thereof,
this Code and pertinent laws, policies, rules and regulations.
SEC. 45. Authority of Forest Officers.—When in the performance of their official
duties, forest officers or other government officials or employees duly authorized by the
Department Head or Director shall have free entry into areas covered by a license
agreement, license, lease, or permit.
Forest officers are authorized to administer oath and take acknowledgment in offi-
cial matters connected with the functions of their office, and to take testimony in official
investigations conducted under the authority of this Code and the implementing rules
and regulations.
SEC. 46. Scaling Stations.—In collaboration with appropriate government agen-
cies, the Bureau shall establish control or scaling stations at suitably located outlets of
timber and other forest products to insure that they were legally cut or harvested.
SEC. 47. Mining Operations.—Mining operations in forest lands shall be regu-
lated and conducted with due regard to protection, development and utilization of other
surface resources.
Location, prospecting, exploration, utilization or exploitation of mineral resources
in forest reservations shall be governed by mining laws, rules and regulations. No loca-
tion, prospecting, exploration, utilization, or exploitation of mineral resources inside
forest concessions shall be allowed unless proper notice has been served upon the licen-
sees thereof and the prior approval of the Director, secured.
Mine tailings and other pollutants affecting the health and safety of the people,
water, fish, vegetation, animal life and other surface resources, shall be filtered in silt
traps or other filtration devices and only clean exhausts and liquids shall be released
therefrom.

158
 REVISED FORESTRY CODE

Surface-mined areas shall be restored to as near its former natural configuration

or as approved by the Director prior to its abandonment by the mining concern.
SEC. 48. Mineral Reservations.—Mineral reservations which are not the subject
of mining operations or where mining operations have been suspended for more than
five (5) years shall be placed under forest management by the Bureau.
Mineral reservations where mining operations have been terminated due to the
exhaustion of its minerals shall revert to the category of forest land, unless otherwise
reserved for other purposes.
SEC. 49. Roads and Other Infrastructure.—Roads and other infrastructure in
forest lands shall be constructed with the least impairment to the resource values
thereof. Government agencies undertaking the construction of roads, bridges, commu-
nications, and other infrastructure and installations inside forest lands, shall coordi-
nate with the Bureau, especially if it will involve the utilization or destruction of timber
and/or other forest resources, or watershed disturbance therein, in order to adopt meas-
ures to avoid or reduce damage or injury to the forest resource values.
They shall likewise extend assistance in the planning and establishment of roads,
wharves, piers, port facilities, and other infrastructure in locations designated as wood-
processing centers or for the convenience of wood-based industries.
In order to coincide and conform to government plans, programs, standards, and
specifications, holders of license agreements, licenses, leases and permits shall not un-
dertake road or infrastructure construction or installation in forest lands without the
prior approval of the Director, or in alienable and disposable lands, civil reservations
and other government lands, without the approval of the government agencies having
administrative jurisdiction over the same.
All roads and infrastructure constructed by holders of license agreements, licenses,
leases, and permits belong to the State and the use and administration thereof shall be
transferred to the government immediately upon the expiration or termination thereof.
Prior thereto the Bureau may authorize the public use thereof, if it will not be detri-
mental to forest conservation measures.
Where roads are utilized by more than one commercial forest user, the Bureau
shall prescribe the terms and conditions of joint use including the equitable sharing of
construction and/or maintenance costs, and of the use of these roads by other parties
and the collection of such fees as may be deemed necessary.
SEC. 50. Logging Roads.—There shall be no indiscriminate construction of log-
ging roads.
Such roads shall be strategically located and their widths regulated so as to mini-
mize clear-cutting, unnecessary damage or injury to healthy residuals, and erosion.
Their construction must not only serve the transportation need of the logger but, most
importantly, the requirement to save as many healthy residuals as possible during
cutting and hauling operations.

159
LAND

SEC. 51. Management of Occupancy in Forest Lands.—Forest occupancy shall

henceforth be managed. The Bureau shall study, determine and define which lands may
be the subject of occupancy and prescribed therein, an agro-forestry development pro-
gram.
Occupants shall undertake measures to prevent and protect forest resources.
Any occupancy in forest land which will result in sedimentation, erosion, reduction
in water yield, and impairment of other resources to the detriment of community and
public interest shall not be allowed.
In areas above 50 percent in slope, occupation shall be conditioned upon the plant-
ing of desirable trees thereon and/or adoption of other conservation measures.

“To me a lush carpet of pine needles or spongy grass is more welcome than the most luxu-
rious Persian rug.” — Helen Keller
(M. Velas)

SEC. 52. Census of Kaingineros, Squatters, Cultural Minorities, and Other Oc-
cupants and Residents in Forest Lands.—Henceforth, no person shall enter into forest
lands and cultivate the same without lease or permit.
A complete census of kaingineros, squatters, cultural minorities, and other occu-
pants and residents in forest lands with or without authority or permits from the gov-
ernment, showing the extent of their respective occupation and resulting damage, or
impairment of forest resources, shall be conducted.

160
 REVISED FORESTRY CODE

The Bureau may call upon other agencies of the government and holders of license
agreement, license, lease, and permit over forest lands to participate in the census.
26
SEC. 53. Criminal Prosecution.—Kaingineros, squatters, cultural minorities
and other occupants who entered into forest lands and grazing lands before May 19,
1975, without permit or authority, shall not be prosecuted: Provided, That they do not
increase their clearings: Provided, further, That they undertake, within two (2) months
from notice thereof, the activities to be imposed upon them by the Bureau in accordance
with management plan calculated to conserve and protect forest resources in the area;
Provided, finally, That kaingineros, squatters, cultural minorities and other occupants
shall whenever the best land use of the area so demands as determined by the Director,
be ejected and relocated to the nearest accessible government resettlement area.

E. Special Uses

SEC. 54. Pasture in Forest Lands.—No forest land 50 percent in slope or over
may be utilized for pasture purposes.
Forest lands which are being utilized for pasture shall be maintained with suffi-
cient grass cover to protect soil, water, and other forest resources.
If grass cover is insufficient, the same shall be supplemented with trees or such
vegetative cover as may be deemed necessary.
The size of forest lands that may be allowed for pasture and other special uses
shall be determined by rules and regulations, any provision of law to the contrary not-
withstanding.
27
SEC. 55. Wildlife.—All measures shall be adopted to conserve wildlife. The Di-
rector shall regulate the hunting of wildlife in forest lands in order to maintain an eco-
logical balance of flora and fauna.
SEC. 56. Recreation.—The Bureau shall, in the preparation of multiple-use
management plans, identify and provide for the protection of scenic areas in all forest
lands which are potentially valuable for recreation and tourism, and plan for the devel-
opment and protection of such areas to attract visitors thereto and meet increasing
demands therefore.
The construction and operation of necessary facilities to accommodate outdoor rec-
reation shall be done by the Bureau with the use of funds derived from rentals and fees
for the operation and use of recreational facilities by private persons or operators, in
addition to whatever funds may be appropriated for such purposes.
SEC. 57. Other Special Uses of Forest Lands.—Forest lands may be leased for a
period not exceeding twenty-five (25) years, renewable upon the expiration thereof for a
similar period, or held under permit, for the establishment of sawmills, lumber yards,
_______________________
26
As amended by Sec. 3, P.D. No. 1559, 11 June 1978.
27
As amended by Sec. 3, P.D. No. 1559, 11 June 1978.

161
LAND

timber depots, logging camps, rights-of-way, or for the construction of sanatoria, bath-
ing establishments, camps, salt works, or other beneficial purposes which do not in any
way impair the forest resources therein.
F. Qualifications
SEC. 58. Diffusion of Benefits.—The privilege to utilize, exploit, occupy, or possess
forest lands, or to conduct any activity therein, or to establish and operate wood-processing
plants, shall be diffused to as many qualified and deserving applicants as possible.
SEC. 59. Citizenship.—In the evaluation of applications of corporations, in-
creased Filipino equity and participation beyond the 60 percent (60%) constitutional
limitation shall be en-
couraged. All other factors
being equal, the applicant
with more Filipino equity
and participation shall be
preferred.
SEC. 60. Financial
and Technical Capabi-
lity.—No license agree-
ment, license, lease, or
permit over forest lands
shall be issued to an ap-
plicant unless he proves
satisfactorily that he has
the financial resources and
technical capability not
only to maximize utiliza- “Behold this and always love it! It is very sacred, and you
tion, but also to practice must treat it as such...”— Sioux Indian
forest protection, conser- (M. Velas)
vation, and development
measures to ensure the perpetuation of said forest in productive condition.
28
SEC. 61. Transfers.—Unless authorized by the department head, no licensee,
lessee, or permittee may transfer, exchange, sell, or convey his license agreement, li-
cense, lease or permit, or any of his rights or interests therein, or any of his assets used
in connection therewith.
The licensee, lessee, or permittee shall be allowed to transfer or convey his license
agreement, license, lease or permit only if the license, lease or permit has been in exis-
tence for at least three (3) years; the licensee, lessee or permittee has not violated any
forestry law, rule or regulation and has been faithfully complying with the terms and
conditions of the license agreement, license, lease or permit; the transferee has all the
_______________________
28
As amended by Sec. 3, P.D. No. 1559, 11 June 1978.

162
 REVISED FORESTRY CODE

qualifications and none of the disqualifications to hold a license agreement, license, lease
or permit; there is no evidence that such transfer or conveyance is being made for pur-
poses of speculation; and the transferee shall assume all the obligations of the transferor.
As used in this section, the term assets shall not include cattle and other live-
stocks or animals raised in grazing lands and forest lands, and planted trees and other
products raised in industrial tree plantations, tree farms and agro-forestry farms.
SEC. 62. Service Contracts.—The Department Head, may in the national inter-
est, allow forest products licensees, lessees, or permittees to enter into service contracts
for financial, technical, management, or other forms of assistance, in consideration of a
fee, with any foreign person or entity for the exploration, development, exploitation or
utilization of the forest resources, covered by their license agreements, licenses, leases
or permits. Existing valid and binding service contracts for financial, technical, man-
agement or other forms of assistance are hereby recognized as such.
29
SEC. 63. Equity Sharing.—Every corporation holding a license agreement, li-
cense, lease, or permit to utilize, exploit, occupy, or possess any forest land, or conduct
any activity therein, or establish and operate a wood-processing plant, shall within one
(1) year after the effectivity of this amendatory Decree, formulate and submit to the
Department Head for approval a plan for the sale of at least ten percent (10%) of its
subscribed capital stock in favor of employees, laborers, and the general public.
The plan shall be so implemented that the sale of the shares of stocks shall be ef-
fected by the corporation not later than the sixth year of its operation, or the first year
of effectivity of the amendatory Decree, if the corporation has been in operation for more
that five (5) years prior to such effectivity.
No corporation shall be issued any license agreement, license, lease or permit after
the effectivity of his amendatory Decree, unless it submits such a plan and the same is
approved for implementation within the sixth year of its operation.
The Department Head shall promulgate the necessary rules and regulations to
carry out the provisions of this section, particularly on the determination of the manner
of payment, factors affecting the selling price, establishment of priorities in the pur-
chase of the shares of stock, and the preparation of a fund to ensure the financial capa-
bility of the deserving employees and laborers. The industries concerned shall extend all
assistance in the promulgation of policies on the matter, such as the submission of all
data and information relative to their operation, personnel management and asset
evaluation.
G. Regulatory Fees

SEC. 64. Charges, Fees, and Bonds.—The Department Head, upon recommenda-
tion of the Director, shall fix the amount of charges, rental, bonds, and fees for the dif-
ferent kinds of utilization, exploitation, occupation, possession, or activity inside forest
_______________________
29
As amended by Sec. 3, P.D. No. 1559, 11 June 1978.

163
LAND

lands, the filing and processing of applications therefore, the issuance and renewal of
license agreements, licenses, leases and permits, and for other services: Provided, That
all fees and charges presently being collected under existing laws and regulations shall
continue to be imposed and collected until otherwise provided: Provided, further, That
timber taken and removed from private lands for commercial purposes shall be exempt
from the payment of forest charges.
SEC. 65. Authority of Department Head to Impose Other Fees.—In addition to
the fees and charges imposed under existing laws, rules and regulations, the Depart-
ment Head is hereby authorized, upon recommendation of the Director and in consulta-
tion with representatives of the industries affected, to impose other fees for forest pro-
tection, management, reforestation, and development, the proceeds of which shall ac-
crue into a special deposit of the Bureau as its revolving fund for the aforementioned
30
purposes.
SEC. 66. Collection and Disbursement.—The collection of the charges and fees
above-mentioned shall be the responsibility of the Director or his authorized represen-
tative. The Director shall remit his monthly collection of fees and charges mentioned in
Section 64 to the Treasurer of the Philippines within the first ten (10) days of the suc-
ceeding month: Provided, That the proceeds of the collection of the fees imposed under
Section 65 and the special deposit heretofore required of licensees shall be constituted
into a revolving fund for such purposes and be deposited in the Philippine National
Bank, as a special deposit of the Bureau. The Budget Commissioner and the National
Treasurer shall effect the quarterly releases out of the collection accruing to the general
fund upon request of the Director on the basis of a consolidated annual budget of a work
program approved by the Department Head and the President.
In the case of the special deposit revolving fund, withdrawals therefrom shall be
effected by the Department Head on the basis of a consolidated annual budget prepared
by the Director of a work program for the specific purposes mentioned in Section 65.
SEC. 67. Basis of Assessment.—Tree measurement shall be the basis for assess-
ing government charges and other fees on timber cut and removed from forest lands,
alienable or disposable lands, and civil reservations; Provided, That until such time as
the mechanics of tree measurement shall have been developed and promulgated in rules
and regulations, the present scaling method provided for in the National Internal Reve-
nue Code shall be used.
The Director may, with the approval of the Department Head, prescribe a new
method of assessment of forest products and collection of charges thereon based upon
the result of production cost and market studies undertaken by the Bureau; Provided,
That such charges shall not be lower than those now imposed.

_______________________
30
Reforestation Bond, Prescribing the Revised Schedule of Forestry Administrative Fees
(DAO No. 18, Series of 1993).

164
 REVISED FORESTRY CODE

H. Charges on Forest Products

31
SEC. 68. Measuring of Forest Products and Invoicing and Collection of
Charges Thereon.—The duties incident to the measuring of forest products shall be
discharged by the Bureau of Forest Development under regulations of the Ministry of
32
Natural Resources. The invoicing and collection of the charges thereon shall be done
by the Bureau of Internal Revenue
under regulations approved by the
Minister of Finance (now Depart-
ment of Finance).
33
SEC. 69. Mode of Meas-
uring Timber.—Except as herein-
below provided, all timber shall be
measured and manifested in the
round or squared, before being
sawn or manufactured. The volume
of all round timber shall be ascer-
tained by multiplying the area of
the small and by the length of the
log. The diameter of the log to be
measured exclusive of the bark;
but if the end of a log is irregular,
the average diameter shall be
used; and in order to ascertain the
volume of a log more than eight
meters long, the diameter of the
middle of said log, or the average of
the diameters at both ends thereof
“How gladly does the spirit leap forth, and suddenly shall be used as basis. If a log in
enlarge its sense of being to the full extent of the the round, cut under license, is
broad, blue, sunny deep! His salt breath brings a measured and manifested by forest
blessing along with it.”— Nathaniel Hawthorne officers, the Director of Forest
(T. Cayton) Development shall make due
allowance for rot, cavities, or other
natural defects; but from any decision of the Director of Forest Development in this
_______________________
31
Renumbered by Sec. 1, R.A. No. 7161, 10 October 1991; as amended by B.P. Blg. 83, 17
September 1980.
32
Now Department of Environment and Natural Resources. R.A. 7161 incorporating certain
sections of the NIR Code of 1977, as amended; (Section 2 creating subsection H of P.D. No. 705).
However, there appears to be an error in R.A. No. 7161, Section 1 referring to revisions of Sec-
tions 230 to 238 of the National Internal Revenue Code. Reference should be to Sections 270, 271.
33
Renumbered by Sec. 1, R.A. No. 7161, 10 October 1991.

165
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respect, an appeal shall lie to his Ministry Head, whose decision shall be final. The
manifest of timber cut by licensees operating sawmills in or near the forest shall be
attested by forest officers whenever practicable.
The volume of squared timber shall be ascertained by multiplying the average of
the cross section measured by the length, to which forty percent, shall be added for loss
in squaring: Provided, however, That if squared timber cut under license is measured
and manifested by forest officers, the Director of Forest Development shall make due
allowance for rot, cavities, or other natural defects; but from any decision of the Director
of Forest Development in this respect, an appeal shall lie to his Department Head,
whose decision shall be final. The privilege of manifesting timber after squaring shall,
however, be granted only to licensees who have squared their logs in the forests with
the ax and intend to take it to the market in this form.
If sawn or otherwise manufactured timber is found which has not been manifested
in accordance with the provisions hereof, the corresponding forest charges shall be as-
sessed on twice the volume of the actual contents of such sawn or manufactured timber.
34
SEC. 70. Charges on Timber Cut in Forest Land.—There shall be collected
charges on each cubic meter of timber cut in forest land, whether belonging to the first,
second, third, or fourth group, twenty-five percent (25%) of the actual FOB market price
based on species and grading: Provided, however, That in the case of pulpwood and
matchwood cut in forest land, forest charges on each cubic meter shall be ten percent
(10%) of the actual FOB market price.
35
SEC. 71. Charges on Firewood, Branches, and Other Recoverable Wood Wastes
of Timber.—Except for all mangrove species whose cutting shall be banned, there shall
be collected forest charges on each cubic meter of firewood cut in forest land, branches
and other recoverable wood wastes of timber, such as timber ends, tops, and stumps,
when used as raw materials for the manufacture of finished products, ten pesos
(P10.00).
Only third or fourth-group wood can be taken for firewood. However, if jointly au-
thorized by the Secretaries of both the Departments of Environment and Natural Re-
sources, and Agriculture, first and second-group woods may be removed for firewood
purposes from land which is more valuable for agricultural than for forest purposes.
36
SEC. 72. Charges on Minor Forest Products.—All other forest products of for-
est land which are not covered by the preceding section shall be exempt from almaciga
resin, and bamboo which shall be charged at ten percent (10%) of the actual FOB mar-
ket price.

_______________________
34
As amended by Sec. 3, R.A. No. 7161, 10 October 1991.
35
As amended by Sec. 4, R.A. No. 7161, 10 October 1991.
36
Sec. 73 of P.D. No. 705, as amended (formerly Sec. 235 of the NIRC); further amended by
Sec. 5, R.A. No. 7161, 10 October 1991.

166
 REVISED FORESTRY CODE

37
SEC. 73. Effectivity and Application of Forest Charges and Determination of
Market Price of Forest Products.—The rates of forest charges provided for in Sections
70, 71, and 72 hereof shall be effective upon approval of this Act. The new rates shall be
published in the Official Gazette or in two (2) newspapers of national circulation and
shall also be posted in conspicuous places in the different Department of Environment
and Natural Resources field offices.
The actual FOB market price of forest products shall be justly determined once a
year by the Secretary of Environment and Natural Resources: Provided, That he shall
cause the creation of a committee to be composed of representatives of the Department
of Environment and Natural Resources, the National Economic and Development Au-
thority, the Department of Trade and Industry, the Bureau of Internal Revenue and the
wood and furniture industry and consumers sectors which shall formulate the criteria
and/or guidelines in the determination of the actual FOB market price to be used as the
basis for the assessment of the ad valorem tax, taking into consideration production
cost (developing cost, contingencies and miscellaneous cost), species and grade of tim-
ber, government share, reforestation, tariff duties, taxes, risk involved and a reasonable
margin of profit for domestic and export market prices for wood and wood products.
These forest charges shall be applied to naturally growing timber and forest prod-
ucts gathered within public forest lands, alienable and disposable lands and private
lands. Forest charges collected shall be in lieu of the administrative charge on environ-
ment and other fees and charges imposed thereon: Provided, That planted trees and
other forest products harvested from industrial tree plantations and private lands cov-
ered by existing tiller or by approved land application are exempted from payment of
forest charges.
38
SEC. 74. Charges on Gums, Resins, and Other Forest Products.—On gums,
resins, rattan, and other forest products of forest lands which are not hereinabove pro-
vided for, there is herein imposed upon the person removing such forest product a
charge of ten percent (10%) of the actual market value thereof, determined in the man-
ner indicated below.
The market value of the various forest products on which forest charges may thus
be collected shall be determined from time to time by a joint assessment of the Commis-
sioner and the Director of Forest Development, to be approved by their respective Min-
istry Heads, the same to be published for the information of public in the Official Ga-
zette, in two daily newspapers of national circulation, and posted in a conspicuous place
in the municipal building of a municipality concerned.
39
SEC. 75. Tax Exemptions of Forest Products Lawfully Removed under Gratui-
tous License.—No charges shall be collected on forest products removed in conformity
_______________________
37
New section introduced by Sec. 6, R.A. No. 7161, 10 October 1991.
38
Sec. 8, as amended by B.P. Blg. 83, 17 September 1980.
39
As amended by B.P. Blg. 83, 17 September 1980.

167
LAND

with the terms of a gratuitous license of the Bureau of Forest Development and in com-
pliance with the law and the regulations of such Bureau.
40
SEC. 76. Tax Exemption of Trees and Products Removed from Public Lands
under a Tree Farm Lease.—No charges shall be collected on trees and products removed
from public lands planted to ipil-ipil and/or falcata under a tree farm lease with the
government.

Chapter IV
Criminal Offenses and Penalties
41
SEC. 77. Cutting, Gathering, and/or Collecting Timber or Other Forest Prod-
ucts Without License.—Any person who shall cut, gather, collect, remove timber or other
forest products from any forest land, or timber from alienable or disposable public land,
or from private land, without any authority, or possess timber or other forest products
without the legal documents as required under existing forest laws and regulations,
shall be punished with the penalties imposed under Articles 309 and 310 of the Revised
Penal Code: Provided, That in the case of partnerships, associations, or corporations,
the officers who ordered the cutting, gathering, collection or possession shall be liable,
and if such officers are aliens, they shall, in addition to the penalty, be deported without
further proceedings on the part of the Commission on Immigration and Deportation.
The Court shall further order the confiscation in favor of the government of the
timber or any forest products cut, gathered, collected, removed, or possessed as well as
the machinery, equipment, implements and tools illegally used in the area where the
timber or forest products are found.
42
SEC. 77-A. Administrative Authority of the Department Head or His Duly Au-
thorized Representative to Order Confiscation.—In all cases of violations of this Code or
other forest laws, rules and regulations, the Department Head or his duly authorized
representative, may order the confiscation of any forest products illegally cut, gathered,
removed or possessed or abandoned, and all conveyances used either by land, water or
air in the commission of the offense and to dispose of the same in accordance with per-
43
tinent laws, regulations or policies on the matter.

_______________________
40
As amended by B.P. Blg. 83, 17 September 1980.
41
As amended by P.D. No. 1559, 11 June 1978 and E.O. No. 277, 25 July 1987. See DENR
Adm. Order No. 59 (1990) and Adm. Order No. 54 (1993), Guidelines in the confiscation, forfeiture
and disposition of conveyances used in the commission of offenses, and Memo Order No. 162,
Guidelines for the disposition of confiscated logs, lumber, and other forest products, post.
42
New section introduced by Sec. 2, E.O. No. 277, s. 1987; renumbered under Sec. 7, R.A.
No. 7161, 10 October 1991.
43
The Supreme Court has clarified in Paat v. CA (G.R. No. 111107, 10 January 1997) that
an action for replevin will not lie against conveyance pending administrative confiscation pro-
ceedings. (Summarize gist of proceedings)

168
 REVISED FORESTRY CODE

44
SEC. 77-B. Rewards to Informants.—Any person who shall provide any infor-
mation leading to the apprehension and conviction of any offender for any violation of this
Code or other forest laws, rules and regulations, or confiscation of forest products shall be
given a reward in the amount of twenty percent (20%) of the proceeds of the confiscated
forest products.
45
SEC. 78. Unlawful Oc-
cupation or Destruction of Forest
Lands and Grazing Lands.—Any
person who enters and occupies or
possesses, or makes kaingin for
his own private use or for others,
any forest land or grazing land
without authority under a license
agreement, lease, license or per-
mit, or in any manner destroys
such forest land or grazing land or
part thereof, or causes any dam-
age to the timber stand and other
products and forest growth found
therein, or who assists, aids or
abets any other person to do so, or
sets a fire, or negligently permits
a fire to be set in any forest land
or grazing land, or refuses to “You will find something far greater in the woods than you
vacate the area when ordered to will find in books. Stones and trees will teach you that which
do so, pursuant to the provisions you will never learn from masters.”—St. Bernard
of Section 53 hereof shall, upon (Digital Vision)
conviction, be fined in an amount
of not less than Five Hundred Pesos (P500.00), nor more than Twenty Thousand Pesos
(P20,000.00) and imprisoned for not less than six (6) months nor more than two (2) years
for each such offense, and be liable to the payment to ten (10) times the rental fees and
other charges which would have accrued had the occupation and use of the land been
authorized under a license agreement, lease, license or permit: Provided, That in the case
of an offender found guilty of making kaingin, the penalty shall be imprisonment for not
less than two (2) nor more than four (4) years and a fine equal to eight (8) times the regu-
lar forest charges due on the forest products destroyed, without prejudice to the payment
of the full cost of production of the occupied area as determined by the Bureau: Provided,
further, That the maximum of penalty prescribed herein shall be imposed upon the of-
_______________________
44
New section introduced by Sec. 2, E.O. No. 277, s. of 1987; renumbered under sec. 7, R.A.
No. 7161, 10 October 1991.
45
As amended by Sec. 3, P.D. No. 1559, 11 June 1978; renumbered under Sec. 7, R.A. No.
7161, 10 October 1991.

169
LAND

fender who repeats the same offense and who commits the same offense and double the
maximum of the penalty upon the offender who commits the same offense for the third
time.
In all cases the Court shall
further order the eviction of the
offender from the land and the
forfeiture to the government of all
improvements made and all ve-
hicles, domestic animals and equip-
ment of any kind used in the com-
mission of the offense. If not suit-
able for use by the Bureau, said
vehicles, domestic animals, equip-
ment and improvements shall be
sold at public auction, the proceeds
of which shall accrue to the Devel-
opment Fund of the Bureau.
In case the offender is a go-
vernment official or employee, he
shall, in addition to the above
penalties be deemed automatically
dismissed from office and perma-
nently disqualified form holding
any elective or appointive position. “The real mystery of life is not a problem to be solved,
SEC. 79.
46
Pasturing Live- it is a reality to be experienced.” — J.J. Van der
Leeuw
stock.—Imprisonment for not less
(T. Cayton)
than six (6) months nor more than
two (2) years and a fine equal to ten (10) times the regular rentals due, in addition to
the confiscation of such livestock and all improvements introduced in the area in favor
of the government, shall be imposed upon any person, who shall, without authority
under a lease or permit, graze or cause to graze livestock in forest lands, grazing lands
and alienable and disposable lands which have not as yet been disposed of in accor-
dance with the Public Land Act; Provided, That in case the offender is a corporation,
partnership or association, the officers and directors thereof shall be liable.
47
SEC. 80. Illegal Occupation of National Parks System and Recreation Areas
and Vandalism Therein.—Any person who, shall, without permit, occupy for any length
of time any portion of the national parks system or shall, in any manner cut, destroy,
_______________________
46
Renumbered under Sec. 7, R.A. No. 7161, 10 October 1991.
47
As amended by Sec. 3, P.D. No. 1559, 11 June 1978; renumbered under Sec. 7, R.A. No.
7161, 10 October 1991.

170
 REVISED FORESTRY CODE

damage or remove timber or any species of vegetation or forest cover and other natural
resources found therein, or shall mutilate, deface, or destroy objects of natural beauty or
of scenic value within areas in the national parks system, shall be fined not less than
Five Hundred Pesos (P500.00) or more than Twenty Thousand Pesos (P20,000.00) ex-
clusive of the value of the thing damaged. Provided, That if the area requires rehabilita-
tion or restoration as determined by the Director, the offender shall also be required to
restore or compensate for the restoration of the damage: Provided, further, That any
person who, without proper permit shall hunt, capture or kill any kind of bird, fish or
wild animal life within the area in the national parks system shall be subject to the
same penalty. Provided, finally, That the Court shall order eviction of the offender from
the land and the forfeiture in favor of the government of all timber or any species or
vegetation and other natural resources collected or removed, and any construction or
improvement made thereon by the offender. If the offender is an association or corpora-
tion, the president or manager shall be directly responsible and liable for the act of his
employees or laborers.
In the event that an official or employee of a city or municipal government is pri-
marily responsible for detecting and convicting the violator of the provisions of this
section, fifty percent (50%) of the fine collected shall accrue to such municipality or city
for the development of local parks.
48
SEC. 81. Destruction of Wildlife Resources.—Any person violating the provi-
sions of Section 55 of this Code, or the regulations promulgated thereunder, shall be
fined not less than One Hundred Pesos (P100.00) for each such violation and in addition
shall be denied a permit for a period of three (3) years from the date of the violation.
49
SEC. 82. Survey by Unauthorized Person.—Imprisonment for not less than
two (2) nor more than four (4) years, in addition to the confiscation of the implements
used in the violation of this Section including the cancellation of the license, if any,
shall be imposed upon any person who shall, without permit to survey from the Direc-
tor, enter any forest lands, whether covered by a license agreement, lease, license, or
permit, or not, and conduct or undertake a survey for whatever purpose.
50
SEC. 83. Misclassification and Survey by Government Official or Employee.—
Any public officer or employee who knowingly surveys, classifies, or recommends the
release of forest lands as alienable and disposable lands contrary to the criteria and
standards established in this Code, or the rules and regulations promulgated here-
under, shall, after an appropriate administrative proceeding, be dismissed from the
service with prejudice to re-employment, and upon conviction by a court of competent
jurisdiction, suffer an imprisonment of not less than one (1) year and a fine of not less
than One Thousand Pesos (P1,000.00). The survey, classification, or release of forest
lands shall be null and void.
_______________________
48
Renumbered under Sec. 7, R.A. No. 7161, 10 October 1991.
49
Renumbered under Sec. 7, R.A. No. 7161, 10 October 1991.
50
Renumbered under Sec. 7, R.A. No. 7161, 10 October 1991.

171
LAND

51
SEC. 84. Tax Declaration on Real Property.—Imprisonment for a period of not
less than two (2) nor more than four (4) years and perpetual disqualification from hold-
ing an elective or appointive office, shall be imposed upon any public officer or employee
who shall issue a tax declaration on real property without a certification from the Direc-
tor of Forest Development and the Director of Lands or their duly designated represen-
tatives that the area declared for taxation is alienable and disposable lands, unless the
property is titled or has been occupied and possessed by members of the national cul-
tural minorities prior to July 4, 1955.
52
SEC. 85. Coercion and Influence.—Any person who coerces, influences, abets,
or persuades the public officer or employee referred to in Sections 74 and 75 commit any
of the acts mentioned therein shall suffer imprisonment of not less than one (1) year
and pay a fine of Five Hundred Pesos (P500.00) for every hectare or a fraction thereof so
improperly surveyed, classified, or released.
In all other cases, any person who coerces, influences, abets, or persuades the pub-
lic officer or employee by using power and influence in deciding any pending case or
matter in his favor shall be punished by a fine of not more than Five Thousand Pesos
(P5,000.00) and imprisonment of not less than one (1) year.
53
SEC. 86. Payment, Collection, and Remittance of Forest Charges.—Any person
who fails to pay the amount due and payable under the provisions of this Code, the
National Internal Revenue Code, or the rules and regulations promulgated thereunder,
shall be liable to the payment of a surcharge of twenty-five percent (25%) of the amount
due and payable.
Any person who fails or refuses to remit to the proper authorities said forest charges
collectible pursuant to the provisions of this Code or the National Internal Revenue Code,
or who delays, obstructs or prevents the same, or who orders, causes or effects the trans-
fer or diversion of the funds for purposes other than those specified in this Code, for each
such offense shall, upon conviction, be punished by a fine of not exceeding one hundred
thousand pesos (P100,000.00) and/or imprisonment for a period of not exceeding six (6)
years in the discretion of the Court. If the offender is a government official or employee,
he shall, in addition, be dismissed from the service with prejudice to reinstatement and
with disqualification from holding any elective or appointive office.
If the offender is a corporation, partnership or association, the officers and direc-
tors thereof shall be liable.
54
SEC. 87. Sale of Wood Products.—No person shall sell or offer for sale any log,
lumber, plywood, or other manufactured wood products in the international or domestic
_______________________
51
Renumbered under Sec. 7, R.A. No. 7161, 10 October 1991.
52
As amended by Sec. 3, P.D. No. 1559, 11 June 1978; renumbered under Sec. 7, R.A. No.
7161, 10 October 1991.
53
Renumbered under Sec. 7, R.A. No. 7161, 10 October 1991.
54
Renumbered under Sec. 7, R.A. No. 7161, 10 October 1991.

172
 REVISED FORESTRY CODE

market unless he complies with grading rules established or to be established by the

government.
Failure to adhere to the established grading rules and standards, or any act of fal-
sification of the volume of logs, lumber, or other forest products shall be a sufficient
cause for the suspension of the export, sawmill, or other license or permit authorizing
the manufacture or sale of such products for a period of not less than two (2) years.
A duly accredited representative of the Bureau shall certify to the compliance by
the licensees with grading rules.
Every dealer in lumber and other building materials covered by this Code shall is-
sue an invoice for each sale of such material and such invoice shall state that the kind,
standard and size of material sold to each purchaser in exactly the same as described in
the invoice. Any violation of this Section shall be sufficient ground for the suspension of
the dealer’s license for a period of not less than two (2) years and, in addition thereto,
the dealer shall be punished for each such offense by a fine of not less than Two Hun-
dred Pesos (P200.00) or the total value of the invoice, whichever is greater.
55
SEC. 88. Arrest, Institution of Criminal Actions.—A forest officer or employee of
the Bureau or any personnel of the Philippine Constabulary/Integrated National Police
shall arrest even without warrant any person who has committed or is committing in his
presence any of the offenses defined in this Chapter. He shall also seize and confiscate, in
favor of the government, the tools and equipment used in committing the offense, and the
forest products cut, gathered or taken by the offender in the process of committing the
offense. The arresting forest officer or employee shall thereafter deliver within six (6)
hours from the time of arrest and seizure, the offender and the confiscated forest prod-
ucts, tools and equipment and file the proper complaint with the appropriate official des-
ignated by law to conduct preliminary investigation and file information in Court.
If the arrest and seizure are made in the forest, far from the authorities desig-
nated by law to conduct preliminary investigations, the delivery to, and filing of the
complaint with, the latter shall be done within a reasonable time sufficient to the place
of delivery. The seized products, materials and equipment shall be immediately dis-
posed of in accordance with forestry administrative orders promulgated by the Depart-
ment Head.
The Department Head may deputize any agency, barangay or barrio official, or
any qualified person to protect the forest and exercise the power or authority provided
for in the preceding paragraph.
Reports and complaints regarding the commission of any of the offenses defined in
this Chapter, not committed in the presence of any forest officer or employee, or any
personnel of the Philippine Constabulary/Integrated National Police or any of the depu-
tized officers or officials, shall immediately be investigated by the forest officer assigned
in the area or any personnel of the Philippine Constabulary/Integrated National Police
_______________________
55
As amended by Sec. 1, P.D. No. 1775, 14 January 1981; renumbered under Sec.

173
LAND

where the offense was allegedly committed, who shall thereupon receive the evidence
supporting the report or complaint.
If there is a prima facie evidence to support the complaint or report, the investigat-
ing forest officer and/or members of the Philippine Constabulary/Integrated National
Police shall file the necessary complaint with the appropriate official authorized by law
to conduct a preliminary investigation of criminal case and file an information in Court.
56
SEC. 89-A. The Armed Forces of the Philippines shall organize a special force
in every region to help enforce the provisions of this Act under such rules and regula-
tions as may be agreed upon by the Secretaries of National Defense and Natural Re-
sources.
57
SEC. 89-B. Administrative Authority of the Director to Impose Fines—In all
cases of violations of this Code and other forest laws, rules and regulations where fine is
the principal penalty, the director is hereby authorized to impose administratively the
penalty consisting of the fine.

Special Clauses
58
SEC. 90. Separability Clause.—Should any provision herein be subsequently
declared unconstitutional, the same shall not affect the validity or the legality of the
other provisions.
59
SEC. 91. Repealing Clause.—Presidential Decree Nos. 330 and 389, Common-
wealth Act No. 452, Republic Act No. 4715, and all laws, orders, rules and regulations
or any part thereof which are inconsistent herewith are hereby repealed or amended
accordingly.
SEC. 92. Effectivity.—This Code shall take effect immediately upon promulga-
tion.
Done in the City of Manila, this 19th day of May, 1975.

If today is a typical day on planet Earth, we will lose

about 30,000 hectares of rain forests, or 1,250 hectares
*
per hour, or 21 hectares per minute.

_______________________
56
New section introduced by Sec. 4, P.D. No. 1559, 11 June 1978; renumbered by Sec. 7,
R.A. No. 7161, 10 October 1991.
57
New section introduced by Sec. 4, P.D. No. 1559, 11 June 1978; renumbered by Sec. 7,
R.A. No. 7161, 10 October 1991.
58
Renumbered under Sec. 7, R.A. No. 7161, 10 October 1991.
59
Renumbered under Sec. 7, R.A. No. 7161, 10 October 1991.

174
 REVISED FORESTRY CODE

Timber License is Not a Right

A timber license agreement is not a contract but a mere privilege which may
be modified, amended, or rescinded when required by national interest.
Facts: Petitioner company (Ysmael) wrote to the Ministry of Environment and
60
Natural Resources (MNR) seeking the reinstatement of its logging concession covering
a portion of a public forest in Maddela, Nueva Vizcaya. The timber license agreement
(TLA) was issued in 1965 and cancelled in 1983 when the government unilaterally or-
dered the cancellation of all logging concessions in Nueva Vizcaya and Quirino prov-
inces. Barely a year later, the area covered by the Ysmael’s TLA was reawarded to two
other logging companies. Petitioner also seeks the cancellation of these TLAs alleging
discrimination.
The Ministry, through then Minister Ernesto Maceda, denied both its requests and
pointed out that there is an existing ban on all logging operations in the province of
Nueva Vizcaya and Quirino. Furthermore, the Ministry ruled that “a timber license was
not a contract within the due process clause of the Constitution, but only a privilege
which could be withdrawn whenever public interest or welfare so demands …”
When the logging ban was lifted in 1986, Ysmael appealed the order of the Minis-
try to the Office of the President (OP). However, the OP denied the petition for lack of
merit and for being prematurely filed. Hence, this petition.
Issue: Is there grave abuse of discretion on the part of the MNR in denying the
reinstatement of Ysmael’s logging concession?
Held: No. First, the MNR’s refusal to reverse final and executory administrative
orders is within its right as an administrative agency tasked to enforce governmental
policies and objectives. Second, the petitioner’s failure to file his petition within a rea-
sonable period precludes his availment of the benefits of certiorari. Laches had set in.
Finally, “(t)imber licenses, permits and license agreements are the principal instru-
ments by which the State regulates the utilization and disposition of forest resources to
the end that public welfare is promoted. And it can hardly be gainsaid that they merely
evidence a privilege granted by the State to qualified entities and do not vest in the
latter a permanent or irrevocable right to the particular concession area and the forest
products therein. They may be validly amended, modified, replaced or rescinded by the
Chief Executive when national interests so require. Thus, they are not deemed con-
tracts within the purview of the due process of law clause.” [See Sections 3(e) and 20 of
Presidential Decree No. 705, as amended; Tan v. Dir. of Forestry, 125 SCRA 302, Oct.
27, 1983.]
Felipe Ysmael Jr. & Co. Inc. v. Deputy Executive Secretary
G.R. No. 79538, October 18, 1990
_______________________
60
The MNR was later renamed the Department of Environment and Natural Resources
(DENR)

175
LAND

The Right of the Future Generations

Petitioners Filipino children, representing themselves and generations

yet unborn, have the right and legal personality to sue in a court of law by
way of a class suit in order to protect their environment. This is based on the
principle of intergenerational responsibility.

Background:

Statistics showed that in the mid-twentieth century, the Philippines had about
sixteen million (16M) hectares of virgin tropical rainforests. In 1988, data from satellite
photographs taken of the country indicated that only about 800,000 hectares were left
of these forests.
The official policy of the govern-
ment then was that logging was being
done in virgin forests. Undoubtedly, this
was a carryover of the policy when vir-
gin forests were still abundant in the
country.
In 1989, records disclosed that the
Philippine government granted logging
concessions (officially known as Timber
License Agreement or TLAs) to some
ninety-two corporations covering an area
of some 3.89 million hectares, or almost
five times more than what was avail-
able. Statistics also showed that de-
forestation was occurring at the rate of
some 120,000 hectares per year. “If future generations are to remember us with grati-
While it was difficult to theorize a tude rather than contempt, we must leave them more
cause of action based on the above data, than the miracles of technology. We must leave them a
glimpse of the world as it was in the beginning, not
(for one, the plaintiff will have to prove just after we got through with it.” — Henry David
where the 800,000 thousand hectares Thoreau
are, something which the government (T. Cayton)
itself did not quite know), it was
necessary to bring these matters to the attention of the government officials and to the
public at large.
An environmental advocate—working with the Philippine Ecological Network
(PEN) and the Haribon Foundation for the Conservation of Natural Resources (Hari-
bon)—conceptualized a legal action. Naming his own children as the main plaintiffs
together with the children of his relatives and friends from all over the Philippines,
legal proceedings were initiated. During this time, the timber industry and the logging
companies were at the height of their political and financial power.

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It must be emphasized that the defendant—then DENR Secretary Fulgencio Fac-

toran Jr.—was not responsible for the grant of the numerous TLAs. On the contrary, it
was during his term that the number of TLAs were significantly reduced. He was per-
sonally sympathetic to the cause being advocated by the case. However, the Office of the
Solicitor General (OSG), the official counsel of government agencies, was not of similar
sentiment. Instead of filing an answer to the complaint and then proceed to the trial of
the case, the OSG filed a motion to dismiss on the technicality that plaintiffs failed to
state a cause of action. In simple terms, this means that the plaintiff’s children did not
have a legal personality to sue.
After the Opposition was filed by the plaintiffs, the lower court dismissed the case
without any hearing for the reasons that:
1. The case “failed to state a cause of action.”
2. The issue was political in nature and therefore not the proper subject for judi-
cial resolution.
3. Any relief granted would result in the impairment of contracts.
The plaintiffs brought the case directly to the Supreme Court on a pure question of
law. The case is now known for having advanced the principle of intergenerational re-
sponsibility. However, when the case was filed before the lower court (Regional Trial
Court of Makati), and even when it was initially brought to the Supreme Court, this
principle was unknown both to the Court and to the plaintiffs’ lawyer himself. The the-
ory of the case was based solely on common sense: That if the government were to allow
the denudation of all the forests in the country in the next eight to ten years, the plain-
tiffs-children would no longer see, enjoy and benefit from the forests in their lifetime.
At the other end of the globe, a Georgetown University Professor of Law had been
working on the theoretical framework of the principle. At that end, it was more sophis-
ticatedly known with the terminological mouthful: “intergenerational responsibility.”
The lawyer handling the case and the US professor did not know one another.
Facts: “In a broader sense, this petition bears upon the right of Filipinos to a
balanced and healthful ecology which the petitioners dramatically associate with the
twin concepts of ‘intergenerational responsibility’ and ‘intergenerational justice.’ Spe-
cifically, it touches on the issue of whether the said petitioners have a cause of action to
‘prevent the misappropriation or impairment’ of Philippine rainforests and ‘arrest the
unabated hemorrhage of the country’s vital life-support systems and continued rape of
Mother Earth.’
“The controversy has its genesis in Civil Case No. 90-777 which was filed before
Branch 66 (Makati, Metro Manila) of the Regional Trial Court (RTC), National Capital
Judicial Region. The principal plaintiffs therein, now the principal petitioners, are all
minors duly represented and joined by their respective parents. Impleaded as an addi-
tional plaintiff is the Philippine Ecological Network, Inc. (PEN), a domestic, non-stock

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and non-profit corporation organized for the purpose of, inter alia, engaging in con-
certed action geared for the protection of our environment and natural resources. The
original defendant was the Honorable Fulgencio S. Factoran, Jr., then Secretary of the
Department of Environment and Natural Resources (DENR). His substitution in this
petition by the new Secretary, the Honorable Angel C. Alcala, was subsequently ordered
upon proper motion by the petitioners. The complaint was instituted as a taxpayers’
class suit and alleges that the plaintiffs “are all citizens of the Republic of the Philip-
pines, taxpayers, and entitled to the full benefit, use and enjoyment of the natural re-
source treasure that is the country’s virgin tropical rainforests.” The same was filed for
themselves and others who are equally concerned about the preservation of said re-
source but are “so numerous that it is impracticable to bring them all before the Court.”
The minors further asseverate that they “represent their generation as well as genera-
tions yet unborn.” Consequently, it is prayed for that judgment be rendered:

“. . . ordering defendant, his agents, representatives and other persons acting in his behalf
to—

(1) Cancel all existing timber license agreements in the country;

(2) Cease and desist from receiving, accepting, processing, renewing or approving new tim-
ber license agreements and granting the plaintiffs “. . . such other reliefs just and equitable under
the premises.”

“The complaint starts off with the general averments that the Philippine archipel-
ago of 7,100 islands has a land area of thirty million (30,000,000) hectares and is en-
dowed with rich, lush, and verdant rainforests in which varied, rare, and unique species
of flora and fauna may be found; these rainforests contain a genetic, biological, and
chemical pool which is irreplaceable; they are also the habitat of indigenous Philippine
cultures which have existed, endured and flourished since time immemorial; scientific
evidence reveals that in order to maintain a balanced and healthful ecology, the coun-
try’s land area should be utilized on the basis of a ratio of fifty-four percent (54%) for
forest cover and forty-six percent (46%) for agricultural, residential, industrial, com-
mercial and other uses; the distortion and disturbance of this balance as a consequence
of deforestation have resulted in a host of environmental tragedies, such as (a) water
shortages resulting from the drying up of the water table, otherwise known as the aqui-
fer, as well as of rivers, brooks, and streams, (b) salinization of the water table as a
result of the intrusion therein of salt water, incontrovertible examples of which may be
found in the island of Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion
and the consequential loss of soil fertility and agricultural productivity, with the volume
of soil eroded estimated at one billion (1,000,000,000) cubic meters per annum—
approximately the size of the entire island of Catanduanes, (d) the endangering and
extinction of the country’s unique, rare and varied flora and fauna, (e) the disturbance
and dislocation of cultural communities, including the disappearance of the Filipino’s
indigenous cultures, (f) the siltation of rivers and seabeds and consequential destruction

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of corals and other aquatic life leading to a critical reduction in marine resource produc-
tivity, (g) recurrent spells of drought as is presently experienced by the entire country,
(h) increasing velocity of typhoon winds which result from the absence of windbreakers,
(i) the flooding of lowlands and agricultural plains arising from the absence of the ab-
sorbent mechanism of forests, (j) the siltation and shortening of the lifespan of multi-
billion peso dams constructed and operated for the purpose of supplying water for do-
mestic uses, irrigation and the generation of electric power, and (k) the reduction of the
earth’s capacity to process carbon dioxide gases which has led to perplexing and catas-
trophic climatic changes such as the phenomenon of global warming, otherwise known
as the greenhouse effect.”
“Plaintiffs further assert that the adverse and detrimental consequences of contin-
ued deforestation are so capable of unquestionable demonstration that the same may be
submitted as a matter of judicial notice. This notwithstanding, they expressed their
intention to present expert witnesses as well as documentary, photographic and film
evidence in the course of the trial.
As their cause of action, they specifically alleged that:

“CAUSE OF ACTION . .

7. Plaintiffs replead by reference the foregoing allegations.

8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million hec-
tares of rainforests constituting roughly fifty-three percent (53%) of the country’s land
mass.
9. Satellite images taken in 1987 reveal that there remained no more than 1.2
million hectares of said rainforests or four percent (4.0%) of the country’s land area.
10. More recent surveys reveal that a mere 850,000 hectares of virgin old-growth
rainforests are left, barely 2.8% of the entire land mass of the Philippine archipelago
and about 3.0 million hectares of immature and uneconomical secondary growth forests.
11. Public records reveal that defendant’s predecessors have granted timber li-
cense agreements (TLAs) to various corporations to cut the aggregate area of 3.89 mil-
lion hectares for commercial logging purposes. A copy of the TLA holders and the corre-
sponding areas covered is hereto attached as Annex A.
12. At the present rate of deforestation, that is about 200,000 hectares per an-
num or 25 hectares per hour—nighttime, Saturdays, Sundays and holidays included—
the Philippines will be bereft of forest resources after the end of this ensuing decade, if
not earlier.
13. The adverse effects, disastrous consequences, serious injury, and irreparable
damage of this continued trend of deforestation to the plaintiff minors’ generation and

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to generations yet unborn are evident and incontrovertible. As a matter of fact, the
environmental damages enumerated in paragraph 6 hereof are already being felt, ex-
perienced and suffered by the generation of plaintiff adults.
14. The continued allowance by defendant of TLA holders to cut and deforest the
remaining forest stands will work great damage and irreparable injury to plaintiffs—
especially plaintiff minors and their successors—who may never see, use, benefit from,
and enjoy this rare and unique natural resource treasure. This act of defendant consti-
tutes a misappropriation and/or impairment of the natural resource property he holds
in trust for the benefit of plaintiff minors and succeeding generations.
15. Plaintiffs have a clear and constitutional right to a balanced and healthful
ecology and are entitled to protection by the State in its capacity as the parens patriae.
16. Plaintiffs have exhausted all administrative remedies with the defendant’s
office. On March 2, 1990, plaintiffs served upon defendant a final demand to cancel all
logging permits in the country
17. A copy of the plaintiffs’ letter dated March 1, 1990 is hereto attached as An-
nex B. Defendant, however, fails and refuses to cancel the existing TLAs, to the continu-
ing serious damage and extreme prejudice of plaintiffs.
18. The continued failure and refusal by defendant to cancel the TLAs is an act
violative of the rights of plaintiffs, especially plaintiff minors who may be left with a
country that is desertified (sic), bare, barren and devoid of the wonderful flora, fauna
and indigenous cultures which the Philippines has been abundantly blessed with.
19. Defendant’s refusal to cancel the aforementioned TLAs is manifestly contrary
to the public policy enunciated in the Philippine Environmental Policy which, in perti-
nent part, states that it is the policy of the State —
a. to create, develop, maintain and improve conditions under which man and na-
ture can thrive in productive and enjoyable harmony with each other;
b. to fulfill the social, economic and other requirements of present and future
generations of Filipinos and;
c. to ensure the attainment of an environmental quality that is conducive to a life
of dignity and well-being’ (P.D. No. 1151, 6 June 1977).
20. Furthermore, defendant’s continued refusal to cancel the aforementioned
TLAs is contradictory to the Constitutional policy of the State to—
a. effect ‘a more equitable distribution of opportunities, income and wealth’ and
‘make full and efficient use of natural resources (sic).’ (Section 1, Article XII of the Con-
stitution);
b. ‘protect the nation’s marine wealth.’ (Section 2, ibid);
c. ‘conserve and promote the nation’s cultural heritage and resources (sic).’ (Sec-
tion 14, Article XIV, id.);

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d. ‘protect and advance the right of the people to a balanced and healthful ecology
in accord with the rhythm and harmony of nature.’ (Section 16, Article II, id.)
21. Finally, defendant’s act is contrary to the highest law of humankind—the
natural law—and violative of plaintiffs’ right to self-preservation and perpetuation.
22. There is no other plain, speedy and adequate remedy in law other than the
instant action to arrest the unabated hemorrhage of the country’s vital life-support
systems and continued rape of Mother Earth.”
On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to
Dismiss the complaint based on two (2) grounds, namely: (1) the plaintiffs have no
cause of action against him and (2) the issue raised by the plaintiffs is a political ques-
tion which properly pertains to the legislative or executive branches of government. In
their 12 July 1990 Opposition to the Motion, the petitioners maintain that (1) the com-
plaint shows a clear and unmistakable cause of action, (2) the motion is dilatory and (3)
the action presents a justiciable question as it involves the defendant’s abuse of discre-
tion.
On 18 July 1991, respondent Judge issued an order granting the aforementioned
motion to dismiss. In the said order, not only was the defendant’s claim—that the com-
plaint states no cause of action against him and that it raises a political question—
sustained, the respondent Judge further ruled that the granting of the reliefs prayed for
would result in the impairment of contracts which is prohibited by the fundamental law
of the land.
Issues: Do the petitioners-children have the right to sue in their own behalf and
on behalf of unborn generations? Does the issue here involve a political question and
therefore non-justiciable? Would a relief granted here violate the constitutional provi-
sion against the non-impairment of contracts?
Held: “Before going any further, We must first focus on some procedural mat-
ters. Petitioners instituted Civil Case No. 90-777 as a class suit. The original defendant
and the present respondents did not take issue with this matter. Nevertheless, We
hereby rule that the said civil case is indeed a class suit. The subject matter of the com-
plaint is of common and general interest not just to several, but to all citizens of the
Philippines. Consequently, since the parties are so numerous, it becomes impracticable,
if not totally impossible, to bring all of them before the court. We likewise declare that
the plaintiffs therein are numerous and representative enough to ensure the full protec-
tion of all concerned interests. Hence, all the requisites for the filing of a valid class suit
under Section 12, Rule 3 of the Revised Rules of Court are present both in the said civil
case and in the instant petition, the latter being but an incident to the former.
This case, however, has a special and novel element. Petitioners minors assert that
they represent their generation as well as generations yet unborn. We find no difficulty
in ruling that they can, for themselves, for others of their generation and for the suc-
ceeding generations, file a class suit.

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Their personality to sue in behalf of the succeeding generations can only be based
on the concept of intergenerational responsibility insofar as the right to a balanced and
healthful ecology is concerned. Such a right, as hereinafter expounded, considers the
“rhythm and harmony of nature.” Nature means the created world in its entirety. Such
rhythm and harmony indispensably include, inter alia, the judicious disposition, utiliza-
tion, management, renewal and conservation of the country’s forest, mineral, land,
waters, fisheries, wildlife, off-shore areas and other natural resources to the end that
their exploration, development and utilization be equitably accessible to the present as
well as future generations.
Needless to say, every generation has a responsibility to the next to preserve that
rhythm and harmony for the full enjoyment of a balanced and healthful ecology. Put a
little differently, the minors’ assertion of their right to a sound environment constitutes,
at the same time, the performance of their obligation to ensure the protection of that
right for the generations to come.
The locus standi of the petitioners having thus been addressed, We shall now pro-
ceed to the merits of the petition.
After a careful perusal of the complaint in question and a meticulous consideration
and evaluation of the issues raised and arguments adduced by the parties, we do not
hesitate to find for the petitioners and rule against the respondent Judge’s challenged
order for having been issued with grave abuse of discretion amounting to lack of juris-
diction. The pertinent portions of the said order read as follows:

“After a careful and circumspect evaluation of the Complaint, the Court cannot help but
agree with the defendant. For although we believe that plaintiffs have but the noblest of all inten-
tions, it (sic) fell short of alleging, with sufficient definiteness, a specific legal right they are seek-
ing to enforce and protect, or a specific legal wrong they are seeking to prevent and redress (Sec.
1, Rule 2, RRC). Furthermore, the Court notes that the Complaint is replete with vague assump-
tions and vague conclusions based on unverified data. In fine, plaintiffs fail to state a cause of
action in its Complaint against the herein defendant.

Furthermore, the Court firmly believes that the matter before it, being impressed
with political color and involving a matter of public policy, may not be taken cognizance
of by this Court without doing violence to the sacred principle of ‘Separation of Powers’
of the three (3) co-equal branches of the government.
The Court is likewise of the impression that it cannot, no matter how we stretch
our jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing
timber license agreements in the country and to cease and desist from receiving, accept-
ing, processing renewing or approving new timber license agreements. For to do other-
wise would amount to ‘impairment of contracts’ abhorred (sic) by the fundamental law.”
We do not agree with the trial court’s conclusion that the plaintiffs failed to allege

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with sufficient definiteness a specific legal right involved or a specific legal wrong com-
mitted, and that the complaint is replete with vague assumptions and conclusions based
on unverified data. A reading of the complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal right—the right to a bal-
anced and healthful ecology which, for the first time in our nation’s constitutional his-
tory, is solemnly incorporated in the fundamental law. Section 16, Article II of the 1987
Constitution explicitly provides:

“SEC. 16. The State shall protect and advance the right of the people to a balanced and
healthful ecology n accord with the rhythm and harmony of nature.”
This right unites with the right to health which is provided for in the preceding section of
the same article:
“SEC. 15. The State shall protect and promote the right to health of the people and instill
health consciousness among them.”

While the right to a balanced and healthful ecology is to be found under the Decla-
ration of Principles and State Policies and not under the Bill of Rights, it does not follow
that it is less important than any of the civil and political rights enumerated in the
latter. Such a right belongs to a different category of rights altogether for it concerns
nothing less than self-preservation and self-perpetuation—aptly and fittingly stressed
by the petitioners—the advancement of which may even be said to predate all govern-
ments and constitutions.
As a matter of fact, these basic rights need not even be written in the Constitution
for they are assumed to exist from the inception of humankind. If they are now explic-
itly mentioned in the fundamental charter, it is because of the well-founded fear of its
framers that unless the rights to a balanced and healthful ecology and to health are
mandated as state policies by the Constitution itself, thereby highlighting their continu-
ing importance and imposing upon the state a solemn obligation to preserve the first
and protect and advance the second, the day would not be too far when all else would be
lost not only for the present generation, but also for those to come —generations which
stand to inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty to
refrain from impairing the environment. During the debates on this right in one of the
plenary sessions of the 1986 Constitutional Commission, the following exchange tran-
spired between Commissioner Wilfrido Villacorta and Commissioner Adolfo Azcuna who
sponsored the section in question:
“MR. VILLACORTA:
Does this section mandate the State to provide sanctions against all forms of pollu-
tion—air, water, and noise pollution?

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MR. AZCUNA:
Yes, Madam President. The right to healthful (sic) environment necessarily carries
with it the correlative duty of not impairing the same and, therefore, sanctions may be
provided for impairment of environmental balance.”
The said right implies, among many other things, the judicious management and
conservation of the country’s forests. Without such forests, the ecological or environ-
mental balance would be irreversibly disrupted.
After a careful examination of the petitioners’ complaint, We find the statements
under the introductory affirmative allegations, as well as the specific averments under
the subheading CAUSE OF ACTION, to be adequate enough to show, prima facie, the
claimed violation of their rights. On the basis thereof, they may thus be granted, wholly
or partly, the reliefs prayed for. It bears stressing, however, that insofar as the cancella-
tion of the TLAs is concerned, there is the need to implead, as party defendants, the
grantees thereof for they are indispensable parties.
The foregoing considered, Civil Case No. 90-777 cannot be said to raise a political
question. Policy formulation or determination by the executive or legislative branches of
government is not squarely put in issue. What is principally involved is the enforcement
of a right vis-a-vis policies already formulated and expressed in legislation. It must,
nonetheless, be emphasized that the political question doctrine is no longer the insur-
mountable obstacle to the exercise of judicial power or the impenetrable shield that
protects executive and legislative actions from judicial inquiry or review. The second
paragraph of Section 1, Article VII of the Constitution states that:

“Judicial power includes the duty of the courts of justice to settle actual controversies in-
volving 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.”

Commenting on this provision in his book, Philippine Political Law, Mr. Justice
Isagani A. Cruz, a distinguished member of this Court, says:

“The first part of the authority represents the traditional concept of judicial power, involv-
ing the settlement of conflicting rights as conferred by law. The second part of the authority
represents a broadening of judicial power to enable the courts of justice to review what was before
forbidden territory, to wit, the discretion of the political departments of the government.
As worded, the new provision vests in the judiciary, and particularly the Supreme Court,
the power to rule upon even the wisdom of the decisions of the executive and the legislature and
to declare their acts invalid for lack or excess of jurisdiction because tainted with grave abuse of
discretion. The catch, of course, is the meaning of ‘grave abuse of discretion,’ which is a very
elastic phrase that can expand or contract according to the disposition of the judiciary.”

In Daza v. Singson, Mr. Justice Cruz, now speaking for this Court, noted:

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“In the case now before us, the jurisdictional objection becomes even less tenable
and decisive. The reason is that, even if we were to assume that the issue presented
before us was political in nature, we would still not be precluded from resolving it under
the expanded jurisdiction conferred upon us that now covers, in proper cases, even the
political question. Article VII, Section 1, of the Constitution clearly provides: . . .”
The last ground invoked by the trial court in dismissing the complaint is the non-
impairment of contracts clause found in the Constitution. The court a quo declared that:
“The Court is likewise of the impression that it cannot, no matter how we stretch
our jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing
timber license agreements in the country and to cease and desist from receiving, accept-
ing, processing, renewing or approving new timber license agreements. For to do other-
wise would amount to ‘impairment of contracts’ abhorred (sic) by the fundamental law.”
We are not persuaded at all; on the contrary, We are amazed, if not shocked, by
such a sweeping pronouncement. In the first place, the respondent Secretary did not, for
obvious reasons, even invoke in his motion to dismiss the non-impairment clause. If he
had done so, he would have acted with utmost infidelity to the government by providing
undue and unwarranted benefits and advantages to the timber license holders because
he would have forever bound the government to strictly respect the said licenses accord-
ing to their terms and conditions regardless of changes in policy and the demands of
public interest and welfare. He was aware that as correctly pointed out by the petition-
ers, into every timber license must be read Section 20 of the Forestry Reform Code (P.D.
No. 705) which provides:
“. . . Provided, That when the national interest so requires, the President may
amend, modify, replace or rescind any contract, concession, permit, licenses or any other
form of privilege granted herein . . .”
Needless to say, all licenses may thus be revoked or rescinded by executive action.
It is not a contract, property or a property right protected by the due process clause of
the Constitution. In Tan v. Director of Forestry, this Court held:
“. . . A timber license is an instrument by which the State regulates the utilization
and disposition of forest resources to the end that public welfare is promoted. A timber
license is not a contract within the purview of the due process clause; it is only a license
or privilege, which can be validly withdrawn whenever dictated by public interest or
public welfare as in this case.
‘A license is merely a permit or privilege to do what otherwise would be unlawful,
and is not a contract between the authority, federal, state, or municipal, granting it and
the person to whom it is granted; neither is it property or a property right, nor does it
create a vested right; nor is it taxation’ (37 C.J. 168). Thus, this Court held that the
granting of license does not create irrevocable rights, neither is it property or property
rights (People v. Ong Tin, 54 O.G. 7576). . .”

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We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. v. Deputy Ex-
ecutive Secretary:
“. . . Timber licenses, permits and license agreements are the principal instru-
ments by which the State regulates the utilization and disposition of forest resources to
the end that public welfare is promoted. And it can hardly be gainsaid that they merely
evidence a privilege granted by the State to qualified entities, and do not vest in the
latter a permanent or irrevocable right to the particular concession area and the forest
products therein. They may be validly amended, modified, replaced or rescinded by the
Chief Executive when national interests so require. Thus, they are not deemed con-
tracts within the purview of the due process of law clause [See Sections 3(ee) and 20 of
Pres. Decree No. 705, as amended. Also, Tan v. Director of Forestry, G. R. No. L-24548,
October 27, 1983, 125 SCRA 302].”
Since timber licenses are not contracts, the non-impairment clause, which reads:

“SEC. 10. No law impairing the obligation of contracts shall be passed.”

In the second place, even if it is to be assumed that the same are contracts, the in-
stant case does not involve a law or even an executive issuance declaring the cancella-
tion or modification of existing timber licenses. Hence, the non-impairment clause can-
not as yet be invoked. Nevertheless, granting further that a law has actually been
passed mandating cancellations or modifications, the same cannot still be stigmatized
as a violation of the non-impairment clause. This is because by its very nature and
purpose, such a law could have only been passed in the exercise of the police power of
the state for the purpose of advancing the right of the people to a balanced and health-
ful ecology, promoting their health and enhancing the general welfare. In Abe v. Foster
Wheeler Corp., this Court stated:
“The freedom of contract, under our system of government, is not meant to be ab-
solute. The same is understood to be subject to reasonable legislative regulation aimed
at the promotion of public health, moral, safety and welfare. In other words, the consti-
tutional guaranty of non-impairment of obligations of contract is limited by the exercise
of the police power of the State, in the interest of public health, safety, moral and gen-
eral welfare.”
Concurring Opinion of Justice Feliciano:
I join in the result reached by my distinguished brother in the Court, Davide, Jr.,
J. in this case which, to my mind, is one of the most important cases decided by this
Court in the last few years. The seminal principles laid down in this decision are likely
to influence profoundly the direction and course of the protection and management of
the environment, which of course embraces the utilization of all the natural resources in
the territorial base of our polity. I have therefore sought to clarify, basically to myself,
what the Court appears to be saying.

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Two (2) points are worth making in this connection. Firstly, neither petitioners nor
the Court has identified the particular provision or provisions (if any) of the Philippine
Environment Code which give rise to a specific legal right which petitioners are seeking
to enforce. Secondly, the Philippine Environment Code identifies with notable care the
particular government agency charged with the formulation and implementation of
guidelines and programs dealing with each of the headings and sub-headings men-
tioned above. The Philippine Environment Code does not, in other words, appear to
contemplate action on the part of private persons who are beneficiaries of implementa-
tion of that Code.
As a matter of logic, by finding petitioners’ cause of action as anchored on a legal
right comprised in the constitutional statements above noted, the Court is in effect
saying that Section 15 (and Section 16) of Article II of the Constitution are self-
executing and judicially enforceable even in their present form. The implications of this
doctrine will have to be explored in future cases; those implications are too large and
far-reaching in nature even to be hinted at here.
My suggestion is simply that petitioners must, before the trial court, show a more
specific legal right—a right cast in language of a significantly lower order of generality
than Article II (15) of the Constitution—that is or may be violated by the actions, or
failures to act, imputed to the public respondent by petitioners so that the trial court
can validly render judgement granting all or part of the relief prayed for. To my mind,
the Court should be understood as simply saying that such a more specific legal right or
rights may well exist in our corpus of law, considering the general policy principles
found in the Constitution and the existence of the Philippine Environment Code, and
that the trial court should have given petitioners an effective opportunity so to demon-
strate, instead of aborting the proceedings on a motion to dismiss.
It seems to me important that the legal right which is an essential component of a
cause of action be a specific, operable legal right, rather than a constitutional or statu-
tory policy, for at least two (2) reasons. One is that unless the legal right claimed to
have been violated or disregarded is given specification in operational terms, defen-
dants may well be unable to defend themselves intelligently and effectively; in other
words, there are due process dimensions to this matter
The second is a broader-gauge consideration—where a specific violation of law or
applicable regulation is not alleged or proved, petitioners can be expected to fall back on
the expanded conception of judicial power in the second paragraph of Section 1 of Arti-
cle VIII of the Constitution which reads:
“Section 1 . . . . Judicial power includes the duty of the courts of justice to settle ac-
tual 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 gov-
ernment.”

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When substantive standards as general as “the right to a balanced and healthy

ecology” and “the right to health” are combined with remedial standards as broad rang-
ing as “a grave abuse of discretion amounting to lack or excess of jurisdiction,” the re-
sult will be, it is respectfully submitted, to propel courts into the uncharted ocean of
social and economic policy making. At least in respect of the vast area of environmental
protection and management, our courts have no claim to special technical competence
and experience and professional qualifications. Where no specific, operable norms and
standards are shown to exist, then the policy making departments—the legislative and
executive departments—must be given a real and effective opportunity to fashion and
promulgate those norms and standards, and to implement them before the courts
should intervene.
My learned brother Davide, Jr., J., rightly insists that the timber companies,
whose concession agreements or TLAs petitioners demand public respondents should
cancel, must be impleaded in the proceedings below. It might be asked that, if petition-
ers’ entitlement to the relief demanded is not dependent upon proof of breach by the
timber companies of one or more of the specific terms and conditions of their concession
agreements (and this, petitioners implicitly assume), what will those companies litigate
about? The answer I suggest is that they may seek to dispute the existence of the spe-
cific legal right petitioners should allege, as well as the reality of the claimed factual
nexus between petitioners’ specific legal right and the claimed wrongful acts or failures
to act of public respondent administrative agency. They may also controvert the appro-
priateness of the remedy or remedies demanded by petitioners, under all the circum-
stances which exist.
I vote to grant the Petition for Certiorari because the protection of the environ-
ment, including the forest cover of our territory, is of extreme importance for the coun-
try. The doctrines se out in the Court’s decision issued today should, however, be sub-
jected to closer examination.
Minors Oposa, et al. v. Factoran, et al.
G.R. No. 101083, July 30, 1993

Post-Supreme Court Decision

It will be noted that the last part of the Decision directs the petitioners to return to the
Regional Trial Court and try the case in said court impleading therein the TLA holders.
At the very outset, impleading all the TLA holders was one of the options explored
by the plaintiffs. Two strategic and tactical considerations, however, militated against
this alternative: (1) Plaintiffs were represented by only one lawyer Picking a fight
against 92 logging companies which were at the height of their power would be like an
ant challenging an elephant to a duel; (2) Plaintiffs avoid being entangled in an unnec-
essary, tedious, protracted, and lengthy legal battle to prove violations on the part of
the TLA holder in order to justify the cancellation.

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Instead of suing the holders of the TLA, plaintiffs opted for the line of least resis-
tance—a suit against the grantor of the TLAs on the theory that the Dept. of Environ-
ment and Natural Resources granted permits to cut trees over area (3.9 m. hectares)
more than the area available (800,000 hectares). While the class suit is necessarily
couched in legal language and theory, the overall goal of the suit was to force a policy
shift, i.e., to protect and preserve the remaining virgin forests of the country.
Fortunately, during the pendency of the case, the DENR issued Department Ad-
ministrative Order No. 24, Series of 1991 effective on January 1, 1992. The Order, in
effect, banned all logging in the remaining 800,000 hectares of virgin forests left in the
Philippines. By a happy coincidence, this was a very strategic goal of the legal action.
In effect therefore, the policy question involved in the legal case had become moot
and academic by executive action, to the credit of then DENR Secretary, F. Factoran,
Jr. The eloquent pronouncements of the Supreme Court on the concept of inter-
generational responsibility and the legal right of future generations to initiate the legal
action were a purely accidental bonus.
The concurring opinion of Justice Feliciano and his suggestions were very well
taken. They have since become the basis for what is now the Citizen’s Suit provision in
the Clean Air Act (RA 8749) and the Solid Waste Management Act (RA 9003).

Illegal Possession of Lumber

Lumber, although omit-
ted in the definition of forest
products under the Forestry
Code, is a processed log or
timber. As such, it needs
proper documentation as any
forest product is required.
Facts: On April 1,
1990, a team of DENR opera-
tives searched the premises
of the Mustang Lumber in
Valenzuela, Metro Manila
and found a variety of lum-
ber products without the
“We abuse the land because we regard it as a commodity belonging proper documentation and
to us. When we see land as a community to which we belong, we permits. When the company
may begin to use it with love and respect.”—Aldo Leopold was unable to explain the
(Digital Vision) absence of any documen-
tation and upon the disco-
very that the company’s permit had already expired, the DENR operatives confiscated

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the lumber products without any search warrant. Mustang Lumber now questions the
validity of the confiscation without any search and seizure order by the court. Moreover,
it alleges that the word “lumber” is not included in the term “timber.”
Issue: Was there a valid seizure of the lumber?
Held: Yes. In Webster’s Third International Dictionary, lumber is defined, inter
alia, as “timber or logs after being prepared for the market.” Simply put, lumber is a
processed log or timber.
It is settled that in the absence of legislative intent to the contrary, words and
phrases used in a statute should be given their plain, ordinary, and common usage
meaning. And insofar as possession of timber without the required legal documents is
concerned, Section 68 of Presidential Decree No.705, as amended, makes no distinction
between raw or processed timber. Neither should we. Ubi lex non distinguit nec nos
distinguire debemus (where the law does not distinguish, neither should we).
It was duly established that the petitioner’s truck was coming out from petitioner’s
lumberyard loaded with lauan and almaciga lumber of different sizes and dimensions
which were not accompanied with the required invoices and transport documents. The
seizure of such truck and its cargo was a valid exercise of the power vested upon a forest
officer or employee by Section 80 of Presidential Decree No. 705, as amended by Presi-
dential Decree No. 1775.
“Search of a moving vehicle is one of the five doctrinally accepted exceptions to the
constitutional mandate that no search or seizure shall be made except by virtue of a war-
rant issued by a judge after personally determining the existence of a probable cause.
The other exceptions are (1) search as an incident to a lawful arrest, (2) seizure of
evidence in plain view, (3) customs searches, and (4) consented warrantless search.
“We also affirm the rulings of both the trial court and the Court of Appeals that
the search on April 4, 1990 was a continuation of the search on April 3, 1990 done un-
der and by virtue of the search warrant issued on April 3, 1990. Under (Section 9, Rule
126 of) the Rules of Court, a search warrant has a lifetime of ten days. Hence, it could
be served at any time within the said period, and if its object or purpose cannot be ac-
complished in one day, the same may be continued under the same warrant the follow-
ing day, provided it is still within the ten-day period.
“They (Mustang Lumber) are presumably trifling attempts to block the serious ef-
forts of the DENR to enforce the decree, efforts which deserve the commendation of the
public in the light of the urgent need to take firm and decisive action against the de-
spoilers of our forests whose continuous destruction only ensures to the generations to
come, if not the present, an inheritance of parched earth incapable of sustaining life.
The government must not tire in its vigilance to protect the environment by prosecuting
without fear or favor any person who dares to violate our laws for the utilization and
protection of our forests.”
Mustang Lumber v. CA
G.R. No. 104988, June 18, 1996

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Replevin in Motor Vehicles Impounded by the DENR

A legal action for replevin to recover a motor vehicle which was found to be trans-
porting illegal forest product is not proper without the exhaustion of administrative
remedies. The administrative procedure for the confiscation and forfeiture of the motor
vehicle must be allowed to run its course. The court must “not arrogate unto itself the
authority to resolve a controversy the jurisdiction over which is initially lodged with an
administrative body of special competence.”

Background:

Illegally-cut forest products are usually apprehended not while they are being cut
inside the forests but while they are being transported along the main highway. The
truck used to transport the forest contraband is, in law, a tool, equipment or instrument
used in the commission of a crime and is therefore subject to seizure and forfeiture. The
procedure for forfeiture is covered by an administrative procedure of the DENR where
the owner of the truck is given due notice and the opportunity to explain. The truck
owners, however, often in cahoots with the illegal loggers, have resorted to the filing of
cases against the DENR officers in custody of the motor vehicle. This case, an action to
recover property which is alleged to be wrongfully withheld by another is, in legal lan-
guage, known as an action for replevin. It usually also includes actions for damages
against the DENR officers. This has a very frustrating effect on the officers concerned
who went to great lengths in apprehending the vehicle and its contraband. In addition,
the action for damages has a demoralizing and chilling effect on the DENR and/or police
officers who apprehended the vehicles, not to mention the personal expense that the
officials sued have to incur to defend themselves.
Facts: On May 19, 1989, the truck of private respondent Victoria de Guzman
while on its way to Bulacan from Cagayan Province. Upon inspection by operatives of
the Department of Environment and Natural Resources (DENR) and finding that the
driver could not produce the required documents for the forest products found concealed
in the truck, the same was seized.
On May 23, 1989, Jovito Layugan, then the Community Environment and Natural
Resource Officer (CENRO) of Aritao issued an order of confiscation of the truck. The
order also directed the owner to submit within fifteen (15) days an explanation why the
truck should not be forfeited. De Guzman failed to submit the required explanation.
On June 22, 1989, Regional Executive Director (RED) Rogelio Baggayan of DENR
sustained Layugan’s action of confiscation and ordered the forfeiture of the truck invok-
ing Section 68-A of the Forestry Code (P. D. No. 705). De Guzman then filed a letter of
request for reconsideration which was denied. De Guzman brought the case on appeal
to the Office of the DENR Secretary.

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However, pending resolution of the appeal, de Guzman filed a suit for replevin
against CENRO Layugan and RED Baggayan with the Regional Trial Court (RTC) of
Cagayan. The court issued an order requiring the return of the truck to de Guzman.
Layugan and Baggayan filed a motion to dismiss with the trial court contending,
among others, that private respondents had no cause of action for their failure to ex-
haust administrative remedies. The trial court denied the motion to dismiss and a sub-
sequent motion for reconsideration.
Appeal was filed by the DENR through its officers with the Court of Appeals which
sustained the trial court’s ruling. Hence, this present petition before the Supreme Court
seeking to reverse the decision of the Court of Appeals. Leonardo Paat was substituted
as petitioner being the successor of Baggayan as the Regional Executive Director of the
DENR in Region 2.
Issue: Can a petition for replevin be used to recover movable property subject of
an administrative forfeiture proceeding in the DENR?
Held: No. “This Court has consistently held that before a party is allowed to seek
the intervention of the Court, it is a pre-condition that he should have availed of all the
means of administrative processes afforded him. Hence, if a remedy within the adminis-
trative machinery can still be resorted to, then such remedy should first be exhausted
first before the court’s judicial power can be sought. The premature invocation of the
court’s intervention is fatal to one’s cause of action.
In the case at (hand), there is no question that the controversy was pending before
the Secretary of DENR when it was forwarded to him following the denial by (DENR
officers) of (De Guzman’s) motion for reconsideration…” “In their letter of reconsidera-
tion dated June 28, 1989, spouses de Guzman clearly recognize the presence of an ad-
ministrative forum to which they seek to avail, as they did avail, in the resolution of
their case. The letter, reads, thus:
“ . . . If this motion for reconsideration does not merit your favorable action, then this letter
should be considered as an appeal to the Secretary.”
It was easy to perceive then that the private respondents looked up to the Secre-
tary for the review and disposition of their case. By appealing to him, they acknowl-
edged the existence of an adequate and plain remedy still available and open to them in
the ordinary course of the law.
Thus, they cannot now, without violating the principle of exhaustion of adminis-
trative remedies, seek court’s intervention by filing an action for replevin for the grant
of their relief during the pendency of an administrative proceedings.
“. . . (I)t is (also) important to point out that the enforcement of forestry laws,
rules and regulations and the protection, development and management of forest lands
fall within the primary and special responsibilities of the Department of Environment
and Natural Resources. By the very nature of its function, the DENR should be given a

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 REVISED FORESTRY CODE

free hand unperturbed by judicial intrusion to determine a controversy which is well

within its jurisdiction. The assumption by the trial court, therefore, of the replevin suit
filed by private respondents constitutes an unjustified encroachment into the domain of
the administrative agency’s prerogative. The doctrine of primary jurisdiction does not
warrant a court to arrogate unto itself the authority to resolve a controversy the juris-
diction over which is initially lodged with an administrative body of special compe-
tence.”
“It is worth stressing at this point, that a suit for replevin is founded solely on the
claim that the defendant wrongfully withholds the property sought to be recovered. It
(is the proper petition) to recover possession of personal chattels that are unlawfully
detained. ‘To detain’ is defined as to mean ‘to hold or keep in custody,’ and it has been
held that there is tortuous taking whenever there is an unlawful meddling with the
property, or an exercise or claim of dominion over it, without any pretense of authority
or right …”;
“Under the Rules of Court, it is indispensable in a replevin proceeding that the
plaintiff must show by his own affidavit that he is entitled to the possession of property,
that the property is wrongfully detained by the defendant, alleging the cause of deten-
tion, that the same has not been taken for tax assessment, or seized under execution, or
attachment, or if so seized, that it is exempt from such seizure. The affidavit must also
indicate the actual value of the property, double which is the amount of the required
replevin bond. De Guzman miserably failed to convince this Court that a wrongful de-
tention of the subject truck obtains in the instant case. It should be noted that the truck
was seized by the DENR because it was transporting forest products without the re-
quired permit of the DENR in manifest contravention of Section 68 of (the Forestry
Code)…” “(This) unquestionably (justifies) the confiscation as well as the disposition by
the Secretary of DENR or his duly authorized representatives of the conveyances used
in violating the provision of forestry laws. Evidently, the continued possession or deten-
tion of the truck by the DENR for administrative forfeiture proceeding is legally per-
missible.” “Hence, (there is) no wrongful detention (and thus a petition for replevin
cannot prosper).”
Paat v. CA
G. R. No. 111107, January 10, 1997

Counter-Strike
In a replevin action, the petitioner (Plaintiff) seeking the return of a thing must
state under oath that the same has not been seized by law. This is one of the formal
requirements of the petition and is necessary before a Court of Law will entertain the
same.
Where a petitioner states under oath that a thing has not been seized—knowing

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fully well that it has been so seized by the DENR and that confiscation proceedings
were under way—he exposes himself to criminal liability for perjury. Filing a case
against him for perjury during the pendency of the replevin proceedings adds leverage
for the DENR. Lest we forget, law is a game of pressure. He who blinks, loses.

Chainsaw Act of 2002

(Republic Act 9175)

SECTION 1. Title.—This Act

shall be known as the “Chainsaw
Act of 2002”.
SEC. 2. Declaration of Po-
licy.—It is the policy of the State, con-
sistent with the Constitution, to
conserve, develop and protect the forest
resources under sustainable manage-
ment. Toward this end, the State shall
pursue an aggressive forest protection
program geared towards eliminating
illegal logging and other forms of forest
destruction which are being facilitated
with the use of chainsaws. The State
shall therefore regulate the ownership,
possession, sale, transfer, importation
and/or use of chainsaws to prevent
them from being used in illegal logging
or unauthorized clearing of forests.
SEC. 3. Definition of Terms.—
As used in this Act, the term:
a. “Chainsaw” shall refer to
any portable power saw or similar
cutting implement, rendered opera-
tive by an electric or internal com-
bustion engine or similar means, “If trees could scream, would we be so cavalier about
cutting them down? We might, if they screamed all the
that may be used for, but is not time, for no good reason.” — Jack Handey
limited to, the felling of trees or the (Digital Vision)
cutting of timber;
b. “Chainsaw dealer” shall refer to a person, natural or juridical, engaged in the
manufacture, importation, distribution, purchase and/or sale of chainsaws.
c. “Department” shall refer to the Department of Environment and Natural Re-
sources ; and

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 CHAINSAW ACT

d. “Secretary” shall refer to the Secretary of the Department of Environment and

Natural Resources.
SEC. 4. Persons Authorized to Manufacture, Sell, and Import Chainsaws.—
Chainsaws shall only be sold and/or imported by manufacturers, dealers and/or private
owners who are duly authorized by the Department.
SEC. 5. Persons Authorized to Possess and Use a Chainsaw.—The Department is
hereby authorized to issue permits to possess and/or use a chainsaw for the felling
and/or cutting of trees, timber and other forest or agro-forest products to any applicant
who:
a. has a subsisting timber license agreement, production sharing agreement, or
similar agreements, or a private land timber permit;
b. is an orchard and fruit tree farmer;
c. is an industrial tree farmer;
d. is a licensed wood
processor and the chainsaw shall
be used for the cutting of timber
that has been legally sold to said
applicant; or
e. Shall use the chainsaw
for a legal purpose.
Agencies of the government
that use chainsaws in some
aspects of their functions must
likewise secure the necessary
permit from the Department
before operating the same.
SEC. 6. Registration of
Chainsaws.—Within a period of
three (3) months from effectivity
“Suburbia is where the developer bulldozes out the trees,
hereof, all persons who own or are then names the streets after them.” — Bill Vaughan
otherwise in possession of chain- (Digital Vision)
saws must register the same with
the Department, through any of its Community Environment and Natural Resources
Office, which shall issue the corresponding registration certificate or permit if it finds
such persons to be qualified hereunder.
Every permit to possess and/or use a chainsaw for legitimate purpose shall be
valid for two (2) years upon issuance: Provided, that permits to possess and use chain-
saw issued to non-commercial orchard and fruit tree farmers shall be valid for a period

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of five (5) years upon issuance. For this purpose, the Department shall be allowed to
collect reasonable registration fees for the effective implementation of this Act.
SEC. 7. Penal Provisions.
1. Selling, Purchasing, Re-selling, Transferring, Distributing or Possessing a
Chainsaw Without a Proper Permit.—Any person who sells, purchases, transfers the
ownership, distributes, or otherwise disposes or possesses a chainsaw without first
securing the necessary permit from the Department shall be punished with imprison-
ment of four (4) years, two (2) months and one (1 ) day to six years or a fine of not less
than Fifteen thousand pesos (PhP 15,000.00) but not more than Thirty thousand pesos
(PhP 30,000.00) or both at the discretion of the court, and the chainsaw/s confiscated in
favor of the government.
2. Unlawful Importation or Manufacturing of Chainsaw.—Any person who im-
ports or manufactures a chainsaw without obtaining prior authorization from the De-
partment shall be punished by imprisonment of not less than one (1) month nor more
than six (6) months and a fine of not less than One thousand pesos (PhP 1,000.00) nor
more than four thousand pesos (PhP 4,000.00).
3. Tampering of Engine serial Number.—Any person who is found to have de-
faced or tampered with the original registered engine serial number of any chainsaw
unit shall be punished by imprisonment of not less than one (1) month nor more than
six (6) months and a fine of not less than one thousand pesos (PhP 1,000.00) nor more
than Four thousand pesos (PhP 4,000.00).
4. Actual Unlawful Use of Chainsaw.—Any person who is found to be in posses-
sion of a chainsaw and uses the same to cut trees and timber in forest land or elsewhere
except as authorized by the Department shall be penalized with imprisonment of six (6)
years and one (1) day to eight (8) years or a fine of not less than Thirty thousand pesos
(PhP 30,000.00) but not more than Fifty thousand pesos (PhP 50,000.00) or both at the
discretion of the court without prejudice to being prosecuted for a separate offense that
may have been simultaneously committed. The chainsaw unlawfully used shall be like-
wise confiscated in favor of the government.
If the violation under this Section is committed by or through the command or or-
der of another person, partnership or corporation, the penalties herein provided shall
likewise be imposed on such other person, or the responsible officer/s in such partner-
ship or corporation.
If the offender is a public official or employee, in addition to the above penalties,
he shall be removed from office and perpetually qualified from holding any public office.
The chainsaws confiscated under this Section shall be sold at public auction to
qualified buyers and the proceeds thereof shall go to the Department.
SEC. 8. Reward.—Any person who voluntarily gives information leading to the
recovery or confiscation of an unregistered chainsaw and the conviction of persons
charged thereof shall be entitled to a reward equivalent to twenty (20%) of the value of

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 CHAINSAW ACT

the chainsaw unit/s. The Department is authorized to include in its budget the amount
necessary to carry out the purpose of this section.
SEC. 9. Authority of the Secretary.—To effectively implement the provisions of
this Act, the Secretary shall issue the implementing rules and regulations within ninety
(90) days upon approval of this Act. He shall likewise organize an office within the De-
partment to ensure that the requirements imposed by this Act may be complied with
qualified persons, within the shortest possible time, at the least possible expense.
In the Province of Palawan, the provisions of this Act shall be implemented by the
Palawan Council for Sustainable Development pursuant to Republic act No. 7611 or the
Strategic Environmental Plan for Palawan.
SEC. 10. Revocation of Registration and Permit.—The Secretary may revoke any
Certificate of Registration or permit previously issued to a person found violating the
provisions of this Act, or the rules and regulations issued pursuant thereto.
SEC. 11. Joint Congressional Oversight Committee.—To monitor and oversee
the implementation of this Act, including the approval of the rules and regulations
issued pursuant hereto, there is hereby created a Joint Congressional Oversight Com-
mittee to be composed of the Chairpersons of the Senate Committee on Environmental
and Natural Resources and the house committee on Natural Resources as Chairperson
and Co-chairperson, five (5) members of each of the Senate and the House of Represen-
tatives who shall be designated by the Senate President and the Speaker of the House
of Representatives as members: Provided, that the two (2) of the five (5) senators and
two (2) of the five (5) House Members shall be nominated by the respective Minority
Leaders of the Senate and the House of Representatives.
SEC. 12. Transitory Provision.—In the interim while the Department is formu-
lating the implementing rules and regulations to effectively carry out the provisions of
this Act, the Bureau of Customs is prohibited from approving any chainsaw importation
without clearance from said Department.
SEC. 13. Separability Clause.—If, for any reason, any part or provision of this
Act shall be declared as unconstitutional or invalid, such parts or provisions not af-
fected thereby shall remain in full force and effect.
SEC. 14. Repealing Clause.—All laws, executive orders, presidential decrees,
letters or instruction, rules and regulations, or parts thereof which are inconsistent
with any of the provisions of this Act are hereby repealed and/or amended accordingly.
SEC. 15. Effectivity.—This Act shall take effect fifteen (15) days after its com-
plete publication in the Official Gazette or in at least two (2) national newspaper of
general circulation, whichever comes earlier.

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Protected Species
Conservation and Protection of Wildlife Resources
(Republic Act 9147)
Chapter I
General Provisions

SECTION 1. Title.—This Act shall be known as the “Wildlife Resources Conser-

vation and Protection Act.”
SEC. 2. Declaration of Policy.—It shall be the policy of the State to conserve the
country’s wildlife resources and their habitats for sustainability. In the pursuit of this
policy, this Act shall have the fol-
lowing objectives:
a. to conserve and protect
wildlife species and their habitats to
promote ecological balance and en-
hance biological diversity;
b. to regulate the collection
and trade of wildlife;
c. to pursue, with due regard
to the national interest, the Philip-
pine commitment to international
conventions, protection of wildlife
and their habitats; and
d. to initiate or support scien-
tific studies on the conservation of
biological diversity.
SEC. 3. Scope of Applica- “The creation of a thousand forests is in one acorn.”
tion.—The provisions of this Act — Ralph Waldo Emerson
shall be enforceable for all wildlife (A. Oposa)
species found in all areas of the country, including protected areas under Republic Act
No. 7586, otherwise known as the National Integrated Protected Areas System (NIPAS)
Act, and critical habitats. This Act shall also apply to exotic species which are subject to
trade, are cultured, maintained and/or bred in captivity or propagated in the country.
SEC. 4. Jurisdiction of the Department of Environment and Natural Resources
and the Department of Agriculture.—The Department of Environment and Natural
Resources (DENR) shall have jurisdiction over all terrestrial plant and animal species,
all turtles and tortoises and wetland species, including but not limited to crocodiles,

198
 CONSERVATION AND PROTECTION OF WILDLIFE RESOURCES

waterbirds and all amphibians and dugong. The Department of Agriculture (DA) shall
have jurisdiction over all declared aquatic critical habitats, all aquatic resources, in-
cluding but not limited to all fishes, aquatic plants, invertebrates and all marine mam-
mals, except dugong. The secretaries of the DENR and the DA shall review, and, by
joint administrative order, revise and regularly update the list of species under the
respective jurisdiction. In the Province of Palawan, jurisdiction herein conferred is
vested to the Palawan Council for Sustainable Development pursuant to Republic Act
No. 7611.

Chapter II
Definition of Terms

SEC. 5. Definition of Terms.—As used in this Act, the term;

a) “Bioprospecting” means the research, collection and utilization of biological
and genetic resources for purposes of applying the knowledge derived therefrom solely
for commercial purposes;
b) “By-product or derivatives” means any part taken or substance extracted from
wildlife, in raw or in processed form. This includes stuffed animals and herbarium
specimens;
c) “Captive-breeding/culture or propagation” means the process of producing in-
dividuals under controlled conditions or with human interventions;
d) “Collection or collecting” means the act of gathering or harvesting wildlife, its
by-products or derivatives;
e) “Conservation” means preservation and sustainable utilization of wildlife,
and/or maintenance, restoration and enhancement of the habitat;
f) “Critically endangered species” refers to a species or subspecies that is facing
extremely high risk of extinction in the wild in the immediate future;
g) “Economically important species” means species which have actual or potential
value in trade or utilization for commercial purposes;
h) “Endangered species” refers to species or subspecies that is not critically en-
dangered but whose survival in the wild is unlikely if the causal factors continue oper-
ating;
i) “Endemic species” means species or subspecies which is naturally occurring
and found only within specific areas in the country;
j) “Exotic species” means species or subspecies which do not naturally occur in the
country;
k) “Export permit” refers to a permit authorizing an individual to bring out wild-
life from the Philippines to any other country;

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l) “Gratuitous permit” means permit issued to any individual or entity engaged in

noncommercial scientific or educational undertaking to collect wildlife;
m) “Habitat” means a place or environment where a species or subspecies natu-
rally occur or has naturally established its population;
n) “Import permit” refers to a permit authorizing an individual to bring in wild-
life from another country;
o) “Indigenous wildlife” means species or subspecies of wildlife naturally occur-
ring or has naturally established population in the country;
p) “Introduction” means bringing species into the wild that is outside its natural
habitat;
q) “Reexport permit” refers to a permit authorizing an individual to bring out of
the country a previously imported wildlife;
r) “Secretary” means either or both the Secretary of the Department of Environ-
ment and Natural Resources and the Secretary of the Department of Agriculture;
s) “Threatened species” a general term to denote species or subspecies considered
as critically endangered, vulnerable or other accepted categories of wildlife whose popu-
lation is at risk of extinction;
t) “Trade” means the act of engaging in the exchange, exportation or importation,
purchase or sale of wildlife, their derivatives or by-products, locally or internationally;
u) “Traditional use” means utilization of wildlife by indigenous people in accor-
dance with written or unwritten rules, usage, customs and practices traditionally ob-
served, accepted and recognized by them;
v) “Transport permit” means a permit issued authorizing an individual to bring
wildlife from one place to another within the territorial jurisdiction of the Philippines;
w) “Vulnerable species” refers to species or subspecies that is not critically en-
dangered nor endangered but is under threat from adverse factors throughout their
range and is likely to move to the endangered category in the near future;
x) “Wildlife” means wild forms and varieties of flora and fauna, in all develop-
mental stages, including those which are in captivity or are being bred or propagated;
y) “Wildlife collector’s permit” means a permit to take or collect from the wild cer-
tain species and quantities of wildlife for commercial purpose; and
z) “Wildlife farm/culture permit” means a permit to develop, operate and main-
tain a wildlife breeding farm for conservation, trade and/or scientific purposes;

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 CONSERVATION AND PROTECTION OF WILDLIFE RESOURCES

Chapter III
Conservation and Protection of Wildlife Resources

SEC. 6. Wildlife Information.—All activities, as subsequently manifested under

this Chapter, shall be authorized by the Secretary upon proper evaluation of best avail-
able information or scientific data showing that the activity is, or for a purpose, not
detrimental to the survival of the species or subspecies involved and/or their habitat.
For this purpose, the Secretary shall regularly update wildlife information through
research.
SEC. 7. Collection of Wildlife.—Collection of wildlife may be allowed in accor-
dance with Section 6 of this Act: Provided, That in the collection of wildlife, appropri-
ated and acceptable wildlife collection techniques with least or no detrimental effects to
the existing wildlife populations and their habitats shall, likewise, be required: Pro-
vided, further, That collection of wildlife by indigenous people may be allowed for tradi-
tional use and not primarily for trade: Provided, furthermore, That collection and utili-
zation for said purpose shall not cover threatened species: Provided, finally, that Sec-
tion 23 of this Act shall govern the collection of threatened species.
SEC. 8. Possession of Wildlife.—No person or entity shall be allowed possession
of wildlife unless such person or entity can prove financial, technical capability and
facility to maintain said wildlife: Provided, That the source was not obtained in viola-
tion of this Act.
SEC. 9. Collection and/or Possession of By-Products and Derivatives.—Local
transport of wildlife, by-products and derivatives may be collected and or possessed:
Provided, That the source was not obtained in violation of this Act.
SEC. 10. Local Transport of Wildlife, By-Products and Derivatives.—Local
transport of wildlife, by-products and derivatives collected or possessed through any
other means shall be authorized unless the same is prejudicial to the wildlife and public
health.
SEC. 11. Exportation and/or Importation of Wildlife.—Wildlife species may be
exported to or imported from another country as may be authorized by the Secretary or
the designated representative, subject to strict compliance with the provisions of this
Act and rules and regulations promulgated pursuant thereto: Provided, That the recipi-
ent of the wildlife is technically and financially capable to maintain it.
SEC. 12. Introduction, Reintroduction or Restocking of Endemic and Indigenous
Wildlife.—The introduction, reintroduction or restocking of endemic and indigenous
wildlife shall be allowed only for population enhancement or recovery purposes subject
to prior clearance from the Secretary or the authorized representative pursuant to Sec-
tion 6 of this Act.

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Any proposed introduction shall be subject to a scientific study which shall focus
on the bioecology. The proponent shall also conduct public consultations with concerned
individuals or entities.
SEC. 13. Introduction of Exotic
Wildlife.—No exotic species shall be
introduced into the country, unless a
clearance from the Secretary or the
authorized representative is first obtain-
ed. In no case shall exotic species be
introduced into protected areas covered
by Republic Act No. 7586 and to critical
habitats under Section 25 thereof.
In cases where introduction is
allowed, it shall be subject to environ-
mental impact study which shall focus
on the bioecology, socioeconomic and
related aspects of the area where the
species will be introduced. The propo-
nent shall also be required to secure the
prior informed consent from the local
stakeholders.
SEC. 14. Bioprospecting—
Bioprospecting shall be allowed upon
execution of an undertaking by any “The real threat to whales is whaling, which has
endangered many whale species.” — Dave Barry
proponent, stipulating therein its
compliance with and commitment(s) to (Digital Vision)
reasonable terms and conditions that
may be imposed by the Secretary which are necessary to protect biological diversity.
The Secretary or the authorized representative, in consultation with concerned
agencies, before granting the necessary permit, shall require that prior informed con-
sent be obtained by the applicant from the concerned indigenous cultural communities,
local communities, management board under Republic Act No. 7586 or private individ-
ual or entity. The applicant shall disclose fully the intent and scope of the bioprospect-
ing activity in a language and process understandable to the community. The prior
informed consent from the indigenous peoples shall be obtained in accordance with
existing laws. The action on the bioprospecting proposal by concerned bodies shall be
made within a reasonable period.
Upon submission of the complete requirements, the Secretary shall act on the re-
search proposal within a reasonable period.
If the applicant is a foreign entity or individual, a local institution should be ac-
tively involved in the research, collection and, whenever applicable and appropriate, in

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the technological development of the products derived from the biological and genetic
resources.
SEC. 15. Scientific Researches on Wildlife.—Collection and utilization of biologi-
cal resources for scientific research and not for commercial purposes shall be allowed
upon execution of an undertaking/agreement with and issuance of a gratuitous permit
by the Secretary or the authorized representative: Provided, That prior clearance from
concerned bodies shall be secured before the issuance of the gratuitous permit: Pro-
vided, further, That the last paragraph of Section 14 shall likewise apply.
SEC. 16. Biosafety.—All
activities dealing on genetic en-
gineering and pathogenic organ-
isms in the Philippines, as well as
activities requiring the importa-
tion, introduction, field release
and breeding of organisms that are
potentially harmful to man and
the environment shall be reviewed
in accordance with the biosafety
guidelines ensuring public welfare
and the protection and conser-
vation of wildlife and their habi-
tats.
Calauit Island: A. Oposa
SEC. 17. Commercial
Breeding or Propagation of Wildlife Resources.—Breeding or propagation of wildlife for
commercial purposes shall be allowed by the Secretary or the authorized representative
pursuant to Section 6 through the issuance of wildlife farm/culture permit: Provided,
That only progenies of wildlife raised, as well as unproductive parent stock shall be
utilized for trade: Provided, further, That commercial breeding operations for wildlife,
whenever appropriate, shall be subject to an environmental impact study.
SEC. 18. Economically Important Species—The Secretary, within one (1) year
after the effectivity of this Act, shall establish a list of economically-important species.
A population assessment of such species shall be conducted within a reasonable period
and shall be regularly reviewed and updated by the Secretary.
The collection of certain species shall only be allowed when the results of the as-
sessment show that, despite certain extent of collection, the population of such species
can still remain viable and capable of recovering its numbers. For this purpose, the
Secretary shall establish a schedule and volume of allowable harvests.
Whenever an economically important species become threatened, any form of col-
lection shall be prohibited except for scientific, educational or breeding/propagation
purposes, pursuant to the provisions of this Act.

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SEC. 19. Designation of Management and Scientific Authorities for International

Trade in Endangered Species of Wild Fauna and Flora.—For the implementation of the
international agreement on international trade in endangered species of wild fauna and
flora, the management authorities for terrestrial and aquatic resources shall be the
Protected Areas and Wildlife Bureau (PAWB) of the DENR and the Bureau of Fisheries
and Aquatic Resources (BFAR) of the DA, respectively and that in the Province of
Palawan the implementation hereof is vested to the Palawan Council for Sustainable
Development pursuant to Republic Act No. 7611.
To provide advice to the management authorities, there shall be designated scien-
tific authorities for terrestrial and aquatic/marine species. For the terrestrial species, the
scientific authorities shall be the Ecosystems Research and Development Bureau (ERDB)
of the DENR, the U.P. Institute of
Biological Sciences and the
National Museum and other
agencies as may be designated by
the Secretary. For the marine and
aquatic species, the scientific
authorities shall be the FBAR, the
U.P. Marine Science Institute, U.P.
Visayas, Silliman Universtiy and
the National Museum and other
agencies as may be designated by
the Secretary: Provided, That in
the case of terrestrial species, the
ERDB shall chair the scientific
authorities, and in the case of
marine and aquatic species, the
U.P. Marine Science Institute shall
chair the scientific authorities.
SEC. 20. Authority of the
Secretary to Issue Permits.—The
Secretary or the duly authorized
representative, in order to effec-
tively implement this Act, shall
issue permits/certifications/clearan- “Twinkle, twinkle little bat; How I wonder what you’re at!
ces with corresponding period of Up above the world you fly, Like a tea-tray in the sky” —
validity, whenever appropriate, Lewis Carroll
(G. Tapan)
which shall include but not limited
to the following:
1. Wildlife farm or culture permit 3 to 5 years;
2. Wildlife collector’s permit 1 to 3 years;

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 CONSERVATION AND PROTECTION OF WILDLIFE RESOURCES

3. Gratuitous permit 1 year;

4. Local transport permit 1 to 3 months; and
5. Export/Import/Re-export permit 1 to 6 months.
These permits may be renewed subject to the guidelines issued by the appropriate
agency and upon consultation with concerned groups.
SEC. 21. Fees and Charges.—Reasonable fees and charges as may be determined
upon consultation with the concerned groups, and in the amount fixed by the Secretary
shall be imposed for the issuance of permits enumerated in the preceding section.
For the export of wildlife species, and export permit fee of not greater than three
per centum (3%) of the export value, excluding transport costs, shall charged: Provided,
however, That in the determination of aforesaid fee, the production costs shall be given
due consideration. Cutflowers, leaves and the like, produced from farms shall be ex-
empted from the said export fee: Provided, further, That fees and charges shall be re-
viewed by the Secretary every two (2) years or as the need arises and revise the same
accordingly, subject to consultation with concerned sectors.

ARTICLE TWO
Protection of Threatened Species

SEC. 22. Determination of Threatened Species.—The Secretary shall determine

whether any wildlife species or subspecies is threatened, and classify the same as criti-
cally endangered, endangered, vulnerable or other accepted categories based on the best
scientific data and with due regard to internationally accepted criteria, including but
not limited to the following:
a) present or threatened destruction, modification or curtailment of its habitat or
range;
b) over-utilization for commercial, recreational, scientific or educational purposes;
c) inadequacy of existing regulatory mechanisms; and
d) other natural or man-made factors affecting the existence of wildlife.
The Secretary shall review, revise and publish the list of categorized threatened
wildlife within one (1) year after effectivity of this Act. Thereafter, the list shall be up-
dated regularly or as the need arises: Provided, That a species listed as threatened shall
not be removed therefrom within three (3) years following its initial listing.
Upon filing of a petition based on substantial scientific information of any person
seeking for the addition or deletion of a species from the list, the Secretary shall evalu-
ate in accordance with the relevant factors stated in the first paragraph of this section,
the status of the species concerned and act on said petition within a reasonable period.
The Secretary shall also prepare and publish a list of wildlife which resembles so
closely in appearance with listed threatened wildlife, which species shall likewise be
categorized as threatened.

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SEC. 23. Collection of Threatened Wildlife, By-Products and Derivatives.—The

collection of threatened wildlife, as determined and listed pursuant to this Act, includ-
ing its by-products and derivatives, shall be allowed only for scientific, or breeding or
propagation purposes in accordance with Section 6 of this Act: Provided, That only the
accredited individuals, business, research, educational or scientific entities shall be
allowed to collect for conservation breeding or propagation purposes.
SEC. 24. Conservation Breeding or Propagation of Threatened Species.—
Conservation breeding or propagation of threatened species shall be encouraged in
order to enhance its population in its natural habitat. It shall be done simultaneously
with the rehabilitation and/or protection of the habitat where the captive-bred or
propagated species shall be released, reintroduced or restocked.
Commercial breeding or propagation of threatened species may be allowed pro-
vided that the following minimum requirements are met by the applicant, to wit:
e) Proven effective breeding and captive management techniques of the species;
and
f) Commitment to undertake commercial breeding in accordance with Section 17
of this Act, simultaneous with conservation breeding.
The Secretary shall prepare a list of threatened species for commercial breeding
and shall regularly revise or update such list or as the need arises.
SEC. 25. Establishment of Critical Habitats.—Within two (2) years following the
effectivity of this Act, the Secretary shall designate critical habitats outside protected
areas under Republic Act No. 7586, where threatened species are found. Such designa-
tion shall be made on the basis of the best scientific data, taking into consideration
species’ endemicity and/or richness, presence of manmade pressures/threats to the sur-
vival of wildlife living in the area, among others.
All designated critical habitats shall be protected, in coordination with the local
government units and other concerned groups, from any form of exploitation or destruc-
tion which may be detrimental to the survival of the threatened species dependent
therein. For such purpose, the Secretary may acquire, by purchase, donation or expro-
priation, lands, or interests therein, including the acquisition of usufruct, establishment
of easements or other undertakings appropriate in protecting the critical habitat.

ARTICLE THREE
Registration of Threatened and Exotic Species

SEC. 26. Registration of Threatened and Exotic Wildlife in the Possession of Pri-
vate Persons.—No person or entity shall be allowed possession of wildlife unless such
person or entity can prove financial and technical capability and facility to maintain
said wildlife. Twelve (12) months after the effectivity of this Act, the Secretary shall set
a period, within which person/entities shall register all threatened species collected and

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exotic species imported prior to the effectivity of this Act. However, when the threat-
ened species is needed for breeding/propagation or research purposes, the State may
acquire the wildlife through a mutually acceptable arrangement.
After the period set has elapsed, threatened wildlife possessed without certificate
of registration shall be confiscated in favor of the government, subject to the penalties
herein provided.
All Philippine wildlife which are not listed as threatened prior to the effectivity of
this Act but which may later become so, shall likewise be registered during the period
set after the publication of the updated list of threatened species.

Chapter IV
Illegal Acts

SEC. 27. Illegal Acts.—Unless otherwise allowed in accordance with this Act, it
shall be unlawful for any person to
willfully and knowingly exploit wild-
life resources and their habitats, or
undertake the following acts:
a. killing and destroying wild-
life species, except in the following
instances;
(i) when it is done as part
of the religious rituals of
established tribal groups or indi-
genous cultural communities
(ii) when the wildlife is
afflicted with an incurable com-
municable disease;
(iii) when it is deemed
necessary to put an end to the
misery suffered by the wildlife;
(iv) when it is done to
prevent an imminent danger to
the life or limb of a human To protect what is wild is to protect what is gentle. Per-
being; and haps the wildernes we fear is the pause within our own
heartbeats, the silent space that says we live only by
(v) when the wildlife is grace. Wilderness lives by this same grace.—Terry Tem-
killed or destroyed after it has pest Williams
been used in authorized re- (A. Oposa)
search or experiment;
b. inflicting injury which cripples and/or impairs the reproductive system of wild-
life species;

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c. effecting any of the following acts in critical habitat(s):

(i) dumping of waste products detrimental to wildlife;
(ii) squatting or otherwise occupying any portion of the critical habitat;
(iii) mineral exploration and/or extraction;
(iv) burning;
(v) logging; and
(vi) quarrying;
d. introduction, reintroduction or restocking of wildlife resources;
e. trading of wildlife;
f. collecting, hunting or possessing wildlife, their by-products and derivatives;
g. gathering or destroying of active nests, nest trees, host plants and the like;
h. maltreating and/or inflicting other injuries not covered by the preceding para-
graph; and
i. transporting of wildlife.

Chapter V
Fines and Penalties

SEC. 28. Penalties for Violations of this Act.—For any person who undertakes il-
legal acts under paragraph (a) of the immediately preceding section to any species as
may be categorized pursuant to this Act, the following penalties and/or fines shall be
imposed:
a) imprisonment of a minimum of six (6) years and one (1) day to twelve (12)
years and/or fine of One hundred thousand pesos (P 100,000.00) to One million pesos (P
1,000,000.00), if inflicted or undertaken against species listed as critical;
b) imprisonment of four (4) years and one (1) day to six (6) years and/or a fine of
Fifty thousand pesos (P 50,000.00) to Five hundred thousand pesos (P 500,000.00), if
inflicted or undertaken against endangered species;
c) imprisonment of two (2) years and one (1) day to four (4) years and/or a fine of
Thirty thousand pesos (P 30,000.00) to Three hundred thousand pesos (P 300,000.00), if
inflicted or undertaken against vulnerable species;
d) imprisonment of one (1) year and one (1) day to two (2) years and/or a fine of
Twenty thousand pesos (P 20,000.00) to Two hundred thousand pesos (P 200,000.00), if
inflicted or undertaken against other threatened species; and
e) imprisonment of six (6) months and one (1) day to one (1) year and/or a fine of
Ten thousand pesos (P 10,000.00) to One hundred thousand pesos (P 100,000.00), if
inflicted or undertaken against other wildlife species;

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For illegal acts under paragraph (b) of the immediately preceding section, the fol-
lowing penalties and/or fines shall be imposed:
a) imprisonment of a minimum of four (4) years and one (1) day to six (6) years
and/or a fine of Fifty thousand pesos (P 50,000.00) to Five hundred thousand pesos (P
500,000.00), if inflicted or undertaken against species listed as critical:
b) imprisonment of two (2) years and one (1) day to four (4) years and/or a fine of
Thirty thousand pesos (P 30,000.00) to Two hundred thousand pesos (P 200,000.00), if
inflicted or undertaken against endangered species;
c) imprisonment of one (1)
year and one (1) day to two (2) years
and/or a fine of Twenty thousand
pesos (P 20,000.00) to Two hundred
thousand pesos (P 200,000.00), if
inflicted or undertaken against
vulnerable species;
d) imprisonment of six (6)
months and one (1) day to one (1)
year and/or a fine of Ten thousand
pesos (P 10,000.00) to Fifty thousand
pesos (P 50,000.00), if inflicted or
undertaken against other threatened
species; and
e) imprisonment of one (1)
month to six (6) months and/or a fine
of Five thousand pesos (P 5,000.00)
to Twenty thousand pesos
(P20,000.00), if inflicted or under-
taken against other wildlife species;
For illegal acts under para-
graph (c) and (d) of the immediately
A true conservationist is a man who knows that preceding section, an imprisonment
the world is not given by his fathers but borrowed of one (1) month to eight (8) years
from his children.—Audobon and/or a fine of Five thousand pesos
(A. Oposa, Trees) (P 5,000.00) to Five million pesos (P
5,000,000.00) shall be imposed.
For illegal acts under paragraphs (e), the following penalties and/or fines shall be
imposed:
a) imprisonment of two (2) years and one (1) day to four (4) years and/or a fine of
Five thousand pesos (P 5,000.00) to Three hundred thousand pesos (P 300,000.00), if
inflicted or undertaken against species listed as critical;

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b) imprisonment of one (1) year and one (1) day to two (2) years and/or a fine of
Two thousand pesos (P 2,000.00) to Two hundred thousand pesos (P 200,000.00), if
inflicted or undertaken against endangered species;
c) imprisonment of six (6) months and one (1) day to one (1) year and/or a fine of
One thousand pesos (P 1,000.00) to One hundred thousand pesos (P 100,000.00), if in-
flicted or undertaken against vulnerable species;
d) imprisonment of one (1) month and one (1) day to six (6) months and/or a fine
of Five hundred pesos (P 500.00) to Fifty thousand pesos (P 50,000.00), if inflicted or
undertaken against species listed as other threatened species; and
e) imprisonment of ten (10) days to one (1) month and/or a fine of Two hundred
pesos (P 200.00) to Twenty thousand pesos (P 20,000.00), if inflicted or undertaken
against other wildlife species;
For illegal acts under paragraph (f) and (g) of the immediately preceding section,
the following penalties and/or fines shall be imposed:
a) imprisonment of two (2) years and one (1) day to four (4) years and a fine of
Thirty thousand pesos (P 30,000.00) to Three hundred thousand pesos (P 300,000.00), if
inflicted or undertaken against species listed as critical species;
b) imprisonment of one (1) year and one (1) day to two (2) years and a fine of
Twenty thousand pesos (P 20,000.00) to Two hundred thousand pesos (P 200,000.00), if
inflicted or undertaken against endangered species;
c) imprisonment of six (6) months and one (1) day to one (1) year and a fine of
Ten thousand pesos (P 10,000.00) to One hundred thousand pesos (P 100,000.00), if
inflicted or undertaken against vulnerable species;
d) imprisonment of one (1) month and one (1) day to six (6) months and a fine of
Five thousand pesos (P 5,000.00) to Fifty thousand pesos (P 50,000.00), if inflicted or
undertaken against species listed as other threatened species; and
e) imprisonment of ten (10) days to one (1) month and a fine of One thousand pe-
sos (P 1,000.00) to Five thousand pesos (P 5,000.00), if inflicted or undertaken against
other wildlife species: Provided, that in case of paragraph (f), where the acts were per-
petuated through the means of inappropriate techniques and devices, the maximum
penalty herein provided shall be imposed.
For illegal acts under paragraphs (h) and (i) of the immediately preceding section,
the following penalties and/or fines shall be imposed:
a) imprisonment of six (6) months and one (1) day to one (1) year and a fine of
Fifty thousand pesos (P 50,000.00) to One hundred thousand pesos (P 100,000.00), if
inflicted or undertaken against species listed as critical species;
b) imprisonment of three (3) months and one (1) day to six (6) months and a fine
of Twenty thousand pesos (P 20,000.00) to Fifty thousand pesos (P 50,000.00), if in-
flicted or undertaken against endangered species;

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c) imprisonment of one (1) month and one (1) day to three (3) months and a fine
of Five thousand pesos (P 5,000.00) to Twenty thousand pesos (P 20,000.00), if inflicted
or undertaken against vulnerable species;
d) imprisonment of ten (10) days to one (1) month and a fine of One thousand pe-
sos (P 1,000.00) to Five thousand pesos (P 5,000.00), if inflicted or undertaken against
species listed as other threatened species;
e) imprisonment of five (5) days to ten (10) days and a fine of Two hundred pesos
(P 200.00) to One thousand pesos (P1,000.00), if inflicted or undertaken against other
wildlife species.
All wildlife, its derivatives or by-products, and all paraphernalia, tools and con-
veyances used in connection with violations of this Act, shall be ipso facto forfeited in
favor of the government: Provided, That where the ownership of the aforesaid convey-
ances belongs to a third person who has no participation in or knowledge of the illegal
acts, the same may be released to said owner. The apprehending agency shall immedi-
ately cause the transfer of all wildlife that have been seized or recovered to the nearest
Wildlife Rescue Center of the Department in the area.
If the offender is an alien, he shall be deported after service of sentence and pay-
ment of fines, without any further proceedings.
The fines herein prescribed shall be increased by at least ten percent (10%) every
three (3) years to compensate for inflation and to maintain the deterrent function of
such times.
Chapter VI
Miscellaneous Provisions

SEC. 29. Wildlife Management Fund.—There is hereby established a Wildlife

Management Fund to be administered by the Department as a special account in the
National Treasury. It shall finance rehabilitation or restoration of habitats affected by
acts committed in violation of this Act and support scientific research, enforcement and
monitoring activities, as well as enhancement of capabilities of relevant agencies.
The fund shall derive from fines imposed and damages awarded, fees, charges, do-
nations, endowments, administrative fees or grants in the form of contributions. Con-
tributions to the Fund shall be exempted from donor taxes and all other taxes, charges
or fees imposed by the government.
SEC. 30. Deputation of Wildlife Enforcement Officers.—The Secretary shall
deputize wildlife enforcement officers from non-government organizations, citizens
groups, community organizations and other volunteers who have undergone the neces-
sary training for this purpose. The Philippine National Police (PNP), the Armed Forces
of the Philippines (AFP), the National Bureau of Investigation (NBI), and other law
enforcement agencies shall designate wildlife enforcement officers. As such, the wildlife
enforcement officers shall have the full authority to seize illegally traded wildlife and to
arrest violators of this Act subject to existing laws, rules and regulations on arrest and
detention.

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SEC. 31. Establishment of National Wildlife Research Centers.—The Secretary

shall establish national wildlife research centers for terrestrial and aquatic species to
lead in the conduct of scientific researchers on the proper strategies for the conservation
and protection of wildlife, including captive breeding or propagation. In this regard, the
Secretary shall encourage the participation of experts from academic/research institu-
tions and wildlife industry.
SEC. 32. Wildlife Rescue Center.—The Secretary shall establish designate wild-
life rescue centers to take temporary custody and care of all confiscated, abandoned
and/or donated wildlife to ensure their welfare and well-being. The Secretary shall
formulate guidelines for the disposition of wildlife from the rescue centers.
SEC. 33. Creation of Wildlife Traffic Monitoring Units.—The Secretary shall
create wildlife traffic monitoring units in strategic air and seaports all over the country
to ensure the strict compliance and effective implementation of all existing wildlife
laws, rules and regulations, including pertinent international agreements.
Customs officers and/or other authorized government representatives assigned at
air or seaports who may have intercepted wildlife commodities in the discharge of their
official functions shall, prior to further disposition thereof, secure a clearance from the
wildlife traffic monitoring unit assigned in the area.
SEC. 34. Exemption from Taxes.—Any donation, contribution, bequest, subsidy
of financial aid which may be made to the Department of Environment and Natural
Resources or to the Department of Agriculture and to NGOs engaged in wildlife conser-
vation duly registered with the Securities and Exchange Commission as certified by the
local government unit, the Department of Environment and Natural Resources or the
Department of Agriculture, for the conservation and protection of wildlife resources and
their habitats shall constitute as an allowable deduction from the taxable income of the
donor and shall be exempt from donor’s tax.
SEC. 35. Flagship Species.—Local government units shall initiate conservation
measures for endemic species in their areas. For this purpose, they may adopt flagship
species such as the Cebu black shama (Copsychus cebuensis), tamaraw (Bubalus min-
dorensis), Philippine tarsier (Tarsius syrichta), Philippine teak (Tectona philippinensis),
which shall serve as emblems of conservation for the local government concerned.
SEC. 36. Botanical Gardens, Zoological Parks and Other Similar Establish-
ments.—The Secretary shall regulate the establishment, operation and maintenance of
botanical gardens, zoological parks and other similar establishments for recreation,
education and conservation.
SEC. 37. Implementing Rules and Regulations.—Within twelve (12) months fol-
lowing the effectivity of this Act, the secretaries of the Department of Environment and
Natural Resources, and the Department of Agriculture, in coordination with the Com-
mittees on Environment and Ecology of the Senate and the House of Representative,
respectively, shall promulgate respective rules and regulations for the effective imple-
mentation of this Act.

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Whenever appropriate, coordination in the preparation and implementation of

rules and regulations on joint and inseparable issues shall be done by both Depart-
ments. The commitments of the State to international agreements and protocols shall
likewise be a consideration in the implementation of this Act.
SEC. 38. Appropriations.—The amount necessary to initially implement the pro-
visions of this Act shall be charged against the appropriations of the Department of
Environment and Natural Resources in the current General Appropriations Act. There-
after, such sums as may be necessary to fully implement the provisions of this Act shall
be included in the annual General Appropriations Act.
SEC. 39. Separability Clause.—Should any provision of this Act be subsequently
declared as unconstitutional, the same shall not affect the validity or the legality of the
other provisions.
SEC. 40. Repealing Clause.—
Act Nos. 2590 and 3983,
Commonwealth Act No. 63, as
amended, Presidential Decree No.
1219, as amended, Republic Act No.
6147, and other laws, orders and
regulations inconsistent herewith
are hereby repealed or amended
accordingly.
SEC. 41. Effectivity.—This Act
shall take effect fifteen (15) days
after publication in the Official
Gazette or two (2) newspapers of
general circulation.
Approved: July 30, 2001.

The (forests) hold answers to more

questions than we yet know how to ask.—Nancy Newhall
(N. Oshima)

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Protection of the Philippine Eagle (Republic Act 6147)

SECTION 1. It is hereby declared that the Pithecophaga jefferyi, commonly
known as the monkey-eating eagle, shall be a protected bird in the Philippines.
SEC. 2. To ensure the
proper conservation, preser-
vation, and management of
the monkey-eating eagle, the
killing, hunting, wounding, or
taking away of the same
and/or destroying, disturbing,
or taking away of the nests or
eggs of such a bird, in contra-
vention of the rules and regu-
lations promulgated by the
Secretary of Environment
61
and Natural Resources, is
hereby prohibited and made
subject to the penal provi-
sions in Section 5 hereon.
The Secretary of Envi-
ronment and Natural Resour-
ces shall promulgate rules
and regulations for the imple-
mentation of this Act within
ninety (90) days from and
after the effectivity thereof. “The Harpy Eagle maybe the largest in terms of bulk or weight, but
In preparation of said rules the Philippine Eagle is the largest in terms of wingspan and height.”
— Dr. Robert Kennedy of the Harvard Museum of Natural
and regulations, the Secre- History
tary of Environment and (Alejo P. Manaloto, Haribon Foundation)
Natural Resources shall seek
the recommendation of the Director of Parks and Wildlife and the Philippine Wildlife
Conservation Foundation.
SEC. 3. The Director of Parks and Wildlife shall establish sanctuaries as are nec-
essary to preserve this threatened species. For this purpose, the Director of Parks and
Wildlife may seek the assistance of the National Science Development Board including
private associations or foundations, such as the Philippine Wildlife Conservation Founda-
tion, the World Wildlife Fund, and the International Union for the Conservation of Na-
ture and Natural Resources, for such support, financial grant, or technical cooperation
_______________________
61
All reference to the Department or Secretary of Agriculture and Natural Resources should
now read as Department of Secretary of Environment and Natural Resources pursuant to E.O.
No. 192 (1987).

214
 PROTECTION OF WILD FLOWERS

arrangements, as may be necessary or requisite to carry out and effectively implement

the provisions of this Act.
SEC. 4. For the expenses in the establishment and maintenance of the sanctuar-
ies, the conduct of studies on the natural habitat, food requirements, predatory-prey
control measure and other ecological factors most conducive to the conservation and
management of the monkey-eating eagle and other requirements for the implementa-
tion of this Act, there is hereby authorized to be appropriated out of any funds in the
National Treasury not otherwise appropriated, the sum of One Hundred Thousand
Pesos (P100,000.00) for the first year after the approval of this Act and subsequent
appropriations shall be included in the General Appropriations Act.
SEC. 5. Any person violating any provision of this Act shall be punished by a
penalty of prision correccional or by a fine of not less than Six Hundred Pesos (P600.00),
nor more than One Thousand Pesos (P1,000.00), or by both such imprisonment and fine
at the discretion of the Court. In case of any subsequent offense, the court shall impose
both the imprisonment and the fine. In case of insolvency, the corresponding subsidiary
imprisonment shall be suffered.
SEC. 6. All Acts, part of Acts, orders, rules and regulations inconsistent with the
provisions of this Act are hereby repealed.
SEC. 7. This Act shall take
effect upon its approval.
Approved: November 9, 1970.
Protection of Wild Flowers
62
(Republic Act 3983)
SECTION 1. Except as provi-
ded in this Act, it shall be unlawful
for any person in the Philippine
Islands to take, collect, kill, mutilate,
or have in his or her possession,
living or dead, or to purchase, offer
or expose for sale, transport, ship, or
export, alive or dead, any protected
flowering plant, fern, orchid, lycopod
or club moss or other wild plants in
the Philippines.
SEC. 2. It shall be the duty of “Weeds are flowers too, once you get to know them.”— A.
the Secretary of Environment and A. Milne Eeyore from Winnie the Pooh
Natural Resources to issue and (A. Oposa, Flowers in Pulo)
promulgate regulations which shall
_______________________
62
The Philippines is a party to the Convention of International Trade and Endan-
gered Species (CITES).

215
LAND

specify from time to time the classes or species of the rare and flowering plants, includ-
ing orchids, ferns, lycopods or club mosses (known in some localities as buntot pusa or
palawit), which shall be protected under this Act; and to issue such other regulations as
may be necessary prescribing the conditions governing the collection, alive or dead,
possession, destruction, killing, transportation, sale or exposure for sale or export, alive
or dead, of any of the Protected Wild Plants in the Philippines.
SEC. 3. The rules so promulgated shall also specify the bureau or office of the
Department of Environment and Natural Resources, to which the duty of carrying out
the purposes of this Act may be delegated by the Department Head; shall fix the fees for
the collection of individual species or group of species of protected wild plants; and may
be made applicable to the whole Philippine Islands or any specified locality or localities
and may be continued in force indefinitely or for a given number of years or for any
specific portion or portions of each successive year.
SEC. 4. The Secretary of Environment and Natural Resources is hereby empow-
ered to issue licenses for the collection, possession, transportation, sale, or export of
such protected wild plants as should be collected only by licensed collectors, upon pay-
ment of the fees to be fixed in accordance with this Act. Such licenses shall specify the
number and kind of plants which may be collected, and the conditions under which they
may be kept or disposed of. The Secretary of Environment and Natural Resources may
issue a special permit for the possession of very rate specimens.
SEC. 5. A permit may be granted by the Secretary of Environment and Natural
Resources free of charge to any person of good repute of legal age, permitting the holder
to collect specimens of protected wild plants for scientific or educational purposes. Such
permits shall be in force for a period of one year only and shall be subject to such condi-
tions as the Secretary of Environment and Natural Resources may deem wise to impose
for the proper carrying out of the purposes of this Act. Upon proof that the holder of
such permit has taken, killed, or destroyed any protected wild plant in whole or in part
for other than a scientific or educational purpose, he shall be subject to the same pen-
alty as if he had no permit.
SEC. 6. No license or permit shall be granted under the provisions of this Act
except to citizens of the Philippine Islands or of the United States, or to associations or
corporations that are duty registered or incorporated under the laws of the Philippine
Islands or of the United States or of any state thereof and authorized to transact busi-
ness in the Philippine Islands and sixty-one percent of whose capital stock or interest in
said capital stock is owned wholly by citizens of the Philippine Islands or of the United
States, or to citizens of countries the laws of which allow similar rights to citizens of the
Philippine Islands.
SEC. 7. The making of any false statement upon the application blank for a col-
lecting license or permit shall subject the offender both to the forfeiture of his license or
permit and to the other penalties hereinafter provided.
SEC. 8. The taking, collection, destruction, or mutilation of orchids, ferns, and
lycopods or club mosses and such other plants as may be designated by the Secretary of

216
 PROTECTION OF WILD FLOWERS

Environment and Natural Resources is prohibited within a distance of one hundred

meters from any public highway or trail; Provided, however, That this prohibition shall
not apply to the owner of land on which such plants may be found or the duly author-
ized agent of the owner.
SEC. 9. Members of the Phi-
lippine Constabulary; members of
municipal and municipal district po-
lice, and such foresters, rangers, and
forest guards of the Bureau of Fores-
try; botanists, geologists, and field
chemists of the Bureau of Science;
public lands inspectors, special
attorneys and surveyors of the Bu-
reau of Lands; agronomists and plant
inspectors of the Bureau of Plant
Industry; and other competent per-
sons as may be designated in writing
by the Secretary of Environment and
Natural Resources, are hereby made
deputy wardens of protected wild
plants and are hereby given full aut-
hority and directed to enforce the
provisions of this Act and the regu-
lations promulgated thereunder and
to arrest offenders against the same.
SEC. 10. Any person, associa-
tion, or corporation violating this Act
or any order or regulation deriving
force from its provisions shall be
punished for each offense by a fine of
not less than Ten Pesos (P10.00) nor “I am the Lorax, I speak for the trees, for the trees
more than Two Hundred Pesos have no tongues.” — Dr. Suess
(P200), or by imprisonment, in the (G. Tapan)
discretion of the court; Provided,
That in the case of an association or corporation, the president or manager shall be di-
rectly responsible for the acts of his employees or laborers if it is proven that the latter
acted with his knowledge; otherwise the responsibility shall extend only as far as fine is
concerned; Provided, further, That all plants gathered or collected in violation of this Act
shall be forfeited to the government.
SEC. 11. This Act shall take effect on its approval.
Approved, December 3, 1932.

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Prospecting of Biological and Genetic Resources

(Executive Order No. 247)

WHEREAS, Section 16, Article II of the Philippine Constitution, vests in the State
the ultimate responsibility to preserve and protect the environment; and Section 2,
Article XII provides that
wildlife, flora and fauna,
among others, are owned by
the State and the disposi-
tion, development, and utili-
zation thereof are under its
full control and supervision;
WHEREAS, it is in the
interest of the State’s con-
servation efforts to ensure
that the research, collection,
and use of species, genes, and
their products be regulated;
and to identify and recognize
the rights of indigenous cul-
tural communities and other
Philippine communities to
their traditional knowledge
and practices when this infor-
mation is directly and indi-
rectly put to commercial use;
WHEREAS, under Arti-
cle XVI of the Convention on
Biological Diversity of which “The human spirit needs places where nature has not been
the Philippines is a party, rearranged by the hand of man.”— Author Unknown
each contracting party is
(Digital Vision)
mandated to take legislative,
administrative, or policy measures, as appropriate, with the aim that contracting parties,
in particular those that are developing countries, which provide genetic resources are
provided access to and transfer of technology which makes use of those resources, on
mutually agreed terms, including technology protected by patents and other intellectual
property rights;
WHEREAS, the Department on Environment and Natural Resources (DENR) is
the primary government agency responsible for the conservation, management, devel-
opment, and sustainable use of the country’s environment and natural resources; the
Department of Science and Technology (DOST), the primary agency mandated to pro-

218
 PROSPECTING OF BIOLOGICAL AND GENETIC RESOURCES

mote local capability in science and technology to achieve technological self-reliance in

selected areas vital to national development; the Department of Agriculture (DA), the
agency responsible for the promotion of sustainable agriculture and aquatic resource
development; the Department of Health (DOH), the agency responsible for the formula-
tion, planning, implementation, and coordination of policies and programs in the field of
health, including the research, regulation, and development of drugs and medicine; the
Department of Foreign Affairs (DFA), the agency responsible for promoting interna-
tional relations;
WHEREAS, an inter-agency approach is the most appropriate way of regulating
the research, collection, exploitation, and use of biological and genetic resources;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philip-
pines, by virtue of the powers vested in me by Law and the Constitution, do hereby order:
SECTION 1. Policy of the State.—It shall be the policy of the State to regulate
the prospecting of biological and genetic resources so that these resources are protected
and conserved, are developed and put to the sustainable use and benefit of the national
interest. Further, it shall promote the development of local capability in science and
technology to achieve technological self-reliance in selected areas.
SEC. 2. Consent of Indigenous Cultural Communities—
a. Prospecting of biological and genetic resources shall be allowed within the an-
cestral lands and domains of indigenous cultural communities only with the prior in-
formed consent of such communities; obtained in accordance with the customary laws of
the concerned community.
b. Prospecting of biological and genetic resources shall be allowed only with the
prior informed consent of the concerned local communities.
SEC. 3. When Research Agreement Is Necessary—The prospecting of biological
and genetic resources shall be allowed when the person, entity, or corporation, foreign
or domestic, undertaking such activities, on recommendation of the Inter-Agency Com-
mittee on Biological and Genetic Resources, has entered into a Research Agreement
with the Philippine government, represented by the DENR, DOH, DA, or DOST, de-
pending on the nature and character of the prospecting activity. For purposes of this
Executive Order, traditional uses of biological resources by indigenous and local com-
munities shall not require a Research Agreement.
If the research and collection of biological and genetic resources is intended, di-
rectly or indirectly, for commercial purposes, the agreement must be a Commercial
Research Agreement. For purposes of this Executive Order, all Research Agreements
with private persons and corporations, including all agreements with foreign or interna-
tional entities, shall conform with the minimum requirements of a Commercial Re-
search Agreement.
If the prospecting of biological and genetic materials is intended primarily for aca-
demic purposes, the agreement shall be an Academic Research Agreement. Only duly-

219
LAND

recognized Philippine universities and academic institutions, domestic governmental

entities, and intergovernmental entities may apply for an Academic Research Agree-
ment.
Where the Commercial or Academic Collector is merely an agent or merely collect-
ing for another person or entity, the agreement between the Commercial Collector and
the Principal must be reviewed by the Inter-Agency Body to determine the latter
agreement does not undermine the substantive requirements of this Executive Order.
SEC. 4. Application for Academic Research Agreement and Commercial Research
Agreement.—The applicant shall first submit an application for a Research Agreement to
the Inter-Agency Committee
on Biological and Genetic
Resources through the Pro-
tected Areas and Wildlife
Bureau (PAWB). It must
include a research proposal
stating the purpose, source
of funds, duration, and a list
of biological and genetic
materials and the amount to
be taken. The requisites for
research agreements are in
Appendix B.
For Academic Research
Agreements, the proposal
may be broader and more
general in character as
provided in Section 5 (m).
A copy of the proposal
must be submitted to the
recognized head of the local
Flow, flow, flow, the current of life is ever onward.—
or indigenous cultural com- Kobodashi
munity or communities that (A. Oposa)
may be affected. Action on
the proposal shall be made only after 60 days has lapsed after a copy of the proposal is
received by the persons concerned.
SEC. 5. Minimum Terms of the Commercial Research Agreement and Academic
Research Agreement.—The Minimum Terms of the Commercial Research Agreement
and Academic Research Agreement are as follows:
a. There must be a limit on samples that the Commercial/Academic Collector
may obtain and export and that the approved list and amount of the samples taken
from the area must be followed strictly;

220
 PROSPECTING OF BIOLOGICAL AND GENETIC RESOURCES

b. A complete set of all specimens collected shall be deposited by the Commer-

cial/Academic Collector with the National Museum or a duly designated governmental
entity; Provided, That holotypes designated by the author must be maintained at the
National Museum;
c. Access to collected specimens and relevant data shall be allowed to all Filipino
citizens and the Philippine governmental entities whenever these specimens are depos-
ited in depositories abroad;
d. The Commercial/Academic Collector, or in appropriate cases, its Principal,
must inform the Philippine government, as well as the affected local and indigenous
cultural communities all discoveries from the activity conducted in the Philippines, if a
commercial product is derived from such activity;
e. The agreement shall include a provision for the payment of royalties to the na-
tional government, local or indigenous cultural community an individual person or
designated beneficiary in case commercial use is derived from the biological and genetic
resources taken. Where appropriate and applicable, other forms of compensation may
be negotiated:
f. There shall be a provision allowing the Philippine government to unilaterally
terminate the agreement whenever the Commercial/Academic Collector has violated
any of its terms. The Agreement may also be revoked on the basis of public interest and
welfare;
g. A status report of the research and the ecological state of the area and/or species
concerned shall be submitted to the Inter-Agency Committee regularly as agreed upon;
h. If the Commercial Collector or its Principal is a foreign person or entity, it
must be stipulated that scientists who are citizens of the Philippines must be actively
involved in the research and collection process and, where applicable and appropriate
as determined by the Inter-Agency Committee, This involvement shall be at the cost of
the Commercial Collector;
i. The Commercial Collector and/or its Principal shall be encouraged to avail of
the services of Philippine universities and academic institutions. Where applicable and
appropriate, the Commercial Collector and/or its Principal shall be required to transfer
equipment to a Philippine institution or entity;
j. A fixed fee must be paid to the DENR in accordance with a schedule of fees for-
mulated by the Inter-Agency Committee;
k. The maximum term for a Commercial Research Agreement shall be for three
years and renewable upon review by the Inter-Agency Committee; and
l. In case of endemic species, there must be a statement that the technology must
be made available to a designated Philippine institution and can be used commercially
and locally without paying royalty to a Collector or Principal. Provided, however, That
where appropriate and applicable, other agreements may be negotiated. Provided, fur-
ther, that the following terms shall be considered in an Academic Research Agreement:

221
LAND

m. The Academic Research Agreement may be comprehensive in scope and cover

as may areas as may be projected. It may stipulate that all scientists and researchers
affiliated with a duly-recognized university, academic institution, governmental and
intergovernmental entity need not apply for a different Research Agreement but may
conduct research and collection activities in accordance with an existing Academic Re-
search Agreement. In such cases, the university, academic institution and governmen-
tal entity shall ensure that all the terms and conditions of the government are complied
with by the affiliated scientist or researcher. In all cases, the university institution or
governmental entity must ensure that affected communities have given their prior
informed consent to the activities to be undertaken;
n. There must be a provision requiring the Academic Collector to apply for a com-
mercial research agreement when it becomes clear that the research and collection
being done has commercial prospects;
o. A minimal fee must be paid to the Philippine government in accordance with a
schedule of fees by the Inter-Agency Committee; and
p. The maximum term for an Academic Research Agreement shall be for five
years and renewable upon review by the Inter-Agency Committee.
SEC. 6. Composition and Functions of the Inter-Agency Committee on Biological
and Genetic Resources.—An Inter-Agency Committee on Biological and Genetic Re-
sources attached to the DENR is hereby created as the regulatory body to ensure that
the provisions of this Executive Order are enforced and implemented. The Inter-Agency
Committee shall be composed of the following:
1. An Undersecretary of the Department of Environment and Natural Resources
designated by the DENR Secretary who shall be the Chairperson of the Committee.
2. An Undersecretary of the Department of Science and Technology (DOST) des-
ignated by the DOST Secretary who shall be co-chairperson of the Committee.
3. A permanent representative of the Secretary of the Department of Agriculture,
who must be knowledgeable about biodiversity or biotechnology.
4. Two permanent representatives of the Philippine science community from the
academe and who must be experts in any of the following fields: biodiversity, biotechnol-
ogy, genetics, natural products chemistry or similar disciplines, shall be appointed by the
DOST Secretary after nominations from and consultations with the science community.
5. A permanent representative of the Secretary of the Department of Health who
must be knowledgeable about pharmaceutical research and development.
6. A permanent representative of the Department of Foreign Affairs who has to
facilitate international linkage relative to bioprospecting.
7. A permanent representative of the National Museum who has expertise on
natural history and/or biological diversity.
8. A representative from a non-government organization (NGO) active in biodi-
versity protection to be selected by the NGO community through a process designed by
themselves and later endorsed by the Philippine Council of Sustainable Development.

222
 PROSPECTING OF BIOLOGICAL AND GENETIC RESOURCES

9. A representative from a People’s Organization (PO) with membership consist-

ing of indigenous cultural communities and/or their organizations to be selected by the
PO community through a process designed by themselves and through the endorsement
of the Philippine Council for Sustainable Development.
All members of the Inter-Agency Committee shall serve for a period of three years
which may be renewed for another three years. In case of death, resignation, removal or
other circumstance which requires the replacement of a member, said member may be
succeeded by another person with the same qualifications and appointed in a similar
process. The replacement shall serve the unexpired term of the member replaced.
A Technical Secretariat, to be headed by the PAWB, shall be created to support
the work of the Inter-Agency Committee. The Technical Secretariat shall be staffed
with personnel from the PAWB and other agencies who shall be designated by the me-
mbers of the Inter-Agency Committee.
SEC. 7. Powers and Functions of the Inter-Agency Committee.—The Inter-
Agency Committee shall meet at least once every quarter and shall have the following
functions:
a. Process applications for Research Agreements and recommend for approval
thereof to the Secretary of DENR, DOH, DA, or DOST depending on the nature and
character of the prospecting activity;
b. Ensure that the conditions for the Research Agreements are strictly observed;
c. Determine the list and amount of biological and genetic materials that may be
taken from the area and ensure that these are complied with;
d. Deputize and train appropriate agencies so as to ensure that no biological and
genetic materials are taken from the Philippines and exported abroad except under a
valid Research Agreement. It shall also be ensured that the specimens collected have
been deposited in the Philippines;
e. Ensure that the rights of the indigenous and local communities wherein the
collection or researches are being conducted are protected, including the verification
that the consent requirements in Sections 3 and 4 are complied with. The Inter-Agency
Committee, after consultations with the affected sectors, shall formulate and issue
guidelines implementing the provision on prior informed consent;
f. Study and recommend to the President and the Congress appropriate laws on
the utilization of biological and genetic resources including new laws on intellectual
property rights;
g. Involve local scientists in the decision making process by creating a Multi-
Disciplinary Advisory Body and other entities as may facilitate local involvement in the
research, collection and utilization of biological and genetic resources;
h. Develop a conceptual framework, using the research agreements entered into
as well as other data as basis, for significantly increasing knowledge of Philippine bio-
diversity. The Inter-Agency Committee shall establish mechanisms to ensure the inte-

223
LAND

gration and dissemination of the information generated from research, collection and
utilization activities;
i. Coordinate with the National Committee on Biosafety when necessary or ap-
propriate;
j. Issue rules and regulations to effectively carry out the provisions of this Execu-
tive Order; and
k. Perform such other func-
tions as may be necessary to im-
plement this Executive Order.
All decisions of the Inter-
Agency Committee must be by a
majority of all its members.
SEC. 8. Monitoring Imple-
mentation of the Research Agree- “There is a tragic clash between Truth and the
ment.—The Protected Areas and world. Pure undistorted truth burns up the world.” --
Wildlife Bureau (PAWB) of the Nikolai Berdyaev
DENR shall be the lead agency in
monitoring the implementation of
the research agreement. The re-
gional offices of the DENR shall
also participate in the monitoring.
SEC. 9. Appeals.—Decisions
of the Secretary (DENR, DA, DOH,
or DOST) may be appealed to the
Office of the President. Recourse to
the courts shall be allowed after It is not so much for its beauty that the forest makes
exhaustion of all administrative a claim upon men’s hearts, as for that subtle some-
remedies. thing, that quality of air that emanation from old
SEC. 10. Sanctions and Pe- trees, that so wonderfully changes and renews a
nalties.—Undertaking activities in weary spirit.—Robert Louis Stevenson
violation of this Executive Order (A. Oposa, Bugsuk Island)
shall be subjected to such criminal
penalties as may be proper under existing laws including the National Integrated Pro-
tected Areas System Act of 1992 and the Revised Forestry Code. Failure to comply with
the provisions of the Research Agreements entered into under Sections 3, 4, and 5 shall
be a valid cause of immediate termination of the Agreement and the imposition of a
perpetual ban on undertaking prospecting of biological and genetic resources in the
Philippines.
SEC. 11. Existing Researches, Contracts Agreements.—All existing research pro-
jects, where allowed under existing law, may proceed pending the negotiation and entry
into force of appropriate research agreement. All valid and existing contracts and
agreements entered into by the PAWB, the National Museum or other governmental

224
 TREE PLANTING

entities shall remain valid and effective; Provided, That the parties shall be required to
enter into a new agreement conforming to this Executive Order.
SEC. 12. Official Depository.—The official depository of all original and official
documents such as agreements and minutes of the meeting is the PAWB.
SEC. 13. Funding.—The activities
of the Inter-Agency Committee on Biologi-
cal and Genetic resources shall be funded
in accordance with law. Such funding,
where allowed by law, may include savings
coming from the appropriate and con-
cerned Departments and proceeds from the
fees imposed on the Research Agreements.
SEC. 14. Effectivity.—This Execu-
tive Order and rules and regulations take
effect immediately upon publication in two
newspapers of general circulation and
upon filing of three certified copies with
the U. P. Law Center.
SEC. 15. Implementing Rules and
Regulations.—The implementing rules and
regulations shall be formulated by the In-
ter-Agency Committee and signed by the
Secretary of DENR not later than three
“Trees give peace to the souls of men.”—Nora months after the effectivity of the Executive
Waln Correspondent 1895-1964
Order.
(A. Oposa)
Done in the City of Manila, on this
18th day of May, 1995.

Tree Planting
Requiring the Planting of Trees in Certain Places
(Presidential Decree No. 953)
Whereas, the planting of trees on lands adjoining the edge of rivers and creeks is
both a measure of beautification and reforestation; and
Whereas, the planting of trees along roads and areas intended for the common use
of owners of lots in subdivisions will provide shade and healthful environment therein;
Now, Therefore, I, Ferdinand E. Marcos, President of the Philippines, by virtue of
the powers vested in me by the Constitution, do hereby order and decree:
SECTION 1. The following shall plant trees:
1. Every person who owns land adjoining a river or creek shall plant trees ex-
tending at least five meters on his land adjoining the edge of the bank of the river or

225
LAND

creek, except when such land, due to its permanent improvement, cannot be planted
with trees;
2. Every owner of an existing subdivision shall plant trees in the open spaces re-
quired to be reserved for the common use and enjoyment of the owners of the lots
therein as well as along all roads and service streets. The subdivision owner shall con-
sult the Bureau of Forest Development as to the appropriate species of trees to be
planted and the manner of planting them; and
3. Every holder of a license agreement, lease, license or permit from the govern-
ment involving occupation and utilization of forest or grazing land with a river or creek
therein, shall plant trees extending at least twenty (20) meters from each edge of the
bank of the river or creek.
The persons hereinabove required to plant trees shall take good care of them, and,
from time to time, remove any tree planted by them in their respective areas which has
grown very old, is diseased, or is defective, and replant with trees their respective areas
whenever necessary.
SEC. 2. Every owner of land subdivided into residential/commercial/industrial
lots after the effectivity of this Decree shall reserve, develop, and maintain not less than
thirty percent (30%) of the total area of the subdivision, exclusive of roads, service
63
streets and alleys, as open space for parks and recreational areas.
No plan for a subdivision shall be approved by the Land Registration Commission
or any office or agency of the government unless at least thirty percent (30%) of the
total area of the subdivision, exclusive of roads, service streets and alleys, is reserved as
open space for parks and recreational areas and the owner thereof undertakes to de-
velop such open space, within three (3) years from the approval of the subdivision plan,
in accordance with the development plan approved by the Bureau of Forest Develop-
ment and to maintain such parks and recreational areas.
SEC. 3. Any person who cuts, destroys, damages, or injures naturally growing or
planted trees of any kind, flowering or ornamental plants and shrubs, or plants of sce-
nic, aesthetic, and ecological values, along public roads, in plazas, parks other than
national parks, school premises or in any other public ground or place, or on banks of
rivers or creeks, or along roads in land subdivisions or areas therein for the common use
of the owners of lots therein, or any species of vegetation or forest cover found therein
shall, be punished with imprisonment for not less than six months and not more than
two years, or a fine of not less than Five Hundred Pesos (P500.00) and not more than
Five Thousand Pesos (P5,000.00), or with both such imprisonment and fine at the dis-
cretion of the court, except when the cutting, destroying, damaging or injuring is neces-
sary for public safety or the pruning thereof is necessary to enhance beauty, and only
upon the approval of the duly authorized representative of the head of agency or politi-
cal subdivision having jurisdiction therein, or of the Director of Forest Development in
the case of trees on banks of rivers and creeks, or of the owner of the land subdivision in
_______________________
63
The open space requirement has been modified by B.P. Blg. 220.

226
 TREE PLANTING

the case of trees along roads and in other areas therein for the common use of owners of
lots therein. If the offender is a corporation, partnership or association, the penalty
shall be imposed upon the officer or officers thereof responsible for the offense, and if
such officer or officers are aliens, in addition to the penalty herein prescribed, he or they
shall be deported without further
proceedings before the Commission
on Immigration and Deportation.
Nothing in this Decree shall prevent
the cancellation of a license agree-
ment, lease, license or permit from
the government, if such cancellation
is prescribed therein or in govern-
ment regulations for such offense.
SEC. 4. Any person who
shall violate any provision of Section
1 hereof, or any regulation promul-
gated thereunder, shall be punished
with imprisonment for not less than
six months but not more than two
years, or with a fine of not less than
Five Hundred Pesos (P500.00) but
not more than Five Thousand Pesos
(P5,000.00), or with both such im-
prisonment and fine at the discre-
tion of the court. If the offender is a
public officer or employee, he shall,
in addition, be dismissed from the
public service and disqualified per- “A tree is the climax species of the plant kingdom
petually to hold public office. as man is the climax species of the animal king-
SEC. 5. Any person who shall dom.—Anonymous
violate the provision of Section 2 (A. Oposa)
hereof, or any regulation promulga-
ted thereunder, shall be punished with imprisonment for not less than two (2) years but
not more than five (5) years, or with a fine equivalent to the value, at current valuation, of
the area representing thirty percent (30%) of the total area of the subdivision, or both
such fine and imprisonment at the discretion of the Court.
SEC. 6. The Director of Forest Development shall issue such rules and regula-
tions as may be necessary to carry out the purposes of this Decree.
SEC. 7. All laws, rules and regulations, or parts thereof, inconsistent herewith
are hereby repealed.
SEC. 8. This Decree shall take effect upon its promulgation.
Done in the City of Manila, this 6th day of July, 1976.

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List of Endangered Species (DAO 2004-15)

Pursuant to Sections 5 & 22 of Republic Act No. 9147 otherwise known as the
Wildlife Conservation and Protection Act, the preliminary List of Threatened Wildlife,
including their different categories and
the List of Other Wildlife Species under
the jurisdiction of DENR are hereby
established.
SECTION 1. Definition of Terms.
—As used in this Order, the following
terms shall mean as follows:
1. Threatened Species—is a gene-
ral term to denote species or subspecies
considered as critically endangered, en-
dangered, vulnerable or other accepted
categories of wildlife whose population is
at risk of extinction;
2. Critically Endangered Species
—refers to a species or subspecies that is
facing extremely high risk of extinction
in the wild in the immediate future;
3. Endangered Species—refers to
species or subspecies that is not criti-
cally endangered but whose survival in
the wild is unlikely if the causal factors
continue operating;
4. Vulnerable Species—refers to
species or subspecies that is not critically
endangered nor endangered but is under
threat from adverse factors throughout
their range and is likely to move to the
“The peace of nature and of the innocent crea-
endangered category in the near future;
tures of God seem to be secure and deep, only
5. Other Threatened Species— so long as the presence of man and his restless
refers to species or subspecies that is not and unquiet spirit are not there to trouble its
critically endangered, endangered nor sanctity.” — Tomas De Quincey, “Prelimi-
vulnerable but is under threat from ad- nary Confessions” (1821-56) (G. Tapan)
verse factors, such as over collection,
throughout their range and is likely to move to the vulnerable category in the near future;
6. Other Wildlife Species—refers to non-threatened species that have the ten-
dency to become threatened due to predation and destruction of habitat or other similar
causes as may be listed by the Secretary upon the recommendation of the National
Wildlife Management Committee.

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 LIST OF ENDANGERED SPECIES

SEC. 2. The List of Threatened Wildlife and their Categories.

A. Critically Endangered Species

MAMMALS

Family Scientific Name Common Name

Bovidae Bubalus mindorensis Tamaraw
Cervidae Cervus alfredi Visayan spotted deer
Muridae Crateromys australis Dinagat hairy-tailed cloud rat
Crateromys paulus Ilin hairy-tailed cloud rat
Pteropodidae Dobsonia chapmani Philippine bare-backed fruit
bat
Dugongidae Dugong dugon Dugong
Suidae Sus cebifrons Visayan warty pig

BIRDS

Family Scientific Name Common Name

Psittacidae Cacatua haematuropygia
Bucerotidae Aceros waldeni
Anthracoceros montani
Dicaeidae Dicaeum quadricolor
Accipitridae Pithecophaga jefferyi
Cuculidae Centropus steerii
Sternidae Sterna bernsteini
Gruidae Grus antigone
Columbidae Phapitreron cinereiceps
Gallicolumba menagei
Gallicolumba keayi
Gallicolumba platenae
Ptilinopus arcanus
Philippine Cockatoo
Walden’s hornbill
Sulu hornbill
Cebu flowerpecker
Philippine eagle
Black-hooded coucal
Chinese crested tern
Sarus crane
Tawi-tawi brown dove
Sulu bleeding-heart
Negros bleeding-heart
Mindoro bleeding-heart
Negros fruit-dove

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“I am not nearly so interested in what monkey man

was derived from as I am in what kind of monkey he
is to become.” — Loren Eiseley
(G. Tapan)

REPTILES

Family Scientific Name Common Name

Cheloniidae Eretmoche lys imbricata Hawksbill turtle
Bataguridae Heosemys leytensis Philippine pond turtle
Crocodylidae Crocodylus mindorensis Philippine crocodile
Varanidae Varanus mabitan Panay monitor lizard

CITES-LISTED SPECIES (APPENDIX I)

All species of fauna and flora listed under Appendix I of the Convention on
International Trade in Endangered Species of Wild Fauna and Flora (CITES)
B. Endangered Species
MAMMALS

Family Scientific Name Common Name

Pteropodidae Acerodon jubatus Golden-crowned fruit bat
Nyctimene rabori Philippine tube-nosed fruit bat
Cervidae Cervus calamianensis Calamian deer
Muridae Crateromys heaneyi Panay bushy-tailed cloud rat
Suidae Sus sp. A from the Sulu
Archipelago

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 LIST OF ENDANGERED SPECIES

BIRDS

Family Scientific Name Common Name

Bucerotidae Penelopides panini Visayan tarictic hornbill
Penelopides mindorensis Mindoro hornbill
Pycnonotidae Hypsipetes siquijorensis Streak-breasted bulbul
(=Ixos siquijorensis ) (=Mottle-breasted bulbul)
Psittacidae Prioniturus verticalis Blue-winged racket-tail
Ciconiidae Ciconia boyciana Japanese white stork
Muscicapidae Rhinomyias albigularis White-throated jungle fly-
catcher
Stachyris speciosa Flame-templed babbler
(=Dasycrotapha speciosa)
Turdidae Copsychus cebuensis Black shama
Rhyacornis bicolor Luzon water-redstart
Columbidae Gallicolumba criniger Mindanao bleeding-heart
Ardeidae Gorsachius goisagi Japanese night-heron
Scolopacidae Tringa guttifer Nordmann’s greenshank

REPTILES

Family Scientific Name Common Name

Cheloniidae Caretta caretta Loggerhead turtle
Chelonia mydas Green sea turtle
Lepidochelys olivacea Olive ridley sea turtle
Dermochelys coriacea Leatherback turtle
Bataguridae Heosemys spinosa Spiny terrapin
Trionychidae Pelochelys cantorii Southeast Asian softshell Tur-
tle

AMPHIBIANS

Family Scientific Name Common Name

Ranidae Platymantis negrosensis Negros forest tree frog
Platymantis polilloensis Polillo forest tree frog

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Family Scientific Name
Platym antis spelaeus
Platymantis subterrestris
CITES-LISTED SPECIES (APPENDIX II)
All species of fauna and flora listed under Appendix II of the Convention on Inter-
national Trade in Endangered Species of Wild Fauna and Flora (CITES)
C. Vulnerable Species
MAMMALS
Family Scientific Name
Pteropodidae Acerodon leucotis
Pteropus dasymallus
Pteropus speciosus
Pteropus leucopterus
Muridae Archboldomys luzonensis
Crateromys schadenbergi
Phloeomys cumingi
Batomys russatus
Cervidae Cervus mariannus
Manidae Manis culionensis
Erinaceidae Podogymnura aureo-
spinula
Felidae Prionailurus bengalensis
Suidae Sus barbatus
Sus philippensis
Tragulidae Tragulus napu
Pteropodidae Pteropus sp. A from Min-
doro Island
Haplonycteris sp. A from
Sibuyan Island
232
Common Name
Negros limestone frog
Mt. Data cloud frog
Common Name
Palawan flying fox
Wooly flying fox
Philippine gray flying fox
White-winged fruit bat
Isarog shrew-mouse
Bushy tailed-cloud rat
Southern Luzon giant cloud
rat
Dinagat hairy-tailed rat
Philippine brown deer
Palawan pangolin
Dinagat gymnure
Leopard cat
Bearded pig
Philippine warty pig
Mouse deer
 LIST OF ENDANGERED SPECIES

BIRDS

Family Scientific Name Common Name

Columbidae Ducula carola Spotted imperial pigeon
Ducula mindorensis Mindoro imperial-pigeon
Ptilinopus marchei Flame-breasted fruit dove
Ducula pickeringii Grey imperial-pigeon
Caloenas nicobarica Nicobar pigeon
Ducula poliocephala Pink-bellied imperial-pigeon
Gallicolumba luzonica Luzon bleeding-heart pigeon
Ptilinopus merrilli Cream-bellied fruit dove
Treron formosae Whistling green-pigeon
Alcedinidae Ceyx melanurus Philippine dwarf kingfisher
Alcedo argentata Silvery kingfisher
Todiramphus winchelli Rufous-lored kingfisher
Actenoides hombroni Blue-capped kingfisher
Muscicapidae Muscicapa randi Ashy-breasted flycatcher
Ficedula platenae Palawan flycatcher
Rhinomyias insignis White-browned jungle
flycatcher
Ficedula basilanica Little slaty flycatcher
Hypothymis coelestis Celestial blue monarch
Campephagidae Coracina ostenta White-winged cuckoo-shrike
Coracina mcgregori Mcgregor’s cuckoo-shrike
Dicaeidae Dicaeum haematostictum Visayan flowerpecker
Dicaeum retrocinctum Scarlet-collared flowerpecker
Eurylaimidae Eurylaimus samarensis Visayan broadbill
Eurylaimus steerii Mindanao broadbill
Picidae Picoides ramsayi Sulu woodpecker
Chloropseidae Chloropsis flavipennis Philippine leafbird
Pittidae Pitta steerii Azure-breasted pitta
Pitta kochi Koch’s pitta
Estrildidae Erythrura viridifac ies Green-faced parrotfinch

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Family Scientific Name Common Name

Turdidae Zoothera cinerea Ashy thrush
Rhyacornis bicolor Luzon water-redstart
Timaliidae Ptilocichla falcate Falcated wren-babbler
Phasianidae Polyplectron emphanum Palawan peacock-pheasant
Bucerotidae Anthracoceros marchei Palawan hornbill
Aceros leucocephalus Writhed hornbill
Buceros hydrocorax Rufous hornbill
Psittacidae Prioniturus platenae Blue-headed racket-tail
Prioniturus luconensis Green-headed racket-tailed
parrot
Tanygnathus lucionensis Blue-naped parrot
Strigidae Bubo philippensis Philippine eagle-owl
Mimizuki gurneyi Giant scops-owl
Accipitridae Spizaetus philippensis Philippine hawk-eagle
Ichthyophaga ichthyaetus Grey-headed fish-eagle
Silviidae Acrocephalus sorghophi- Streaked reed-warbler
lus
Phylloscopus ijimae Ijima’s leaf-warbler
Ardeidae Egretta eulophotes Chinese egret
Emberizidae Emberiza sulphurata Japanese yellow bunting
Scolopacidae Eurynorhynchus pyg- Spoon-billed sandpiper
maeus
Numenius tahitiensis Bristle-thighed curlew
Charadriidae Charadrius peronii Malaysian plover
Sturnidae Gracula religiosa Palawan hill myna
Anatidae Anas luzonica Philippine duck
Anhingidae Anhinga melanoga ster Darter
Megapodiidae Megapodius cumingii Tabon scrubfowl

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 LIST OF ENDANGERED SPECIES

REPTILES

Family Scientific Name Common Name

Varanidae Varanus olivaceus Gray’s monitor lizard
Varanus salvator cumingi Malay monitor lizard
(Mindanao population)
Varanus salvator marmo- Malay monitor lizard
ratus (Northern Philippine
population)
Varanus salvator Malay monitor lizard
nuchalis (Central Visayas population)

AMPHIBIANS

Family Scientific Name Common Name

Ichthyophiidae Ichthyophis glandulosus Basilan caecilian
Ichthyophis mindanaoensis Mindanao caecilian
Bufonidae Ansonia mcgregori Macgregor’s slender toad
Ranidae Limnonectes magnus Mindanao fanged Frog
Platymantis hazelae Hazel’s forest frog
Platymantis insulatus Gigante island
limestone frog
Platymantis lawtoni Lawton’s forest frog
Platymantis rabori Rabor’s forest frog
Rana igorota Taylor’s igorot frog
Rhacophoridae Philau tus schmackeri Mindoro tree frog

D. Other Threatened Species

MAMMALS

Family Scientific Name Common Name

Viverridae Arctictis binturong Binturong
Cynocephalidae Cynocephalus volans Flying lemur
Cercopithecidae Macaca fascicularis Philippine macaque
Pteropodidae Pteropus vampyrus Giant flying fox
Tarsiidae Tarsius syrichta Philippine tarsier

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REPTILES

Family Scientific Name Common Name

Varanidae Varanus salvator rudicol- Rough-necked monitor
lis
Agamidae Hydrosaurus postulatus Philippine sailfin Lizard
Boidae Python reticulates Reticulated python
Trimeresurus flavomacu- Batanes pit viper
latus
mcgregori

SEC. 3. The List of Other Wildlife Species

BIRDS

Family Scientific Name Common Name

Oriolidae Oriolus isabellae Isabela oriole

AMPHIBIANS

Family Scientific Name Common Name

Discoglossidae Barbourula busuangensis Philippine flat-headed frog

SEC. 4. Interpretation.—In case of conflict between the scientific name and the
common name in the actual application, the scientific name shall be the controlling
interpretation.
SEC. 5. Species under
more than one category.—In
case of conflict between the
enumeration of species in this
Order and the CITES Appen-
dices, the listing in this Order
shall prevail. However, for
conservation purposes other
than the application of penal-
ties under Section 28 of Re-
public Act 9147, the higher
category shall apply.
SEC. 6. Review and
Updating of the List—The “Fish say, they have their Stream and Pond; But is there
Secretary, in consultation with anything Beyond”? — Rupert Brooke
scientific authorities, the (Y. Lee)

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academe and other stakeholders, shall regularly review and update or as the need arises
the herein list of wild fauna and flora; Provided that a species listed as threatened shall
not be removed therefrom within three years following its initial listing.
SEC. 7. Effectivity.—This Order shall take effect fifteen (15) days after publica-
tion in a newspaper of national circulation.

Agriculture
Agriculture and Fisheries Modernization (Republic Act 8435)

SECTION 1. Short Title.—This act shall be known as the “Agriculture and

Fisheries Modernization Act of 1997.”
SEC. 2. Declaration of Policy.—The goals of the national economy are more eq-
uitable distribution of op-
portunities, income and
wealth; a sustained in-
crease in the amount of
goods and services pro-
duced by the nation for the
benefit of the people; and
an expanding productivity
as the key to raising the
quality of life for all, espe-
cially the underprivileged.
The State shall pro-
mote industrialization and
full employment based on
sound agricultural deve-
lopment and agrarian re-
form, through industries
that make full and effi- “Agriculture is the first form of culture.”— Will Durant
cient use of human and
(A. Oposa)
natural resources, and
which are competitive in both domestic and foreign markets. In pursuit of these goals,
all sectors of the economy and all regions of the country shall be given optimum op-
portunity to develop. Private enterprises, including corporations, cooperatives, and
similar collective organizations, shall be encouraged to broaden the base of their owner-
ship.
Thus, it is hereby declared the policy of the State to enable those who belong to the
agriculture and fisheries sectors to participate and share in the fruits of development
and growth in a manner that utilizes the nations resources in the most efficient and
sustainable way possible by establishing a more equitable access to assets, income,
basic and support services and infrastructure.

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The State shall promote food security, including sufficiency in our staple food,
namely rice and white corn. The production of rice and white corn shall be optimized to
meet our local consumption and shall be given adequate support by the State.
The State shall adopt the mar-
ket approach in assisting the agricul-
ture and fisheries sectors while rec-
ognizing the contribution of the said
sector to food security, environmental
protection, and balanced urban and
rural development, without neglect-
ing the welfare of the consumers,
especially the lower income groups.
The state shall promote market-
oriented policies in agricultural pro-
duction to encourage farmers to shift
to more profitable crops.
The state shall empower the
agricultural and fisheries sector to
develop and sustain themselves. To-
ward this end, the State shall un-
sure the development of the agricul-
ture and fisheries sectors in accor- “Forget not that the earth delights to feel your bare
dance with the following principles: feet and the wind longs to play with your hair.”—
a. Poverty Alleviation and So- Kahlil Gibran
cial Equity—The State shall ensure (A. Oposa)
that the poorer sectors of society
have equitable access to resources, income opportunities, basic and support services and
infrastructure especially in areas where productivity is low as a means of improving
their quality of life compared with other sectors of society;
b. Food Security—The State shall assure the availability, adequacy, accessibility
of food supplies to all at all times;
c. Rational Use of Resources—The State shall adopt a rational approach in the al-
location of public investments in agriculture and fisheries in order to assure efficiency
and effectiveness in the use of scarce resources and thus obtain optimal returns on its
investments;
d. Global Competitiveness—The State shall enhance the competitiveness of the
agriculture and fisheries sectors in both domestic and foreign markets;
e. Sustainable Development—The State shall promote development that is com-
patible with the preservation of the ecosystem in areas where agriculture and fisheries
activities are carried out. The State should exert care and judicious use of the country’s
natural resources in order to attain long-term sustainability;

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f. People Empowerment—The State shall promote people empowerment by ena-

bling all citizens through direct participation or through their duly elected, chosen or
designated representatives the opportunity to participate in policy formulation and
decision-making by establishing the appropriate mechanisms and by giving them access
to information; and
g. Protection from Unfair Competition—The State shall protect small farmers
and fisher folk from unfair competition such as monopolistic and oligopolistic practices
by promoting a policy environment that provides them priority access to credit and
strengthened cooperative-based marketing system.
SEC. 3. Statement of Objectives.—This Act shall have the following objectives:
a. To modernize the agriculture and fisheries sectors by transforming these sec-
tors from a resource-based to a technology-based industry;
b. To enhance profits and incomes in the agriculture and fisheries sectors, par-
ticularly the small farmers and fisherfolk, by ensuring equitable access to assets, re-
sources and services, and promoting higher-value crops, value-added processing, agri-
business activities, and agro-industrialization;
c. To ensure the accessibility, availability and stable supply of food to all at all
times;
d. To encourage horizontal and vertical integration, consolidation and expansion
of agriculture and fisheries activities, group functions and other services through the
organization of cooperatives, farmers’ and fisherfolk‘s associations, corporations, nu-
cleus estates, and consolidated farms and to enable these entities to benefit from
economies of scale, afford them a stronger negotiating position, pursue more focused,
efficient and appropriate research and development efforts and enable them to hire
professional managers;
e. To promote people empowerment by strengthening people’s organizations, co-
operatives and NGO’s and by establishing and improving mechanisms and resources for
their participation in government decision-making and implementation;
f. To pursue a market-driven approach to enhance the comparative advantage of
our agriculture and fisheries sectors in the world market;
g. To induce the agriculture and fisheries sectors to ascend continuously the
value-added ladder by subjecting their traditional or new products to further processing
in order to minimize the marketing of raw, unfinished or unprocessed products;
h. To adopt policies that will promote industry dispersal and rural industrializa-
tion by providing incentives to local and foreign investors to establish industries that
have backward linkages to the country’s agriculture and fisheries resource base;
i. To provide social and economic adjustment measures that increase productivity
and improve market efficiency while ensuring the protection and preservation of the
environment and equity for small farmers and fisherfolk; and
j. To improve the quality of life of all sectors.

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SEC. 4. Definition of Terms.—

“Agrarian Reform Community” is a barangay at the minimum or a cluster of con-
tiguous barangays where there is a critical mass of farmers or farm workers and which
features the main thrust of agrarian development land tenure improvement and effec-
tive delivery of support services.
“Agricultural Lands” refers to lands devoted to or suitable for the cultivation of the
soil, planting of crops, growing of trees, raising of livestock, poultry, fish or aquiculture
production, including the harvesting of such farm products, and other farm activities
and practices performed in conjunction with such farming operations by persons
whether natural or juridical and not classified by the law as mineral land, forest land,
residential land, commercial land, or industrial land.
“Agricultural Land Use Conversion” refers to the process of changing the use of ag-
ricultural land to non-agricultural uses.
“Agricultural Sector” is the sector engaged in the cultivation of the soil, planting of
crops, growing of fruit trees, raising of livestock, poultry, or fish, including the harvest-
ing and marketing off such farm products, and other farm activities and practices.
“Agricultural Mechanization” is the development, adoption, manufacture and ap-
plication of appropriate location-specific, and cost-effective agricultural technology us-
ing human, animal, mechanical, electrical and other non-conventional sources of energy
for agricultural production and post-harvest operations consistent with agronomic con-
ditions and for efficient and economic farm management.
“Agriculture and Fisheries Modernization” is the process of transforming the agri-
culture and fisheries sectors into one that is dynamic, technologically advanced and
competitive yet centered on human development guided by the sound practices of sus-
tainability and the principles of social justice.
“Agro-Processing Activities” refers to the processing of raw agricultural and fishery
products into semi-processed or finished products which include materials for the
manufacture for food and/or non-food products, pharmaceuticals and other industrial
products.
“Banks”, collective used, means government banks and private banks, rural banks
and cooperative banks.
“Basic Needs Approach to Development” involves the identification, production and
marketing of wage goods and services for consumption of rural communities.
“Communal Irrigation System (CIS)” is an irrigation system that is managed by a
bona fide Irrigators Association.
“Competitive Advantage” refers to competitive edge in terms of product quality
and/or price. It likewise refer to the ability to produce a product with the greatest rela-
tive efficiency in the use of resources.

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“Cooperatives” refers to duly registered associations of persons with a common

bond of interest who have voluntarily joined together to achieve a lawful common social
and economic end, making equitable contributions to the capital required and accepting
a fair share of the risks and benefits of the undertaking in accordance with universally
accepted cooperatives principles.
“Department” refers to the Department of Agriculture.
“Economic Scale “ refers to the minimum quantity of volume of goods required to
be efficient.
“Economies of Scale” refers to the decrease in unit cost as more units are produced
due to the spreading out of fixed costs over a greater number of units produced.
“Empowerment” involves providing authority, responsibility and information to
people directly engaged in agriculture and fishery production, primarily at the level of
the farmers, fisher folk and those engaged in food and non-food production and process-
ing, in order to give them wider choices and enable them to take advantage of the bene-
fits of the agriculture and fishery industries.
“Extension Services” refers to the provision of training, information, and support
services by the government and non-government organizations to the agriculture and
fisheries sectors to improve the technical, business, and social capabilities of farmers
and fisher folk.
“Farmer’s and Fisherfolk’s Organizations or Associations” refer to farmers and
fisherfolks cooperatives, associations or corporations duly registered with appropriate
government agencies and which are composed primarily of small agricultural producers,
farmers, farm, workers, agrarian reform beneficiaries, fisher folk who voluntarily join
together to form business enterprises or non-business organizations which they them-
selves own, control and patronize.
“Farm-to-Market Roads” refer to roads linking the agriculture and fisheries pro-
duction sites, coastal landing points and post-harvest facilities to the market and arte-
rial roads and highways.
“Fisheries“ refers to all systems or networks of interrelated activities which in-
clude the production, growing, harvesting, processing, marketing, developing, conserv-
ing, and managing of all aquatic resources and fisheries areas.
“Fisheries Sector” is the sector engaged in the production, growing, harvesting,
processing, marketing, developing, conserving, and managing of aquatic resources and
fisheries areas.
“Fishing” refers to the application of techniques using various gear in catching fish
and other fisheries products.
“Fishing Grounds” refers to areas in any body of water where fish and other
aquatic resources congregate and become target of capture.

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“Food Security” refers to the policy objective, plan and strategy of meeting the food
requirements of the present and future generations of Filipinos in substantial quantity,
ensuring the availability and affordability of food to all, either through local production
or importation, of both, based on the country’s existing and potential resource endow-
ment and related production advantages, and consistent with the over all national de-
velopment objectives and policies. However, sufficiency in rice and white corn should be
pursued.
“Fresh Agricultural And Fishery Products” refers to agricultural and fisheries
products newly taken or captured directly from its natural state or habitat, or those
newly harvested or gathered from agricultural areas or bodies of water used for aquicul-
ture.
“Global Competitiveness” refers to the ability to compete in terms of price, quality
and value of agriculture and fishery products relative to those of other countries.
“Gross Value-Added” refers to the total value, excluding the value of non-
agricultural of fishery intermediate inputs, of goods and services contributed by the
agricultural and fisheries sectors.
“Head works” refers to the composite parts of the irrigation system that divert wa-
ter from natural bodies of water such as river, streams, and lakes.
“Industrial Dispersal” refers to the encouragement given to manufacturing enter-
prises to establish their plants in rural areas. Such firms normally use agricultural raw
materials either in their primary or intermediate state.
“Irrigable Lands” refers to lands which display marked characteristics justifying
the operation of an irrigation system.
“Irrigated Lands” refers to lands services by natural irrigation or irrigation facili-
ties. These include lands where water is not readily available as existing irrigation
facilities need rehabilitation or upgrading or where irrigation water is not available
year-round.
“Irrigation System” refers to a system of irrigation facilities covering contiguous
areas.
“Irrigators’ Association (IA)” refers to an association of farmers within a contigu-
ous area served by a National Irrigation System or Communal Irrigation System.
“Land Use” refers to the manner of utilizing the land, including its allocation, de-
velopment and management.
“Land Use Plan” refers to a document embodying a set of policies accompanied by
maps and similar illustrations which represent the community-deserved pattern of
population distribution and a proposal for the future allocation of land to the various
land-using activities, in accordance with the social and economic objectives of the peo-
ple. It identifies the location, character and extent of the area’s land resources to be

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used for different purposes and includes the process and the criteria employed in the
determination of the land use.
“Land Use Planning” refers to the act of defining the allocation, utilization, devel-
opment and management of all lands within a given territory or jurisdiction according
to the inherent qualities of the land itself and supportive of sustainable, economic,
demographic, socio-cultural and environmental objectives as an aid to decision-making
and legislation.
“Main Canal” refers to the channel where diverted water from a source flows to
the intended area to be irrigated.
“Market Infrastructure” refers to facilities including, but not limited to, market
buildings, slaughterhouses, holding pens, warehouses, market information centers,
connecting roads, transport and communication and cold storage used by the farmers
and fisher folk in marketing their produce.
“National Information Network (NIN)” refers to an information network which
links all offices and levels of the Department with various research institutions and
local end-users, providing easy access to information and marketing services related to
agriculture and fisheries.
“National Irrigation System (NIS)” refers to a major irrigation system managed by
the National Irrigation Administration.
“Network of Protected Areas for Agricultural and Agro-industrial Development
(NPAAD)” refers to agricultural areas identified by the Department through the Bureau
of Soils and Water Management in coordination with the National Mapping and Re-
sources Information Authority in order to ensure the efficient utilization of land for
agriculture and Agro-industrial development and promote sustainable growth . The
NPAAD covers all irrigated areas, all irrigable lands already covered by irrigation pro-
jects with firm funding commitments; all alluvial plain land highly suitable for agricul-
ture whether irrigated or not; Agro-industrial crop lands or lands presently planted to
industrial crops that support the viability of existing agricultural infrastructure and
agro-based enterprises, highlands, areas located at an elevation of five hundred (500)
meters or above and have the potential for growing semi temperate and high-value
crops; all agricultural lands that are ecological fragile, the conversion of which will
result in serious environmental degradation, and mangrove areas and fish sanctuaries.
“On-Farm Irrigation Facilities” refers to composite facilities that permit entry of
water to paddy areas and consist of farm ditches and turnouts.
“Primary Processing” refers to the physical alteration of raw agricultural or fishery
products with or without the use of mechanical facilities.
“Post-Harvest Facilities” includes, but is not limited to , threshing, drying, milling,
grading , storing, and handling of produce and such other activities as stripping, win-
nowing, chipping and washing.

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“Post -Harvest Facilities” includes, but it is not limited to, threshers, moisture me-
ters, dryers, weighing scales, milling equipment, fish ports, fish landings, ice plants and
cold storage facilities, processing plants, warehouses, buying stations, market infra-
structure and transportation.
“Premature Conversion of Agricultural Land” refers to the undertaking of any de-
velopment activity, the results of which modify or alter the physical characteristics of
the agricultural lands to render them suitable for non-agricultural purposes, without an
approved order of conversion from the DAR.
“Resource Accounting” refers to a tracking changes in the environment and natural
resources biophysically and economically (in monitory terms)
“Resource-based” refers to the utilization of natural resources.
“Rural Industrialization” refers to the process by which the economy is transformed
from one that is predomi-
nantly agricultural to one that
is dominantly industrial and
service-oriented. Agriculture
provides the impetus and
push for industry and services
through the market that it
creates, the labor that it ab-
sorbs, and the income that it
generates which is channeled
to industry and services. As
development continues, with
agriculture still an important
sector, industry and services
begin to generate income and
markets and concomitantly
increase their share of total “Nothing is real to us but hunger.”—Kakuzo Okakura
income.
(M. Velas)
“Strategic Agriculture
and Fisheries Development Zones (SAFDZ)“ refers to the areas within the NAPAAD
identified for production, Agro-Processing and marketing activities to help develop and
modernize, either the support of government, the agriculture and fisheries sectors in an
environmentally and socio-cultural sound manner.
“Secondary Canal” refers to the channel connected to the main canal which dis-
tributes irrigation to specific areas.
“Secondary Processing” refers to the physical transformation of semi-processed ag-
ricultural or fishery products.
“Shallow Tube Well (STW)” refers to a tube or shaft vertically set into the ground
for the purpose of bringing ground water to the soil surface from a depth of less than 20
meters by suction lifting.

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“Small Farmers and Fisherfolk” refers to natural person dependent on small-scale

subsistence farming and fishing activities as their primary source of income.
“Small and Medium Enterprise (SME)” refers to any business activity or enterprise
engaged in industry, agribusiness and/or services, whether single proprietorship, coopera-
tive, partnership or corporation whose total assets, inclusive of those arising from loans
but exclusive of the land on which the particular business entity’s office, plan and equip-
ment are situated, must have value falling under the following categories:
Micro - not more than P 1,500,000
Small - P 1,500,001 to P 15,000,000
Medium - P15,000,001 to P 60,000,000
The Department, in consultation with the Congressional Oversight Committee on Agri-
cultural and Fisheries Modernization, may adjust the above values as deemed necessary.
“Socio-culturally Sound” means the consideration of the social structure of the
community such as leadership pattern, distribution of roles across gender and age
groups, the diversity of religion and other spiritual beliefs, ethnicity and cultural diver-
sity of the population.
“Technology-based” refers to utilization of technology.
“Zoning Ordinance” refers to a local legislation approving the development land
use plan and providing for the regulations and other conditions on the uses of land
including the limitation of the infrastructure that may be placed within the territorial
jurisdiction of a city or municipality.

TITLE I

PRODUCTION AND MARKETING SUPPORT SERVICES

Chapter 1

Strategic Agricultural and Fisheries Development Zones

SEC. 5. Declaration of Policy.—It is the policy of the State to ensure that all sec-
tors of the economy and all regions of the country shall be given optimum opportunity to
develop through the rational and sustainable use of resources peculiar to each area in
order to maximize agricultural productivity, promote efficiency and equity and acceler-
ate the modernization of the agriculture and fisheries sectors of the country.
SEC. 6. Network of Areas for Agricultural and Agro-Industrial Development.—
The Department shall, within six (6) months after the approval of this Act, and in con-
sultation wit the local government units , appropriate government agencies, concerned
non-government organizations (NGOs)and organized farmers’ and fisherfolk‘s groups,
identify the strategic Agriculture and Fisheries Development Zones (SAFDZ) within the

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network of protected areas for agricultural and agro-industrial development to ensure

that lands are efficiently and sustainably utilized for food and non-food production and
agro-industrialization.
The SAFDZ which shall serve as centers where development in the agriculture
and fisheries sectors are catalyzed in an environmentally and socio-cultural sound
manner, shall be identified on the basis of the following criteria
a. Agro-climatic and environmental conditions giving the area as competitive ad-
vantage in the cultivation, culture, production and processing of particular crops, ani-
mals and aquatic products;
b. Strategic location of the area for the establishment of agriculture or fisheries
infrastructure, industrial complexness, production and processing zones;
c. Strategic location and of the area for market development and market net-
working both at the local and international levels; and
d. Dominant presence of agrarian reform communities (ARCs) and/or small
owner-cultivators and amortizing owners/agrarian reform beneficiaries and other small
farmers and fisher folk in the area.
The SAFDZ shall have an integrated development plan consisting of production,
processing, investment, marketing, human resources and environmental protection
components.
SEC. 7. Modern Farms.—The Department in coordination with the local gov-
ernment units (LGUs) and appropriate government agencies, may designate agrarian
reform communities (ARCs) and other areas within the SAFDZ suitable for economic
scale production which will serve as model farms.
Farmer-landowners whose lands are located within these designated areas shall
be given the option to enter into a management agreement with corporate entities with
proven competence in farm operations and management, high-end quality production
and productivity through the use of up-to-date technology and collateral resources such
as skilled manpower, adequate capital and credit, and access to markets, consistent
with the existing laws.
SEC. 8. Mapping.—The Department, through the Bureau of Soils and Water
Management (BSWM), in coordination with the National Mapping and Resource Infor-
mation Authority (NAMRIA) and the Housing and Land Use Regulatory Board
(HLURB) shall undertake the mapping of network of areas for agricultural and agro-
industrial development for all municipalities, cities and an appropriate scale. The
BSWM may call on other agencies to provide technical and other logistical support in
this undertaking .
SEC. 9. Delineation of Strategic Agriculture and Fisheries Development Zones.—
The Department, in consultation with the Department of Agrarian Reform, the De-
partment of Trade and Industry, the Department of Environment and Natural Re-
sources, Department of Science and Technology, the concerned LGU’s, the organized

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farmers and fisher folk groups, the private sector and communities shall, without
prejudice to the development of identified economic zones and free ports, establish and
delineate based on sound resource accounting, the SAFDZ within one (1) year from the
effectivity of this Act.
All irrigated lands, irrigable lands already covered by irrigation a projects with
firm funding commitments, and lands with existing or having the potential for growing
high-value crops so delineated and included within the SAFDZ shall not be converted
for a period of five (5) years front the effectivity for this Act: Provided, however, That
not more than five percent (5%) of the said lands located within the SAFDZ may be
converted upon compliance with existing laws, rules, regulations, executive order and
issuances, and administrative orders relating to land use conversion: Provided, further,
That thereafter 1) a review of the SAFDZ, specifically of the productivity of the areas,
improvement of the quality of life of farmers and fisher folk, and efficiency and defec-
tiveness of the support services shall be conducted by the Department and the Depart-
ment of Agrarian Reform, in coordination with the Congressional Oversight Committee
on Agricultural Committee and Fisheries Modernization; 2) conversion may be allowed,
if at all, on a case-to-case basis subject to existing laws, rules, regulations, executive
orders and issuances, and administrative orders governing land use conversion; 3) in
case of conversion, the land owners will pay the Department the amount equivalent to
the government‘s investment cost including inflation.
SEC. 10. Preparation of Land Use and Zoning Ordinance.—Within one (1) year
from the finalization of the SAFDZ, in every city and municipality, all cities and mu-
nicipalities shall have prepared their respective land use and zoning ordinance incorpo-
rating the SAFDZ, where applicable. Thereafter, all land use plans and zoning ordi-
nances shall be updated every four (4) years or as often as may be deemed necessary
upon the recommendation of the Housing and Land Use Regulatory Board and must be
completed within the first year of the term of office of the mayor. If the cit-
ies/municipalities fail to comply with the preparation of zoning and land use plans, the
DILG shall impose the penalty as provided for under Republic Act No.7160
SEC. 11. Penalty for Agricultural Inactivity and Premature Conversion.—Any
person or juridical entity who knowingly or deliberately causes any irrigated agricul-
tural lands seven (7) hectares or larger, whether contiguous for not, within the pro-
tected areas for agricultural development, as specified under Section 6 in relation to
Section 9 of this Act, to lie idle and unproductive for a period exceeding one (1) year,
unless due to force majeure, shall be subject to an idle land tax of Three Thousand Pe-
sos (P3,000.00) per hectare per year. In addition, the violator, shall be required to put
back such lands to productive agricultural use. Should the continued agricultural inac-
tivity, unless due to force majeure, exceed a period of two (2) years, the land shall be
subject to escheat proceedings.
Any person found guilty of premature or illegal conversion shall be penalized with
imprisonment of two (2) to six (6) years, or a fine equivalent to one hundred percent

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(100%) of the government‘s investment cost, or both, at the discretion of the court, and
an accessory penalty of forfeiture of the land and any improvement thereon.
In addition, the DAR may impose the following penalties, after determining, in an
administrative proceedings, that violation of this law has been committed:
a. Consolation or withdrawal of the authorization for land use conversion; and
b. Backlisting, or automatic disapproval of pending and subsequent conversion
applications that they may file with the DAR.
SEC. 12. Protection of Watershed Areas.—All watersheds that are sources of wa-
ter for existing and potential irrigable areas and recharge areas of major aquifers iden-
tified by the Department of Agriculture and the Department of Environment and Natu-
ral resources shall be preserves as such at all times.

Chapter 2
Agriculture and Fisheries Modernization Plan

SEC. 13. Agriculture and Fisheries Modernization Plan (AFMP).—The Depart-

ment, in consultation with the
farmers and fisher folk, the pri-
vate sector, NGOs, people’s orga-
nizations and the appropriate go-
vernment agencies and offices,
shall formulate and implement a
medium-and long-term compre-
hensive Agriculture and Fishe-
ries Modernization Plan.
The Agriculture and Fishe-
ries Modernization Plan shall
focus on five (5) major concerns:
a. Food security;
b. Poverty alleviation and
social equity;
c. Income enhancement
and profitability, especially for
farmers and fisher folk;
“Nature is self-made machine, more perfectly automated
d. Global competitiveness;
than any automated machine. To create something in
the image of nature is to create a machine, and it was by and
learning the inner working of nature that man became a e. Sustainability.
builder of machines.”—Erick Hoffer SEC. 14. Food Security,
(T. Cayton)
Poverty Alleviation, Social Equity
and Income Enhancement.—The Department, in coordination with other concerned
departments or agencies, shall formulate medium-and long-term plans addressing food

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security, poverty alleviation, social equity and income enhancement concerns based on,
but not limited to, the following goals and indicators for development:
a. Increased income and profit of small farmers and fisherfolk;
b. Availability of rice and other staple foods at affordable process;
c. Reduction of rural poverty and income inequality; d. Reduction of the incidence
of malnutrition;
e. Reduction of rural unemployment and underemployment; and
f. Improvement in land tenure of small farmers.
SEC. 15. Global Competitiveness and Sustainability.—The Department shall
formulate medium-and-long-
term plans aimed at enhancing
the global competitiveness and
sustainability of the country in
agriculture and fisheries based
on, but not limited to, the fol-
lowing goals and indicators for
development:
a. Increase in the vol-
ume, quality and value of agri-
culture and fisheries produc-
tion for domestic consumption
and for exports;
b. Reduction in post-
harvest losses;
c. Increase in the num- “We ask a simple question: And that is all we wish: Are
ber/types and quality of proc- fishermen all liars? Or do only liars fish?” — William
essed agricultural and fishery Sherwood Fox, Silken Lines and Silver Hooks,
products; 1954
d. Increase in the num- (M. Velas)
ber of international trading
partners in agriculture and fishery products;
e. Increase in the number of sustainable agriculture and fisheries firms engaged
in domestic production, processing, marketing and export activities;
f. Increase in and wider level of entrepreneurship among farmers and fisher folk
in the area;
g. Increase in the number of farms engaged in diversified farming; and
h. Reduced use of agro-chemicals that are harmful to health and the environ-
ment.

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SEC. 16. Global Climate Change.—The Department, in coordination with the

Philippine Atmospheric, Geophysical and Astronomical Service Administration (P. A. G.
A. S. A.) and such other appropriate government agencies, shall devise a method of
regularly monitoring and considering the effect of global climate changes, weather dis-
turbances, and annual productivity cycles for the purpose of forecasting and formulat-
ing agriculture and fisheries production programs.
SEC. 17. Special Concerns.—The Department shall consider the following areas
of concerns, among other in formulating the AFMP:
a. Strategies and programs aimed to achieve growth and profitability targets in
the context of the constraints and challenges of the World Trade Organization (WTO);
b. Programs arising from the implementation of the Agrarian Reform Program;
c. Identification of SAFDZ;
d. Infrastructure and market support for the SAFDZ;
e. Infrastructure support to make agriculture and fisheries production inputs, in-
formation and technology readily available to farmers, fisherfolk, cooperatives and en-
trepreneurs;
f. Credit programs for small farmers and fisher folk, and agricultural graduates;
g. Comprehensive and integrated agriculture and fisheries research, develop-
ment and extension services;
h. Preservation of biodiversity, genetic materials and the environment;
i. Adequate and timely response against environmental threats to agriculture
and fisheries;
j. Rural non-farm employment;
k. Access to aquatic resources by fisher folk; l. Basic needs program for the im-
poverished sectors of society who will be affected by liberalization;
m. Indigenous peoples;
n. Rural youth;
o. Women;
p. Handicapped persons; and
q. Senior citizens.
SEC. 18. Monitoring and Evaluation.—The Department shall develop the capa-
bility of monitoring the AFMP through a Program Benefit Monitoring and Evaluation
System (PBMES). In addition, it can secure the services of independent consultants and
external evaluators in order to assess its over-all impact. The Department shall make
periodic reports to the Congressional Oversight Committee on Agriculture and Fisher-
ies Modernization.

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SEC. 19. Role of Other Agencies.—All units and agencies of the government
shall support the Department in the implementation of the AFMP.
In particular, the Department of Public Works and Highways shall coordinate
with the Department with respect to the infrastructure support aspect of the plan order
to accomplish networking of related infrastructure facilities.
The Department of Interior and Local Government shall provide assistance to the
Department in mobilizing resources under the control of local government units.
The Department of Trade and Industry, Agrarian Reform, Science and Technology,
and Environment and Natural Resources shall coordinate their investment programs
and activities to complement the Department’s implementation of the AFMP.
The Department of Education, Culture and Sports, the Technical Educational and
Skills Development Authority, the Department of Health with the Department of Social
Services and Development shall coordinate with the Department to determine the fi-
nancial requirements of small farmers and fisherfolk to adjust to the effects of moderni-
zation as envisioned in the Agriculture and Fisheries Modernization Plan.
The departments referred above shall be required to identify in their budget pro-
posals the allocation intended for the improvement of the environmental and other
conditions affecting agriculture and fisheries.
Congressional initiatives shall also be coordinated by the Committees on Agricul-
ture on both Houses to complement and enhance the programs and activities of the
Department in the implementation of the AFMP.

Chapter 3
Credit

SEC. 20. Declaration of Policy.—It is hereby declared the policy of the State to
alleviate poverty and promote vigorous growth in the countryside through access to
credit by small farmers, fisher folk, particularly the women involved in the production,
processing and trading of agriculture and fisheries products and the small and medium
scale enterprises (SMEs) and industries engaged in agriculture and fisheries.
Interest rates shall be determined by market forces, provided that existing credit
arrangements with agrarian reform beneficiaries are not affected. Emphasis of the
program shall be on proper management and utilization.
In this regard, the State enjoins the active participation of the banking sector and
government financial institutions in the rural financial system.
SEC. 21. Phase-out of the Directed Credit Programs (DCPs) and Provision for the
Agro-Industry Modernization Credit and Financing Program (AMCPP).—The Depart-
ment shall implement existing DCPs; however, the Department shall, within a period of
four (4) years from the effectivity of this Act, phase-out all DCPs and deposit all its
loanable funds including those under the Comprehensive Agricultural Loan Fund

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(CALF) including new funds provided by this Act for the AMCFP and transfer the man-
agement thereof to cooperative banks , rural banks, government financial institutions
and viable NGOs for the Agro-Industry Modernization Credit Financing Program
(AMCFP). Interest earnings of the said deposited loan funds shall be reverted to the
AMCFP.
SEC. 22. Coverage.—An agriculture, fisheries and agrarian reform credit and fi-
nancing system shall be designed for the use and benefit of farmers, fisher folk those
engaged in food and non-food production, processing and trading, cooperatives, farm-
ers’/fisherfolk‘s organization, and SMEs engaged in agriculture hereinafter referred to
in this chapter as the “beneficiaries”
SEC. 23. Scope of the Agro-Industry Modernization Credit and Financing Pro-
gram (AMCFP).—The Agro-Industry Modernization Credit and Financing Program
shall include the packaging and delivery of various credit assistance programs for the
following:
a. Agriculture and fishe-
ries production including pos-
sessing of fisheries and agri-
based products and farm inputs;
b. Acquisition of work
animals, farm and fishery
equipment and machinery;
c. Acquisition of seeds,
fertilizer, poultry, livestock,
feeds and other similar items;
d. Procurement of agri-
culture and fisheries products
for storage, trading, processing
and distribution;
e. Acquisition of water
pumps and installation of tube
wells for irrigation; Trees and forests are the lungs of the earth; The Land
and the soil are the skin; The sea and the waterways are
f. Construction, acquisi-
its blood. Whatever we do to the vital organs of the earth,
tion and repair of facilities for we do to our bodies.
production, processing, storage, (A. Oposa)
transportation, communication,
marketing and such other facilities in support of agriculture and fisheries;
g. Working capital for agriculture and fisheries graduates to enable them to en-
gage in agriculture and fisheries related economic activities;
h. Agribusiness activities which support soil and water conservation and ecology-
enhancing activities;

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i. Privately-funded and LGU-funded irrigation systems that are designed to pro-

tect the watershed;
j. Working capital for long-gestating projects; and
k. Credit guarantees on uncollaterized loans to farmers and fisherfolks.
SEC. 24. Review of the mandates of Land Bank of the Philippines Crop Insur-
ance Corporation, Guarantee Fund For Small and Medium Enterprises, Quedan and
Rural Credit Guarantee Corporation, Agricultural Credit Policy Council.—The Depart-
ment of Finance shall commission and independent review of the charters and the re-
spective programs of the Land Bank of the Philippines (LBP), Philippine Crop Insur-
ance Corporation (PCIC), Guarantee Fund for Small and Medium Enterprises
(GFSME), Quedan and Rural Credit Guarantee Corporation (Quendancor), and Agricul-
tural Credit Policy Council (ACPC), and recommend policy changes and other measures
to induce the private sectors participation in lending to agriculture and to improve
credit access by farmers and fisherfolk: Provided, That agriculture and fisheries pro-
jects with long gestation period shall be entitled to a longer grace period in repaying the
loan based on the economic life of the project.
The Land Bank of the Philippines, shall, in accordance with its original mandate,
focus primarily on plans and programs in relation to the financing of agrarian reform
and the delivery of credit services to the agriculture and fisheries sectors, especially to
small farmers and fisherfolk.
The review shall start six (6) months after the enactment of this Act. Thereafter,
the review shall make recommendations to the appropriate Congressional Committees
for possible legislative actions and to the Executive Branch for policy and program
changes within six (6) months after submission.
SEC. 25. Rationalization of Credit Guarantee Schemes and Funds.—All existing
credit guarantee schemes and funds applicable to the agriculture and fishery sectors
shall be rationalized and consolidated into an Agriculture and Fisheries Credit Guaran-
tee Fund. The rationalization shall cover the credit guarantee schemes and funds oper-
ated by the Quendancor, the GFSME and the Comprehensive Agricultural Loan Fund.
The Agriculture and Fisheries Credit Guarantee Fund shall be managed and imple-
mented by the Quendancor Provided, That representation to the Quendancor Board
shall be granted to cooperatives, local government units and rural financial institutions;
Provided, further, That credit guarantee shall be given only to small-scale agriculture
and fisheries activities and to countryside micro-small, and medium enterprises. It may
also cover loan guarantees for purchase orders and sales contracts.
The Agriculture and Fisheries Credit Guarantee Fund shall be funded by at least
ten percent (10%) of the funding allocation for the AMCFP.

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Chapter 4
Irrigation

SEC. 26. Declaration of Policy.—It is the policy of the State to use its natural re-
sources rationally and equitably. The state shall prevent the further destruction of
watersheds, rehabilitate existing irrigation systems and promote the development of
irrigation systems that are effective, affordable, appropriate, and efficient.
In the choice of location-specific irrigation projects, the economic principle of com-
parative advantage shall always be adhered to.
SEC. 27. Research and Development.—Irrigation Research and Development
(R&D) shall be pursued and priority shall be given to the development of effective, ap-
propriate , and efficient irrigation and water management technologies.
The Department shall coordinate with the Department of Environment and Natu-
ral Resources concerning the preservation and rehabilitation of watersheds to support
the irrigation systems.
SEC. 28. Criteria for Selection of Irrigation Development Scheme.—The Selec-
tion of appropriate scheme of
irrigation development shall be
location-specific and based on
the following criteria:
a. Technical feasibility;
b. Cost-effectiveness;
c. Affordability, low in-
vestment cost per unit area;
d. Sustainability and
simplicity of operation;
e. Recovery of operation
and maintenance cost;
f. Efficiency in water use;
g. Length of gestation
period; and
h. Potential for increas-
ing unit area productivity. “Every dewdrop and raindrop had a whole heaven
All irrigation projects within it.”— Henry Wadsworth Longfellow
shall, in addition to the criteria (A. Oposa)
enumerated above, be subjected
to a social cost-benefit analysis.
SEC. 29. Simplified Public Bidding.—The construction, repair, rehabilitation,
improvement, or maintenance of irrigation projects and facilities shall follow the Com-
mission on Audit (COA) rules on simplified public bidding.

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Irrigation projects undertaken by farmers, farmer’s organizations and other pri-

vate entities whose funding is partly or wholly acquired by way of loan from govern-
ment financial institutions shall not be subject to the bidding requirements of the gov-
ernment.
SEC. 30. National Irrigation Systems (NIS).—The National Irrigation Admini-
stration (NIA) shall continue to plan, design, develop, rehabilitate, and improve the
NISs. It shall continue to maintain and operate the major irrigation structures includ-
ing the head works and main canals.
In addition, the NIA is mandated to gradually turn over operation and mainte-
nance of the National Irrigation System’s secondary canals and on-farm facilities to
Irrigators’ Associations
SEC. 31. Communal Irrigation Systems (CIS).—The Department shall, within
five (5) years from the effectivity of this Act, devolve the planning, design and manage-
ment of CISs, including the transfer of NIA’s assets and resources in relation to the
CIS, to the LGUs. The budget for the development, construction, operation and mainte-
nance of the CIS and other types of irrigation systems shall be prepared by and coursed
through the LGUs. The NIA shall continue to provide technical assistance to the LGUs
even after complete devolution of the Irrigation Systems to the LGUs, as may be
deemed necessary.
SEC. 32. Minor Irrigation Schemes.—The Department shall formulate and de-
velop a plan for the promotion of a private sector-led development of minor irrigation
systems, such as Shallow Tube Wells (STWs), Low-Lift pumps (LLPs) and other inun-
dation systems. the plan shall be included in the Short-term Agriculture and fisheries
Modernization Plan.
SEC. 33. Other Irrigation Construction Schemes.—The Government shall also
encourage the construction of irrigation facilities through other viable schemes for the
construction of irrigation such as build-operate-transfer, build-transfer and other
schemes that will fast-track the development of irrigation systems.
SEC. 34. Guarantee of the National Government.—To make build-operate-
transfer (BOT) projects for irrigation attractive to proponents, the national government
shall issue the need payment guarantee for BOT projects which shall answer for default
of the National Irrigation Administration. Such amounts needed to answer for the pay-
ment guarantee is hereby to be appropriated.
SEC. 35. Irrigation Service Fees (ISF).—Upon effectivity of this Act, the NIA
shall immediately review the ISF rates and recommend to the Department reasonable
rates within six (6) months from the effectivity of this Act.
SEC. 36. Monitoring and Evaluation.—The Department shall monitor the im-
plementation of R&D programs and irrigation projects. The Department shall review all
existing irrigation systems every four (4) years, to determine their viability or ineffec-

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tiveness. The Department shall employ the services of independent evaluators to assess
the overall impact of the country’s irrigation development .
SEC. 37. Exemption from Election Ban.—The repair, maintenance and rehabili-
tation of irrigation facilities as well as BOT irrigation projects shall be exempted from
the scope of the election ban on public works.

Chapter 5
Information and Marketing Support Service

SEC. 38. Declaration of Policy.—It is hereby declared the policy of the State to
empower Filipino farmers and fisherfolk, particularly the women, involved in agricul-
ture and fisheries through the provision of timely, accurate and responsive business
information and efficient trading services which will link them to profitable markets for
their products. They shall likewise be given innovative support toward the generation of
maximum income through assistance in marketing.
SEC. 39. Coverage.—A market information system shall be installed for the use
and benefit of, but not limited to, the farmers and fisher folk, cooperatives, traders,
processors, the LGUs and the Department.
SEC. 40. The Marketing Assistance System.—The Department shall establish a
National Marketing Assistance Program that will immediately lead to the creation of a
national marketing umbrella in order to ensure the generation of the highest possible
income for the farmers and fisher folk or groups of farmers and fisher folk, matching
supply and demand in both domestic and foreign markets.
SEC. 41. National Information Network.—A National Information Network
(NIN) shall be set up from the Department level down to the regional, provincial and
municipal offices within one (1) year from the approval of this Act taking into account
existing information networks and seems.
The NIN shall likewise link the various research institutions for easy access to
data on agriculture and fisheries research and technology. All departments, agencies,
bureaus, research institutions, and local government units shall consolidate and con-
tinuously update all relevant information and data on a periodic basis and make such
data available on the Internet.
SEC. 42. Information and Marketing Service.—The NIN shall provide informa-
tion and marketing services related to agriculture an fisheries which shall include the
following:
a. Supply data;
b. Demand data
c. Price and Price trends;

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d. Product standards for both fresh and processed agricultural and fisheries pro-
jects;
e. Directory of, but not limited to cooperatives, traders, key market centers, proc-
essors and business institutions concerned with agriculture and fisheries at the provin-
cial and municipal levels;
f. Research information and technology generated from research institutions in-
volved in agriculture and fisheries;
g. International, regional and local market forecasts; and
h. Resource accounting data.
SEC. 43. Initial Set-up.—The Department shall provide technical assistance in
setting -up the NIN at the local level through the cooperatives and the LGUs Provided ,
That , at the local level, a system that will make marketing information and services
related to agriculture and fisheries will be readily available in the city/municipal public
market for the benefit of the producers, traders and consumers.
SEC. 44. Role of Government Agencies.—The Bureau of Agricultural Statistics
will serve as the central information server and will provide technical assistance to end-
users in accessing and analyzing product and market information and technology.
The Department of Transportation and Communications shall provide technical
and infrastructure assistance to the Department in setting up the NIN.
LGUs shall coordinate with the Department for technical assistance in order to ac-
celerate the establishment and training of information end-users in their respective
jurisdictions.
The Cooperative Development Authority shall coordinate with the Department for
technical assistance in order to provide training assistance to cooperatives in the use of
market information and technology.
SEC. 45. Role of Private Sector.—The NIN shall likewise be accessible to the pri-
vate sector engaged in agriculture and fisheries enterprises. The Department shall
formulate guidelines and determine fees for private sector entities that use the NIN.

Chapter 6
Other Infrastructure

SEC. 46. Agriculture and Fisheries Infrastructure Support Services.—The De-

partment of Public Works and Highways , the Department of Transportation and Com-
munications, the Department of Trade and Industry and the LGUs shall coordinate
with the Department to address the infrastructure requirements in accordance with
this Act Provided, that The Department and the LGU shall also strengthen its agricul-
tural engineering support in carrying out the smooth and expeditious implementation of
agricultural infrastructure projects.

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SEC. 47. Criteria for Prioritization.—The prioritization of government resources

for rural infrastructure shall be based on the following criteria:
a. Agro-industrial potential of the area;
b. Socio-economic contributions of the investments in the area;
c. Absence of public investments in the area; and
d. Presence of agrarian reform beneficiaries and other small farmers and fisher
folk in the area.
SEC. 48. Public Infrastructure Facilities.—Public Infrastructure investments
shall give preference to the kind , type and model of infrastructure facilities that are
cost-effective and will be useful for the production, conservation, and distribution of
most commodities and should benefit the most number of agriculture and fisheries
producers and processors.
SEC. 49. Private Infrastructure Facilities.—For infrastructure facilities primar-
ily benefiting private investors, the State shall facilitate the purchase and use of such
utilities and shall keep to the minimum the bureaucratic requirements for these types
of investments. Private investors include cooperatives or corporations of agriculture and
fisheries producers and processors.
SEC. 50. Public Works Act.—The Department of Public Works and Highways
shall coordinate with the Department for the purpose of determining the order of priori-
ties for public works funded under the Public Works Act directly or indirectly affect
agriculture and fisheries.
SEC. 51. Fishports, Seaports and Airports.—The Department of Transportation
and Communications, Philippine Ports Authority and Philippine Fisheries Development
Authority shall coordinate with the Department for the purpose of determining priority
fishports, seaports and airports and facilitating the installation of bulk-handling and
storage facilities , and other post-harvest facilities needed to enhance the marketing of
agriculture and fisheries products Provided, that fishports , seaports an airports are
also equipped with quarantine , sanitary and phytosanitary centers. The Department of
Transportation and Communications (DOTC) shall have the mandate to cancel arrastre
and cargo handling franchises among operators whom it deems inefficient and/or inef-
fective owing, but not limited to, a past history of under-capitalization, lack of equip-
ment and lack of professional expertise. The DOTC shall recommend to the Philippine
Ports Authority and consult with ship-owners and ship-operators in assessing the
cargo-handling capabilities of cargo operators prior to extending new franchises or
awards.
SEC. 52. Farm-to-Market Roads.—The Department shall coordinate with the
LGUs and the resident-farmers and fisher folk in order to identify priority locations of
farm-to -market roads that take into account the number of farmer and fisher folk and
their families who shall benefit therefrom and the amount, kind and importance of
agricultural and fisheries products produced in the area.

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Construction of farm-to-market roads shall be a priority investment of the LGUs

which shall provide a counterpart of not less than ten percent (10%) of the project cost
subject to their IRA in the area.
SEC. 53. Rural Energy.—The Department shall coordinate with the Department
of Energy (DOE), the Department of Public Works and Highways (DPWH), the National
Electrification Administration (NEA) and the National Power Corporation (NAPOCOR)
for the identification and installation of appropriate types of energy sources particularly
in the use of non-conventional energy sources for the locality in order to enhance agri-
culture and fisheries development in the area.
SEC. 54. Communications Infrastructure.—The Department shall coordinate
with the DOTC to facilitate the installation of telecommunication facilities in priority
areas, in order to enhance agriculture and fisheries development.
SEC. 55. Water Supply System.—The Department shall coordinate with the
DPWH and the LGUs for the identification and installation of water supply system in
the locality for agro-industrial uses to enhance agriculture and fisheries development in
the area.
SEC. 56. Research and Technology Infrastructure.—The Department in coordi-
nation with other government agencies shall give priority and facilitate the funding of
infrastructure necessary for research ventures such as farm laboratories and demon-
stration farms with state colleges and universities that derive their core funds from the
Department .
SEC. 57. Post-Harvest Facilities.—The Department shall coordinate with the
Bureau of Post-Harvest for Research and Extension and the Post-harvest Horticulture,
Training and Research Center of the University of the Philippines, Los Baños, to iden-
tify appropriate post-harvest facilities and technology needed to enhance agriculture
and fisheries development in the area.
SEC. 58. Public Market and Abattoirs.—The Department shall encourage the
LGUs to turn over the management and supervision of public markets and abattoirs to
market vendors’ cooperatives and for that purpose, the appropriation for post-harvest
facilities shall include the support for market vendor’ facilities.
The Department shall coordinate with the LGUs in the establishment of standard-
ized market systems and use of sanitary market , facilities , and abattoirs, intended to
ensure the food safety and quality.
All markets shall have a sanitation unit, proper and adequate drainage and sew-
erage system, ample water supply, public toilets with lavatories, garbage receptacles,
ice plants and cold storage, adequate lighting and ventilation and supply of electricity
to ensure cleanliness and sanitation. Price monitoring bulletin boards for selected com-
modities and weighing scales accessible to the public shall also be established.
Proper protection and preservation of agriculture and fisheries products being sold
in the market shall also be observed. All foods which require no further cooking shall be

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wrapped, covered, or enclosed in containers to preserve the freshness and prevent con-
tamination. Selling of products on market floors shall be prohibited.
SEC. 59. Agricultural Machinery.—The Department shall give priority to the
development and promotion of appropriate agricultural machinery and other agricul-
tural mechanization technologies to enhance agricultural mechanization in the country-
side.

Chapter 7
Products Standardization and Consumer Safety

SEC. 60. Declaration of Policy.—It is the policy of the State that all sectors in-
volved in the production, processing, distribution and marketing of food and non-food
agricultural and fisheries products shall adhere to, and implement the use of product
standards in order to ensure consumer safety and promote the competitiveness of agri-
culture and fisheries products.
SEC. 61. Bureau of Agriculture and Fisheries Product Standards.—The De-
partment, within six (6) months after the approval of this act, and in consultation with
the Department of Trade and Industry and the Bureau of Food and Drug, shall estab-
lish the Bureau of Agriculture and Fisheries Product Standards (BAFPS).
SEC. 62. Coverage.—The BAFPS shall set and implement standards for fresh,
primary-and -secondary-processed agricultural and fishery products.
SEC. 63. Powers and Functions.—The BAFPS shall have the following powers
and functions:
a. Formulate and enforce standards of quality in the processing, preservation,
packaging, labeling, importation, exportation, distribution, and advertising of agricul-
tural and fisheries products;
b. Conduct research on product standardization, alignment of the local standards
with the international standards; and
c. Conduct regular inspection of processing plants, storage facilities, abattoirs, as
well as public and private markets in order to ensure freshness, safety and quality of
products.
SEC. 64. Pool of Experts and Advisers.—The BAFPS may coordinate, seek the
services of, and consult with both private and governmental agencies, research insti-
tute, educational establishments and such other individuals and entities with expertise
in the field of product standards and consumer safety.
The Department of Trade and Industry, the Food and Nutrition Research Insti-
tute, and the Bureau of Food and Drug Administration shall provide technical advice
and form part of the pool of experts/advisers of the BAFPS.

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TITLE 2
HUMAN RESOURCE DEVELOPMENT

SEC. 65. Declaration of Policy.—It is hereby declared the policy of the State to
give priority to education and training on science and technology in order to accelerate
social progress and promote total human liberation and development.
The State shall promote industrialization and full employment, based on sound
agriculture and fisheries development and agrarian reform, through industries that
make full and efficient use of human and natural resources.
SEC. 66. National Agriculture and Fisheries Education System (NAFES).—The
Commission on Higher Education (CHED), in coordination with the Department and
appropriate government agencies, shall establish a National Agriculture and Fisheries
Education System (NAFES) which shall have the following objectives:
a. To establish, maintain and support a complete and integrated system of agri-
culture and fisheries education relevant to the needs of the economy, the community
and society.
b. To modernize and rationalize agriculture and fisheries education from the elemen-
tary to the tertiary levels;
c. To unify, coordinate and
improve the system of imple-
mentation of academic programs
that are geared toward achieving
agriculture and fisheries devel-
opment in the country; and
d. To upgrade the quality,
ensure sustainability and pro-
mote the global competitiveness,
at all levels, of agriculture and
fisheries education.
SEC. 67. Education Pro-
gram for Elementary and Secon-
dary Levels.—There is hereby
established an Agriculture and
“In end, we will protect only what we love, we will love Fisheries Education Program,
only what we understand, and we will understand under the NAFES specially de-
only what we are taught.” — Baba Dioum signed for elementary and secon-
(A. Oposa, Teaching Children in the dary levels. The program shall be
Visayan Sea to see the underwater) formulated, organized and imple-
mented by the DECS with the following objectives:
a. to develop appropriate values that form the foundation for sustained growth in
agriculture and fisheries modernization.

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b. to increase the attractiveness of agriculture and fisheries education, so that

more young and talented person will look at agriculture and fisheries as an acceptable
option for career and livelihood;
c. to promote appreciation of science in agriculture and fisheries development;
d. to develop among students, positive attitudes towards entrepreneurship and
global competition in the agriculture and fisheries business;
e. to improve the present curriculum in the elementary and secondary levels by
emphasizing the core values necessary for agriculture and fisheries modernization; and
f. to develop an outreach program where students, parents and schools become
instruments in effecting positive changes in the pupil’s home and community.
SEC. 68. Post-Secondary Education Program.—There is hereby established a
Post-Secondary Education Program for Agriculture and Fisheries under the NAFES,
which shall be formulated and developed by TESDA in coordination with the appropri-
ate government agencies and the private sector. The program shall include, among
others, the following:
a. a mechanism for a flexible process of curriculum development;
b. integration of the dual training system in the various agricultural curricula
and training programs;
c. integration of entrepreneurship and global competitiveness in the agro-
fisheries curricula;
d. institutionalizing agriculture and fisheries skills standards and technical test-
ing and certification;
e. regular upgrading of learning/training facilities, school buildings , laboratory
equipment; and
f. development of a system for the strict enforcement of school regulations re-
garding standards and requirements.
SEC. 69. Network of National Centers of Excellence for Tertiary Education.—
There is hereby established a Network of National Centers of Excellence in Agriculture
and Fisheries Education, composed of qualified public and private colleges and universi-
ties, duly accredited as National Centers of Excellence (NCE) in the field of agriculture
and fisheries.
For this purpose, the CHED shall formulate and implement a system of accredita-
tion Provided, That not more than one provincial institute in every province and no
more than one national university in each field in every region shall be accredited as
such and Provided, further, That the system shall be based on the following criteria:
a. institutional accessibility, population, economic contribution of agriculture and
fisheries in the community, and the needs or unique requirements of the area
b. quantity and quality of research studies conducted;

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c. degree of utilization of research results;

d. quantity and quality of faculty members;
e. type of facilities;
f. linkage with international organizations; and
g. potential contribution to agriculture and fisheries development in the target area.
SEC. 70. Rationalization Plan.—For the purpose of upgrading and maintaining
a high decree of academic excellence in the fields of agriculture and fisheries, all exist-
ing public and private colleges and universities that are not hereinafter designated and
accredited as centers of excellence shall be given adequate time to redirect its program
to non-agriculture and/or non-fisheries areas needed by the province or region and/or
merge their program with accredited NCEs in accordance with the Rationalization Plan
to be jointly formulated by CHED and the Philippine Association of State Universities
and Colleges (PASUC) upon consultation with the institution concerned.
The Rationalization Plan shall include a policy for the effective utilization of af-
fected personnel and facilities, and shall not be construed as to result in the decrease of
the budget allocation for the state universities and colleges concerned.
SEC. 71. Counterpart Funding from LGUs.—The LGUs shall, within two, (2)
years from the effectivity of this Act, provide at least ten percent (10%) of the Mainte-
nance and Other Operating Expenses (MOOE) budget for the operation of the provincial
institutes within their area of responsibility.
In consultation with the LGUs, the CHED shall develop a provincial-national
partnership scheme for a reasonable sharing of financial support taking into account
social equity factors for poor provinces.
SEC. 72. National Integrated Human Resource Development Plan in Agriculture
and Fisheries.—The CHED, in coordination with the Department and appropriate gov-
ernment agencies, shall formulate, develop and implement an integrated human re-
source development plan in agriculture and fisheries which shall serve as an instru-
ment that will provide over-all direction in setting priorities in curricular programs,
enrollment, performance targets, and investment programs.
SEC. 73. Output-Oriented Performance Standards.—In order to ensure the in-
stitutional accountability, efficiency, and quality, there shall be formulated and devel-
oped an Output-Oriented Performance Standards which shall serve as the primary
instrument for institutional evaluation.
For this purpose, all public and private universities and colleges, that are desig-
nated as centers of excellence, shall cause to be installed a computerized monitoring
and evaluation system that periodically collects and regularly measures variables indi-
cating institutional performance based on the Output-Oriented Performance Standards.
SEC. 74. Evaluation System.—Not later than one (1) year from the effectivity of
this Act, the CHED shall establish a baseline information using the Output-Oriented

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Performance Standards referred to in Section 73 of this Title. Once every five (5) years
thereafter, all designated NCEs in agriculture and fisheries shall be subject to a third
party evaluation.
The evaluation shall include, among others, management and educational experts
of national stature and representatives of key sectors of the agriculture and fisheries
industries, as well as representatives of the Department, the Department of Environ-
ment and Natural Resources, the Department of Science and Technology, and the Na-
tional Economic and Development Authority.
SEC. 75. Agriculture and Fisheries Board.—There shall be created an Agricul-
ture and Fisheries Board in the Professional Regulation Commission to upgrade the
Agriculture and Fisheries profession.
Those who have not passed the Civil Service Examination for Fisheries and Agri-
culture but have served the industry in either private or public capacity for not less
than five (5) years shall be automatically granted eligibility by the Board of Examiners.
The first board of examination for B.S. Fisheries and/or Agriculture Graduates
shall be conducted within one (1) year from the approval of this Act.
SEC. 76. Continuing Agriculture and Fisheries Education Program.—The Com-
mission on Higher Education, the Department of Education, Culture and Sports and
Technical Education and Skills Development Authority, in coordination with the De-
partment and the public and private universities and colleges, shall formulate and de-
velop a National and Integrated Continuing Agriculture and Fisheries Education Pro-
gram, which shall address the current education and training requirements of teachers,
professors and educators in agriculture and fisheries.
For this purpose, pre-service and in-service training of teachers in Home Econom-
ics Livelihood Education (HELE) for the primary level and Technology and Home Eco-
nomics (THE) for the Secondary level, shall be upgraded.
SEC. 77. Scholarship Program.—The CHED in coordination with the public and
private universities and colleges, TESDA and the DBM, shall develop a national schol-
arship program that provides opportunities for deserving academic staff to pursue ad-
vanced degrees in agriculture and fisheries. Where appropriate, such scholarship pro-
gram shall also provide opportunities for graduate work in foreign universities.
SEC. 78. Merit System.—To promote the development of scientific excellence
and academic scholarship, the public and private universities and colleges, in coopera-
tion with the CHED and the DBM, shall institute an output- oriented unified system of
promotion for the academic personnel.
SEC. 79. Budgetary Allocation Scheme.—The Budgetary Allocation Scheme for
NAFES shall be as follows:
a. The current appropriation or budgets of state universities and colleges, that
are herein designate as NCEs, shall continue and shall be modified and adjusted in
succeeding years in order to meet the standards of the rationalized programs of the

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institutions as approved by Congress and shall be included in the annual General Ap-
propriations Act;
b. NCEs that are created under this Act shall likewise be provided with budget-
ary support based on their programs and a new staffing pattern as approved by DBM
and shall be included in the annual General Appropriations Act.

TITLE 3
RESEARCH DEVELOPMENT AND EXTENSION
Chapter 1
Research and Development

SEC. 80. Declaration of

Policy.—It is hereby declared
the policy of the State to pro-
mote science and technology as
essential for national develop-
ment and progress.
The State shall likewise
give priority to research and
development, invention, inno-
vation, and their utilization
and to science and technology
education, training, and ser-
vices. In addition to appropri-
ate and relevant technology,
the state shall support indige-
nous and self-reliant scientific
and technological capabilities,
“The laws of nature are just, but terrible. There is no weak and their application to the
mercy in them. Cause and consequence are inseparable and country’s productive system
inevitable. The elements have no forbearance. The fire burns, the and national life.
water drowns, the air consumes, the earth buries. And perhaps
SEC. 81. The National
it would be well for our race if the punishment of crimes against
Research and Development
the Laws of Man were as inevitable as the punishment of crimes
against the Laws of Nature—were Man as unerring in his System in Agriculture and
judgments as Nature.”—Henry Wadsworth Longfellow
Fisheries.—The Department,
(A. Oposa)
in coordination with the De-
partment of Science and Technology and other appropriate agencies and research insti-
tutions shall enhance, support and consolidate the existing National Research and De-
velopment System in Agriculture and Fisheries within six (6) months from the approval
of this Act. Provided, That fisheries research and development shall be pursued sepa-
rately, from but in close coordination with that of agriculture.

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SEC. 82. Special Concerns in Agriculture and Fisheries Research Services.—

Agriculture and Fisheries Research and Development activities shall be multidiscipli-
nary and shall involve farmers, fisherfolk and their organizations, and those engaged in
food and non-food production and processing including the private and public sectors.
Research institutions and centers shall enjoy autonomy and academic freedom.
The Department, in collaboration with the Department of Science and Technology and
other appropriate agencies, shall harmonize its merit and output-oriented promotion
system governing the scientific community in order to promote increased research excel-
lence and productivity and provide the government research system a competitive edge
in retaining its scientific personnel.
Appropriate technology shall be used to protect the environment, reduce cost of pro-
duction , improve product quality and increase value added for global competitiveness.
SEC. 83. Funds for Research and Development.—Considering the nature of re-
search, development and extension activities, funding shall be based on the following
guidelines:
a. Allocation of multi-year budgets which shall be treated as research and devel-
opment grants.
b. The budget for agriculture and fisheries research and development shall be at
least one percent (1%) of the gross value added (GVA) by year 2001 allocating at least
one percent (1%) of the total amount by 1999. The Department of Finance (DOF) in
consultation with the Department shall formulate revenue enhancement measures to
fund this facility.
c. At least twenty percent (20%) shall be spent in support of basic research and
not more than eighty percent (80%) shall be used for applied research and technology
packaging and transfer activities.
d. A science fund shall be established from which the scientific community in ag-
riculture and fisheries shall draw its financial resource for sustained career develop-
ment, Provide, That only the interest earnings of the funds shall be used.
The Department and other research agencies, in the national interest, are encour-
aged to go into co-financing agreements with the private sector in the conduct of re-
search and development provided that the terms and conditions of the agreement are
beneficial to the country.
SEC. 84. Excellence and Accountability in Research and Development.—The De-
partment, in collaboration with the Department of Science and Technology and other
appropriate government agencies, shall formulate the national guidelines in evaluating
research and development activities and institutions, which shall involve an independ-
ent and interdisciplinary team of collegial reviewer and evaluators.
SEC. 85. Communication of Research Results and Research-Extension Link-
age.—Research information and technology shall be communicated through the Na-
tional Information Network (NIN)

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All government agencies including the state colleges and universities and private
educational institutions selected as NCEs shall be computerized , networked , provided
with regular updated information and shall likewise provide, through the NIN results
of research and development activities and current available technology relating agri-
culture and fisheries.

Chapter 2
Extension Services

SEC. 86. Declaration of Policy.—It is hereby declared the policy of the State to
promote science and technology as essential for national development and progress. The
State shall give priority for the utilization of research results through formal and non-
formal education, extension, and training services. It shall support the development of a
national extension system that will help accelerate the transformation of Philippine
agriculture and fisheries from a resource -based to a technology-based industry.
SEC. 87. Extension Services.—Agriculture and Fisheries extension services shall
cover the following major services to the farming and fishing community:
a. Training services;
b. Farm or business advisory services;
c. Demonstration services; and
d. Information and communication support services through trimedia.
SEC. 88. Special Concerns in the Delivery of Extension services.—The delivery of
agriculture and Fisheries Extension Services shall be multidisciplinary and shall in-
volve the farmers, fisherfolk, and their organizations and those engaged in food and
non-food production and processing, including the private and public sectors.
There shall be a national merit and promotion system governing all extension per-
sonnel, regardless of source of funding, to promote professionalism and achieve excel-
lence and productivity in the provision of the government extension services.
SEC. 89. The National Extension System for Agriculture and Fisheries (NE-
SAF).—The Department in coordination with the appropriate government agencies,
shall formulate a National Extension System for Agriculture and Fisheries.
The National Extension System for Agriculture and Fisheries shall be composed of
three (3) subsystems:
a. The national government subsystem which directly complements;
b. The local government subsystems; and
c. The private sector subsystem.
SEC. 90. The Role of Local Government Units.—The LGUs shall be responsible
for delivering direct agriculture and fisheries extension services.

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The provincial governments shall integrate the operations for the agriculture ex-
tension services and shall undertake an annual evaluation of all municipal extension
programs. The extension program of state colleges and universities shall primarily focus
on the improvement of the capability of the LGU extension service by providing:
a. Degree and non-degree training programs;
b. Technical assistance;
c. Extension cum research activities;
d. Monitoring and evaluation of LGU extension projects; and
e. Information support services through the tri-media and electronics.
SEC. 91. Role of the
Private Sector in Extension.
—The department shall en-
courage the participation of
farmers and fisherfolk coope-
ratives and associations and
others in the private sector
in the training and other
complementary extension
services especially in com-
munity organizing, use of
participatory approaches, po-
pularization of training ma-
terials, regenerative agricul-
tural technologies, agri-busi-
ness and management skills.
The Department is
Man is wise and constantly in quest of more wisdom; but the hereby authorized to com-
ultimate wisdom, which deals with beginnings, remains locked in mission and provide funding
a seed. There it lies, the simplest fact of the universe and at the
same time the one which calls forth faith rather than reason.—Hal for such training and exten-
Borland “The Certainty-April 5,” Sundial of the Seasons sion services undertaken by
(1964) the private sector.
(A. Oposa)
SEC. 92. The Role of
Government Agencies.—The Department, together with state colleges and universities
shall assist in the LGU’s extension system by improving their effectiveness and effi-
ciency through capability-building and complementary extension activities such as:
a. technical assistance;
b. training of LGU extension personnel;
c. improvement of physical facilities;
d. extension cum research; and
e. information support services;

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SEC. 93. Funding for Extension Activities.—Extension activities shall be sup-

ported by the following measures:
a. allocation of multi-year budgets that shall be treated as grants;
b. allow transfer of funds from the Department to the local government units as
extension grants, and
c. the budget for agriculture and fisheries extension services shall be at least one
percent (1%) of the gross value added (GVA) by year 2001
SEC. 94. Excellence and Accountability in Extension.—The Department shall for-
mulate the guidelines in evaluating extension, activities, and institutions, which shall in-
volve an independent and interdisciplinary team of the collegial reviewers and evaluators.
SEC. 95. Extension Communication Support for LGU’s.—The Department in co-
ordination with the public and private universities and colleges, shall develop an inte-
grated multimedia support for national and LGU extension programs. The Department
shall assist the LGU’s in the computerization of communication support services to
clients and linkages to the NIN.
TITLE 4
RURAL NON-FARM EMPLOYMENT
Chapter 1

SEC. 96. Declaration of policy.—It is hereby declared the policy of the State to
promote full employment. Economic history, however, shows that as an economy mod-
ernizes the number of workers employed in its agricultural sector declines. It is there-
fore necessary to formulate policies and implement programs that will employ workers
efficiently in rural areas in order to improve their standard of living, and reduce their
propensity to migrate to urban areas.
SEC. 97. Objectives.—Rural non-farm employment aims to:
a. promote a basic needs approach to rural development;
b. make rural workers more adaptable and flexible through education and train-
ing;
c. promote rural industrialization and the establishment of agro- processing en-
terprises in rural communities; and
d. increase the income of rural workers.

Chapter 2
The Basic Needs Program

SEC. 98. Principles.—The Department, in coordination with the appropriate

government agencies, shall formulate the Basic Needs Program to create employment
and cushion the effect of liberalization based on the following principles:

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a. No credit subsidies shall be granted. The normal rules of banking shall apply
to all enterprises involved, provided that existing credit arrangements with ARBs shall
not be affected.
b. Enterprises can use training, information, advisory and related services of the
Government free of charge.
c. The participation of the private sector shall be voluntary.
Teams composed of specialists from government agencies and the private sectors
shall develop pilot programs in selected locales to establish the planning, implementa-
tion and evaluation procedures.
SEC. 99. Participation of Government Agencies.—The replication of the program
shall be the responsibility of the local government units concerned in collaboration with
the appropriate government agencies, and the private sector. The local government
units shall bear the costs of promoting and monitoring the basic needs program for
which their IRA shall be increased accordingly as recommended by the Secretary of the
Department Provided, That the appropriate national government agencies shall con-
tinue to provide the necessary technical as well as financial assistance to the LGUs in
the replication of the program.
The Cooperatives Development Authority shall encourage the establishment and
growth of associations and cooperatives as vehicles for the stable expansion of basic
needs enterprises.
The Department of Education, Culture and Sports, Department of Health, and the
Technical Education and Skills Development Authority shall coordinate with the De-
partment and Congress in the review, rationalization and reallocation of their regular
budgets as well as their budgets under the GATT- related measures fund to finance
education, training, health and other welfare services for farmers and fisherfolk.

Chapter 3
Rural Industrialization Industry Dispersal Program

SEC. 100. Principles.—Rural industrialization and industry dispersal programs

shall be based on the interplay of market forces. The Board of Investments (BOI) is
hereby required to give the highest priority to the grant of incentives to business and
industries with linkages to agriculture.
SEC. 101. Role of Government Agencies.—The appropriate government agencies,
under the leadership of the LGUs concerned, shall provide integrated services and in-
formation to prospective enterprises under the one-stop-shop concept.
Local government units are authorized to undertake investment and marketing
missions provided that the costs of such missions are borne by the LGUs concerned. In
making their land use plans, the LGUs, in consultation with the appropriate govern-
ment agencies concerned, shall identify areas for industrial parks.

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The Department shall coordinate with the Department of Trade and Industry , in
particular, the Board of Investments, in the formulation of investments priorities for
rural areas.
The Regional Wage Boards shall consult participating enterprises in this program
before they issue wage orders.
SEC. 102. Participating Enterprises.—Participating enterprises may request
any government agency for training, technical and advisory services free of cost.
A set of incentives shall be given to enterprises that subcontract part of their pro-
duction to farmers, fisherfolk and landless workers during periods when they are not
engaged in agricultural activities.
SEC. 103. Financing.—Except for basic infrastructure and other goods that
benefit all citizens, the facilities of this program should be undertaken and financed by
the private sector.

“Let us never forget that the cultivation of the Earth

is the most important labor of man. After tillage,
the acts follow. The farmers therefore, are the
founders of civilization.”—D. Webster
(A. Oposa)

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Chapter 4
Training of Workers

SEC. 104. Role of TESDA.—TESDA shall organize local committees that will
advise on the scope, nature and duration of training for the above-mentioned programs.
TESDA is authorized to request the additional budgetary resources for these pro-
grams: Provided, That after a reasonable period, the task of coordinating the training is
transferred to the LGUs concerned.
SEC. 105. Role of the DENR.—The Department and the DENR shall organize
the training of workers in coastal resources management and sustainable fishing tech-
niques.
SEC. 106. Role of the Technology and Livelihood Resource Center (TLRC).—The
TLRC shall undertake field training in entrepreneurship and management of workers
involved in the basic needs program.
SEC. 107. Special Training Projects for Women.—The Department, in collabora-
tion with the appropriate government agencies concerned shall plan and implement
special training projects for women for absorption in the basic needs and rural industri-
alization programs.

TITLE 5
TRADE AND FISCAL INCENTIVES

SEC. 108. Taxation policies must not deter the growth of value-adding activities
in the rural areas.
SEC. 109. All enterprises engaged in agriculture and fisheries as duly certified
by the Department in consultation with the Department of Finance and the board of
Investment, shall, for five (5) years after the effectivity of this Act, be exempted from
the payment of tariff and duties for the importation of all types of agriculture and fish-
eries inputs, equipment and machinery such as, but not limited to, fertilizer, insecticide,
pesticide, tractor, trailers, trucks, farm implements and machinery, harvesters, thresh-
ers, hybrid seeds, genetic materials, sprayers, packaging machinery and materials,
bulk-handling facilities such as conveyors and mini loaders, weighing scales, harvesting
equipment, spare parts of all agricultural equipment, fishing equipment and parts
thereof, refrigeration equipment, and renewable energy systems such as solar panels
Provided, however, That the imported agricultural and fishery inputs, equipment and
machinery shall be for the exclusive use of the importing enterprise.
The Department, in consultation with the Department of Finance and the Board of
Investment, shall, within ninety (90) days from the effectivity of this Act, formulate the
implementing rules and regulations governing the importation of agriculture and fish-
ery inputs, equipment and machinery.

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SEC. 110. Any person, partnership, corporation, association and other juridical
entity found circumventing the provisions of Section 109 of this Act shall suffer the
penalty of imprisonment for a period of not less than six (6) months but not more than
one (1) year, or a fine equivalent to two hundred percent (200%) of the value of the im-
ported materials, or both, at the discretion of the court, and the accessory penalties of
confiscation of the imported goods in favor of the government and revocation of the
privileges given under this title.
In cases where the violator is a juridical entity, the officers responsible in the vio-
lation of Section 109 shall suffer the penalty of imprisonment prescribed in this Section.
The importation of goods equivalent to or exceeding the declared assets of the en-
terprise, partnership, or the authorized capital stock in case of corporations, and/or the
resale of the imported goods shall be a prima facie evidence of the violation of the provi-
sions of Section 109 of this Act.

GENERAL PROVISIONS

SEC. 111. Initial Appropriation.—For the first year of implementation of this

Act, the amount of Twenty Billion pesos (P20,000,000,000.00) is hereby appropriated.
The Department is hereby authorized to re-align its appropriations in the current year
of the date of effectivity of this Act to conform with the requirements of this Act Pro-
vided, That the amount shall be allocated and disbursed as follows:
1. Thirty percent (30%) for irrigation;
2. Ten percent (10%) for post-harvest facilities Provided, That the Secretary of
Agriculture may invest up to fifty percent (50%) of the said amount to fund post-harvest
facilities of cooperatives, especially market vendors’ cooperatives, where said coopera-
tives exist and are operational Provided, further, That if no cooperatives are opera-
tional, said amount shall fund the post-harvest facilities of the market -assistance sys-
tem;
3. Ten percent (10%) for other infrastructure including fishports, seaports, and
airports, farm-and -coast-to-market roads, rural energy, communications infrastructure,
watershed rehabilitation, water supply system, research and technology infrastructure,
public markets and abattoirs;
4. Ten percent (10%) for the Agro-industry Modernization Credit and Financing
Program (AMCFP) to be deposited by the Department in participating rural-based pub-
lic and private financial institutions provided that no less than fifty percent (50%) of
said funds shall be deposited in rural banks in cooperative banks;
5. Eight percent (8%) for the implementation of the Farmer-Fisherfolk Marketing
Assistance System and support of market vendors’ cooperatives;
6. Ten percent (10%) for research and development, four percent (4%) of which
shall be used to support the Biotechnology Program;

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7. Five percent (5%) for capability-building of farmers and fisherfolk organiza-

tions and LGUs for the effective implementation of the agriculture and fisheries pro-
grams at the local level;
8. Six percent (6%) for salary supplement of Extension Workers under the LGUs;
9. Five percent (5%) for NAFES , for the upgrading of the facilities of State Uni-
versities and Colleges that will be chosen as national center of excellence in agriculture
and fisheries education;
10. Four percent (4%) for the National Information Network (NIN) consisting of
both the national and local levels;
11. One-and-three-fourth percent (1.75%) for SUC- and TESDA-administered
Rural Non-Farm Employment Training; and
12. One-fourth percent (0.25%) for the identification of the SAFDZs.
SEC. 112. Continuing Appropriation.—The Department of Budget and Man-
agement (DBM) is hereby mandated to include annually in the next six (6) years, in the
President’s Program of expenditures for submission to Congress, and release, an
amount not less than Seventeen billion pesos (P17,000,000,000.00) for the implementa-
tion of this Act.
Additional funds over and above the regular yearly budget of the Department shall
be sourced from twenty percent (20%) of the proceeds of the securitization of govern-
ment assets, including the Subic, Clark, and other special economic zones.
Other sources of funds shall be from the following:
a. Fifty Percent (50%) of the net earnings of the Public Estates Authority;
b. Loans, grants, bequest, or donations, whether from local or foreign sources;
c. Forty percent (40%) of the TESDA Skills Development Fund;
d. Net proceeds from the privatization of the Food Terminal Inc. (FTI), the Bu-
reau of Animal Industry (BAI), the Bureau of Plant Industry (BPI), and other assets of
the Department that will be identified by the DA Secretary and recommended to the
President for privatization;
e. Proceeds from the Minimum Access Volume (MAV) in accordance with the
provisions of Republic Act No. 8178;
f. Poverty alleviation Fund; and
g. Fifty Percent (50%) of the Support Facilities and Services Fund under Repub-
lic Act No. 6657.
SEC. 113. Implementing Rules and Regulations.—The Secretary within ninety
(90) working days after the effectivity of this act, together with the Department of
Agrarian Reform (DAR), Department of Environment and Natural Resources (DENR),
Department of Finance (DOF), Department of Science and Technology (DOST), De-
partment of Trade and Industry (DTI), Commission on Higher Education (CHED),

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Technical Education and Skills Development Authority (TESDA), Department of Edu-

cation , Culture and sports (DECS), Department of Social services and Development
(DSSD), National Economic and Development Authority (NEDA), Department of
Budget and Management (DBM), Department of Labor and Employment (DOLE),
Commission on Audit (COA), Civil Service Commission (CSC), in consultation with
other agencies concerned, farmers, fisherfolk and agribusiness organizations, and in
coordination with the Congressional Oversight committee on Agriculture and Fisheries
Modernization, shall promulgate the rules and regulations for the effective implementa-
tion of this act.
The Secretary shall submit to the Committee on Agriculture of both houses of con-
gress copies of the implementing rules and regulations within thirty (30) days after
their promulgation.
Any violation of this section shall render the official/s concerned liable under Re-
public Act. No. 6713 otherwise known as the “Code of Conduct and Ethical Standards
for Public Officials and Employees” and other existing administrative and/or criminal
laws.
SEC. 114. Congressional Oversight Committee on Agricultural and Fisheries
Modernization.—A congressional Committee on Agricultural and Fisheries Moderniza-
tion is hereby created to be composed of the Chairs of the Committee on Agriculture of
both Houses, six (6) members of the House of Representatives and six (6) members of
the Senate, to be designated respectively by the Speaker of the House and the President
of the Senate, who shall endeavor to have the various sectors and regions of the country
represented.
The Chairs of the Committees on Agriculture in the Senate and House of Repre-
sentatives, shall be respectively, the Chair and Co-Chair of the Oversight Committee.
The other members shall receive no compensation: however, traveling and other neces-
sary expenses shall be allowed.
The Committee shall oversee and monitor the implementation of the Congres-
sional Commission on Agricultural Modernization (AGRICOM) recommendations as
well as all programs, projects and activities related to agriculture and fisheries, and its
allied concerns in both public and private sectors, with a view to providing all legisla-
tive support and assistance within the powers of Congress to ensure their inclusion,
wherever feasible, in the national, regional, provincial, municipal, and sectoral devel-
opment plans to recommend the disposal of assets no longer needed by the Department
to fund the modernization program, and to see them through their successful imple-
mentation.
SEC. 115. Powers and Functions of the Committee.—The Congressional Over-
sight on Agriculture and Fisheries Modernization shall have the following powers and
functions:
a. Prescribe and adopt guidelines that will govern its work;

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b. Hold hearings, receive testimonies and reports pertinent to its specified con-
cerns;
c. Secure from any department, bureau, office or instrumentality of the Govern-
ment such assistance as may be needed, including technical information, preparation,
and production of reports and submission of recommendations or plans as it may re-
quire;
d. Summon by subpoena any public or private citizen to testify before it, or re-
quire by subpoena duces tecum to produce before it such records, reports or other docu-
ments as may be necessary in the performance of its functions;
e. Use resource persons from the public and private sectors as may be needed;
f. Carry on the winding-up work of AGRICOM, such as editing and printing all
technical reports and studies as well as bibliographic cataloguing of its collection of
source materials, continue its information and advocacy work;
g. Cause to be transferred to the Committee all works, outputs, source materials,
and assets, funds, supplies and equipment of AGRICOM;
h. Approve the budget for the work of the Committee and all disbursements
therefrom, including compensation of all personnel;
i. Organize its staff and hire and appoint such employees and personnel whether
temporary, contractual or on consultancy, subject to applicable rules; and
j. Generally to exercise all the powers necessary to attain the purposes for which
its created.
SEC. 116. Periodic Reports.—The Committee shall submit periodic reports on its
findings and make recommendations on actions to be taken by Congress and the appro-
priate department, and in order to carry out the objectives of this Act, an initial amount
of Twenty million pesos (P20,000,000.00) is hereby appropriated for the Oversight
Committee for the first year of its operation.
SEC. 117. Automatic Review.—Every five (5) years after the effectivity of this
Act, an independent review panel composed of experts to be appointed by the President
shall review the policies and programs in the Agriculture and Fisheries Modernization
Act and shall make recommendations, based on its findings, to the President and to
both Houses of Congress.
SEC. 118. Repealing Clause.—All laws, decrees, executive issuance, rules and
regulations inconsistent with this Act are hereby repealed or modified accordingly.
SEC. 119. Separability Clause.—The provisions of this Act are hereby declared
to be separable, and in the event one or more of such provisions are held unconstitu-
tional, the validity of the other provisions shall not be affected thereby.
SEC. 120. Effectivity.—This Act shall take effect thirty (30) days from the date of
its publication in the Official Gazette or in at least two (2) newspapers general circulation.
Approved: 22 December 1997.

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 HIGH—VALUED CROPS

Philippine Policy on Transgenics

(Department of Agriculture Administrative Order No. 8, S. 2002)

“This is the Philippine government policy regarding “the importation and release
into the environment of plants and plant products derived from the use of modern bio-
technology.” It is divided into 22 sections and classified into seven parts. This can be
further classified into three major portions that include the general provisions, approval
and delisting procedures, and the miscellaneous provisions:
The first part contains the general provisions (Part I). These consist of the defini-
tion of terms, coverage of the policy, the risk assessment process and the responsible
officer (Sec. 1-4). The second major portion provides the procedures for different aspects
of transgenics. This includes the approval process for importation of regulated articles
for contained use (Part II, Sec. 5-6); the approval process for field testing of regulated
articles (Part III, Sec. 7-8); the approval process for propagation of regulated articles
(Part IV, Sec. 9-10); the approval process for importation of regulated articles for direct
use as food or feed, or for processing (Part V, Sec. 11-12), and; the procedure for delist-
ing of regulated articles (Part VI, Sec. 13-14). The remaining portion contains the mis-
cellaneous provisions (Part VII). These comprise the confidential business information,
outside experts and accreditation of laboratories, fees, appeal, transition period, repeal-
ing clause, separability, and the effectivity (Sec, 15-22).”

High—Valued Crops (Republic Act 7900)

SECTION 1. Title.—This Act shall be known as the “High-Value Crops Devel-
opment Act of 1995.”
SEC. 2. Declaration
of Policy.—It is hereby de-
declared the policy of the
State to accelerate the
growth and development of
agriculture in general,
enhance productivity and in-
comes of farmers and the
rural population, improve
investment climate, compe-
tencies and efficiency of
agribusiness and develop
high-value crops as export
crops that will significantly
augment the foreign ex- “Our understandings are always liable to error. Nature and
change earnings of the coun- certainty are very hard to come at, and infallibility is mere vanity
try, through an all-out pro- and pretense.” — Marcus Antoninus
(A. Oposa)

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motion of the production, processing, marketing, and distribution of high-value crops in

suitable areas of the country.
The State shall be guided by the principles that land has a social function and land
ownership has a social responsibility. As such, owners and lessees of agricultural land,
being stewards, have the obligation to cultivate the lands they own or lease and make
the land economically productive on a sustainable and environmentally friendly man-
ner. The State has the right to expropriate lands not utilized for the benefit of the com-
munity and the country as a whole.
The State shall effect an efficient use of land and other productive resources with
due regard to ecological balance and environmental protection, rural development, eq-
uity consideration, mobilization of human resources, and increased agro-industrial
production for the alleviation of poverty and sustainable growth objectives.
SEC. 3. Scope of Application.—This Act shall cover upland dwellers as well as
lowland tenants, indigenous and cultural communities, Comprehensive Agrarian Re-
form Program (CARP) beneficiaries, upland farm owners, farmers, farmers’ organiza-
tions/associations/cooperatives, community associations and farmworkers, and to the
extent herein provided, the departments, offices, agencies, subdivisions, branches or
instrumentalities in the areas identified by the Department of Agriculture as key com-
mercial crop production areas.
SEC. 4. Definition of Terms.—For purposes of this Act, the term:
1. “Non-traditional crops”—refer to crops other than rice, corn, coconut and
sugar.
2. “High-value crops (HVC)”—these are crops other than traditional crops which
include, but are not limited to: coffee and cacao, fruit crops (citrus, cashew, guyabano,
papaya, mango, pineapple, strawberry, jackfruit, rambutan, durian, mangosteen,
guava, lanzones, and watermelon), root crops (potato and ubi), vegetable crops (aspara-
gus, broccoli, cabbage, celery, carrots, cauliflower, radish, tomato, bell pepper, and pa-
tola), legumes, pole sitao (snap beans and garden pea), spices and condiments (black
pepper, garlic, ginger, and onion), and cutflower and ornamental foliage plants (chry-
santhemum, gladiolus, anthuriums, orchids, and statice).
3. “Idle and abandoned land”—refers to any agricultural land not cultivated, ti-
tled or developed to produce any crop nor devoted to any specific economic purpose con-
tinuously for a period of three (3) years immediately prior to the receipt of notice of
acquisition by the government as provided under the CARP.
4. “Alienable and disposable lands”—refer to those lands of the public domain
which have been the subject of the present system of classification and declared as not
needed for forest purposes.
5. “Forest land”—refers to the lands of the public domain which have not been
declared as alienable or disposable, public forests, permanent forests or forest reserves,
forest reservations, timberlands, grazing lands, game refuge, and bird sanctuaries.

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SEC. 5. Site Identification.—The Department of Agrarian Reform and the De-

partment of Agriculture, in coordination with the Department of Environment and
Natural Resources, and the municipal government concerned, shall identify the broad
areas suitable for high-valued crops production, within six (6) months after the effectiv-
ity of this Act: Provided, That such site identification shall be reviewed at appropriate
intervals to ensure consistency with the agrarian reform program and the national land
use policy.
SEC. 6. Tenurial Arrangement.—Farmer cooperatives may lease the land for a
period of twenty-five (25) years, and not to exceed one thousand hectares (1,000 has.) in
area.
SEC. 7. Farm Model.—For the program, farmers may adopt the cooperative sys-
tem in putting up economically-sized farms for high-value crop farming. Farmer mem-
bers shall collectively manage individual farms which includes contracting process and
means of production; planning and coordinating crops varieties; and raising breed, hec-
tarage, distribution and some production measures with reference to the market it shall
serve. Said farm models may be replicated by farmers’ organizations all over the coun-
try.
SEC. 8. High-Value Crops Development Fund (HVCDF).—For the purpose of
providing the funding requirements of the production, marketing, and processing of
high-value crops, and the establishment of low-cost credit to qualified project propo-
nents, there is hereby created a High-Value Crops Development Fund (HVCDF), with
an initial amount of One billion pesos (P1,000,000,000). The HVCDF shall be sourced
from the Comprehensive Agricultural Loan Fund (CALF) and shall be managed by the
Land Bank of the Philippines (LBP) and the Development Bank of the Philippines
(DBP). Other sources of funds, including but not limited to borrowings from local and
international financial institutions, shall also be considered to further support the pro-
gram: Provided, That sixty percent (60%) of the HVCDF shall be utilized for direct lend-
ing to high-value crop producers while the remaining forty percent (40%) shall be allo-
cated by the Department of Agriculture to guarantee loans granted by private financial
institutions toward high-value crop production through existing guarantee institutions.
The Department of Agriculture, which is directly responsible for the management of the
HVCDF, is hereby authorized to designate the Land Bank of the Philippines and the
Development Bank of the Philippines to manage the direct lending operations of the
sixty percent (60%) portion of the HVCDF through LBP and DBP facilities or their
conduits.
All financial institutions, whether public or private, shall be tapped to support the
program. Participating banks are hereby exempted from the compliance requirement of
64
Presidential Decree No. 717: Provided, That they shall lend a minimum of five percent

_______________________
64
Providing an Agrarian Reform Credit and Financing System for Agrarian Reform Benefi-
ciaries through Banking Institutions [P.D. No. 717 (29 May 1975)].

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LAND

(5%) of their loanable funds without alternative compliance directly to farmers’ associa-
tions or cooperatives.
Other sources of funds, including but not limited to borrowings from local and in-
ternational financial institutions, shall also be considered to further support the pro-
gram.
SEC. 9. Incentives.—The proponents of the program shall be entitled to the fol-
lowing incentives:
a. Crop insurance—the insurance program of the Philippine Crop Insurance Cor-
poration (PCIC) shall be expanded to cover high-value crops. The premium rates shall
be set not on the basis of the performance of previous programs specifically on rice and
corn;
b. Credit assistance—the HVCDF shall be loaned out to farmers’ organizations/
associations/cooperatives composed of, but not limited to, CARP beneficiaries, subject to
the prevailing Land Bank interest rates;
c. Credit Guarantee—to enhance the bankability of projects, a credit guarantee
cover shall be extended by the Quedan and Rural Credit Guarantee Corporation
(QUEDANCOR) which shall thereby be provided with a commensurate guarantee fund,
in the form of equity, out of the HVCDF;
d. Grace period on lease of government lands payments—project proponents shall
effect payment on the lease not earlier than two (2) years after the lease agreement is
signed and approved. The grace period shall be determined by the gestation periods of
the crops;
e. Tax exemption—project proponents as defined in Section 7 of this Act shall be
entitled to the following tax exemptions:
1. Exemptions from taxes and duties subject to the provisions of Article 62
of Republic Act No. 6938 or the Cooperative Code of the Philippines;
2. Exemption from the value-added tax in accordance with Section 103 of
65
the National Internal Revenue Code, as amended; and
3. Exemption from taxes, fees and charges under Title One of Book Two of
66
the Local Government Code of 1991 in accordance with Section 133(n) of the said
Code.
f. Market linkage—the Department of Agriculture, in coordination with the De-
partment of Trade and Industry, shall link-up agribusiness cooperatives directly with
consumers cooperatives, agro-processing companies, or exporters to provide marketing
outlets and assure relatively higher and stable prices. Agro-processing firms buying
directly from project proponents shall be granted tax rebates.
_______________________
65
R.A. No. 8424, 11 December 1997.
66
R.A. No. 7160, 10 October 1991.

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 HIGH—VALUED CROPS

To ensure health and proper trading, the agribusiness development group of the
Department of Agriculture shall establish and enforce standards in grading, sampling
and inspection, tests and analysis, specifications, nomenclature, units of measurement,
code of practice and packaging, preservation, conservation and transportation of high-
value crops.
g. Technical and infrastructure support—technical support on research and ex-
tension, infrastructure development, financial and market information shall be pro-
vided by the Department of Agriculture, Department of Trade and Industry, Depart-
ment of Science and Technology, Cooperative Development Authority, state universities
and colleges and other relevant government agencies;
h. Post harvest facilities—access to post harvest facilities, storage and distribu-
tion/transport facilities of existing government agencies shall be facilitated. Assistance
shall be given to qualified and viable farmers/growers cooperatives in the availment of
soft loans or grants for the construction of post-harvest, processing and storage facili-
ties. Guidelines for the eventual transfer of ownership of these facilities to the propo-
nent shall be formulated by the Department of Agriculture;
i. Good seeds and planting materials—the Department of Agriculture, in coordi-
nation with the state universities and colleges, the Department of Trade and Industry,
and farmers organizations shall make good seeds and materials readily available to
farmers/farmers’ cooperatives to ensure high yield and good quality produce. However,
the project proponents may be allowed to import, free of duties, high quality
seeds/planting materials subject to quarantine laws and Section 15 of Republic Act No.
7083 or the Seed Industry Development Act of 1992; and
j. Fiscal incentives—the same fiscal incentives granted by the Board of Invest-
ments shall be automatically granted to project proponents.
SEC. 10. Inter-Agency Committee.—A committee, composed of representatives
from the Department of Agriculture, the Department of Agrarian Reform, the Bangko
Sentral ng Pilipinas, the Land Bank of the Philippines, the Development Bank of the
Philippines, the Cooperative Development Authority, the Department of Science and
Technology, the Department of Trade and Industry, the Department of Environment
and Natural Resources, and the Department of the Interior and Local Government and
one (1) each from the small farmers and commercial producers sectors to be designated
by the Secretary of Agriculture, shall formulate and prescribe, after public hearing and
publication as required by law, the implementing rules and regulations in order to carry
out the provisions of this Act. The representatives from the Department of Agriculture
and the Department of Trade and Industry shall be the chairman and the vice-
chairman, respectively, of the committee.
The Secretary of the Department of Agriculture shall report to both Houses of
Congress on the status of the High-Value Crops Development Program biannually.
SEC. 11. Agribusiness Development Group.—The agribusiness development
group of the Department of Agriculture shall be strengthened to implement, coordinate

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and monitor the program based on the rules and regulations set forth by the inter-
agency committee. Aside from its usual functions, it shall be tasked to perform the fol-
lowing functions:
a. Assist in the formulation of general and specific policies for the development of
high-value crops;
b. Set up the appropriate system to monitor the utilization of the HVCDF and
shall furnish the Bangko Sentral ng Pilipinas regular reports on the financial institu-
tions’ compliance to the program;
c. Extend assistance in marketing and distribution of high-value crops through
monitoring and dissemination of market information, including identification of the
local supply-demand situation, domestic market matching and overseas market intelli-
gence and promotion activities on high-value crops;
d. Enjoin the Department of Transportation and Communications to effect a
more efficient, regular, adequate, suitable, and economical means of transporting and/or
shipping of high-value crops, for purposes of reducing marketing costs and ensuring
stable consumer supply;
e. Encourage the establishment of wholesale markets in identified major centers
of the country: Provided, That agricultural produce collection centers may also be estab-
lished in areas where feasible, which may also serve as buying stations of farm prod-
ucts, packaging houses, pick-up points and meeting places of farmers’/growers’ coopera-
tives;
f. Establish linkages with various government and private research institutions
for the conduct of studies and researches designed to promote the production, market-
ing and processing of high-value crops;
g. Conduct farmers’ training programs primarily aimed at increasing their
knowledge on production technologies and on market potentials and prospects for vari-
ous types of high-value crops, through the DA-Agricultural Training Institute (ATI), the
DTI or the LGU’s technicians or by contracting agriculturists and marketing specialists
from private or academic institutions;
h. Establish experimental stations and seed farms for the development of varie-
ties suitable to the agro-climatic conditions of the area and markets that will provide
greatest value added to high-value crops; and
i. Devise and maintain a system for regularly obtaining information on current
and future production, their prices and movement in trade, to determine and effect a
balanced distribution of high-value crops by means of inter-trading or intra-trading
among the established wholesale markets. Such amount as may be needed for the ini-
tial operating expenses of the group shall be charged to any available funds in the ap-
propriation for current operating expenditures of the Department of Agriculture.
Thereafter, the amount necessary for its operations shall be included in the annual
General Appropriations Act.

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 FERTILIZERS AND PESTICIDES

SEC. 12. Repealing Clause.—All laws or parts thereof, decrees, orders, rules and
regulations inconsistent with the provisions of this Act are hereby repealed or modified
accordingly: Provided, however, That nothing in this Act shall be construed or applied
as amending the CARL and other laws on agrarian reform.
SEC. 13. Separability Clause.—If any of the provisions of this Act is declared in-
valid, the other provisions not affected thereby shall remain in full force and effect.
SEC. 14. Effectivity Clause.—This Act shall take effect immediately following its
publication in a newspaper of general circulation or in the Official Gazette, whichever
comes first.
Approved: 23 February 1995.

Fertilizers and Pesticides

(Presidential Decree No. 1144)
WHEREAS, it is Government policy to provide adequate assistance to the agricul-
tural sector in line with the national objective of increasing food production;
WHEREAS, fertilizer
and pesticides are vital
inputs in food production
and must be supplied in ade-
quate quantities at reason-
able cost;
WHEREAS, improper
pesticides usage presents
serious risks to users, hand-
lers, and the public in gene-
ral because of the inherent
toxicity of these compounds
which are, moreover, poten-
tial environmental contami-
nants;
WHEREAS, there is a
need to educate the agricul-
ture sector on the benefits as “Because we decided to plant only one crop in a certain
well as the hazards of pesti- patch of land, we in effect removed the interplay of predator
cides use so that it can util- and prey in the cycle of life. Thus, because the bugs that prey
ize pesticides properly to on grains no longer have their own predator, we call them
pests, use chemical poison to kill them, and eventually
promote human welfare
poisoning also the living soil, and, in the end, poisoning
while avoiding dangers to ourselves.”
health and environmental (A. Oposa)
pollution.

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WHEREAS, the fertilizer and pesticides industries have much in common in terms
of clientele, distribution channels, system of application in farmer’s fields, and technical
supervision by the same farm management technicians under the government‘s food
production program;
WHEREAS, the foregoing considerations make it desirable to have one agency to
regulate fertilizer importation, manufacture, formulation, distribution, delivery, sale,
transport and the storage as well as pesticide labeling, distribution, storage, transporta-
tion, use and disposal;
WHEREAS, the Fertilizer Industry Authority was created by Presidential Decree
No. 135, dated 22 February 1973, and amended by Presidential Decree Nos. 517 and
669, dated 19 July 1974 and 11 March 1975 respectively, in order to regulate, control
and develop the fertilizer industry but does not include the pesticide industry in its
jurisdiction;
WHEREAS, there is an urgent need to create a technically-oriented government
authority equipped with the required expertise to regulate, control and develop both the
fertilizer and the pesticide industries;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines
by virtue of the powers vested in me by the Constitution, do hereby decree and order the
following:
SECTION 1. Creation of the Fertilizer and Pesticide Authority.—The Fertilizer
and Pesticide Authority, hereinafter referred to as the FPA, is hereby created and at-
tached to the Department of Agriculture for the purpose of assuring the agricultural
sector of adequate supplies of fertilizer and pesticide at reasonable prices, rationalizing
the manufacture and marketing of fertilizer, protecting the public from the risks inher-
ent in the use of pesticides, and educating the agricultural sector in the use of these
inputs.
SEC. 2. Abolition of the Fertilizer Industry Authority.—The Fertilizer Industry
Authority created under Presidential Decree 135 dated 22 February 1973, as amended
by Presidential Decrees 517 and 669, dated 19 July 1974 and 11 March 1975 respec-
tively, is hereby abolished.
The FPA shall assume such appropriations, assets and liabilities and hire such
personnel of the FIA as may be determined by its Board of Directors; Provided, that
such assumption is made within sixty (60) days from the effectivity of this decree.
SEC. 3. Definitions.—For the purpose hereof, the terms herein below shall be
understood to mean as follows:
a. “Pesticide”—any substance or product, or mixture thereof, including active in-
gredients, adjuvants and pesticide formulations, intended to control, prevent, destroy,
repel or mitigate directly or indirectly, any pest. The term shall be understood to in-
clude insecticide, fungicide, bactericide, nematocide, herbicide, molluscicide, avicide,
rodenticide, plant regulator, defoliant, desiccant and the like.

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 FERTILIZERS AND PESTICIDES

b. “Fertilizer”—includes any substance - solid or liquid - or any nutrient element

or elements - organic or inorganic - singly or in combination with other materials, ap-
plied directly to the soil for the purpose of promoting plant growth, increasing crop yield
or improving their quality.
c. “Other agricultural chemicals”—shall mean chemicals, chemical inputs and
chemical compounds not herewith covered by the definition of fertilizer and pesticide
but utilized by the agricultural sector.
d. “Handlers”—shall mean exporters, importers, manufacturers, formulators, dis-
tributors, suppliers, wholesalers, dealers, repackers, commercial applicators, warehous-
ers, and retailers of fertilizers, fertilizer inputs, pesticide and other agricultural inputs.
e. “Tolerance level”—shall mean the maximum amount of pesticides as deter-
mined by the FPA, which may be allowed to remain in any raw agricultural produce at
any stage between harvesting and consumption.
f. “Imminent hazard”—shall mean a situation which exists when the continued
use of a pesticide will likely result in unreasonable adverse effects on the public and/or
the environment or will involve unreasonable hazards to the survival of a species de-
clared endangered by the appropriate authorities.
SEC. 4. Board of Directors.—The powers and functions of the FPA shall be
vested in and exercised by a Board of Directors which shall be composed of the following
officials or their representatives:
1. Secretary of Agriculture – Chairman
2. Secretary of Industry – Member
3. Secretary of Finance – Member
4. Secretary of Trade – Member
5. Governor, Central Bank – Member
6. President, Philippine National Bank – Member
7. Director, Bureau of Plant Industry – Member
8. Commissioner, Pollution Control Commission – Member
9. Administrator, Food and Drug Administration - Member
The members of the Board shall elect a Vice-Chairman who shall act as Chairman
in case of the absence, inability or temporary incapacity of the Chairman.
SEC. 5. Organization.—The FPA is empowered to determine and create its or-
ganizational structure in order to achieve its objectives, including the number, positions
and salaries of its officers and employees.
The Board is empowered to create the positions of Administrator, Deputy Admin-
istrator for Fertilizer, Deputy Administrator for Pesticides, and other subordinates
officials as may be required.
The Board shall appoint all the officers of the FPA, establish a compensation
scheme including allowances and benefits working hours and such other conditions of
employment as it may deem proper, discipline and/or remove for cause, and exercise

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such other powers over its personnel as may be necessary for the efficient operation of
the FPA.
SEC. 6. Powers and Functions.—The FPA shall have jurisdiction over all exist-
ing handlers of pesticide, fertilizers and other agricultural chemical inputs. The FPA
shall have the following powers and functions.
I. Common to Fertilizers, Pesticides and Other Agricultural Chemicals
1. To conduct an information campaign regarding the sale and effective use of
these products;
2. To promote and coordinate all fertilizer and pesticide research in cooperation
with the Philippine Council for Agriculture and Resources Research and other appro-
priate agencies to ensure scientific pest control in the public interest, safety in the use
and handling of pesticides, higher standards and quality of products and better applica-
tion methods;
3. To call upon any depart-
ment, bureau, office, agency
instrumentality of the govern-
ment, including government-
owned or controlled corporations,
or any officer or employee thereof
and on the private sector, for
such information or assistance as
it may need in the exercise of its
powers and in the performance of
its functions and duties;
4. To promulgate rules
and regulations for the registra-
tion and licensing of handlers of
these products, collect fees per-
taining thereto, as well as the
renewal, suspension, revocation,
or cancellation of such registra-
tion or licenses and such other
rules and regulations as may be A. Oposa and Jojo Dela Victoria tracing the source of
necessary to implement this ammonium nitrates seized in a raid in the Island of
Calituban, March 2004.” For his anti-illegal fishing
Decree;
campaign Jojo dela Victoria was murdered in his home in
5. To establish and impose Cebu on April 12, 2006.
appropriate penalties on handlers
of these products for violations of any rules and regulations established by the FPA;
6. To institute proceedings against any person violating any provisions of this
Decree and/or such rules and regulations as may be promulgated to implement the
provisions of this Decree after due notice and hearing;

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 FERTILIZERS AND PESTICIDES

7. To delegate such selected privileges, powers or authority as may be allowed by

law to corporations, cooperatives, associations or individuals as may presently exist or
be organized to assists the FPA in carrying out its functions; and
8. To do any and all acts not contrary to law or existing decrees and regulations
as may be necessary to carry out the functions of the FPA.
II. Fertilizers
1. To make a continuous assessment of the fertilizer supply and demand situa-
tion, both domestic and worldwide;
2. To establish and enforce sales quotes, production schedules, distribution areas
and such other marketing regulations as may be necessary to assure market stability
and viable operations in the industry;
3. To determine and set the volume and prices, both wholesale and retail, of fer-
tilizer and fertilizer industry;
4. To establish and implement regulations governing the import and export of
fertilizer and fertilizer inputs, and when necessary, to itself import and/or export such
items, including the negotiating and contracting of such imports and exports;
5. To import fertilizer and fertilizer inputs exempt from customs duties, compen-
sating and sales taxes and all other taxes, and to purchase naptha locally free from
specific taxes, and the corresponding duty on the imported crude, and to sell or convey
such fertilizer or fertilizer input to any individual, association, or corporation likewise
exempt from the payment of customs duties and all other taxes;
6. To control and regulate all marketing companies, whether importer, inventor,
wholesaler or retailer, by controlling and regulating prices, terms, mark-ups, distribu-
tion channels, promotion, storage and other marketing factors in the domestic fertilizer
market;
7. To regulate and control quality of the different grades of fertilizer and to set
new grades when necessary;
8. To control and regulate all aspects of domestic fertilizer production, including
the utilization of ideal capacity and the orderly expansion of the industry and to compel
the utilization of unused or underutilized capacities of fertilizer companies and to direct
any improvement, modifications or repairs as may be necessary to accomplish this;
9. To approve or to reject the establishment of new fertilizer or fertilizer input
plants and the expansion or contraction of existing capacities;
10. To obtain complete access to all pertinent information on the operations of
the industry, including audited and/or unaudited financial statements, marketing, pro-
duction, and inventory data;
11. To control and assist in the financing of the importation of fertilizer and fer-
tilizer inputs of production, of inventory and working capital, and of the expansion of
the industry;

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12. To do all such things as may be necessary to maintain an adequate supply of

fertilizers to the domestic market at reasonable prices while maintaining the long-term
viability of the industry.
III. Pesticide and Other Agricultural Chemicals
1. To determine specific use or manners of use for each pesticide or pesticide for-
mulation;
2. To establish and enforce tolerance levels and good agricultural practice for use
of pesticides in raw agricultural commodities;
3. To restrict or ban the use of any pesticide or the formulation of certain pesti-
cide in specific areas or during certain periods upon evidence that the pesticide is an
imminent hazard, has caused, or is causing widespread serious damage to crops, fish or
livestock, or to public health and the environment;
4. To prevent the importation of agricultural commodities containing pesticide
residues above the accepted tolerance levels and to regulate the exportation of agricul-
tural products containing pesticide residue above accepted tolerance levels;
5. To inspect the establishment and premises of pesticide handlers to endure that
industrial health and safety rules and anti-pollution regulations are followed;
6. To require if and necessary, of every handler of these products, the submission to
the FPA of a report stating the quantity, value of each kind of product exported, imported,
manufactured, produced, formulated, repacked, stored, delivered, distribution, or sold;
7. Should there be any extraordinary and unreasonable increases in prices, or a
severe shortage in supply of pesticides, or imminent dangers or either occurrences, the
FPA is empowered to imposed such control as may be necessary in the public interest,
including but not limited to such restrictions and controls as the imposition of price
ceilings, controls on inventories, of such pesticides or raw materials thereof as may be
in short supply.
SEC. 7. Power to Issue Rules and Regulations to Implement Decree. -- The FPA
is hereby authorized to issue or promulgate rules and regulations to implement and
carry out the purposes and provisions of this Decree.
SEC. 8. Prohibitions Governing Sale and Use of Fertilizers and Pesticides.—It
shall be unlawful for any handlers of pesticides, fertilizers, and other agricultural
chemicals or for any farmer, planter or end-user of the same as the case may be:
a. To engage in any form of production, importation, distribution, storage, and
sale in commercial quantities without securing from the FPA a license therefore;
b. To use any pesticide or pesticide formulation on crops, livestock, and the envi-
ronment in a manner contrary to good agricultural practice as hereinabove defined;
c. To deal in pesticide and/or fertilizers which have not been previously regis-
tered with FPA, or which registration has expired or has been suspended or revoked;
d. To adulterate pesticides’ formulation and fertilizer grades;

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 FERTILIZERS AND PESTICIDES

e. To impose as a condition for the purchase of fertilizer, the simultaneous pur-

chase of pesticide or other agricultural chemical inputs and vice-versa;
f. To mislabel or make claims which differ in substance from the representation
made in connection with a product’s registration or from its actual effectiveness; and
g. To violate such other rules and regulations as may be promulgated by FPA.
SEC. 9. Registration and Licensing.—No pesticides, fertilizer, or other agricul-
tural chemical shall be exported, imported, manufactured, formulated, stored, distrib-
uted, sold or offered for sale, transported, delivered for transportation or used unless it
has been duly registered with the FPA or covered by a numbered provisional permit
issued by FPA for use in accordance with the conditions as stipulated in the permit.
Separate registrations shall be required for each active ingredient and its possible for-
mulations in the case of pesticides or for each fertilizer grade in the case of fertilizer.
No person shall engage in the business of exporting, importing, manufacturing,
formulating, distributing, supplying, repacking, storing, commercially applying, selling,
marketing, of any pesticide, fertilizer and other agricultural chemicals except under a
license issued by the FPA.
The FPA, in the pursuit of its duties and functions, may suspend, revoke, or mod-
ify the registration of any pesticide, fertilizer and other agricultural chemicals after due
notice and hearing.
SEC. 10. Penalties—
a. Fertilizer—Any person who violates any of the provisions of this Decree or nay
of the provisions of the rules and regulations issued or promulgated by the FPA on Fer-
tilizer shall be punished by imprisonment of not less than 15 years and 1 day or more
than 20 years if the amount involved is more than PhP50,000.00; by imprisonment of
not less than 10 years and 1 day or more than 15 years if the amount involved is
PhP10,000.00 or less, as well as a fine ranging from an amount equal to the value in-
volved to three times such value but which in no case be less than PhP5,000.00 nor
more than PhP20,000.00, by a fine of PhP5,000.00 but not more than PhP10,000.00 by
other violations where the amount involved cannot be determined; Provided, that if
falsification of a public or commercial document is committed by reasons or on the occa-
sion of the commission of any of the acts punishable herein, the offender shall be im-
posed the maximum fine and term of imprisonment as above prescribed. If the violation
is committed by a corporation, firm, partnership, cooperative, association or any other
entity, the penalty shall be imposed upon the guilty officer or officers of such corpora-
tions, firm, partnership, association or entity.
b. Pesticides—Any person who violates any of the provisions of this Decree or any
of the Provisions of the rules and regulations issued or promulgated by the FPA on
pesticide, shall be liable to a penal servitude of not in excess of one year or a fine of
PhP5,000.00 but not more than PhP10,000.00 provided, that if the violation is commit-

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ted by a corporation, firm, partnership, cooperative, association or any other entity, the
penalty shall be imposed upon the guilty officials or officers of such entities.
SEC. 11. Appropriation.—The sum of One Million and Two Hundred Thousand
(1.2 Million) Pesos shall, in addition to what has been appropriated for the Fertilizer
Industry Authority for the Calendar Year 1977, be released out of any funds in the
National Treasury not otherwise appropriated. For every calendar year thereafter, such
sums as may be necessary in the General Appropriations Decree.
Any provision of existing law to the contrary notwithstanding, the FPA may im-
pose fees or receive grants, subsidies, donations, or contributions from any entity and
retain such funds for its operation.
SEC. 12. Life of FPA.—The FPA shall constitute itself immediately and shall
continue to exist until and unless abolished by the President of the Philippines.
SEC. 13. Separability Clause.—The provisions of this Decree are hereby de-
clared to be separable, and in the event any one or more of such provisions are held
unconstitutional, the validity of other provisions shall not be affected.
SEC. 14. Repealing Clause.—All laws, decrees, acts, executive orders, ordi-
nances, rules and regulations which are inconsistent with the provisions of the Presi-
dential Decree are hereby repealed, amended or modified accordingly.
SEC. 15. Effectivity.—This Decree shall take effect upon approval.
Approved.

“If we do not permit the Earth to produce beauty and joy, it

will in the end not produce food either.”
— Joseph Woodkrutch

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 COCONUT CUTTING

Coconut Cutting
(Republic Act 8048)

Regulating the Cutting of Coconut Trees

SECTION 1. Title.—this act shall be known as the “Coconut Preservation Act of
1995.”
SEC. 2. Declaration of Policy. Sunrise in Bantayan Island.
—Considering the importance of the
coconut industry in nation building
being one of the principal industries
and one of the largest income earners
of the country, it becomes mandatory
for the government to step in and
regulate the unabated and indis-
criminate cutting of coconut trees. For
reasons of national interest, it is here-
by declared the policy of the State to
provide for the growth of the industry
by embarking on a sustainable and
efficient replanting program
SEC. 3. Definition of Terms.—
For purposes of this Act, the following
terms shall be defined as follows:
a. Coconut tree refers to a tall
pinnate-leaved palm bearing a large
edible fruit called the coconut.
b. Replanting program refers to
the program formulated by the Philip- “Coconut—The Tree of Life.”
pine Coconut Authority (PCA) to reple- (A. Oposa)
nish the coconut trees which have been
permitted to be cut by the PCA.
c. Permit refers to the written authorization of the PCA allowing the cutting of
coconut trees.
d. Economically unproductive farm refers to a coconut area where the cost of farm
production and maintenance is greater than the generated proceeds or income for a
period of at least three (3) years.
e. Senescent coconut trees are coconut trees which are already over age, weak, and
no longer productive.
SEC. 4. Prohibition.—No coconut tree shall be cut except in the following cases
and only after a permit had been issued therefore:

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a. When the tree is sixty (60) years old;

b. When the tree is no longer economically productive;
c. When the tree is disease-infested;
d. When the tree is damaged by typhoon or lightning;
e. When the agricultural land devoted to coconut production shall have been con-
verted in accordance with law into residential, commercial or industrial areas;
f. When the land devoted to coconut production shall be converted into other ag-
ricultural uses or other agriculture-related activities in pursuance to a conversion duly
applied for by the owner and approved by the proper authorities: Provided, That DO
conversion shall be allowed by the PCA until after it shall have been verified and certi-
fied that for a period of at least three (3) years the majority of the coconut trees have
become senescent and economically unproductive or where the coconut farm is not
adaptable to sound management practices on account of geographical location, topogra-
phy, drainage and other conditions rendering the farm economically unproductive; and
g. When the tree would cause hazard to life and property.
No other causes other than those abovementioned shall be considered as a valid
ground for cutting.
SEC. 5. Permit to Cut.—No coconut tree or trees shall be cut unless a permit
therefore, upon due application being made, has been issued by the PCA pursuant to
Section 6 of this Act.
The applicant shall pay an application fee in the amount of twenty-five pesos
(P25.00) for every tree intended to be cut payable to the PCA. Ten pesos (P 10.00) of the
fee shall accrue in favor of the PCA, ten pesos (P10.00) in favor of the municipal gov-
ernment concerned, and five pesos (P5.00) in favor of the barangay unit concerned. The
fees shall be used for the PCX s replanting program and for the repair and rehabilita-
tion of roads of the respective local government units which have been damaged by the
passage of heavy vehicles used for transporting coconut lumber.
No permit to cut shall be granted unless the applicant, in coordination with the
PCA and the local government unit concerned, has already planted the equivalent
number of coconut trees applied for to be cut.
Such replantings, however, shall not apply to areas converted into industrial,
commercial or residential sites or land transformed in accordance with law, into other
agricultural purposes.
The PCA, in coordination with the local government unit concerned, shall regulate
and oversee the planting, fertilization and care of the newly planted coconut trees. For
this purpose, it shall be incumbent upon the PCA to conduct, from time to time,
on-the-spot inspections of the sites where the coconut trees have been planted.

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 COCONUT CUTTING

SEC. 6. Authority to Cut.—The Philippine Coconut Authority shall have the ex-
clusive authority to grant permit for the cutting of coconut trees. The authority may be
delegated to the city or municipal mayors as the PCA may determine.
SEC. 7. Implementing Rules.—
The Philippine Coconut Authority shall
be the lead agency to implement the
provisions of this Act. For this purpose,
the Philippine Coconut Authority shall
prescribe the necessary rules and regu-
lations for the immediate and effective
implementation of this Act.
The PCA, in order to effectively
implement the provisions of this Act,
may request the assistance of any
local government unit, to monitor and
ensure compliance with this Act inclu-
ding its implementing rules and regu-
lations. For this purpose, the PCA may
deputize the Philippine National Po-
lice or other law enforcement agencies
to investigate and apprehend those
caught violating the provisions of this
Act, including the confiscation of ille-
gally cut trees. “Everything in life is speaking in spite of its
apparent silence.” — Hazrat Inayat Khan
In addition to the foregoing, the
PCA shall also, in coordination with (T. Cayton)
the local government unit concerned, require the registration of all sawmills, lumber-
yards, coconut wood dealers and other persons or entities dealing in the processing,
sawing of the coconut trees.
SEC. 8. Penalties.—Those found guilty of violating this Act or any rules and
regulations issued pursuant hereto shall, upon conviction, be punished by imprison-
ment of not less than one (1) year but not more than six (6) years, or a fine of not less
than Fifty Thousand Pesos (P50,000) but not more than Five Hundred Thousand Pesos
(P500,000), or both in the discretion of the court.
If the offender is a corporation or a juridical entity, the official who ordered or al-
lowed the commission of the offense shall be punished with the same penalty,
If the offender is in die government service, he shall, in addition, be dismissed
from office.
SEC. 9. Separability Clause.—If any part or section of this Act is declared un-
constitutional, such declaration shall not affect the other parts or sections of this Act.

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SEC. 10. Repealing Clause.—All laws, presidential decrees, executive orders,

rules and regulations inconsistent with any provisions of this Act shall be deemed re-
pealed or modified accordingly.
SEC. 11. Effectivity Clause.—This Act shall take effect upon its approval.
Approved: June 7, 1995.

Animal Welfare (Republic Act 8485)

SECTION 1. It is the purpose of this Act to protect and promote the welfare of
all animals in the Philippines by supervising and regulating the establishment and ope-
rations of all facilities utilized for
breeding, maintaining, keeping, trea-
ting or training of all animals either
as objects of trade or as household
pets. For purposes of this Act, pet
animal shall include birds.
SEC. 2. No person, associa-
tion, partnership, corporation, coope-
rative or any government agency or
instrumentality including slaughter
houses shall establish, maintain and
operate any pet shop, kennel, vete-
rinary clinic, veterinary hospital,
stockyard, corral, stud farm or stock
farm or zoo for the breeding, treat-
ment, sale or trading, or training of
animals without first securing from
the Bureau of Animal Industry a
certificate of registration therefore.
The certificate shall be issued
upon proof that the facilities of such
establishment for animals are ade-
quate, clean and sanitary and will
not be used for, nor cause pain and/or
suffering to the animals. The certifi- “God loved the birds and invented trees. Man
cate shall be valid for a period of one loved the birds and invented cages.” — Jacques
Deval.
(1) year unless earlier cancelled for
(G. Tapan)
just cause before the expiration of its
term by the Director of the Bureau of Animal Industry and may be renewed from year
to year upon compliance with the conditions imposed hereunder. The Bureau shall
charge reasonable fees for the issuance or renewal of such certificate.

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 ANIMAL WELFARE

The condition that such facilities be adequate, clean and sanitary, and that they
will not be used for nor cause pain and/or suffering to the animals is a continuing re-
quirement for the operation of these establishments. The Bureau may revoke or cancel
such certificate of registration for failure to observe these conditions and other just
causes.
SEC. 3. The Director of the Bureau of Animal Industry shall supervise and regu-
late the establishment, operation and maintenance of pet shops, kennels, veterinary
clinics, veterinary hospitals, stockyards, corrals, stud farms and zoos and any other
form or structure for the confinement of animals where they are bred, treated, main-
tained, or kept either for sale or trade or for training as well as the transport of such
animals in any form of public or private transportation facility in order to provide
maximum comfort while in transit and minimize, if not totally eradicate, incidence of
sickness and death and prevent any cruelty from being inflicted upon the animals.
The Director may call upon any government agency for assistance consistent with
its powers, duties, and responsibilities for the purpose of ensuring the effective and
efficient implementation of this Act and the rules and regulations promulgated there-
under.
It shall be the duty of such government agency to assist said Director when called
upon for assistance using any available fund in its budget for the purpose.
SEC. 4. It shall be the duty of any owner or operator of any land, air or water
public utility transporting pet, wildlife and all other animals to provide in all cases
adequate, clean and sanitary facilities for the safe conveyance and delivery thereof to
their consignee at the place of consignment. They shall provide sufficient food and wa-
ter for such animals while in transit for more than twelve (12) hours or whenever nec-
essary.
No public utility shall transport any such animal without a written permit from
the Director of the Bureau of Animal Industry or his/her authorized representative. No
cruel confinement or restraint shall be made on such animals while being transported.
Any form of cruelty shall be penalized even if the transporter has obtained a per-
mit from the Bureau of Animal Industry. Cruelty in transporting includes overcrowd-
ing, placing of animals in the trunks or under the hood trunks of the vehicles.
SEC. 5. There is hereby created a Committee on Animal Welfare attached to the
Department of Agriculture which shall, subject to the approval of the Secretary of the
Department of Agriculture, issue the necessary rules and regulations for the strict im-
plementation of the provisions of this Act, including the setting of safety and sanitary
standards, within thirty (30) calendar days following its approval. Such guidelines shall
be reviewed by the Committee every three (3) years from its implementation or when-
ever necessary.
The Committee shall be composed of the official representatives of the following:
1. The Department of Interior and Local Government (DILG);

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2. Department of Education, Culture and Sports (DECS);

3. Bureau of Animal Industry (BAI) of the Department of Agriculture (DA);
4. Protected Areas and Wildlife Bureau (PAWB) of the Department of Environ-
ment and Natural Resources (DENR);
5. National Meat Inspection Commission (NMIC) of the DA;
6. Agriculture Training Institute (ATI) of the DA;
7. Philippine Veterinary Medical Association (PVMA);
8. Veterinary Practitioners Association of the Philippines (VPAP);
9. Philippine Animal Hospital Association of the Philippines (PAHA);
10. Philippine Animal Welfare Society (PAWS);
11. Philippine Society for the Prevention of Cruelty to Animals (PSPCA);
12. Philippine Society of Swine Practitioners (PSSP);
13. Philippine College of Canine Practitioners (PCCP); and
14. Philippine Society of Animal Science (PSAS).
The Committee shall be chaired by a representative coming from the private sector
and shall have two (2) vice-chairpersons composed of the representative of the BAI and
another from the private sector.
The Committee shall meet quarterly or as often as the need arises. The Committee
members shall not receive any compensation but may receive reasonable honoraria
from time to time.
SEC. 6. It shall be unlawful for any person to torture any animal, to neglect to
provide adequate care, sustenance or shelter, or maltreat any animal or to subject any
dog or horse to dogfights or horsefights, kill or cause or procure to be tortured or de-
prived of adequate care, sustenance or shelter, or maltreat or use the same in research
or experiments not expressly authorized by the Committee on Animal Welfare.
The killing of any animal other than cattle pigs, goats, sheep, poultry, rabbits,
carabaos, horses, deer and crocodiles is likewise hereby declared unlawful except in the
following instances:
1. When it is done as part of the religious rituals of an established religion or sect
or a ritual required by tribal or ethnic custom of indigenous cultural communities; how-
ever, leaders shall keep records in cooperation with the Committee on Animal Welfare;
2. When the pet animal is afflicted with an incurable communicable disease as
determined and certified by a duly licensed veterinarian;
3. When the killing is deemed necessary to put an end to the misery suffered by
the animal as determined and certified by a duly licensed veterinarian;

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 ANIMAL WELFARE

4. When it is done to prevent an imminent danger to the life or limb of a human

being;
5. When done for the
purpose of animal population
control;
6. When the animal is
killed after it has been used
in authorized research or
experiments; and
7. Any other ground
analogous to the foregoing as
determined and certified li-
censed veterinarian.
In all the above men-
tioned cases, including those
of cattle, pigs, goats, sheep,
poultry, rabbits, carabaos,
horses, deer and crocodiles
“Bowed by the weight of centuries he leans upon his hoe the killing of the animals
and gazes on the ground, the emptiness of ages in his face, shall be done through hu-
and on his back the burden of the world.” — Edwin mane procedures at all times.
Markham For this purpose, hu-
(A. Oposa)
mane procedures shall mean
the use of the most scientific methods available as may be determined and approved by
the committee.
Only those procedures approved by the Committee shall be used in the killing of
animals.
SEC. 7. It shall be the duty of every person to protect the natural habitat of the
wildlife. The destruction of said habitat shall be considered as a form of cruelty to ani-
mals and its preservation is a way of protecting the animals.
SEC. 8. Any person who violates any of the provisions of this Act shall, upon
conviction by final judgment, be punished by imprisonment of not less than six (6)
months nor more than two (2) years or a fine of not less than One thousand pesos
(P1,000.00) nor more than Five thousand pesos (P5,000.00) or both at the discretion of
the Court. If the violation is committed by a juridical person, the officer responsible
therefore shall serve the imprisonment when imposed. If the violation is committed by
an alien, he or she shall be immediately deported after service of sentence without any
further proceedings.
SEC. 9. All laws, acts, decrees, executive orders, rules and regulations inconsis-
tent with the provisions of this Act are hereby repealed or modified accordingly.

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SEC. 10. This Act shall take effect fifteen (15) days after its publication in at
least two (2) newspapers of general circulation.
Approved: February 11, 1998.

Animals are such agreeable friends; They ask no

questions and Pass no criticisms.
— George Elliot

Regulating the Slaughter of Carabaos (Executive Order No. 626)

WHEREAS, Executive Order No. 234, as amended by Executive Order No. 253, al-
lows the slaughter of carabaos and buffaloes that are three years old or over; and
WHEREAS, present conditions demand that the carabao and the buffalo be con-
served for the benefit of the small farmers who rely on them for energy needs.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby promulgate the
following:
SECTION 1. Executive Order No. 234 is further amended such that the slaugh-
tering of carabaos and buffaloes is hereby prohibited except under the following condi-
tions:
a. Only carabaos and buffaloes that are seven years old or over, if male, and
eleven years old or over, if female, may be slaughtered upon issuance of the necessary
slaughter permit by the authorities concerned;
b. No slaughter permit shall be issued without a certificate by the Provincial or
City Veterinarian concerned, or their authorized representatives, to the effect that the
carabao or buffalo to be slaughtered is of the required age and free from any disease.
SEC. 2. The Minister of Agriculture, upon recommendation of the Director of the
Bureau of Animal Industry, shall issue such rules and regulations that will effectively
carry out the provisions of this Executive Order.
SEC. 3. This Executive Order shall take effect immediately.
Done in the City of Manila, October 21, 1980.

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 PLANT QUARANTINE

Plant Quarantine (Presidential Decree No. 1433)

WHEREAS, economic losses due to injury on agricultural crops brought about by
plant pests have become increasingly significant;
WHEREAS, the prevention of introduction, incursion, establishment and subse-
quent spread of plant pests by
regulating the international and
domestic movements of plants and
plant products, is considered more
practical and economical than any
other method of plant pest control;
WHEREAS, modern means of
transportation and handling of im-
ports and exports have favored the
expeditious and extensive move-
ments of plants and plant products,
thereby, increasing the risk of plant
pest introduction and/or incursion;
WHEREAS, plant quarantine
is basically and essentially a preven-
tive measure, it being the actual
front-line defense against the intro-
duction or incursion into the country
“Unless someone like you cares a whole awful lot,
of plant pests which are destructive Nothing is going to get better. It’s not.” — Dr.
to our agricultural crops; Seuss, “The Lorax”
WHEREAS, some of the provi- (G. Tapan)
sions of Act No. 3027 dated March 8,
1922, entitled, “AN ACT TO PROTECT THE AGRICULTURAL INDUSTRIES OF THE
PHILIPPINE ISLANDS FROM INJURIOUS PLANT PESTS AND DISEASES EXIST-
ING IN FOREIGN COUNTRIES AND FURTHER TO REGULATE THE DOMESTIC
MOVEMENT OF THE PLANT MATERIALS IN ORDER TO MINIMIZE THE INJURY
FROM PESTS AND DISEASES ALREADY INTRODUCED.” And Act No. 3767, dated
November 26, 1930, entitled “AN ACT REGULATING THE IMPORTATION, BRING-
ING OR INTRODUCTION INTO THE PHILIPPINE ISLANDS OF LIVING ANIMALS,
SUCH AS INSECTS, BIRDS, CRUSTACEANS, BATS, MOLLUSKS, REPTILES,
MAMMALS, AND OTHER ANIMALS, NOT FALLING WITHIN THE SCOPE OF THE
TERM ‘DOMESTIC ANIMALS’ AS PROVIDED AND DEFINED IN SECTION FOUR
OF ACT NUMBERED THIRTY-SIX HUNDRED AND THIRTY-NINE, IN ORDER TO
PROTECT THE AGRICULTURAL INDUSTRIES OF THIS COUNTRY AND FOR
OTHER PURPOSES” are no longer relevant and applicable to the protection of plant
industries of this country, and therefore, require urgent and immediate modification
and updating;

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WHEREAS, the Plant Quarantine rules and regulations of the Philippines must be
compatible with those of other countries and with the provisions of the Food and Agri-
culture Organization International Plant Protection Convention of the United Nations
to which the Philippines is a signatory;
WHEREAS, the attainment of the foregoing objectives require the necessary im-
provement and strengthening of the Plant Quarantine Services of the Bureau of Plant
Industry by providing adequate laws; regulations; resources and facilities; and incen-
tives to Plant Quarantine Officers;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution do hereby decree and order the
following:
SECTION 1. This Decree shall be known as the “Plant Quarantine Decree of
1978”.
SEC. 2. Definition of Terms.—The following terms used in this Decree shall
mean as follows:
a. “Person” any natural or juridical person such as corporation, partnerships, so-
cieties, associations, firms, companies and other legal entities.
b. “Director” The Director of Plant Industry.
c. “Plant Quarantine Officer” any person so appointed and/or designated by the
Director of Plant Industry.
d. “Country” any independent political unit or sovereign nation, territory, colony
and political or territorial subdivision.
e. “Carrier” includes any sort or craft or other artificial contrivance used, capable
of being used as means of transportation in land, water or air.
f. “Plants” shall compromise living plants and parts thereof, including seeds, cut-
tings, rhizomes, bulbs and corns, grafts, leaves, roots, scions and others that are capable
of propagation.
g. “Plant Products” shall mean products derived from plants, either in their natu-
ral state or in manufactured or processed form and are capable of harboring plant pests.
h. “Potential Animal Pest” shall compromise certain species of animal that are li-
able to become agricultural crop pests such as insects, monkeys, rodents, bats, finches,
rabbits, snails and other forms of animal life capable of causing injury to agricultural
crops.
i. “Packing Materials” includes leaves, straw, bark and other plant materials
used as wrapping, packing, or converting and are capable of harboring plant pets.
j. “Plant Pest” any form of plant or animal life, or any pathogenic agent, injuri-
ous or potentially injurious to plants and/or plant products.
k. “Quarantine Orders” shall mean those Administrative Orders promulgated
and issued by the Director of Plant Industry to implement the provision of this Decree.

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l. “Commodity Treatment” any form of treatment applied to plants, plant prod-

ucts, and other materials capable of harboring plant pests, for the purpose of destroying
or eliminating any infection/infestation caused by plant pests.
m. “Port of Entry” is a port open to both foreign and domestic trade. The term in-
cludes principal ports of entry and subports of entry.
n. “Importation” is the act of bringing into the country the foreign commodities
mentioned under Section 3 and 4 of this Decree for planting, consumption, manufactur-
ing, domestication or for any other purpose.
o. “Plants Plant Products in Transit” shall refer to plants/plant products brought
into any port in the country but are not intended for landing at the said port.
p. “Exportation” is the act of transporting commodities mentioned under Sections
3, 4, and 6 hereof, from a local port to a foreign port.
q. “Phytosanitary Certification” shall mean plant health certification.
SEC. 3. Importation of plants and plant products. The importation and/or intro-
duction into the Philippines of plants, plant products, soil, packing materials of plant
origin capable of harboring and are a source of medium of infection/infestation of plant
pests, is hereby restricted subject to such quarantine orders, rules and regulations as
may be promulgated, from time to time, by the Director with the approval of the Secre-
tary of Agriculture.
SEC. 4. Importation of potential animal pests.—The importation of certain spe-
cies of animals which are liable to become agricultural crop pests and are capable of
causing injury to agricultural crops, is hereby prohibited. However, importation in lim-
ited quantities for a justifiable purpose and upon a written permit from the Director of
Plant Industry, may be allowed.
SEC. 5. Commodities in transit.—Commodities mentioned under Section 3 and 4
of this Decree, as well as, food provisions of plant origin and plant ornaments on board
carriers, that are in transit shall be required of a clearance from the Plant Quarantine
Officers assigned at the port concerned.
SEC. 6. Exportation of plants and plant products.—The Director and/or Plant
Quarantine Officers shall cause the inspection and phytosanitary certification of all
plants, plant products and other related materials capable of harboring plant pests, if
the importing country so requires.
SEC. 7. Inspection of plants/plants products, potential animal pests, and other
materials.—The Director shall cause the appropriate inspection, of the commodities
mentioned in Sections 3, 4 5 and 6 and to apply the necessary plant quarantine meas-
ures in order to attain the objectives of this Decree.
SEC. 8. Domestic Quarantine of plants and plant products.—In order to prevent
and arrest the spread to other areas, of injurious plant pests existing in certain locali-
ties within the Philippines, the Director, and/or the Plant Quarantine Officers shall

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cause the inspection; treatment, if necessary; and certification of plants and plant prod-
ucts involved in the movement from one locality to another within the country.
In cases where it is necessary to contain plant pest(s) the Director may limit the
movement of certain plants and/or plant products.
SEC. 9. Appointment and/or designation of Plant Quarantine Officers.—The Direc-
tor shall cause the appointment
and/or special designation of Plant
Quarantine Officers, who shall act
as his representatives, in
implementing and enforcing the
provisions of this Decree. Provi-
ded, however, that such special de-
signation shall be in written form.
SEC. 10. Powers and Du-
ties of Plant Quarantine Officers.
a. To inspect all carriers,
crew/passenger luggages and
incoming mails, in order to de-
termine the presence of plants,
plant products, and other mate-
rials capable of harboring plant
pests, as well as, potential ani-
mal pests.
“To see a world in a grain of sand, And a heaven in a wild b. To enter into the in-
flower, Hold infinity in the palm of your hand, An eternity in spect any and all areas where
an hour.”—William Blake plants, plant products, and other
(A. Oposa, Flower)
materials capable of harboring
plant pests are landed, stored, and/or grown.
c. To examine imported plants, plant products, and other materials capable of
harboring plant pests as well as potential animal pests and to administer necessary
measures to ensure effective implementation of the provisions of this Decree.
d. To inspect, administer treatment, if necessary; and issue phytosanitary certifi-
cates on plants, plant products, and other related materials intended for export, if the
improving country so requires.
e. To confiscate and destroy or refuse entry of plants, plant products and poten-
tial animal pests involved in prohibited importations, as well as prohibited plants and
plant products which exportation is, likewise, prohibited.
f. To perform such other related duties which maybe assigned to him, from time to time.
In the exercise of the powers and duties herein vested to Plant Quarantine Offi-
cers, they are hereby given police power and authority.
SEC. 11. Non-liability clause.—All charges for storage, demurrage, cartage, la-
bor and delays incident to inspection, cost of disinfection or disinfestation and other

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post-entry requirements shall be the responsibility of the importer or the exporter, as

the case may be. Provided, that the Bureau of Plant Industry and/or its authorized
representative shall not be held liable for damages to the commodity in the course of the
implementation of the provisions of this Decree.
SEC. 12. Duties of the Importer and Exporter.—The importers, exporters, or their
authorized representatives shall
submit a declaration to the Director
of Plant Industry or his authorized
representatives at, or before the time
of entry/embarkation of commodities
mentioned under Sections 3, 4 and 6
hereof, for importation/exportation.
Such declaration shall indicate the
name and address of the consignor/
consignee; the purpose; kind, nature
and quantity of said commodities; the
country or locality where the same
was grown; place and date of unload-
ing or embarkation; and the
registered name of carrier carrying
the consignment.
SEC. 13. Entrance and Clea-
rance of Carriers.—The owner, ope-
rator, agent or master of carriers
flying international and/or domestic
routes are hereby required to serve a
notice of arrival and departure and
to provide inward and outward cargo
manifests and other declarations of
said carriers to the Plant Quaran-
tine Officer at the port. Prior to de- “The true meaning of life is to plant trees, under
parture, the agent or master of said whose shade you do not expect to sit.” — Nelson
carrier must secure a clearance from Henderson
the Plant Quarantine Officer there- (A. Oposa)
at.
The Collector of Customs or his authorized agents shall, require the owner, agent
or master of carrier to submit a copy of the certificate of Plant Quarantine Clearance as
a pre-requisite to the issuance of the Customs Clearance.
SEC. 14. Collection of fees.—The Director shall promulgate rules and regula-
tions governing the collection of nominal regulatory fees for inspection, certification,
import permits, commodity treatment and other, on commodities mentioned under
Section 3, 4 and 6. Provided, that said collections shall constitute the Revolving Fund of

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the National Plant Quarantine Service, to augment the existing appropriations there-
fore, subject to government accounting and auditing regulations. Provided, however,
that importations and exportations of all government agencies; government owned or
controlled corporations; donations to and for the account of any duly registered relief-
organizations; or any charitable institution certified by the Department of Social Ser-
vices and Development; embassies of foreign governments; and those that may be de-
clared by the President, upon the recommendation of the National Economic and Devel-
opment Authority, in the interest of economic development, are exempted from payment
of such fees excluding, however, the expenses incurred in commodity treatment.
SEC. 15. Overtime Services.—The services of Plant Quarantine Officers, fumiga-
tors and helpers performed outside office hours and reimbursement of meal, transporta-
tion, lodging and other incidental expenses shall be chargeable to party or parties
served at rates to be prescribed by the Secretary of Agriculture upon recommendation of
the Director.
SEC. 16. Cooperating Agencies.—The Director may, when necessary, call upon
other government agencies (military, civil, national or local) in the implementation of
plant quarantine regulation and dissemination of information to the general public.
SEC. 17. Authority to promulgate Special Quarantine Orders, Rules and Regula-
tions.—The Director, with the approval of the Secretary of Agriculture, is hereby au-
thorized to promulgate such Special Quarantine Orders, rules and regulations to im-
plement the provisions of this Decree.
SEC. 18. The Plant Quarantine Board.—For the purpose of carrying out the
provisions of this Decree, a Plant Quarantine Board is hereby created composed of the
following:

a. The Director of Plant Industry Chairman

b. Commissioner of Customs or representative Member
c. General Manager or representative of Philippine Ports Authority Member
d. Director, Bureau of Quarantine or representative Member
e. Director, Bureau of Animal Industry or representative Member
f. Representative from the National Economic and Development Au- Member
thority
g. Representative from the Central Bank of the Philippines Member
h. Administrative or representative of the Philippine Coconut Authority Member
i. Director of Forestry or representative Member
j. Bureau of Plant Industry Legal Officer Member
k. Representative from the Importers’ and Exporters’ Confederation Member
l. Chief, Crop Protection Division, Bureau of Plant Industry Member
m. Postmaster-General or representative Member
n. Chief, Plant Quarantine Section, Bureau of Plant Industry Secretary

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 PLANT QUARANTINE

SEC. 19. Duties of the Board.—The Plant Quarantine Board shall be the advi-
sory body to assist the Director of Plant Industry in formulating orders, rules and regu-
lations for the effective implementation of the revisions of this Decree.
SEC. 20. Board Meeting.—The Board shall meet once every quarter, or may call
special meetings when necessary, provided, that such special meetings shall not be held
more than four (4) times annually. The members of the Board shall receive a per diem
of Two Hundred Pesos (P200.00) each per meeting.
SEC. 21. Quorum.—A majority of the members of the Board shall constitute a
quorum.
SEC. 22. Appropriation of
the Plant Quarantine Board.—The
sum of P300,000.00 annually is,
hereby appropriated for the ex-
penses of the Plant Quarantine
Board. Provided, that any unex-
pected amount of the said sum
shall be reverted to the Plant
Quarantine Revolving Fund.
SEC. 23. Penalty Clause.—
Any person, company or corpora-
tion who violates the provisions of
this Decree, or forges, counterfeits,
alters, defaces and destroys any
document issued by virtue of this
Decree shall be fined not more
(A. Oposa)
than Twenty Thousand Pesos
(P20,000.00) or by imprisonment from prison correctional to prison mayor, or both, at
the discretion of the Court.

SEC. 24. Separability Clause.—If any of the provisions of this Decree shall be
invalid, the remainder shall be operative.
SEC. 25. Repealing Clause.—All laws, rules and regulations inconsistent with
the provisions of this Decree are, hereby superseded or revoked accordingly.
SEC. 26. Effectivity.—This Decree shall take effect immediately upon approval.
Done in the City of Manila, this 10th day of June, 1978.

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LAND

Land Tenure
Property Registration Law (Presidential Decree No. 1529)

The Public Land Act (Commonwealth Act 141) and the Property Registration Law
(Pres. Decree 1529) contained in the 1st edition of the Legal Arsenal have been omitted
in this version. Strictly speaking, they are “natural resources laws” in that these laws
relate to the utilization and ‘acquisition of ownership’ of land, a most vital life-support
system.
There are many outmoded
provisions of the Public Land Act,
among them the provisions on
foreshore lease agreements, and
other land tenure instruments that
emphasize the rights more than
the responsibilities of land ‘owner-
ship’.
This is the fundamental diffe-
rence between the treatment and
philosophy of land between Natural
Resources Law and Environmental
Law. In the Law on Natural Re-
sources, land is treated as a com-
modity. It can be owned by a land
title and the law emphasizes the
rights of a ‘landowner’. In contrast,
the underlying philosophy in Envi-
ronmental Law is that man is a
“If a man owns land, the land owns him.”— Ralph
Waldo Emerson mere trustee of the Land, and
(G. Tapan) emphasizes the responsibilities,
more than the rights, of the guard-
ian of the Land – the temporary holder.
However, the provisions of land titling and land registration can be used crea-
tively. For one, a policy can be formulated and implemented whereby responsibility for
sound land management is made a condition precedent for the acquisition and contin-
ued possession of land. This is the concept of an ‘ecological encumbrance’ or eco-lien, for
short.
The basic idea, therefore, is: So long as a person ensures that the land he takes
care of is sustainably productive and kept in proper vegetative condition, he may ‘ac-
quire’ the privilege to possess it. Note the use of the word ‘privilege’. To possess land is
a privilege, not a right, and it comes with great responsibility.

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 LAND TENURE

Actually, some provisions of the Laws are already in place. For example, we may
use the provisions on easements creatively. Under the Water Code, for example, there
must be a margin of 3, 20, and 40 meters from water of rivers and seashores as ease-
ment zones for salvage and recreation (Sec. 51, Pres. Decree 1067). Under the Forestry
Law (Pres. Decree 705, Section 15), all lands with a 10 degree (or 18%) slope must be
“kept in a vegetative condition sufficient to prevent erosion and adverse effects on the
lowlands and streams.” Certain plots of land along riverbanks, mountainous areas,
mangroves, etc. must be set aside as forest lands.
The problem is not in the law. It is in having the interest to read them, for a start,
then to understand them. Thereafter, we can start using them creatively to ensure that
possessing or holding or ‘owning’ a parcel of land becomes a responsibility to \care for
that land as if it were, as it is, a living being.
Law begins with desire. Where there is a sincere desire to use the Law creatively
to advance the ends of conservation, protection and restoration, the Law begins to sing.
Hopefully, in time, it will also become a tool to till and green the landscape of ideas.

Native Title to Land should be recognized by the Government

Facts: Mateo Cariño filed a petition in the Court of Land Registration asking
that he be inscribed as the owner of a 146-hectare land in Baguio. The government of
the Philippines and of the United States appeared and opposed the petition on the
ground that the land was part of the military reservation of Baguio. Not having shown
any title from the government, and the land being agricultural, Cariño’s case was dis-
missed. This was because mere possession of land would not give the possessor any title
as against the government.
Cariño insists that although prescription did not run against the government, still
a grant is to be conclusively presumed based on his immemorial use and occupation of
the land.
Issue: Is the presumption correct?
Held: Yes. “Every presumption should be indulged against the United States
claiming title to the land, which have been for more than fifty years prior to the treaty
of peace with Spain of April 11, 1899, has been held by the present native Igorot holder
and his ancestors under claim of private ownership.”
A native title to land in the province of Benguet in the Philippine Islands, which
for more than fifty years prior to the treaty of peace with Spain, a native Igorot and his
ancestors have held in accordance with Igorot custom, as private property, should be
recognized by the Insular Government, although no document of title has been issued
from the Spanish Crown.
Cariño v. Insular Government
8 Phil. 150, December 6, 1906

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LAND

Forest Land is Not Disposable

If the area covered by the patent and title is not disposable public land, it being a
part of the forest zone, then the patent and title thereto are null and void.
“The defense of indefeasibility of a certificate of title issued pursuant to a free pat-
ent does not lie against the state in an action for reversion of the land covered thereby
when such land is a part of a public forest or of a forest reservation.”
Republic of the Philippines v. Animas
G.R. No. L-37682, March 29, 1974

“It is well settled that a certificate of title is void when it covers property of public
domain classified as forest or timber and mineral lands. Any title issued on non-
disposable lots even in the hands of alleged innocent purchaser for value, shall be can-
celled.”
Lepanto Consolidated Mining Company v. Manuel Dumyung
G.R. Nos. L-31666–68, April 30, 1979

67
Comprehensive Agrarian Reform Program (Republic Act 6657)

Chapter I
Preliminary Chapter

SECTION 1. Title.—This Act shall be known as the “Comprehensive Agrarian

Reform Law of 1988.”
SEC. 2. Declaration of Principles and Policies.—It is the policy of the State to
pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of the landless
farmers and farmworkers will receive the highest consideration to promote social justice
and to move the nation toward sound rural development and industrialization, and the
establishment of owner cultivatorship of economic-size farms as the basis of Philippine
agriculture.
To this end, a more equitable distribution and ownership of land, with due regard
to the rights of landowners to just compensation and to the ecological needs of the na-
tion, shall be undertaken to provide farmers and farmworkers with the opportunity to
enhance their dignity and improve the quality of their lives through greater productiv-
ity of agricultural lands.

_______________________
67
As amended by R.A. No. 7881, 20 February 1995. The Comprehensive Agrarian Reform
Law is an amendment and revision of the Tenant Emancipation Decree (P.D. 27, 1972, a hand-
written presidential decree, one of the first laws passed by former President Ferdinand Marcos
upon the declaration of Martial Law in the Philippines in 1972).

308
 COMPREHENSIVE AGRARIAN REFORM PROGRAM

The agrarian reform program is founded on the right of farmers and regular
farmworkers, who are landless to own directly or collectively the lands they till or, in
the case of other farm-workers to receive a just share of the fruits thereof. To this end,
the State shall encourage and undertake the just distribution of all agricultural lands,
subject to the priorities and retention limits set forth in this Act, taking into account
ecological, developmental, and equity considerations, and subject to the payment of just
compensation. The State shall respect the right of small landowners, and shall provide
incentive for voluntary landsharing.
The State shall recognize the
right of farmers, farmworkers and
landowners, as well as coopera-
tives and other independent far-
mers’ organizations, to participate
in the planning, organization, and
management of the program, and
shall provide support to agricul-
ture through appropriate techno-
logy and research, and adequate
financial production, marketing
and other support services.
The State shall apply the
principles of agrarian reform, or
stewardship, whenever applicable,
in accordance with law, in the dis-
position or utilization of other
natural resources, including lands
of the public domain, under lease
or concession, suitable to agricul- “My own recipe for world peace is a little bit of land
ture, subject to prior rights, home- for everyone.” — Gladys Taber
stead rights of small settlers and (A. Oposa)
the rights of indigenous commu-
nities to their ancestral lands.
The State may resettle landless farmers and farmworkers in its own agricultural
estates, which shall be distributed to them in the manner provided by law.
By means of appropriate incentives, the State shall encourage the formation and
maintenance of economic-size family farms to be constituted by individual beneficiaries
and small landowners. The State shall protect the rights of subsistence fishermen, es-
pecially of local communities, to the preferential use of communal marine and fishing
resources, both inland and offshore. It shall provide support to such fishermen through
appropriate technology and research, adequate financial, production and marketing
assistance and other services. The State shall also protect, develop and conserve such
resources. The protection shall extend to offshore fishing grounds of subsistence fisher-

309
LAND

men against foreign intrusion. Fishworkers shall receive a just share from their labor in
the utilization of marine and fishing resources.
The State shall be guided by the principles that land has a social function and land
ownership has a social responsibility. Owners of agricultural lands have the obligation
to cultivate directly or through labor administration the lands they own and thereby
make the land productive.
The State shall provide incentives to landowners to invest the proceeds of the
agrarian reform program to promote industrialization, employment and privatization of
public sector enterprises. Financial instruments used as payment for lands shall con-
tain features that shall enhance negotiability and acceptability in the marketplace.
The State may lease undeveloped lands of the public domain to qualified entities
for the development of capital intensive farms, and traditional and pioneering crops
especially those for exports subject to the prior rights of the beneficiaries under this Act.
SEC. 3. Definitions.—For the purpose of this Act, unless the context indicates
otherwise:
a. Agrarian reform means redistribution of lands, regardless of crops or fruits
produced, to farmers and regular farmworkers who are landless, irrespective of tenurial
arrangement, to include the totality of factors and support services designed to lift the
economic status of the beneficiaries and all other arrangements alternative to the
physical redistribution of lands, such as production or profit-sharing, labor administra-
tion, and the distribution of shares of stock, which will allow beneficiaries to receive a
just share of the fruits of the lands they work.
b. Agriculture, agricultural enterprise, or agricultural activity means the cultiva-
tion of the soil, planting of crops, growing of fruit trees, including the harvesting of such
farm products, and other farm activities and practices performed by a farmer in con-
68
junction with such farming operations done by persons whether natural or juridical.
c. Agricultural land refers to land devoted to agricultural activity as defined in
this Act and not classified as mineral, forest, residential, commercial or industrial land.
d. Agrarian dispute refers to any controversy relating to tenurial arrangements,
whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agricul-
ture, including disputes concerning farmworkers’ associations or representation of per-
sons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or condi-
tions of such tenurial arrangements.
It includes any controversy relating to compensation of lands acquired under this
Act and other terms and conditions of transfer of ownership from landowners to farm-
workers, tenants and other agrarian reform beneficiaries, whether the disputants stand
in the proximate relation of farm operator and beneficiary, landowner and tenant, or
lessor and lessee.
_______________________
68
As amended by Sec. 1, R.A. no. 7881, 20 February 1995.

310
 COMPREHENSIVE AGRARIAN REFORM PROGRAM

e. Idle or abandoned land refers to any agricultural land not cultivated, tilled or
developed to produce any crop nor devoted to any specific economic purpose continu-
ously for a period of three (3) years immediately prior to the receipt of notice of acquisi-
tion by the government as provided under this Act, but does not include land that has
become permanently or regularly devoted to nonagricultural purposes. It does not in-
clude land which has become unproductive by reason of force majeure or any other for-
tuitous event, provided that prior to such event, such land was previously used for agri-
cultural or other economic purpose.
f. Farmer refers to a natural person whose primary livelihood is cultivation of
land or the production of agricultural crops, either by himself, or primarily with the
assistance of his immediate farm household, whether the land is owned by him, or by
another person under a leasehold or share tenancy agreement or arrangement with the
owner thereof.
g. Farmworker is a natural person who renders service for value as an employee or
laborer in an agricultural enterprise or farm regardless of whether his compensation is
paid on a daily, weekly, monthly or pakyaw basis. The term includes an individual whose
work has ceased as a consequence of, or in connection with, a pending agrarian dispute
and who has not obtained a substantially equivalent and regular farm employment.
h. Regular farmworker is a natural person who is employed on a permanent basis
by an agricultural enterprise or farm.
i. Seasonal farmworker is a natural person who is employed on a recurrent, peri-
odic or intermittent basis by an agricultural enterprise or farm, whether as a perma-
nent or a nonpermanent laborer, such as dumaan, sacada, and the like.
j. Other farmworker is a farmworker who does not fall under paragraphs (g), (h),
and (i).
k. Cooperatives shall refer to organizations composed primarily of small agricul-
tural producers, farmers, farmworkers, or other agrarian reform beneficiaries who vol-
untarily organize themselves for the purpose of pooling land, human, technological,
financial or other economic resources, and operated on the principle of one member, one
vote. A juridical person may be a member of a cooperative, with the same rights and
duties as a natural person.
Chapter II
Coverage

SEC. 4. Scope.The Comprehensive Agrarian Reform Law of 1988 shall cover, re-
gardless of tenurial arrangement and commodity produced, all public and private agri-
69
cultural lands, as provided in Proclamation No. 131 and Executive Order No. 229,
including other lands of the public domain suitable for agriculture.
_______________________
69
22 July 1987.

311
LAND

More specifically the following lands are covered by the Comprehensive Agrarian
Reform Program:
a. All alienable and disposable lands of the public domain devoted to or suitable
for agriculture. No reclassification of forest or mineral lands to agricultural lands shall
be undertaken after the approval of this Act until Congress, taking into account ecologi-
cal, developmental and equity considerations, shall have determined by law, the specific
limits of the public domain.
b. All lands of the public domain in excess of the specific limits as determined by
Congress in the preceding paragraph;
c. All other lands owned by the government devoted to or suitable for agriculture;
and
d. All private lands devoted to or suitable for agriculture regardless of the agri-
cultural products raised or that can be raised thereon.
SEC. 5. Schedule of Implementation.—The distribution of all lands covered by
this Act shall be implemented immediately and completed within ten (10) years from
the effectivity thereof.
SEC. 6. Retention Limits.—Except as otherwise provided in this Act, no person
may own or retain, directly or indirectly, any public or private agricultural land, the
size of which shall vary according to factors governing a viable family-size farm, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be awarded
to each child of the landowner, subject to the following qualifications: (1) that he is at
least fifteen (15) years of age; and (2) that he is actually tilling the land or directly
managing the farm; Provided, That landowners whose lands have been covered by
70
Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder: Provided, further, That original homestead grantees or their direct
compulsory heirs who still own the original homestead at the time of the approval of
this Act shall retain the same areas as long as they continue to cultivate said home-
stead.
The right to choose the area to be retained, which shall be compact or contiguous,
shall pertain to the landowner; Provided, however, That in case the area selected for
retention by the landowner is tenanted, the tenant shall have the option to choose
whether to remain therein or be a beneficiary in the same or another agricultural land
with similar or comparable features. In case the tenant chooses to remain in the re-
tained area, he shall be considered a leaseholder and shall lose his right to be a benefi-
ciary under this Act. In case the tenant chooses to be a beneficiary in another agricul-
tural land, he loses his right as a leaseholder to the land retained by the landowner.

_______________________
70
Emancipation of Tenants; see footnote 68.

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The tenant must exercise this option within a period of one (1) year from the time the
landowner manifests his choice of the area for retention.
In all cases, the security of tenure of the farmers or farmworkers on the land prior
to the approval of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease, management contract
or transfer of possession of private lands executed by the original landowner in violation
of the Act shall be null and void; Provided, however, That those executed prior to this
Act shall be valid only when registered with the Register of Deeds within a period of
three (3) months after the effectivity of this Act. Thereafter, all Registers of Deeds shall
inform the Department of Agrarian Reform (DAR) within thirty (30) days of any trans-
action involving agricultural lands in excess of five (5) hectares.

“How can we own something which we

did not create—can we then own land? or are
we mere caretakers?
— Anonymous

SEC. 7. Priorities.—The Department of Agrarian Reform (DAR) in coordination

with the Presidential Agrarian Reform Council (PARC) shall plan and program the
acquisition and distribution of all agricultural lands through a period of ten (10) years
from the effectivity of this Act. Lands shall be acquired and distributed as follows:
Phase One: Rice and corn lands under Presidential Decree No. 27; all idle or
abandoned lands; all private lands voluntarily offered by the owners for agrarian re-
form; all lands foreclosed by the government financial institutions; all lands acquired by
the Presidential Commission on Good Government (PCGG); and all other lands owned
by the government devoted to or suitable for agriculture, which shall be acquired and
distributed immediately upon the effectivity of this Act, with the implementation to be
completed within a period of not more than four (4) years;
Phase Two: All alienable and disposable public agricultural lands; all arable pub-
lic agricultural lands under agroforest, pasture and agricultural leases already culti-
vated and planted to crops in accordance with Section 6, Article XII, of the Constitution;
all public agricultural lands which are to be opened for new development and resettle-
ment; and all private agricultural lands in excess of fifty (50) hectares, insofar as the
excess hectarage is concerned, to implement principally the rights of farmers and regu-
lar farmworkers, who are landless, to own directly or collectively the lands they till,
which shall be distributed immediately upon the effectivity of the Act, with the imple-
mentation to be completed within a period of not more than four (4) years.
Phase Three: All other private agricultural lands commencing with large land-
holdings and proceeding to medium and small landholdings under the following sched-
ule:

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a. Landholdings above twenty four (24) hectares up to fifty (50) hectares, to begin
on the fourth (4th) year from the effectivity of this Act and to be completed within three
(3) years; and
b. Landholdings from the retention limit up to twenty four (24) hectares, to begin
on the sixth (6th) year from the effectivity of this Act and to be completed within four
(4) years; to implement principally the right of farmers and regular farmworkers who
are landless, to own directly or collectively the lands they till.
The schedule of acquisition and redistribution of all agricultural lands covered by
this program shall be made in accordance with the above order of priority, which shall
be provided in the implementing rules to be prepared by the Presidential Agrarian
Reform Council (PARC), taking into consideration the following: the need to distribute
lands to the tillers at the earliest practicable time; the need to enhance agricultural
productivity; and the availability of funds and resources to implement and support the
program.
In any case, the PARC, upon recommendation by the Provincial Agrarian Reform
Coordinating Committee (PARCCOM), may declare certain provinces or regions as
priority land reform areas, in which case the acquisition and distribution of private
agricultural lands therein may be implemented ahead of the above schedules.
In effecting the transfer within these guidelines, priority must be given to lands
that are tenanted.
The PARC shall establish guidelines to implement the above priorities and distri-
bution scheme, including the determination of who are qualified beneficiaries: Provided,
That an owner-tiller may be a beneficiary of the land he does not own but is actually
cultivating to the extent of the difference between the area of the land he owns and the
award ceiling of three (3) hectares.
SEC. 8. Multinational Corporations.—All lands of the public domain leased,
held or possessed by multinational corporations or associations, and other lands owned
by the government or by government-owned or controlled corporations, associations,
institutions, or entities, devoted to existing and operational agrobusiness or agro-
industrial enterprises, operated by multinational corporations and associations, shall be
programmed for acquisition and distribution immediately upon the effectivity of this
Act, with the implementation to be completed within three (3) years.
Lands covered by the paragraph immediately preceding, under lease, manage-
ment, grower or service contracts, and the like, shall be disposed of as follows:
a. Lease, management, grower or service contracts covering such lands covering
an aggregate area in excess of 1,000 hectares, leased or held by foreign individuals in
excess of 500 hectares are deemed amended to conform with the limits set forth in Sec-
tion 3 of Article XII of the Constitution.
b. Contracts covering areas not in excess of 1,000 hectares in the case of such cor-
porations and associations, and 500 hectares, in the case of such individuals, shall be

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allowed to continue under their original terms and conditions but not beyond August
29, 1992, or their valid termination, whichever comes sooner, after which, such agree-
ments shall continue only when confirmed by the appropriate government agency. Such
contracts shall likewise continue even after the land has been transferred to beneficiar-
ies or awardees thereof, which transfer shall be immediately commenced and imple-
mented, and completed within the period of three (3) years mentioned in the first para-
graph hereof.
c. In no case will such leases and other agreements now being implemented ex-
tend beyond August 29, 1992, when all lands subject hereof shall have been distributed
completely to qualified beneficiaries or awardees.
Such agreements can continue thereafter only under a new contract between the
government or qualified beneficiaries or awardees, on the one hand, and said enter-
prises, on the other.
Lands leased, held or possessed by multinational corporations, owned by private
individuals and private nongovernmental corporations, associations, institutions and
entities, citizens of the Philippines, shall be subject to immediate compulsory acquisi-
tion and distribution upon the expiration of the applicable lease, management, grower
or service contract in effect as of August 29, 1987, or otherwise, upon its valid termina-
tion, whichever comes sooner, but not later than after ten (10) years following the effec-
tivity of the Act. However, during the said period of effectivity, the government shall
take steps to acquire these lands for immediate distribution thereafter.
In general, lands shall be distributed directly to the individual worker beneficiar-
ies. In case it is not economically feasible and sound to divide the land, then they shall
form a workers’ cooperative or association which will deal with the corporation or busi-
ness association or any other proper party for the purpose of entering into a lease or
growers’ agreement and for all other legitimate purposes. Until a new agreement is
entered into by and between the workers’ cooperative or association and the corpora-
tion, or business association or any other proper party, any agreement existing at the
time this Act takes effect between the former and the previous landowner shall be re-
spected by both the workers’ cooperative or association and the corporation business
association or such other proper party. In no case shall the implementation or applica-
tion of this Act justify or result in the reduction of status or diminution of any benefits
received or enjoyed by the worker-beneficiaries, or in which they may have a vested
right, at the time this Act becomes effective.
The provisions of Section 32 of the Act, with regard to production and income-
sharing shall apply to farms operated by multinational corporations.
During the transition period, the new owners shall be assisted in their efforts to
learn modern technology in production. Enterprises which show a willingness and
commitment and good faith efforts to impart voluntarily such advanced technology will
be given preferential treatment where feasible.

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In no case shall a foreign corporation, association, entity or individual enjoy any

rights or privileges better than those enjoyed by a domestic corporation, association,
entity or individual.
SEC. 9. Ancestral Lands.—For purposes of this Act, ancestral lands of each in-
digenous cultural community shall include, but not be limited to, lands in the actual,
continuous and open possession and occupation of the community and its members;
Provided, That the Torrens System shall be respected.
The right of these communities to their ancestral lands shall be protected to en-
sure their economic, social and cultural wellbeing. In line with the principles of self-
determination and autonomy, the systems of land ownership, land use, and the modes
of settling land disputes of all these communities must be recognized and respected.
Any provision of law to the contrary notwithstanding, the PARC may suspend the
implementation of this Act with respect to ancestral lands for the purpose of identifying
and delineating such lands; Provided, That in the autonomous regions, the respective
legislatures may enact their own laws on ancestral domain subject to the provisions of
the Constitution and the principles enunciated in this Act and other national laws.
71
SEC. 10. Exemptions and Exclusions—
a. Lands actually, directly and exclusively used for parks, wildlife, forest re-
serves, reforestation, fish sanctuaries and breeding grounds, watersheds and man-
groves shall be exempt from the coverage of this Act.
b. Private lands actually, directly and exclusively used for prawn farms and fish-
ponds shall be exempt from the coverage of this Act; Provided, That said prawn farms
and fishponds have not been distributed and Certificate of Land Ownership Award
(CLOA) issued to agrarian reform beneficiaries under the Comprehensive Agrarian
Reform Program.
In cases where the fishponds or prawn farms have been subjected to the Compre-
hensive Agrarian Reform Law, by voluntary offer to sell, or commercial farms defer-
ment or notices of compulsory acquisition, a simple and absolute majority of the actual
regular workers or tenants must consent to the exemption within one (1) year from the
effectivity of this Act. When the workers or tenants do not agree to this exemption, the
fishponds or prawn farms shall be distributed collectively to the worker-beneficiaries or
tenants who shall form a cooperative or association to manage the same.
In cases where the fishponds or prawn farms have not been subjected to the Com-
prehensive Agrarian Reform Law, the consent of the farm workers shall no longer be
necessary; however, the provision of Section 32-A hereof on incentives shall apply.
c. Lands actually, directly and exclusively used and found to be necessary for na-
tional defense, school sites and campuses, including experimental farm stations oper-
ated by public or private schools for educational purposes, seeds and seedlings research
_______________________
71
As amended by Sec. 2, R.A. No. 7881, 20 February 1995.

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and pilot production center, church sites and convents appurtenant thereto, mosque
sites and Islamic centers appurtenant thereto, communal burial grounds and cemeter-
ies, penal colonies and penal farms actually worked by the inmates, government and
private research and quarantine centers and all lands with eighteen percent (18%) slope
and over, except those already developed, shall be exempt from the coverage of this Act.
72
SEC. 11. Commercial Farming. —Commercial farms, which are private agricul-
tural lands devoted to salt beds, fruit farms, orchards, vegetable and cut-flower farms,
and cacao, coffee and rubber plantations, shall be subject to immediate compulsory
acquisition and distribution after ten (10) years from the effectivity of this Act. In the
case of new farms, the ten-year period shall begin from the first year of commercial
production and operation, as determined by the DAR. During the ten-year period, the
Government shall initiate steps necessary to acquire these lands, upon payment of just
compensation for the land and the improvements thereon, preferably in favor of organ-
ized cooperatives or associations, which shall thereafter manage the said lands for the
workers-beneficiaries.
If the DAR determines that the purposes for which this deferment is granted no
longer exist, such areas shall automatically be subject to redistribution.
The provisions of Section 32 of the Act, with regard to production and income-
sharing, shall apply to commercial farms.

Chapter III
Improvement of Tenurial and Labor Relations

SEC. 12. Determination of Lease Rentals.—In order to protect and improve the
tenurial and economic status of the farmers in tenanted lands under the retention limit
and lands not yet acquired under this Act, the DAR is mandated to determine and fix
immediately the lease rentals thereof in accordance with Section 34 of Republic Act No.
3844, as amended: Provided, That the DAR shall immediately and periodically review
and adjust the rental structure for different crops, including rice and corn, of different
regions in order to improve progressively the conditions of the farmer, tenant or lessee.
SEC. 13. Production-Sharing Plan.—Any enterprise adopting the scheme pro-
vided for in Section 32 hereof or operating under a production venture, lease, manage-
ment contract or other similar arrangement and any farm covered by Sections 8 and 11
hereof is hereby mandated to execute within ninety (90) days from the effectivity of this
Act, a production-sharing plan, under guidelines prescribed by the appropriate govern-
ment agency.
Nothing herein shall be construed to sanction the diminution of any benefits such
as salaries, bonuses, leaves and working conditions granted to the employee-
beneficiaries under existing laws, agreements, and voluntary practice by the enterprise,
_______________________
72
As amended by Sec. 3, R.A. No. 7881, 20 February 1995.

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LAND

nor shall the enterprise and its employee-beneficiaries be prevented from entering into
any agreement with terms more favorable to the latter.

Chapter IV
Registration

SEC. 14. Registration of Landowners.—Within one hundred eighty (180) days

from the effectivity of this Act, all persons, natural or juridical, including government
entities, that own or claim to own agricultural lands, whether in their names or in the
name of others, except those who have already registered pursuant to Executive Order
No. 229, who shall be entitled to such
incentives as may be provided for the
PARC, shall file a sworn statement in
the proper assessor’s office in the form
to be prescribed by the DAR, stating
the following information:
a. the description and area of
the property;
b. the average gross income
from the property for at least three (3)
years;
c. the names of all tenants and
farmworkers therein;
d. the crops planted in the pro-
perty and the area covered by each
crop as of June 1, 1987;
e. the terms of mortgages, lease,
and management contracts subsisting
as of June 1, 1987, and
f. the latest declared market
“One does not sell the earth upon which the
value of the land as determined by the
people walk.” — Anonymous
city or provincial assessor.
(A. Oposa)
SEC. 15. Registration of Bene-
ficiaries.—The DAR in coordination with the Barangay Agrarian Reform Committee
(BARC) as organized in this Act, shall register all agricultural lessees, tenants and
farmworkers who are qualified to be beneficiaries of the CARP. These potential benefi-
ciaries with the assistance of the PARC and the DAR shall provide the following data:
a. names and members of their immediate farm household;
b. owners or administrators of the lands they work on and the length of tenurial
relationship;
c. location and area of the land they work;

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 COMPREHENSIVE AGRARIAN REFORM PROGRAM

d. crops planted; and

e. their share in the harvest or amount of rental paid or wages received.
A copy of the registry or list of all potential CARP beneficiaries in the barangay
shall be posted in the barangay hall, school or other public buildings in the barangay
where it shall be open to inspection by the public at all reasonable hours.

Chapter V
Land Acquisition
73
SEC. 16. Procedure for Acquisition of Private Lands. —For purposes of acquisi-
tion of private lands, the following procedures shall be followed:
a. After having identified the land, landowners, and beneficiaries, the DAR shall
send its notice to acquire the land to the owners thereof, by personal delivery or regis-
tered mail, and post the same in a conspicuous place in the municipal building and
barangay hall of the place where the property is located. Said notice shall contain the
offer of the DAR to pay a corresponding value in accordance with the valuation set forth
in Sections 17, and 18, and other pertinent provisions hereof.
b. Within thirty (30) days from the date of receipt of written notice by personal
delivery or registered mail, the landowner, his administrator or representative shall
inform the DAR of his acceptance or rejection of the offer.
c. If the landowner accepts the offer of the DAR, the Land Bank of the Philip-
pines (LBP) shall pay the landowner the purchase price of the land within thirty (30)
days after he executes and delivers a deed of transfer in favor of the government and
surrenders the Certificate of Title and other monuments of title.
d. In case of rejection or failure to reply, the DAR shall conduct summary admin-
istrative proceedings to determine the compensation for the land by requiring the land-
owner, the LBP and other interested parties to submit evidence as to the just compen-
sation for the land, within fifteen (15) days from the receipt of the notice. After the expi-
ration of the above period, the matter is deemed submitted for decision. The DAR shall
decide the case within thirty (30) days after it is submitted for decision.
e. Upon receipt by the landowner of the corresponding payment or, in case of re-
jection or no response from the landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or in LBP bonds in accordance with
this Act, the DAR shall take immediate possession of the land and shall request the
proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the
Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of
the land to the qualified beneficiaries.
f. Any party who disagrees with the decision may bring the matter to the court of
proper jurisdiction for final determination of just compensation.
_______________________
73
See also Sec. 28 on standing crops at time of acquisition.

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LAND

Chapter VI
Compensation

SEC. 17. Determination of Just Compensation.—In determining just compensa-

tion, the cost of acquisition of the land, the current value of like properties, its nature,
actual use and income, the sworn valuation by the owner, the tax declarations, and the
assessment made by government assessors shall be considered. The social and economic
benefits contributed by the farmers and the farmworkers and by the government to the
property as well as the nonpayment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional factors to deter-
mine its valuation.
SEC. 18. Valuation and Mode of Compensation.—The LBP shall compensate the
landowner in such amounts as may be agreed upon by the landowner and the DAR and
the LBP, in accordance with the criteria provided for in Sections 16 and 17, and other
pertinent provisions hereof, or as may be finally determined by the court, as the just
compensation for the land.
The compensation shall be paid in one of the following modes, at the option of the
landowner:
1. Cash payment, under the following terms and conditions:

a. For lands above fifty (50) Twenty-five percent cash(25%),

hectares, in so far as the excess the balance to be paid in government
hectarage is concerned financial instruments negotiable at
any time

b. For lands above twenty- Thirty percent (30%) cash, the

four (24) hectares and up to fifty balance to be paid in government fi-
(50) hectares nancial instruments negotiable at
any time

c. For lands above twenty- Thirty-five percent (35%) cash,

four (24) hectares and below the balance to be paid in government
financial instruments negotiable at
any time

2. Shares of stock in government-owned or controlled corporations, LBP pre-

ferred shares, physical assets, or other qualified investments in accordance with guide-
lines set by the PARC;
3. Tax credits which can be used against any tax liability;
4. LBP bonds, which shall have the following features:

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 COMPREHENSIVE AGRARIAN REFORM PROGRAM

a. Market interest rates aligned with 91day treasury bill rates. Ten percent
(10%) of the face value of the bonds shall mature every year from the date of issu-
ance until the tenth (10th) year; Provided, That should the landowner choose to
forego the cash portion, whether in full or in part, he shall be paid correspondingly
in LBP bonds;
b. Transferability and negotiability. Such LBP bonds may be used by the
landowner, his successors in interest or his assigns, up to the amount of their face
value, for any of the following:
i. Acquisition of land or other real properties of the government, in-
cluding assets under the Asset Privatization Program and other assets fore-
closed by government financial institutions in the same province or region
where the lands for which the bonds were paid are situated;
ii. Acquisition of shares of stock of government-owned or controlled
corporations or shares of stock owned by the government in private corpora-
tions;
iii. Substitution for surety or bail bonds for the provisional release of
accused persons, or performance bonds;
iv. Security for loans with any government financial institution, pro-
vided the proceeds of the loans shall be invested in an economic enterprise,
preferably in a small and medium-scale industry, in the same province or re-
gion as the land for which the bonds are paid;
v. Payment for various taxes and fees to government; Provided, That
the use of these bonds for these purposes will be limited to a certain percent-
age of the outstanding balance of the financial instruments; Provided, fur-
ther, That the PARC shall determine the percentage mentioned above;
vi. Payment for tuition fees of the immediate family of the original
bondholder in government universities, colleges, trade schools, and other in-
stitutions;
vii. Payment for fees of the immediate family of the original bond-
holder in government hospitals; and
viii. Such other uses as the PARC may from time to time allow.

In case of extraordinary inflation, the PARC shall take appropriate measures to

protect the economy.
SEC. 19. Incentives for Voluntary Offers for Sale.—Landowners, other than
banks and other financial institutions, who voluntarily offer their lands for sale shall be
entitled to an additional five percent (5%) cash payment.
SEC. 20. Voluntary Land Transfer.—Landowners of agricultural lands subject
to acquisition under this Act may enter into a voluntary arrangement for direct transfer
of their lands to qualified beneficiaries subject to the following guidelines:

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a. All notices for voluntary land transfer must be submitted to the DAR within
the first year of the implementation of the CARP. Negotiations between the landowners
and qualified beneficiaries covering any voluntary land transfer which remain unre-
solved after one (1) year shall not be recognized and such land shall instead be acquired
by the government and transferred pursuant to this Act.
b. The terms and conditions of such transfer shall not be less favorable to the
transferee than those of the government‘s standing offer to purchase from the land-
owner and to resell to the beneficiaries, if such offers have been made and are fully
known to both parties.
c. The voluntary agreement shall include sanctions for noncompliance by either
party and shall be duly recorded and its implementation monitored by the DAR.
SEC. 21. Payment of Compensation by Beneficiaries Under Voluntary Land
Transfer.—Direct payments in cash or in kind may be by the farmer-beneficiary to the
landowner under terms to be mutually agreed upon by both parties, which shall be
binding upon them, upon registration with the approval by the DAR. Said approval
shall be considered given, unless notice of disapproval is received by the farmer-
beneficiary within thirty (30) days from the date of registration.
In the event they cannot agree on the price of land, the procedure for compulsory
acquisition as provided in Section 16 shall apply. The LBP shall extend financing to the
beneficiaries for purposes of acquiring the land.

Chapter VII
Land Distribution

SEC. 22. Qualified Beneficiaries.—The lands covered by the CARP shall be dis-
tributed as much as possible to landless residents of the same barangay, or in the ab-
sence thereof, landless residents of the same municipality in the following order of pri-
ority:
a. agricultural lessees and share tenants;
b. regular farmworkers;
c. seasonal farmworkers;
d. other farmworkers;
e. actual tillers or occupants of public lands;
f. collectives or cooperatives of the above beneficiaries; and
g. others directly working on the land.
Provided, however, That the children of landowners who are qualified under Sec-
tion 6 of this Act shall be given preference in the distribution of the land of their par-
ents; and Provided, further, That actual tenant-tillers in the landholdings shall not be
ejected or removed therefrom.

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Beneficiaries under Presidential Decree No. 27 who have culpably sold, disposed
of, or abandoned their land are disqualified to become beneficiaries under this Program.
A basic qualification of a beneficiary shall be his willingness, aptitude, and ability
to cultivate and make the land as productive as possible. The DAR shall adopt a system
of monitoring the record or performance of each beneficiary, so that any beneficiary
guilty of negligence or misuse of the land or any support extended to him shall forfeit
his right to continue as such beneficiary. The DAR shall submit periodic reports on the
performance of the beneficiaries to the PARC.
If, due to the landowner’s retention rights or to the number of tenants, lessees, or
workers on the land, there is not enough land to accommodate any or some of them,
they may be granted ownership of other lands available for distribution under this Act,
at the option of the beneficiaries.
Farmers already in place and those not accommodated in the distribution of pri-
vately-owned lands will be given preferential rights in the distribution of lands from the
public domain.
SEC. 23. Distribution Limit.—No qualified beneficiary may own more than
three (3) hectares of agricultural land.
SEC. 24. Award to Beneficiaries.—The rights and responsibilities of the benefi-
ciary shall commence from the time the DAR makes an award of the land to him, which
award shall be completed within one hundred eighty (180) days from the time the DAR
takes actual possession of the land. Ownership of the beneficiary shall be evidenced by
a Certificate of Land Ownership Award, which shall contain the restrictions and condi-
tions provided for in this Act, and shall be recorded in the Register of Deeds concerned
and annotated on the Certificate of Title.
SEC. 25. Award Ceilings for Beneficiaries.—Beneficiaries shall be awarded an
area not exceeding three (3) hectares which may cover a contiguous tract of land or
several parcels of land cumulated up to the prescribed award limits.
For purposes of this Act, a landless beneficiary is one who owns less than three (3)
hectares of agricultural land.
The beneficiaries may opt for collective ownership, such as co-ownership or farm-
ers cooperative or some other form of collective organization; Provided, That the total
area that may be awarded shall not exceed the total number of co-owners or members of
the cooperative or collective organization multiplied by the award limit above pre-
scribed, except in meritorious cases as determined by the PARC. Title to the property
shall be issued in the name of the co-owners or the cooperative or collective organization
as the case may be.
SEC. 26. Payment by Beneficiaries.—Lands awarded pursuant to this Act shall
be paid for by the beneficiaries to the LBP in thirty (30) annual amortizations at six
percent (6%) interest per annum. The payments for the first three (3) years after the
award may be at reduced amounts as established by the PARC; Provided, That the first

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five (5) annual payments may not be more than five percent (5%) of the value of the
annual gross production as established by the DAR. Should the scheduled annual pay-
ments after the fifth year exceed ten percent (10%) of the annual gross production and
the failure to produce accordingly is not due to the beneficiary’s fault, the LBP may
reduce the interest rate or reduce the principal obligation to make the repayment af-
fordable.
The LBP shall have a lien by way of mortgage on the land awarded to the benefici-
ary; and this mortgage may be foreclosed by the LBP for nonpayment of an aggregate of
three (3) annual amortizations. The LBP shall advise the DAR of such proceedings and
the latter shall subsequently award the forfeited landholding to other qualified benefi-
ciaries. A beneficiary whose land, as provided herein, has been foreclosed shall thereaf-
ter be permanently disqualified from becoming a beneficiary under this Act.
SEC. 27. Transferability of Awarded Lands.—Lands acquired by beneficiaries
under this Act may not be sold, transferred or conveyed except through hereditary suc-
cession, or to the government, or the LBP, or to other qualified beneficiaries for a period
of ten (10) years; Provided, however, That the children or the spouse of the transferor
shall have a right to repurchase the land from the government or LBP within a period
of two (2) years. Due notice of the availability of the land shall be given by the LBP to
the Barangay Agrarian Reform Committee (BARC) of the barangay where the land is
situated. The Provincial Agrarian Reform Coordinating Committee (PARCCOM) as
herein provided, shall, in turn, be given due notice thereof by the BARC.
If the land has not yet been fully paid by the beneficiary, the rights to the land
may be transferred or conveyed, with prior approval of the DAR, to any heir of the bene-
ficiary or to any other beneficiary who, as a condition for such transfer or conveyance,
shall cultivate the land himself. Failing compliance herewith, the land shall be trans-
ferred to the LBP which shall give due notice of the availability of the land in the man-
ner specified in the immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall compensate the benefici-
ary in one lump sum for the amounts the latter has already paid, together with the
value of improvements he has made on the land.
SEC. 28. Standing Crops at the Time of Acquisition.—The landowner shall re-
tain his share of any standing crops unharvested at the time the DAR shall take pos-
session of the land under Section 16 of the Act, and shall be given a reasonable time to
harvest the same.

Chapter VIII
Corporate Farms

SEC. 29. Farms Owned or Operated by Corporations or Other Business Associa-

tions.—In the case of farms owned or operated by corporations or other business asso-
ciations, the following rules shall be observed by the PARC:

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 COMPREHENSIVE AGRARIAN REFORM PROGRAM

In general, lands shall be distributed directly to the individual worker-

beneficiaries.
In case it is not economically fea-
sible and sound to divide the land, then
it shall be owned collectively by the
worker-beneficiaries who shall form a
workers’ cooperative or association
which will deal with the corporation or
business association. Until a new agree-
ment is entered into by and between the
workers’ cooperative or association and
the corporation or business association,
any agreement existing at the time this
Act takes effect between the former and
the previous landowner shall be res-
pected by both the workers’ cooperative
or association and the corporation or
business association.
SEC. 30. Homelots and Farmlots
for Members of Cooperatives.—The indi- “A man’s country is not a certain area of land,
vidual members of the cooperatives or of mountains, rivers, and woods, but it is a
corporations mentioned in the preceding principle; and patriotism is loyalty to that
section shall be provided with homelots principle.” — George William Curtis
and small farmlots for their family use, (T. Cayton)
to be taken from the land owned by the
cooperative or corporation.
SEC. 31. Corporate Landowners.—Corporate landowners may voluntarily trans-
fer ownership over their agricultural landholdings to the Republic of the Philippines
pursuant to Section 20 hereof or to qualified beneficiaries, under such terms and condi-
tions, consistent with this Act, as they may agree upon, subject to confirmation by the
DAR.
Upon certification by the DAR, corporations owning agricultural lands may give
their qualified beneficiaries the right to purchase such proportion of the capital stock of
the corporation that the agricultural land, actually devoted to agricultural activities,
bears in relation to the company’s total assets, under such terms and conditions as may
be agreed upon by them. In no case shall the compensation received by the workers at
the time the shares of stocks are distributed be reduced. The same principle shall be
applied to associations, with respect to their equity or participation.
Corporations or associations which voluntarily divest a proportion of their capital
stock, equity or participation in favor of their workers or other qualified beneficiaries
under this section shall be deemed to have complied with the provisions of the Act:
Provided, That the following conditions are complied with:

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a. In order to safeguard the right of beneficiaries who own shares of stocks to

dividends and other financial benefits, the books of the corporation or association shall
be subject to periodic audit by certified public accountants chosen by the beneficiaries;
b. Irrespective of the value of their equity in the corporation or association, the
beneficiaries shall be assured of at least one (1) representative in the board of directors,
or in a management or executive committee, if one exists, of the corporation or associa-
tion; and
c. Any shares acquired by such workers and beneficiaries shall have the same
rights and features as all other shares.
d. Any transfer of shares of stock by the original beneficiaries shall be void ab
initio unless said transaction is in favor of a qualified and registered beneficiary within
the same corporation.
If within two (2) years from the approval of this Act, the land or stock transfer en-
visioned above is not made or realized or the plan for such stock distribution approved
by the PARC within the same period, the agricultural land of the corporate owners or
corporation shall be subject to the compulsory coverage of this Act.
SEC. 32. Production-Sharing.—Pending final land transfer, individuals or enti-
ties owning, or operating under lease or management contract agricultural lands are
hereby mandated to execute a production-sharing plan with their farmworkers or
farmworkers’ organization, if any, whereby three percent (3%) of the gross sales from
the production of such lands are distributed within sixty (60) days at the end of the
fiscal year as compensation to regular and other farmworkers in such lands over and
above the compensation they currently receive; Provided, That these individuals or
entities realize gross sales in excess of five million pesos per annum unless the DAR,
upon proper application, determines a lower ceiling.
In the event that the individual or entity realizes a profit, an additional ten per-
cent (10%) of the net profit after tax shall be distributed to said regular and other
farmworkers within ninety (90) days of the end of the fiscal year.
To forestall any disruption in the normal operation of lands to be turned over to
the farmworker-beneficiaries mentioned above, a transitory period, the length of which
shall be determined by the DAR, shall be established.
During this transitory period, at least one percent (1%) of the gross sales of the en-
tity shall be distributed to the managerial, supervisory and technical group in place at
the time of the effectivity of this Act, as compensation for such transitory managerial
and technical functions as it will perform, pursuant to an agreement that the farm
worker-beneficiaries and the managerial, supervisory and technical group may con-
clude, subject to the approval of the DAR.

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 COMPREHENSIVE AGRARIAN REFORM PROGRAM

74
SEC. 32-A. Incentives.—Individuals or entities owning or operating fishponds
and prawn farms are hereby mandated to execute within six (6) months from the effec-
tivity of this Act an incentive plan with their regular fishpond or prawn farmworkers or
fishpond or prawn farm workers’ organization, if any, whereby seven and a half percent
(7.5%) of their net profit before tax from the operation of the fishpond or prawn farms
are distributed within sixty (60) days at the end of the fiscal year as compensation to
regular and other pond workers in such ponds over and above the compensation they
currently receive.
In order to safeguard the right of the regular fishpond or prawn farm workers un-
der the incentive plan, the books of the fishpond or prawn farm owners shall be subject
to periodic audit or inspection by certified public accountants chosen by the workers.
The foregoing provision shall not apply to agricultural lands subsequently con-
verted to fishpond or prawn farms provided the size of the land converted does not ex-
ceed the retention limit of the landowner.
SEC. 33. Payment of Shares of Cooperative or Association.—Shares of a coopera-
tive or association acquired by farmers-beneficiaries or workers-beneficiaries shall be
fully paid for in an amount corresponding to the valuation as determined in the imme-
diately succeeding section. The landowner and the LBP shall assist the farmers-
beneficiaries and workers-beneficiaries in the payment for said shares by providing
credit financing.
SEC. 34. Valuation of Lands.—A valuation scheme for the land shall be formu-
lated by the PARC, taking into account the factors enumerated in Section 17, in addi-
tion to the need to stimulate the growth of cooperatives and the objective of fostering
responsible participation of the workers-beneficiaries in the creation of wealth
In the determination of a price that is just not only to the individual but to society as
well, the PARC shall consult closely with the landowner and the workers-beneficiaries.
In case of disagreement, the price as determined by the PARC, if accepted by the
workers-beneficiaries, shall be followed, without prejudice to the landowner’s right to
petition the Special Agrarian Court to resolve the issue of valuation.

Chapter IX
Support Services

SEC. 35. Creation of Support Services Office.—There is hereby created the Office
of Support Services under the DAR to be headed by an Undersecretary.
The Office shall provide general support and coordinative services in the imple-
mentation of the programs particularly in carrying out the provisions of the following
services to farmer-beneficiaries and affected landowners:
_______________________
74
New section introduced by Sec. 4, R.A. No. 7881, 20 February 1995.

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1. Irrigation facilities, especially second crop or dry season irrigation facilities;

2. Infrastructure development and public works projects in areas and settlements
that come under agrarian reform, and for this purpose, the preparation of the physical
development plan of such settlements providing suitable barangay sites, potable water
and power resources, irrigation systems and other facilities for a sound agricultural
development plan;
3. Government subsidies for the use of irrigation facilities;
4. Price support and guarantee for all agricultural produce;
5. Extending to small landowners, farmers’ organizations the necessary credit,
like concessional and collateral-free loans, for agro-industrialization based on social
collaterals like the guarantees of farmers’ organizations;
6. Promoting, developing and extending financial assistance to small and me-
dium-scale industries in agrarian reform areas;
7. Assigning sufficient numbers of agricultural extension workers to farmers’ or-
ganization;
8. Undertake research, development and dissemination of information on agrar-
ian reform and low-cost and ecologically sound farm inputs and technologies to mini-
mize reliance on expensive and imported agricultural inputs;
9. Development of cooperative management skills through intensive training;
10. Assistance in the identification of ready market for agricultural produce and
training in other various aspects of marketing; and
11. Administration, operation, management and funding of support services pro-
grams and projects including pilot projects and models related to agrarian reform as
developed by the DAR.
SEC. 36. Funding for Support Services.—In order to cover the expenses and cost
of support services, at least twenty-five percent (25%) of all appropriations for agrarian
reform shall be immediately set aside and made available for this purpose. In relation,
the DAR shall be authorized to package proposals and receive grants, aid and other
forms of financial assistance from any source.
SEC. 37. Support Services to the Beneficiaries.—The PARC shall ensure that
support services to farmers-beneficiaries are provided, such as:
a. Land surveys and titling;
b. Liberalized terms on credit facilities and production loans;
c. Extension services by way of planting, cropping, production and postharvest
technology transfer, as well as marketing and management assistance and support to
cooperatives and farmers’ organizations;
d. Infrastructure such as access trails, mini dams, public utilities, marketing and
storage facilities; and

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 COMPREHENSIVE AGRARIAN REFORM PROGRAM

e. Research, production and use of organic fertilizers and other local substances
necessary in farming and cultivation.
The PARC shall formulate policies to ensure that support services to farmer bene-
ficiaries shall be provided at all stages of land reform.
The Bagong Kilusang Kabuhayan sa Kaunlaran (BKKK) Secretariat shall be
transferred and attached to the LBP, for its supervision including all its applicable and
existing funds, personnel, properties, equipment and records.
Misuse diversion of the financial and support services herein provided shall result
in sanctions against the beneficiary guilty thereof, including the forfeiture of the land
transferred to him or lesser sanctions as may be provided by the PARC, without preju-
dice to criminal prosecution.
SEC. 38. Support Services to Landowners.—The PARC with the assistance of
such other government agencies and instrumentalities as it may direct, shall provide
landowners affected by the CARP and prior agrarian reform programs with the follow-
ing services:
a. Investment information, financial and counseling assistance;
b. Facilities, programs and schemes for the conversion or exchange of bonds is-
sued for payment of the lands acquired with stocks and bonds issued by the national
government, the Central Bank and other government institutions and instrumentali-
ties;
c. Marketing of LBP bonds, as well as promoting the marketability of said bonds
in traditional and non-traditional financial markets and stock exchanges; and
d. Other services designated to utilize productively the proceeds of the sale or
such lands for rural industrialization.
A landowner who invests in rural-based industries shall be entitled to the incen-
tives granted to a registered enterprise engaged in a pioneer or preferred area of in-
vestment as provided for in the Omnibus Investment Code of 1987, or to such other
incentives as the PARC, the LBP, or other government financial institutions may pro-
vide.
The LBP shall redeem a landowner’s LBP bonds at face value, provided that the
proceeds thereof shall be invested in a BOI-registered company or in any agribusiness
or agro-industrial enterprise in the region where the landowner has previously made
investments, to the extent of thirty percent (30%) of the face value of said LBP bonds,
subject to guidelines that shall be issued by the LBP.
SEC. 39. Land Consolidation.—The DAR shall carry out land consolidation pro-
jects to promote equal distribution of landholdings, to provide the needed infrastruc-
tures in agriculture, and to conserve soil fertility and prevent erosion.

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Chapter X
Special Areas of Concern

SEC. 40. Special Areas of Concern.—This is an integral part of the Comprehen-

sive Agrarian Reform Program, the following principles in these special areas of concern
shall be observed:
1. Subsistence fishing—Small fisherfolk, including seaweed farmers, shall be as-
sured of greater access to the utilization of water resources.
2. Logging and mi-
ning concessions—Subject
to the requirement of a
balanced ecology and con-
servation of water re-
sources, suitable areas, as
determined by the De-
partment of Environment
and Natural Resources
(DENR), in logging, min-
ing and pasture areas,
shall be opened up for ag-
rarian settlements whose
beneficiaries shall be re-
quired to undertake refo-
restation and conserva-
tion production methods.
“The first farmer was the first man. All historic nobility rests on
Subject to existing laws,
the possession and use of land.” — Ralph Waldo Emerson rules and regulations,
settlers and members of
(Y. Lee)
tribal communities shall
be allowed to enjoy and exploit the products of the forest other than timber within the
logging concessions.
3. Sparsely occupied public agricultural lands—Sparsely occupied agricultural
lands of the public domain shall be surveyed, proclaimed and developed as farm settle-
ments for qualified landless people based on an organized program to ensure their or-
derly and early development.
Agricultural land allocations shall be made for ideal family-size farms as determined
by the PARC. Pioneers and other settlers shall be treated equally in every respect.
Subject to the prior rights of qualified beneficiaries, uncultivated lands of the pub-
lic domain shall be made available on a lease basis to interested and qualified parties.
Parties who will engage in the development of capital intensive, traditional or pioneer-
ing crops shall be given priority.

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The lease period, which shall not be more than a total of fifty (50) years, shall be
proportionate to the amount of investment and production goals of the lessee. A system
of evaluation and audit shall be instituted.
4. Idle, abandoned, foreclosed, and sequestered lands—Idle, abandoned, fore-
closed and sequestered lands shall be planned for distribution as homelots and family
size farmlots to actual occupants. If land area permits, other landless families shall be
accommodated in these lands.
5. Rural women—All qualified women members of the agricultural labor force
must be guaranteed and assured equal right to ownership of the land, equal shares of
the farm’s produce, and representation in advisory or appropriate decision-making
bodies.
6. Veterans and retirees—In accordance with Section 7 of Article XVI of the Con-
stitution, landless war veterans and veterans of military campaigns, their surviving
spouse and orphans, retirees of the Armed Forces of the Philippines (AFP) and the In-
tegrated National Police (INP), returnees, surrenderees, and similar beneficiaries shall
be given due consideration in the disposition of agricultural lands of the public domain.
7. Agriculture graduates—Graduates of agricultural schools who are landless
shall be assisted by the government, through the DAR, in their desire to own and till
agricultural lands.

Chapter XI
Program Implementation

SEC. 41. The Presidential Agrarian Reform Council.—The Presidential Agrar-

ian Reform Council (PARC) shall be composed of the President of the Philippines as
Chairman, the Secretary of Agrarian Reform as Vice Chairman and the following as
members: Secretaries of the Departments of Agriculture; Environment and Natural
Resources; Budget and Management; Local Government; Public Works and Highways;
Trade and Industry; Finance; Labor and Employment; Director-General of the National
Economic and Development Authority; President, Land Bank of the Philippines; Admin-
istrator, National Irrigation Administration; and three (3) representatives of affected
landowners to represent Luzon, Visayas and Mindanao; six (6) representatives of agrar-
ian reform beneficiaries, two (2) each from Luzon, Visayas and Mindanao, provided that
one of them shall be from the cultural communities.
SEC. 42. Executive Committee.—There shall be an Executive Committee (EX-
COM) of the PARC composed of the Secretary of the DAR as Chairman, and such other
members as the President may designate, taking into account Article XIII, Section 5 of
the Constitution. Unless otherwise directed by PARC, the EXCOM may meet and de-
cide on any and all matters in between meetings of the PARC; Provided, however, That
its decisions must be reported to the PARC immediately and not later than the next
meeting.

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SEC. 43. Secretariat.—A PARC Secretariat is hereby established to provide gen-

eral support and coordinative services such as interagency linkages; program and pro-
ject appraisal and evaluation, and general operations monitoring for the PARC.
The Secretariat shall be headed by the Secretary of Agrarian Reform who shall be
assisted by an Undersecretary and supported by a staff whose composition shall be
determined by the PARC Executive Committee and whose compensation shall be
chargeable against the Agrarian Reform Fund. All officers and employees of the Secre-
tariat shall be appointed by the Secretary of Agrarian Reform.
SEC. 44. Provincial Agrarian Reform Coordinating Committee (PARCCOM).—
A Provincial Agrarian Reform Coordinating Committee is hereby created in each prov-
ince, composed of a Chairman, who shall be appointed by the President upon the rec-
ommendation of the EXCOM, the Provincial Agrarian Reform Officer as Executive Offi-
cer, and one representative each from the Departments of Agriculture, and of Environ-
ment and Natural Resources and from the LBP, one representative each from existing
farmers’ organizations, agricultural cooperatives and nongovernmental organizations in
the province; two representatives from landowners, at least one of whom shall be a
producer representing the principal crop of the province, and two representatives from
farmer and farmworker-beneficiaries, at least one of whom shall be a farmer or farm-
worker representing the principal crop of the province, as members, Provided, That in
areas where there are cultural communities, the latter shall likewise have one repre-
sentative.
The PARCCOM shall coordinate and monitor the implementation of the CARP in
the province. It shall provide information on the provisions of the CARP, guidelines
issued by the PARC and on the progress of the CARP in the province.
SEC. 45. Province by Province Implementation.—The PARC shall provide the
guidelines for a province-by-province implementation of the CARP. The ten-year pro-
gram of distribution of public and private lands in each province shall be adjusted from
year to year by the province’s PARCCOM in accordance with the level of operations
previously established by the PARC, in every case ensuring the support services are
available or have been programmed before actual distribution is effected.
SEC. 46. Barangay Agrarian Reform Committee.—Unless otherwise provided in
this Act, the provisions of Executive Order No. 229 regarding the organization of the
Barangay Agrarian Reform Committee (BARC) shall be in effect.
SEC. 47. Functions of the BARC.—In addition to those provided in Executive
Order No. 229, the BARC shall have the following functions:
a. Mediate and conciliate between parties involved in an agrarian dispute includ-
ing matters related to tenurial and financial arrangements;
b. Assist in the identification of qualified beneficiaries and landowners within the
barangay;

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 COMPREHENSIVE AGRARIAN REFORM PROGRAM

c. Attest to the accuracy of the initial parcellary mapping of the beneficiary’s till-
age;
d. Assist qualified beneficiaries in obtaining credit from lending institutions;
e. Assist in the initial determination of the value of the land;
f. Assist the DAR representatives in the preparation of periodic reports on the
CARP implementation for submission to the DAR;
g. Coordinate the delivery of support services to beneficiaries; and
h. Perform such other functions as may be assigned by the DAR.
The BARC shall endeavor to mediate, conciliate and settle agrarian disputes
lodged before it within thirty (30) days from its taking cognizance thereof. If after the
lapse of the thirty-day period, it is unable to settle the dispute, it shall issue a certifica-
tion of its proceedings and shall furnish a copy thereof upon the parties within seven (7)
days after the expiration of the thirty day period.
SEC. 48. Legal Assistance.—The BARC or any member thereof may, whenever
necessary in the exercise of any of its functions hereunder, seek the legal assistance of
the DAR and the provincial, city, or municipal government.
SEC. 49. Rules and Regulations.—The PARC and the DAR shall have the power
to issue rules and regulations, whether substantive or procedural, to carry out the ob-
jects and purposes of this Act. Said rules shall take effect ten (10) days after publication
in two (2) national newspapers of general circulation.

Chapter XII
Administrative Adjudication

SEC. 50. Quasi-Judicial Powers of the DAR.—The DAR is hereby vested with
the primary jurisdiction to determine and adjudicate agrarian reform matters and shall
have exclusive original jurisdiction over all matters involving the implementation of
agrarian reform except those falling under the exclusive jurisdiction of the Department
of Agriculture (DA) and the Department of Environment and Natural Resources
(DENR).
It shall not be bound by technical rules of procedure and evidence but shall pro-
ceed to hear and decide all cases, disputes or controversies in a most expeditious man-
ner, employing all reasonable means to ascertain the facts of every case in accordance
with justice and equity and the merits of the case. Toward this end, it shall adopt a
uniform rule of procedure to achieve a just, expeditious and inexpensive determination
for every action or proceeding before it.
It shall have the power to summon witnesses, administer oaths, take testimony,
require submission of reports, compel the production of books and documents and an-
swers to interrogatories and issue subpoena, and subpoena duces tecum, and enforce its
writs through sheriffs or other duly deputized officers. It shall likewise have the power

333
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to punish direct and indirect contempts in the same manner and subject to the same
penalties as provided in the Rules of Court.
Responsible farmer leaders shall be allowed to represent themselves, their fellow
farmers, or their organizations in any proceedings before the DAR; Provided, however,
That when there are two or more representatives for any individual or group, the repre-
sentatives should choose only one among themselves to represent such party or group
before any DAR proceedings.
Notwithstanding an appeal to the Court of Appeals, the decision of the DAR shall
be immediately executory.
SEC. 51. Finality of Determination.—Any case or controversy before it shall be
decided within thirty (30) days after it is submitted for resolution. Only one (1) motion
for reconsideration shall be allowed. Any order, ruling or decision shall be final after the
lapse of fifteen (15) days from receipt of a copy thereof.
SEC. 52. Frivolous Appeals.—To discourage frivolous or dilatory appeals from
the decisions or orders on the local or provincial levels, the DAR may impose reasonable
penalties, including but not limited to fines or censures upon erring parties.
SEC. 53. Certificate of the BARC.—The DAR shall not take cognizance of any
agrarian dispute or controversy unless a certification from the BARC that the dispute
has been submitted to it for mediation and conciliation without any success of settle-
ment is presented; Provided, however, That if no certification is issued by the BARC
within thirty (30) days after a matter or issue is submitted to it for mediation or con-
ciliation the case or dispute may be brought before the PARC.

Chapter XIII
Judicial Review

SEC. 54. Certiorari.—Any decision, order, award or ruling of the DAR on any
agrarian dispute or on any matter pertaining to the application, implementation, en-
forcement, or interpretation of this Act and other pertinent laws on agrarian reform
may be brought to the Court of Appeals by certiorari except as otherwise provided in
this Act within fifteen (15) days from the receipt of a copy thereof.
The findings of fact of the DAR shall be final and conclusive if based on substantial
evidence.
SEC. 55. No Restraining Order or Preliminary Injunction.—No court in the Phil-
ippines shall have jurisdiction to issue any restraining order or writ of preliminary
injunction against the PARC or any of its duly authorized or designated agencies in any
case, dispute or controversy arising from, necessary to, or in connection with the appli-
cation implementation, enforcement, or interpretation of this Act and other pertinent
laws on agrarian reform.

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 COMPREHENSIVE AGRARIAN REFORM PROGRAM

SEC. 56. Special Agrarian Court.—The Supreme Court shall designate at least
one (1) branch of the Regional Trial Court (RTC) within each province to act as a Spe-
cial Agrarian Court.
The Supreme Court may designate more branches to constitute such additional
Special Agrarian Courts as may be necessary to cope with the number of agrarian cases
in each province. In the designation, the Supreme Court shall give preference to the
Regional Trial Courts which have been assigned to handle agrarian cases or whose
presiding judges were former judges of the defunct Court of Agrarian Relations.
The Regional Trial Court (RTC) judges assigned to said courts shall exercise said
special jurisdiction in addition to the regular jurisdiction of their respective courts.
The Special Agrarian Courts shall have the powers and prerogatives inherent in or
belonging to the Regional Trial Courts.
SEC. 57. Special Jurisdiction.—The Special Agrarian Courts shall have original
and exclusive jurisdiction over all petitions for the determination of just compensation
to landowners, and the prosecution of all criminal offenses under this Act. The Rules of
Court, shall apply to all proceedings before the Special Agrarian Courts unless modified
by this Act.
The Special Agrarian Courts shall decide all appropriate cases under their special
jurisdiction within thirty (30) days from submission of the case for decision.
SEC. 58. Appointment of Commissioner.s—The Special Agrarian Courts, upon
their own initiative or at the instance of any of the parties, may appoint one or more
commissioners to examine, investigate and ascertain facts relevant to the dispute, in-
cluding the valuation of properties, and to file a written report thereof with the court.
SEC. 59. Orders of the Special Agrarian Courts.—No order of the Special Agrar-
ian Courts on any issue, question, matter or incident raised before them shall be ele-
vated to the appellate courts until the hearing shall have been terminated and the case
decided on the merits.
SEC. 60. Appeals.—An appeal may be taken from the decision of the Special
Agrarian Courts by filing a petition for review with the Court of Appeals within fifteen
(15) days from receipt of notice of the decision; otherwise, the decision shall become
final.
An appeal from the decision of the Court of Appeals, or from any order, ruling or
decision of the DAR, as the case may be, shall be by petition for review with the Su-
preme Court within a non-extendible period of fifteen (15) days from receipt of a copy of
said decision.
SEC. 61. Procedure on Review.—Review by the Court of Appeals or the Supreme
Court, as the case may be, shall be governed by the Rules of Court. The Court of Appeals,
however, may require the parties to file simultaneous memoranda within a period of
fifteen (15) days from notice, after which the case is deemed submitted for decision.

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SEC. 62. Preferential Attention in Courts.—All courts in the Philippines, both

trial and appellate, shall give preferential attention to all cases arising or in connection
with the implementation of the provisions of this Act.
All cases pending in court arising from or in connection with the implementation
of this Act shall continue to be heard, tried and decided into their finality, notwith-
standing the expiration of the ten-year period mentioned in Section 5 hereof.

Chapter XIV
Financing

SEC. 63. Funding Source.—The initial amount needed to implement this Act for
the period of ten (10) years upon approval hereof shall be funded from the Agrarian
Reform Fund created under Sections 20 and 21 of Executive Order No. 229.
Additional amounts are hereby authorized to be appropriated as and when needed
to augment the Agrarian Reform Fund in order to fully implement the provisions of this
Act.
Sources of funding or appropriations shall include the following:
a. Proceeds of the sales of the Assets Privatization Trust;
b. All receipts from assets recovered and from sales of ill-gotten wealth recovered
through the Presidential Commission on Good Government;
c. Proceeds of the disposition of the properties of the Government in foreign coun-
tries;
d. Portion of amounts accruing to the Philippines from all sources of official for-
eign aid grants and concessional financing from all countries, to be used for the specific
purposes of financing production credits, infrastructures, and other support services
required by this Act;
e. Other government funds not otherwise appropriated.
All funds appropriated to implement the provisions of this Act shall be considered
continuing appropriations during the period of its implementation.
SEC. 64. Financial Intermediary for the CARP.—The Land Bank of the Philip-
pines shall be the financial intermediary for the CARP, and shall ensure that the social
justice objectives of the CARP shall enjoy a preference among its priorities.

Chapter XV
General Provisions

SEC. 65. Conversion of Lands.—After the lapse of five (5) years from its award,
when the land ceases to be economically feasible and sound for agricultural purposes, or
the locality has become urbanized and the land will have a greater economic value for

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residential, commercial or industrial purposes, the DAR, upon application of the benefi-
ciary or the landowner, with due notice to the affected parties, and subject to existing
laws, may authorize the reclassification or conversion of the land and its disposition;
Provided, That the beneficiary shall have fully paid his obligation.
75
SEC. 65-A. Conversion into Fishpond and Prawn Farms.—No conversion of
public agricultural lands into fishponds and prawn farms shall be made except in situa-
tions where the provincial government with the concurrence of the Bureau of Fisheries
and Aquatic Resources (BFAR) declares a coastal zone as suitable for fishpond devel-
opment. In such case, the Department of Environment and Natural Resources (DENR)
shall allow the lease and development of such areas; Provided, That the declaration
shall not apply to environmen-
tally critical projects and areas
as contained in title (A) sub-
paragraph two, (B-5) and (C-1)
and title (B), number eleven (11)
of Proclamation No. 2146,
entitled “Proclaiming Certain
Areas and Types of Projects as
Environmentally Critical and
Within the Scope of the Envi-
ronmental Impact Statement
(EIS) System established under
Presidential Decree No. 1586,” to
ensure the protection of river
systems, aquifers and mangrove
vegetations from pollution and
environmental degradation; Pro-
vided, further, That the approval
shall be in accordance with a set
of guidelines to be drawn up and
“To see mangrove trees with a solid green makes people
promulgated by the DAR and
look at the landscape instead of the people.”— Robert
the BFAR; Provided, further-
Muller
more, That small-farmer coo- (G. Tapan, Siargao Mangrove Forest)
peratives and organizations
shall be given preference in the award of the Fishpond Lease Agreement (FLAs).
No conversion of more than five (5) hectares of private lands to fishpond and
prawn farms shall be allowed after the passage of this Act, except when the use of the
land is more economically feasible and sound for fishpond and/or prawn farm, as certi-
fied by the Bureau of Fisheries and Aquatic Resources (BFAR), and a simple and abso-
lute majority of the regular farm workers or tenants agree to the conversion, the De-
_______________________
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New section introduced by Sec. 5, R.A. No. 7881, 20 February 1995.

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partment of Agrarian Reform, may approve applications for change in the use of the
land; Provided, finally, That no piecemeal conversion to circumvent the provisions of
this Act shall be allowed. In these cases where the change of use is approved, the provi-
sions of Section 32-A hereof on incentives shall apply.
76
SEC. 65-B. Inventory.—Within one (1) year from the effectivity of this Act, the
BFAR shall undertake and finish an inventory of all government and private fishponds
and prawn farms, and undertake a program to promote the sustainable management
and utilization of prawn farms and fishponds. No lease under Section 65-A hereof may
be granted until after the completion of the said inventory.
The sustainable management and utilization of prawn farms and fishponds shall
be in accordance with the effluent standards, pollution charges and other pollution
control measures such as, but not limited to, the quantity of fertilizers, pesticides and
other chemicals used, that may be established by the Fertilizer and Pesticide Authority
(FPA), the Environmental Management Bureau (EMB), and other appropriate govern-
ment regulatory bodies, and existing regulations governing water utilization, primarily
Presidential Decree No. 1067, entitled “A Decree Instituting a Water Code, Thereby
Revising and Consolidating the Laws Governing the Ownership, Appropriation, Utiliza-
tion, Exploitation, Development, Conservation and Protection of Water Resources.”
77
SEC. 65-C. Protection of Mangrove Areas.—In existing Fishpond Lease Agree-
ments (FLAs) and those that will be issued after the effectivity of this Act, a portion of
the fishpond area fronting the sea, sufficient to protect the environment, shall be estab-
lished as a buffer zone and be planted to specified mangrove species to be determined in
consultation with the regional office of the DENR. The Secretary of Environment and
Natural Resources shall provide the penalties for any violation of this undertaking as
well as the rules for its implementation.
78
SEC. 65-D. Change of Crops.—The change of crops to commercial crops or
high value crops shall not be considered as a conversion in the use or nature of the land.
The change in crop should however, not prejudice the rights of tenants or leaseholders
should there be any and the consent of a simple and absolute majority of the affected
farm workers, if any, shall first be obtained.
SEC. 66. Exemptions from Taxes and Fees of Land Transfers.—Transactions
under this Act involving a transfer of ownership, whether from natural or juridical
persons, shall be exempted from taxes arising from capital gains. These transactions
shall also be exempted from the payment of registration fees, and all other taxes and
fees for the conveyance or transfer thereof; Provided, That all arrearages in real prop-
erty taxes, without penalty or interest, shall be deductible from the compensation to
which the owner may be entitled.
_______________________
76
New section introduced by Sec. 5, R.A. No. 7881, 20 February 1995.
77
New section introduced by Sec. 5, R.A. No. 7881, 20 February 1995.
78
New section introduced by Sec. 5, R.A. No. 7881, 20 February 1995.

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 COMPREHENSIVE AGRARIAN REFORM PROGRAM

SEC. 67. Free Registration of Patents and Titles.—All Registers of Deeds are
hereby directed to register, free from payment of all fees and other charges, patents,
titles and documents required for the implementation of the CARP.
SEC. 68. Immunity of Government Agencies from Undue Interference.—No in-
junction, restraining order, prohibition or mandamus shall be issued by the lower courts
against the Department of Agrarian Reform (DAR), the Department of Agriculture
(DA), the Department of Environment and Natural Resources (DENR), and the De-
partment of Justice (DOJ) in their implementation of the program.
SEC. 69. Assistance of Other Government Entities.—The PARC, in the exercise
of its functions, is hereby authorized to call upon the assistance and support of other
government agencies, bureaus and offices, including government-owned or controlled
corporations.
SEC. 70. Disposition of Private Agricultural Lands.—The sale or disposition of
agricultural lands retained by a landowner as a consequence of Section 6 hereof shall be
valid as long as the total landholdings that shall be owned by the transferee thereof
inclusive of the land to be acquired shall not exceed the landholding ceilings provided
for in this Act.
Any sale or disposition of agricultural lands after the effectivity of this Act found
to be contrary to the provisions hereof shall be null and void.
Transferees of agricultural lands shall furnish the appropriate Register of Deeds
and BARC an affidavit attesting that his total landholdings as a result of the said ac-
quisition do not exceed the landholding ceiling. The Register of Deeds shall not register
the transfer of any agricultural land without the submission of this sworn statement
together with the proof of service of a copy thereof to the BARC.
SEC. 71. Bank Mortgages.—Banks and other financial institutions allowed by
law to hold mortgage rights or security interests in agricultural lands to secure loans
and other obligations of borrowers, may acquire title to these mortgaged properties,
regardless of area, subject to existing laws on compulsory transfer of foreclosed assets
and acquisition as prescribed under Section 16 of this Act.
SEC. 72. Lease, Management, Grower or Service Contracts, Mortgages, and
Other Claims.—Lands covered by this Act under lease, management, grower or service
contracts, and the like shall be disposed of as follows:
a. Lease, management, grower or service contracts covering private lands may
continue under their original terms and conditions until the expiration of the same even
if such land has, in the meantime, been transferred to qualified beneficiaries.
b. Mortgages and other claims registered with the Register of Deeds shall be as-
sumed by the government up to an amount equivalent to the landowner’s compensation
value as provided in this Act.
SEC. 73. Prohibited Acts and Omissions.—The following are prohibited:

339
LAND

a. The ownership or possession, for the purpose of circumventing the provisions

of this Act, of agricultural lands in excess of the total retention limits or award ceilings
by any person, natural or juridical, except those under collective ownership by farmer
beneficiaries.
b. The forcible entry or illegal detainer by persons who are not qualified benefici-
aries under this Act to avail themselves of the rights and benefits of the Agrarian Re-
form Program.
c. The conversion by any landowner of his agricultural land into any non-
agricultural use with intent to avoid the application of this Act to his landholdings and
to dispossess his tenant farmers of the land tilled by them.
d. The willful prevention or obstruction by any person, association or entity of the
implementation of the CARP.
e. The sale, transfer, conveyance or change of the nature of lands outside of ur-
ban centers and city limits either in whole or in part after the effectivity of this Act. The
date of the registration of the deed of conveyance in the Register of Deeds with respect
to titled lands and the date of the issuance of the tax declaration to the transferee of the
property with respect to unregistered lands, as the case may be, shall be conclusive for
the purpose of this Act.
The sale, transfer or conveyance by a beneficiary of the right to use or any other
usufructuary right over the land he acquired by virtue of being a beneficiary, in order to
circumvent the provisions of this Act.
79
SEC. 73-A. Exception—The provisions of Section 73, paragraph (e), to the con-
trary notwithstanding, the sale and/or transfer of agricultural land in cases where such
sale, transfer or conveyance is made necessary as a result of a bank’s foreclosure of the
mortgaged land is hereby permitted.
SEC. 74. Penalties.—Any person who knowingly or willfully violates the provi-
sions of this Act shall be punished by imprisonment of not less than one (1) month to
not more than three (3) years or a fine of not less than one thousand pesos (P1,000.00)
and not more than fifteen thousand pesos (P15,000.00), or both, at the discretion of the
court.
If the offender is a corporation or association, the officer responsible therefore
shall be criminally liable.
SEC. 75. Suppletory Application of Existing Legislation.—The provisions of Re-
public Act No. 3844 as amended, Presidential Decree Nos. 27 and 266 as amended,
Executive Order Nos. 228 and 229, both series of 1987; and other laws not inconsistent
with this Act shall have suppletory effect.
SEC. 76. Repealing Clause.—Section 35 of Republic Act No. 3844, Presidential
Decree No. 316, the last two paragraphs of Section 12 of Presidential Decree No. 946.
_______________________
79
New section introduced by Sec. 5, R.A. No. 7881, 20 February 1995.

340
 COMPREHENSIVE AGRARIAN REFORM PROGRAM

Presidential Decree No. 1038, and all other laws, decrees, executive orders, rules,
and regulations, issuances or parts thereof inconsistent with this Act are hereby re-
pealed or amended accordingly.
SEC. 77. Separability Clause.—If, for any reason, any section or provision of this
Act is declared null and void, no other section, provision, or part thereof shall be af-
fected and the same shall remain in full force and effect.
SEC. 78. Effectivity Clause.—This Act shall take effect immediately after publi-
cation in at least two (2) national newspapers of general circulation.
Approved: June 10, 1988.

ECO-LIEN
— The psychological need for security of tenure
must be used for ecological advantage.

Cases on Land Reform

Vinzons-Magana v. Estrella
The issuance of a certificate of land transfer to a land reform beneficiary prior to
payment does not violate the property rights of the original owner. At most, the certifi-
cate merely evidences the government‘s recognition of the grantee as the party qualified
to avail of the mechanism for the acquisition of ownership of the land. Neither is this
recognition permanent nor irrevocable. Failure on the part of the farmer to comply with
his obligations can result in the forfeiture of his certificate of land transfer.

G.R. 60269, 13 September 1991

Luz Farms v. Secretary of Agrarian Reform

The inclusion of land devoted to the raising of livestock, poultry and swine in the
Agrarian Reform Law is unconstitutional. (Note: Poultry and livestock do not grow out
of the land or soil, but needs additional and extensive capital to establish and operate)

G.R. 86889, 4 December 1990

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LAND

Maddumba v. GSIS
The GSIS, a government-owned and controlled corporation, may be compelled to
accept at face value Land Bank notes earlier received in payment of land expropriated
under land reform. Since in land reform the owner seldom gets what he wants for his
property, for the government to compel him further to discount those notes would be
another sacrifice, and thus, unfair.

G.R. 61293, 15 February 1990

Association of Small Landowners v. Department of Agrarian Reform

Republic Act 6657, known as the Comprehensive Agrarian Reform Law is constitu-
tional.
As to the manner of fixing compensation
The determination by administrative authorities as to the amount of compensa-
tion may always be reviewed by the courts, hence constitutional.
As to the mode of compensation
Since the Agrarian Reform Program does not deal with traditional expropriation,
it is understandable for government not to immediately have the money needed for
compensation. Hence, some other device was found necessary.
As to the time when title is transferred
The law conditions the transfer of possession and ownership of the land to the
government on receipt by landowner of the corresponding payment or the deposit by the
DAR of the compensation in cash or LBP bonds with an accessible bank. Until then,
title also remains with the landowner. No outright change of ownership is contem-
plated.

175 SCRA 343, 1989

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 COMMUNITY BASED FOREST MANAGEMENT

Integrated Social Forestry

The kaingineros (slash-and-burn farmers) had always been viewed as “enemies” of
the forest. This perception began to shift when it was realized that they could be effec-
tive partners in the management of forested areas. One strategy is to give the forest
occupants certain tenurial privileges and rights over the land that they till, thus ensur-
ing a long-term interest on said land.
Although the law prohibits the disposition of public lands (such as forest lands) to
private individuals, the State adopted a policy of granting long-term tenurial instru-
ments in the concept of a lease to deserving occupants. Section 5 of Letter of Instruction
No. 1260 forms the core of the regulatory instrument that now governs land tenure in
forest lands.
Over the years, this concept has evolved into what is now known as the “commu-
nity based approach.” People who have a stake in the well-being of the forest are in the
best position to, and most effective partners in, the management of the forest. Thus was
born the concept of community-based forest management.

Community Based Forest Management (Executive Order No. 263)

Whereas, Article II, Section 16 of the 1987 Constitution provides for the protection
and advancement of the right of the Filipino people, both men and women, to a health-
ful and balanced ecology;
Whereas, Article II, Section 10 provides for the promotion of social justice to all
citizens in all phases of national development;
Whereas, Article XIV, Section 17 mandates the State to recognize and respect the
rights of the indigenous peoples to their ancestral domains and consider their customs,
traditions and beliefs in the formulation of laws and policies;
Whereas, Executive Order No. 192, series of 1987, mandates the Department of
Environment and Natural Resources (DENR) as the primary government agency re-
sponsible for the sustainable management and development of the country’s natural
resources;
Whereas, the Philippines 2000 and the government‘s Social Reform Agenda sup-
port people empowerment and the full, meaningful, and indispensable participation of
communities as immediate stakeholders of the forest land resources in the protection
and management of the forest ecosystem;
Whereas, the 25-year Master Plan for Forestry Development also recognizes the
indispensable role of local communities in forest protection, rehabilitation, develop-
ment, and management, and targets the protection, rehabilitation, management, and

343
LAND

utilization of at least 4 million hectares of forest lands, through the community-based

forest management strategy;
Whereas, entrusting the responsibility for forest rehabilitation, protection, and
conservation to the community of stakeholders and affording them equitable access to
the forest and coastal resources
are viable forest land management
strategies as borne by the
experience of the DENR and vari-
ous supporting agencies;
Now, Therefore, I Fidel V.
Ramos, President of the Philip-
pines, by virtue of the powers
vested in me by law, do hereby
order that:
SECTION 1. Community-
based forest management (herein
referred to as CBFM) shall be the
national strategy to achieve sus-
tainable forestry and social justice.
SEC. 2. The DENR, through
its Community and Provincial Envi-
ronment and Natural Resource Of-
fices, in coordination with the local
government units and the Depart-
ment of Interior and Local Govern-
ment (DILG) shall, at all times, take
into account the needs and aspira-
tions of local communities whose
livelihood depends on the forest-
lands.
SEC. 3. Participating orga- “Landscapes have a language of their own, express-
ing the soul of the things, lofty or humble, which
nized communities may be granted
constitute them, from the mighty peaks to the small-
access to the forestland resources est of the tiny flowers hidden in the meadow’s grass.”
under long term tenurial agree- — Alexandria David-neel
ments, provided they employ envi- (A. Oposa)
ronment-friendly, ecologically-sus-
tainable, and labor-intensive harvesting methods. Such harvesting methods shall be
mentioned under a site-specific management plan of each recipient community and duly
approved by the DENR.
SEC. 4. The indigenous peoples may participate in the implementation of CBFM
activities in recognition of their rights to their ancestral domains and land rights and
claims.

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 COMMUNITY BASED FOREST MANAGEMENT

SEC. 5. A. CBFM Steering Committee shall be created immediately and headed

by the DENR with members from the Departments of Agriculture, Trade and Industry,
Agrarian Reform, Finance, Science and Technology, Labor and Employment, Interior
and Local Government, Budget and Management, National Defense and Justice; Na-
tional Economic Development and Authority; Philippine Commission on Countrywide
Development under the Office of the President, Committee on Flagship Programs and
Projects of the Office of the President; Presidential Management Staff under the Office
of the President; Cooperative Development Authority, and Offices of Northern and
Southern Cultural Communities. The Committee may invite representatives from the
Philippine Chamber of Commerce, Philippine Wood Products Association, NGO coali-
tion groups, and other public and private organizations to become members of the
Steering Committee. The Committee shall formulate and develop policy guidelines that
will create incentives and conditions necessary to effectively carry out community-based
forest management strategy. Accordingly, members of the CBFM Steering Committee
should, at least, be represented by concerned Assistant Secretaries or heads of bureaus
and agencies.
SEC. 6. The DENR shall work with local governments, people’s organizations
(POs), non-government organizations (NGOs), religious groups, business and industry,
and other concerned organizations to ensure that communities are empowered to initi-
ate and achieve the objectives of this Order.
SEC. 7. In its budget preparation, the DENR shall allot adequate funds to effec-
tively accomplish CBFM targets and shall seek supplementary funding from local and
foreign supporting agencies and organizations. DENR shall ensure the inclusion of
budgetary allocation for CBFM in the annual General Appropriations Act, pending the
passage of the revised Forestry Code.
SEC. 8. The DENR shall establish a Community-Based Forest Management
Special Account (CBFMSA) to support the implementation of the strategy and provide
financial and professional incentive system for deserving communities and government
personnel.
SEC. 9. The DENR may source local and international grants and donations for
the establishment of the CBFM Special Account. Other sources of fund may later be
determined by the CBFM Steering Committee subject to existing government regula-
tions.
SEC. 10. The DENR shall support and set up jointly with relevant colleges and
universities, private and public organizations, arrangements for a community forestry
training program for members of participating units, such as people’s organizations,
non-government organizations, local government units, and other government person-
nel.

345
LAND

SEC. 11. Within six months after the signing of this Order, the DENR, in con-
sultation with government financial institutions, such as the Development Bank of the
Philippines (DBP), the Land Bank of the Philippines (LBP), GSIS and the SSS, shall
effect the creation of favorable
financing mechanisms for access by
communities and organizations in
the pursuit of the CBFM strategy
and its sub-strategies such as com-
munity training and empowerment,
enterprise development, agro-fores-
try development, tree plantations,
and other non-forest-based alterna-
tive livelihood systems.
SEC. 12. The DENR Secre-
tary shall issue new rules, regula-
tions, procedures, and guidelines
necessary to implement this Order
and repeal or modify existing ones
consistent with the policies set forth
by the CBFM Steering Committee.
SEC. 13. The DENR Secre-
tary shall, within six months from
the signing of this Order, submit to
the Office of the President, a Na-
tional Comprehensive Community “People who will not sustain trees will soon live in
Forestry Action Plan, which embo- a world that will not sustain people.” — Bryce
dies the Department’s short, me- Nelson
dium and long-term plans. The ac- (A. Oposa)
tion plan shall be discussed and
approved by the CBFM Steering Committee prior to its submission to the President.
SEC. 14. All previous executive and administrative issuances, which are incon-
sistent herewith, are repealed or amended accordingly.
Done in the City of Manila, this 19th day of July, 1995.

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 COMMUNITY BASED FOREST MANAGEMENT

Allocation/Tenure Instruments in Production Forest Lands

There are four basic categories of instruments that are used in production forest
lands. These are classified according to those involved as follows:
80
A. Communities

1. Community-Based Forest Management Agreement (CBFMA):

This is the current instrument used in the country under EO 263, Series of 1995.
It is a production sharing contract entered into by and between the government and
People’s Organization (PO) to utilize a portion of the forest land with the sustainable
forest management principles in mind. The agreement is binding for 25 years and re-
newable for another 25 years. CBFMA can also take other forms as discussed below:
a. Certificate of Stewardship Contract (CSC):
This is an agreement between and among the government and an individual forest
occupant or families. This assures the latter peaceful occupation, possession and sus-
tainable development over a designated portion of the CBFM project. CSCs are subject
to the allocation and endorsement of the PO.
b. Protected Area Community-Based Resource Management Agreement
(PA-CBRMA):
This is awarded to POs of qualified tenured migrants and indigenous peoples (IP)
in community based projects within protected areas.
c. Certificate of Ancestral Domain Claim-Community-Based Forest Man-
agement Agreement (CADC-CBFMA) and Certificate of Ancestral Land Claim-
Community-Based Forest Management Agreement (CALC-CBFMA):
These instruments are for CADC and CALC holders entering into a CBFMA Pro-
gram.

2. Programs Prior to CBFMA:

a. Forest Land Management Program (FLMP): This provides sole and exclu
sive rights to its participants to occupy, develop and manage specified areas of
forest lands. It also includes the privilege to harvest, sell and utilize products

_______________________
80
CBFM has integrated and unified all people oriented forestry programs. This includes
FLMP, CFP, ISFP, LIUCP, Upland Development Program (UDP), Regional Resources Manage-
ment Project (RRMP), Integrated Rainforest Management Project (IRMP), Forestry Sector Project
(FSP), Coastal Environment Program (CEP), and Recognition of Ancestral Domains/Claims.

347
LAND

grown on the land. The government enters into a Forest Land Management
Agreement (for this program) with forest occupants and residents of upland com-
munities in lieu of national reforestation objectives.
b. Community Forestry Program (CFP): This allows organized communities
to manage, develop and utilize forest resources in a sustainable manner.
c. Integrated Social Forestry Program (ISFP): This endows families with Cer-
tificates of Stewardship (CS) over portions of forest lands. It was conceptualized
with the end of maximizing land productivity, enhancing ecological stability, and
improving the socio- economic conditions of forest occupants and communities.
d. Income Upland Communities Project (LIUCP): This aims to achieve both a
sustainable upland forest management and poverty alleviation in rural communi-
ties.
81
e. Recognition of Ancestral Domain Claims : The program aims to recognize
the rights of indigenous cultural communities and indigenous peoples to their
ancestral domains/lands. DENR awards two forms of certificates as described
below:
I. Certificate of Ancestral Domain Claim (CADC): This is conferred to indigenous
cultural community/indigenous people claiming a particular traditional territory they
possess since time immemorial where ownership is based on their customs and traditions.
II. Certificate of Ancestral Land Claim (CALC): This is bestowed to an indige-
nous Filipino individual, family or clan claiming a particular area they traditionally
possess, occupy and used since time immemorial.
B. Investors
1. Timber License Agreements (TLA):
These endow individuals the right to possess and occupy and thus to utilize forest
resource within a forestland with the condition of developing, protecting and rehabili-
tating the same. They are binding for 25 years and renewable for another 25 years. The
government does not issue TLAs anymore pursuant to the 1987 constitution.
2. Integrated Forest Management Agreement (IFMA):
This is a production-sharing contract entered into by and between the DENR and
a qualified applicant. The former confers exclusive rights to the latter to develop, man-
age, protect and utilize a specified area of forestland and its forest resources. The con-
tract is effective for a period of 25 years and renewable for another 25 years.

_______________________
81
The issuance of CADC and CALC was turned over to the NCIP from the DENR in 1997
with the passage of IPRA (RA 8371).

348
 COMMUNITY BASED FOREST MANAGEMENT

3. Socialized Industrial Forest Management Agreement (SIFMA):

This provides natural and juridical persons the right to develop, utilize and man-
age a small tract of forest land consistent with the principles of sustainable develop-
ment. Individuals or families and associations or cooperatives are qualified recipients
through an agreement with the DENR.
4. Forest Land Grazing Management Agreement (FLGMA):
This is used for grazing areas, binding for 25 years and renewable for another 25
years.
C. Government Employees
1. Contract of Usufruct:
This endows a DENR employee with the rights to enjoy a maximum of 5 hectares
in certain forest lands as tree farms while associations may be granted up to 150 hec-
tares. Beneficiaries enjoy the property with the condition of preserving its form and
substance without right of occupation.
D. Other Allocation / Tenure Instruments
1. Communal Forest:
This is a tract of forestland provided by the DENR Secretary for personal use of
residents of a municipality or city. This endows privileges to cut, collect and remove
82
forest products in accordance with the law and principles of sustainable development.
2. Community Watershed Areas:
These are forestlands designated by the DENR for specific local communities as
83
sources of water supply.
3. Co-Management Agreement:
This is an understanding between the DENR and an LGU towards co-
management of certain forest areas consistent with their respective mandates and the
principles of sustainable forest management.

_______________________
82
EcoGov Book by Atty. Oliva notes “[t]here is as yet no communal forest assigned by DENR
to an LGU.”
83
EcoGov Book by Atty. Oliva notes “[t]here is as yet no communal watershed that has been
assigned by DENR to the LGU.”

349
LAND

Permits Issued for the Utilization of Forest Resources

in Production Forest Lands

Issued Permit Description

1. Ordinary Minor Forest Prod- : This provides permission to cut and utilize any
ucts License (OMFPL) forest products except for timber and rattan,
granted by the DENR.
2. Rattan Cutting Contract : This allows the cutting and gathering of rattan
(RCC) inside forest lands for the purpose of utilization,
disposition and transport of rattan.
3. Wood Recovery Permit (WRP) : This is a permit issued by the DENR for the re-
covery and disposition of abandoned logs, drifted
logs, sunken logs, uprooted and fire/typhoon
damaged trees, tree stumps, tops and branches.

Allocation/Tenure Instruments in Protected Areas

Activities within protected areas are governed by NIPAS Act, Wildlife Resources
Conservation and Protection Act, and the National Caves and Cave Resources Man-
agement and Protection Act.

Instrument
1. Protected Area Community
Based Resource Management
Agreement
2. Use/Development of Facilities
Inside Protected Area
3. Special Land Uses within PA
4. Scientific/Academic Researches
5. Energy Resources Surveys
6. Bioprospecting (Commercial
Research Agreements)
7. Export/Import/Re-Export
(CITES/Non-CITES Permits
and Certifications)
8. Collection and Breeding of Wild-
life
Description
: This is similar to the CBFM Agreements
issued in production forest lands
: These are usually done through Contracts,
Memorandum of Agreements, or Memoran-
dum of Understanding.
: These refer to installation of communication
facilities, electric power lines, etc.
: These are governed by RA 9147 s. 2001.
: These are for energy resources surveys.
: These are governed by DAO 20 s. 1996, EO
247 s. 1995 and RA 9147 s. 2001.
: These are governed by RA 9147 s. 2001.
: These are governed by EO 192 s. 1987 and
sections 17 and 20 of RA 9147 s. 2001.

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 COMMUNITY BASED FOREST MANAGEMENT

Instrument
9. Local Transport of Wildlife
10. Collection and Removal of
Guano and Other Cave Re-
sources
11. Development and Management
of Caves
Description
: This is governed by RA 9147 s. 2001.
: This is covered by RA 9702. Permits are to
be secured from PAWB.
: This is covered by RA 9702. The instrument
is in the form of a Memorandum of Under-
standing or Memorandum of Agreement be-
tween PAWB and the applicant.

Agreements and Permits Involving Forest Resources in Private Lands

Instrument Description
1. Private Forest Development : This is an agreement between DENR and a
Agreement (PFDA) private landowner for the establishment and
development of forest plantation within his
private property. This provides incentives to
applicants.
2. Private Land Timber Permit : This is provided to landowners for the cut-
(PLTP) ting, gathering and utilization of naturally
grown trees in private lands. This is granted
to lands covered by administrative and judi-
cial titles such as Free Patents, Homestead
Patents, Sales Patents and Torrens titles ob-
tained under the Land Registration Act
3. Special Private Land Timber : This is a permit granted to landowners for
Permit (SPLTP) cutting, gathering and utilization of pre-
mium hardwood species, both planted and
naturally grown. Premium hardwood species
include narra, molave, dao, kamagong, ipil,
akle, apanit, banuyo, bakuling, betis, bolong-
eta, kalantas, lanete, lumbayao, sangilo,
supa, teak, tindalo, manggis including Ben-
guet pine.
4. Special Tree Cutting Permit : This is a permit issued by the Secretary of
(STCP) DENR for the cutting, gathering and/or utili-
zation of trees which are affected in the im-
plementation of government or private infra-
structure and development projects.

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LAND

Minerals
Small-Scale Mining Program (Presidential Decree No. 1899)

Whereas, the Philippine mining industry has always been dominated by large-
scale mining operations; prevailing statutes, policies, incentives and financing are gen-
erally addressed to the large-scale sector of the industry; and capital intensity with high
debt-equity ratio, mechanization and heavy energy requirements characterize such type
of operations, whose main attraction is the attainment of economies of scale through
low cost but large tonnage opera-
tions;
Whereas, the advent of in-
flation, volatile commodity pri-
ces, multiple increases of oil and
fuel prices, stringent environ-
mental control measures and
high cost of capital proved to be
most disastrous for Philippine
large scale mines;
Whereas, abundance of
cheap labor in the Philippines,
relative flexibility and simplicity
of operations, minimum capital
requirements, less fuel depen-
dent operations and minimal ef-
fects on the environment are
among the arguments that lend “Conservation is the foresighted utilization, preserva-
support to the development of tion and/or renewal of forests, waters, lands and min-
small-scale mining; erals, for the greatest good of the greatest number for
the longest time.” — Gifford Pinchot
Whereas, there exist small
(Digital Vision)
mineral deposits that are being
or could be worked profitably at small tonnages requiring minimal capital investments
utilizing manual labor; and
Whereas, the development of these small mineral deposits will generate more em-
ployment opportunities, thereby alleviating the living conditions in the rural areas and
will contribute additional foreign exchange earnings.
Now, Therefore, I, Ferdinand E. Marcos, President of the Republic of the Philip-
pines, by virtue of the powers vested in me by the Constitution, do hereby decree and
order as follows:
SECTION 1. Small-scale mining refers to any single unit mining operation hav-
ing an annual production of not more than P50,000 metric tons of ore and satisfying the
following requisites:

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 MINERALS

1. The working is artisanal, either open cast or shallow underground mining,

without the use of sophisticated mining equipment;
2. Minimal investment on infrastructures and processing plant;
3. Heavy reliance on manual labor, and
4. Owned, managed or controlled by an individual or entity qualified under exist-
ing mining laws, rules and regulations.
SEC. 2. The holders of mining rights meeting the conditions of the preceding
section may apply at any time as small-scale mining permittee/licensee, provided they
are holders of valid and existing mining rights, who have subsequently complied with
existing mining rights, who have subsequently complied with existing mining laws,
rules and regulations before the promulgation of this Decree. A permit or license issued
for this purpose shall be valid for two (2) years renewable for another like period.
SEC. 3. The permittee or licensee shall produce within twelve (12) months from
the date of the issuance of the permit or license and shall submit verified periodic re-
ports. Non-compliance with these requirements shall result in the forfeiture of the
rights granted under this Decree.
SEC. 4. The small-scale mining permittee/licensee shall, during the term of the
permit or license, be exempt from payment of all taxes, except income tax.
SEC. 5. The Bureau of Mines and Geosciences shall provide technical assis-
tance, whenever feasible, as determined by the Director of Mines and Geo-Sciences.
SEC. 6. The Director of Mines and Geosciences may waive some other require-
ments from other government agencies, which he may deem unnecessary for the proper
implementation of the provisions of this Decree.
SEC. 7. New mining areas and/or areas covered by existing reservations not covered
by valid and existing mining claims at the time of the promulgation of this Decree shall be
governed by the implementing rules and regulations that shall be hereinafter promulgated.
The permit area falling under this Section, and its immediate vicinity, shall be
closed to mining location and the permittee/licensee shall have the first option to locate
such areas under other mining laws/decrees, which shall be exercised within a period of
two (2) years from the grant of the permit or license and to cover an area equivalent to
but not exceeding one meridonial block.
SEC. 8. The Minister of Natural Resources, upon the recommendation of the Di-
rector of Mines and Geosciences, shall promulgate rules and regulations to properly
implement the provisions of this Decree.
SEC. 9. All laws, decrees, letter of instructions, executive orders, administrative
orders, rules and regulations, or parts thereof, which are inconsistent with any provi-
sions of this Decree, are hereby repealed, amended, or modified accordingly.
SEC. 10. This Decree shall take effect immediately.
Done in the City of Manila, this 23rd day of January, 1984.

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Be careful of what you

take out of the Earth;
Especially those that you
cannot put back in.

(Digital Vision)

People’s Small-Scale Mining (Republic Act No. 7076)

SECTION 1. Title.—This Act shall be known as the “People’s Small-Scale Min-

ing Act of 1991.”
SEC. 2. Declaration of Policy.—It is hereby declared the policy 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 na-
tion’s wealth and natural resources, giving due regard to existing rights as herein pro-
vided.
SEC. 3. Definitions.—For purposes of this Act, the following terms shall be de-
fined 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;

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 PEOPLE’S SMALL-SCALE MINING

b. Small-scale mining refers to mining activities which rely heavily on manual

labor using simple implements and methods and do not use explosives or heavy mining
equipment;
c. Small-scale miners refers to Filipino citizens who, individually or in the com-
pany of other Filipino citizens, voluntarily form a cooperative duly licensed by the De-
partment of Environment and Natural Resources to engage, under the terms and condi-
tions 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 appro-
priate 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;
f. Active mining area refers to areas under actual exploration, development, ex-
ploitation 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 claim owner 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. Claim owner refers to a holder of an existing mining right;
i. Processor refers to a person issued a license to engage in the treatment of min-
erals 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 pursues 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 em-
ployed 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 Envi-
ronment and Natural Resources; and
m. Secretary refers to the Secretary of the Department of Environment and Natu-
ral Resources.
SEC. 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

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Small-Scale Mining Program to be implemented by the Secretary of the Department of

Environment and Natural Resources, hereinafter called the Department, in coordina-
tion with other concerned government agencies, designed to achieve an orderly, system-
atic, 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 problems connected with small-scale 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.
SEC. 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 Au-
gust 1, 1987: Provided, That such areas are not considered as active mining areas: Pro-
vided, further, That the minerals found therein are technically and commercially suit-
able 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.
SEC. 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 ar-
eas; and
c. Private lands, subject to certain rights and conditions, except those with sub-
stantial 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.

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 PEOPLE’S SMALL-SCALE MINING

SEC. 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 con-
cerned: 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.
SEC. 8. Registration of Small-Scale Miners.—All persons undertaking small-
scale mining activities shall register as miners with the Board and may organize them-
selves into cooperatives in order to qualify for the awarding of a people’s small-scale
mining contract.
SEC. 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 contractor
who shall start mining operations within one (1) year from the date of award: Provided,
further, That priority shall be given to small-scale miners residing in the province 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 De-
partment of Environment and Natural Resources regional office having jurisdiction over
the area.
SEC. 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 Re-
sources Development Decree of 1974, but in no case shall the area exceed twenty hec-
tares (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;
c. Quantity of mineral deposits;
d. Safety of miners;
e. Environmental impact and other considerations; and
f. Other related circumstances.
SEC. 11. Easement Rights.—Upon the declaration of a people’s small-scale min-
ing area, the Director, in consultation with the operator, claim-owner, 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, claim-owner, landowner or lessor.

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SEC. 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 sub-contracted, assigned or otherwise transferred.
SEC. 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 ac-
tivities 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 obliga-
tions 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;
e. Comply with pertinent “I’ve met miners who hate talking about mining be-
rules and regulations on envi- cause it is so dangerous and hard and they don’t want
ronmental protection and con- their wives to know.” — Martin C. Smith
servation, particularly those on (Y. Lee)
tree-cutting, mineral-processing
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.
SEC. 14. Rights of Claim-owners.—In case a site declared and set aside as a peo-
ple’s small-scale mining area is covered by an existing mining right, the claim-owner
and the small-scale miners therein are encouraged to enter into a voluntary and accept-
able contractual agreement with respect to the small-scale utilization of the mineral

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 PEOPLE’S SMALL-SCALE MINING

values from the area under claim. In case of disagreement, the claim-owner shall be
entitled to the following rights and privileges:
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 small-scale 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 claim-owner: Provided, That such rights and privileges shall be
available only if he is not delinquent in the performance of his annual work obligations
and other requirements for the last two (2) years prior to the effectivity of this Act.
SEC. 15. Rights of Private Landowners.—The private landowner or lawful pos-
sessor 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 accept-
able 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.
SEC. 16. Ownership of Mill Tailings.—The small-scale mining contractor shall
be the owner of all mill tailings produced from the contract area. He may sell the tail-
ings or have them processed in any custom mill in the area: Provided, That, if the
small-scale mining contractor decides to sell its mill tailings, the claim-owner shall have
a preemptive right to purchase said mill tailings at the prevailing market price.
SEC. 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.
SEC. 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 recom-
mendation 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.

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The Board shall issue licenses for the operation of custom mills and other process-
ing plants subject to pollution control and safety standards.
The Department shall establish assay laboratories to cross-check the integrity of
custom mills and to render metallurgical and laboratory services to mines.
Custom mills shall be constituted as withholding agents for the royalties, produc-
tion share or other taxes due the government.
SEC. 19. Government Share and Allotment.—The revenue to be derived by the
government from the operation of the mining program herein established shall be sub-
ject to the sharing provided in the Local Government Code.
SEC. 20. People’s Small-Scale Mining Protection Fund.—There is hereby cre-
ated 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.
The fund shall also be made available to address the needs of the small-scale min-
ers brought about by accidents and/or fortuitous events.
SEC. 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). Non-payment of the fine imposed shall render the small-scale mining
contractor ineligible for other small-scale mining contracts.
SEC. 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 operate 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.
SEC. 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 deter-
mined by the Board shall not be dispossessed, ejected or removed from said areas: Pro-
vided, That they comply with the provisions of this Act.
SEC. 24. Provincial/City Mining Regulatory Board.—There is hereby created
under the direct supervision and control of the Secretary a provincial/city mining regu-
latory board, herein called the Board, which shall be the implementing agency of the

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 PEOPLE’S SMALL-SCALE MINING

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;
c. Award contracts to small-scale miners;
d. Formulate and implement rules and regulations related to small-scale mining;
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 area; and
f. Perform such other functions as may be necessary to achieve the goals and ob-
jectives of this Act.
SEC. 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 case may be, one (1) small-scale mining representative, one (1) big-scale mining
representative, and the representative from a non-government 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.
SEC. 26. Administrative Supervision over the People’s Small-Scale Mining Pro-
gram.—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 promul-
gate 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.
SEC. 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 confisca-
tion and seizure of equipment, tools and instruments.
SEC. 28. Repealing Clause.—All laws, decrees, letters of instruction, executive
orders, rules and regulations, and other issuances, or parts thereof, in conflict or incon-
sistent with this Act are hereby repealed or modified accordingly.
SEC. 29. Separability Clause.—Any section or provision of this Act which may
be declared unconstitutional shall not affect the other sections or provisions hereof.
SEC. 30. Effectivity.—This Act shall take effect fifteen (15) days after its publi-
cation in the Official Gazette or in a national newspaper of general circulation.
Approved: June 27, 1991.

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Philippine Mining Act (Republic Act 7942)

Chapter I
Introductory Provisions

SECTION 1. Title.—This Act shall be known as the “Philippine Mining Act of

1995.”
SEC. 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.

“What we call Man’s power over Nature turns out to be a power exercised by some men over
other men with Nature as its instrument.” — C.S. Lewis
(G. Tapan)

SEC. 3. Definition of Terms.—As used in and for purposes of this Act, the follow-
ing 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.

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 PHILIPPINE MINING ACT

b. Block or meridional block means an area bounded by one-half minute of lati-

tude and one-half 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 archi-
pelago.
f. Contract area means land or body of water delineated for purposes of explora-
tion, 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.
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 qual-
ity 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 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 iden-
tify, predict, interpret, and communicate information regarding changes in environ-
mental 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 meas-
ured from the baseline of the Philippine archipelago up to two hundred nautical miles
(200 n.m.) offshore.

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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 mineral-
ized area granted/issued under pertinent mining laws.
q. Exploration means the searching or prospecting for mineral resources by geo-
logical, geochemical or geophysical surveys, remote sensing, test pitting, trending, drill-
ing, 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 finan-
cial 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
the contractor including, but not limited to, war, rebellion, insurrection, riots, civil dis-
turbance, 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 herein described 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 percent
(50%) of the capital is owned by Filipino citizens.
u. Government means the government of the Republic of the Philippines.
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 communally-bounded 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.
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.
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.
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.

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 PHILIPPINE MINING ACT

ab. Mineral agreement means a contract between the government and a contrac-
tor, involving mineral production-sharing agreement, co-production agreement, or joint-
venture agreement.
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 its 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 non-stock, non-profit organi-
zations involved in activities dealing with resource and environmental conservation,
management and protection.

“Everything in nature contains all the power of nature. Everything is made of one
hidden stuff.” — Ralph Waldo Emerson
(G. Tapan)

ah. Net assets refers to the property, plant and equipment as reflected in the au-
dited financial statement of the contractor net of depreciation, as computed for tax pur-
poses, 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.

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aj. Onshore means the landward side from the mean tide elevation, including
submerged lands in lakes, rivers and creeks.
ak. Ore means a naturally occurring substance or material from which a mineral
or element can be mined and/or processed for profit.
al. Permittee means the holder of an exploration permit.
am. Pollution control and infrastructure devices refers to infrastructure, machin-
ery, 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 opera-
tions for their disposal.
an. President means the President of the Republic of the Philippines.
ao. Private land refers to any land belonging to any private person which in-
cludes 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 corre-
sponding certificate or evidence of title or patent has not been actually issued.
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 ex-
isting laws.
aq. Qualified person means any citizen of the Philippines with capacity to con-
tract, or a corporation, partnership, association, or cooperative organized or authorized
for the purpose of engaging in mining, with technical and financial capability to under-
take mineral resources development and duly registered in accordance with law at least
sixty percent (60%) of the capital of which is owned by citizens of the Philippines: Pro-
vided, 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 ex-
traction and utilization of quarry resources on public or private lands.
af. 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 con-
tain metals or metallic constituents and/or other valuable minerals in economically
workable quantities: Provided, further, That non-metallic minerals such as kaolin,
feldspar, bull quartz, quartz or silica, sand and pebbles, bentonite, talc, asbestos, barite,

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gypsum, bauxite, magnesite, dolomite, mica, precious and semi-precious stones, and
other nonmetallic minerals that may later be discovered and which the Director de-
clares 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 un-
der 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 Natu-
ral Resources.
ax. Special allowance refers to payment to the claim-owners or surface right own-
ers particularly during the transition period from Presidential Decree No. 463 and Ex-
ecutive 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

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.
The State shall recognize and protect the rights of the indigenous cultural com-
munities to their ancestral lands as provided for by the Constitution.
SEC. 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 na-
tional 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 De-
partment 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 twenty-five 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 percent (10%) share of all royalties and revenues to be derived by the gov-
ernment from the development and utilization of the mineral resources within reserva-

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tions 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.
SEC. 6. Other Reservations.—Mining operations in reserved lands other than
mineral reservations may be undertaken by the Department, subject to limitations as
herein provided. In the event that the Department cannot undertake such activities,
they may be undertaken by a qualified person in accordance with the rules and regula-
tions 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 recom-
mended 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 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.
SEC. 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.
SEC. 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, [and] promulgate such rules and regulations as may be necessary to imple-
ment the intent and provisions of this Act.
SEC. 9. Authority of the Bureau.—The Bureau shall have direct charge in the
administration and disposition of mineral lands and mineral resources and shall under-
take geological, mining, metallurgical, chemical, and other researches as well as geo-
logical 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 non-
governmental organization (NGO) or any qualified person to police all mining activities.
SEC. 10. Regional Offices.—There shall be as many regional offices in the coun-
try as may be established by the Secretary, upon the recommendation of the Director.
SEC. 11. Processing of Applications.—The system of processing applications for
mining rights shall be prescribed in the rules and regulations of this Act.

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SEC. 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 publications 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 and
the survey plan shall be approved by the Director before the approval of the mining
feasibility.
SEC. 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 minute of latitude and one-half min-
ute of longitude.
SEC. 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

SEC. 15. Scope of Application.—This Act shall govern the exploration, develop-
ment, utilization and processing of all mineral resources.
SEC. 16. Opening of Ancestral Lands for Mining Operations.—No ancestral land
shall be opened for mining operations without the prior consent of the indigenous cul-
tural community concerned.
SEC. 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 socio-economic well-
being of the indigenous cultural community.
SEC. 18. Areas Open to Mining Operations.— Subject to any existing rights or
reservations and prior agreements of all parties, all mineral resources in public or pri-
vate 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.
SEC. 19. Areas Closed to Mining Applications.—Mineral agreement or financial
or technical assistance agreement applications shall not be allowed:

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a. In military and other government reservations, except upon prior written

clearance by the government agency concerned;
b. Near or under public or private buildings, cemeteries, archeological and his-
toric sites, bridges, highways, waterways, railroads, reservoirs, dams or other infra-
structure projects, public or private works including plantations or valuable crops, ex-
cept upon written consent of the government agency or private entity concerned;
c. In areas covered by valid and existing mining rights;
d. In areas expressly 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 re-
fuge and bird sanctuaries as “Today the network of relationships linking the human
defined by law and in areas race to itself and to the rest of the biosphere is so complex
expressly prohibited under that all aspects affect all others to an extraordinary degree.
the National Integrated Pro- Someone should be studying the whole system, however,
tected Areas System (NIPAS) crudely that has to be done, because no gluing together of
under Republic Act No. 7586, partial studies of a complex nonlinear system can give a
good idea of the behavior of the whole.”—Murray Gel-
Department Administrative
Mann
Order No. 25, series of 1992
and other laws.

Chapter IV
Exploration Permit

SEC. 20. Exploration Permit.—An exploration permit grants the right to con-
duct exploration for all minerals in specified areas. The Bureau shall have the authority
to grant an exploration permit to a qualified person.
SEC. 21. Terms and Conditions of the Exploration Permit.—An exploration per-
mit shall be for a period of two (2) years, subject to annual review and relinquishment
or renewal upon the recommendation of the Director.
SEC. 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—
1. For individuals, twenty (20) blocks; and
2. For partnerships, corporations, cooperatives, or associations, two hun-
dred (200) blocks.

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b. Onshore, in the entire Philippines—

1. For individuals, forty (40) blocks; and
2. For partnerships, corporations, cooperatives, or associations, four hun-
dred (400) blocks.
c. Offshore, beyond five hundred (500) m from the mean low tide level
1. For individuals, one hundred (100) blocks; and
2. For partnerships, corporations, cooperatives, or associations, one thou-
sand (1,000) blocks.
SEC. 23. Rights and Obligations of the Permittee.—An exploration permit shall
grant to the permittee, his heirs or successors-in-interest, 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 ven-
ture 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.
SEC. 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.
SEC. 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 recom-
mendation of the Director.

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Chapter V
Mineral Agreements

SEC. 26. Modes of Mineral Agreement.—For purposes of mining operations, a

mineral agreement may take the following forms as herein defined:
a. Mineral production sharing agreement — is an agreement where the govern-
ment 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 agree-
ment.
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.
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 re-
maining period of the original agreement subject to the approval of the Secretary.
SEC. 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 Geo-sciences Bureau and in consultation
with the Environmental Management Bureau of the Department.
SEC. 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—
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
2. For partnership, cooperatives, associations, associations, or corporations,
two hundred (200) blocks.

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c. Offshore, in the entire Philippines—

1. Individuals, fifty (50) blocks;
2. For partnerships, cooperatives, associations, or corporations, five hun-
dred (500) blocks; and
d. For the exclusive economic zone, a larger area to be determined by the Secre-
tary.
The maximum areas mentioned above that a contractor may hold under a mineral
agreement shall not include mining/quarry area under operating agreements between
the contractor and a claim-owner/lessee/permittee/licensee entered into under Presiden-
84
tial Decree No. 463.
SEC. 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 thirty
(30) days from its approval by the Secretary.
SEC. 30. Assignment/Transfer.—Any assignment or transfer of rights and obli-
gations under any mineral agreement except a financial or technical assistance agree-
ment shall be subject to the prior approval of the Secretary. Such assignment or trans-
fer 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.
SEC. 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 con-
tinued 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 con-
tractor has met all its financial, fiscal and legal obligations.
SEC. 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 rea-
sonable expenses of the highest bidder.
_______________________
84
Mineral Resources Development Decree of 1976.

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Chapter VI
Financial or Technical Assistance Agreement

SEC. 33. Eligibility.—Any qualified person with technical and financial capabil-
ity to undertake large-scale exploration, development, and utilization of mineral re-
sources in the Philippines may enter into a financial or technical assistance agreement
directly with the government through the Department.
SEC. 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 on-
shore;
b. 4,000 meridional blocks off-
shore; or
c. Combinations of (a) and (b)
provided that it shall not exceed the
maximum limits for onshore and off-
shore areas.
SEC. 35. Terms and Condi-
tions.—The following terms, con-
ditions, and warranties shall be
incorporated in the financial or tech-
nical assistance agreement, to wit:
a. A firm commitment in the
form of a sworn statement, of an
amount corresponding to the expen-
diture obligation that will be inves-
ted in the contract area: Provided,
That such amount shall be subject to
changes as may be provided for in
“All that is necessary for evil to triumph is for good
the rules and regulations of this Act;
men to do nothing.” — Edmund Burke
(G. Tapan) b. A financial guarantee bond
shall be posted in favor of the govern-
ment 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;

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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 agree-
ment 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 regu-
lations 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 cur-
rency, 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 obliged 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 technol-
ogy and facilities to protect the environment and to restore or rehabilitate mined out
areas and other areas affected by mine tailing and other forms of pollution or destruc-
tion;
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 ad-
vantageous 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 wel-
fare of the Filipino people.

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SEC. 36. Negotiations.—A financial or technical assistance agreement shall be

negotiated by the Department and executed and approved by the President. The Presi-
dent shall notify Congress of all financial or technical assistance agreements within
thirty (30) days from execution and approval thereof.
SEC. 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.
SEC. 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.
SEC. 39. Option to Convert into a Mineral Agreement.—The contractor has the
option to convert the financial or technical assistance agreement to a mineral agree-
ment at any time during the term of the agreement, if the economic viability of the
contract area is found to be inadequate to justify large-scale mining operations, after
proper notice to the Secretary as provided for under the implementing rules and regula-
tions: 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.
SEC. 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 sate of the approval thereof.
SEC. 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.

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Chapter VII
Small-Scale Mining

SEC. 42. Small-Scale Mining.—Small-scale mining shall continue to be gov-

85
erned by Republic Act No. 7076 and other pertinent laws.

Chapter VIII
Quarry Resources

SEC. 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, con-
glomerate, tuff, adobe, granite, gabbro, serpentine, inset filling materials, clay for ce-
ramic 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 construction aggregates, a qualified
person and the government may enter into a mineral agreement as defined herein.
SEC. 44. Quarry Fee and Taxes.—A permittee shall, during the term of his per-
mit, 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.
SEC. 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.
SEC. 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.
SEC. 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 me-
chanical processing covering an area of more than five hectares (5 has.) at any one time.

_______________________
85
People’s Small-Scale Mining Act.

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The permit shall have a term of five (5) years, renewable for a like period but not to
exceed a total term of twenty-five (25) years.
SEC. 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 min-
ing 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 co-terminous 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 co-terminous with the expiry days of the
lease.
SEC. 49. Government Gratuitous Permit.—Any government entity or instrumen-
tality 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 co-terminous with said construction.
SEC. 50. Private Gratuitous Permit.—Any owner of land may be granted a pri-
vate gratuitous permit by the provincial governor.
SEC. 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 regula-
tions.
SEC. 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

SEC. 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 trans-

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ported from the small-scale mining areas to the custom mills or processing plants, the
Provincial Mining Regulatory Board (PMRB) concerned shall formulate their own poli-
cies 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 suffi-
cient 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.
SEC. 54. Mineral Trad- “Human subtlety will never devise an invention more
ing Registration.—No person beautiful, more simple or more direct than does Na-
shall engage in the trading of ture, because in her inventions, nothing is lacking and
mineral products, either locally nothing is superfluous.”—Leonardo da Vinci
or internationally, unless regis-
tered with the Department of Trade and Industry and accredited by the Department,
with a copy of said registration submitted to the Bureau.
SEC. 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 peri-
ods 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.
SEC. 56. Eligibility of Foreign-Owned/Controlled Corporations.—A foreign-
owned/controlled corporation may be granted a mineral processing permit.

Chapter X
Development of Mining Communities and Science and Mining Technology

SEC. 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.
SEC. 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 min-
ing 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 devel-
opment, and basic and applied researches. Appropriate supervision and control mecha-
nisms shall be prescribed in the implementing rules and regulations of this Act.

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SEC. 59. Training and Development.—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 special-
ized mining operations, the contractor may, subject to the necessary government clear-
ance, employ qualified foreigners.
SEC. 60. Use of Indigenous Goods, Services, and Technologies.—A contractor
shall give preference to the use of local goods, services and scientific and technical re-
sources in the mining operations, where the same are of equivalent quality, and are
available on equivalent terms as their imported counterparts.
SEC. 61. Donations/Turnover of Facilities.—Prior to cessation of mining opera-
tions 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 re-
move 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 and facilities are continuously maintained and util-
ized by the host and neighboring communities.
SEC. 62. Employment of Filipinos.—A contractor shall give preference to Fili-
pino citizens in all types of mining employment within the country insofar as such citi-
zens 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 Com-
86
monwealth 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: Pro-
vided, That in no case shall each employment exceed five (5) years or the payback pe-
riod 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 op-
eration 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 ex-
ceeding 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 exemp-
tions.

_______________________
86
Philippine Immigration Act of 1940, as amended by R.A. Nos. 118, 135, 144, 287, 503,
749, 1901, 4376, 5171, 5701 and P.D. No. 524.

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Chapter XI
Safety and Environment Protection

SEC. 63. Mines Safety and Environment Protection.—All contractors and per-
mittees 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
87
rules and regulations shall be covered under Republic Act No. 7305.
SEC. 64. Mine Labor.—No person under sixteen (16) years of age shall be em-
ployed in any phase of mining operations and no person under eighteen (18) years of
age shall be employed underground in a mine.
SEC. 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.
SEC. 66. Mine Inspection.—The regional director shall have exclusive jurisdic-
tion 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.
SEC. 67. Power to Issue Orders.—The mines regional director shall, in consulta-
tion 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.
SEC. 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 im-
plementing this Act.
SEC. 69. Environmental Protection.—Every contractor shall undertake an envi-
ronmental 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 and
_______________________
87
The Magna Carta for Public Health Workers (26 May 1992).

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tailings covered areas, aquaculture, watershed development and water conservation;

and socioeconomic development.
SEC. 70. Environmental Impact Assessment (EIA).—Except during the explora-
tion 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 Environ-
ment Impact Assessment System including Sections 26 and 27 of the Local Government
Code of 1991 which require national government agencies to maintain ecological bal-
ance, and prior consultation with the local government units, nongovernmental 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 nongo- This priceless landscape will be scraped off the face
vernmental organizations shall be of the earth, and disemboweled for a useless piece of
allowed and encouraged to partici- shiny metal called gold. Is this moral?
pate in ensuring that contrac-
tors/permittees shall observe all
the requirements of environmental
protection.
SEC. 71. Rehabilitation.—
Contractors and permittees shall
technically and biologically reha-
bilitate the excavated, mined-out,
tailings covered and disturbed
areas to the condition of environ-
mental 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 com-
munities affected by mining
activities and for research on the
social, technical and preventive “The superior man seeks what is right; the inferior
aspects of rehabilitation. Failure one, what is profitable.” — Confucius
to fulfill the above obligation shall (N. Oshima)
mean immediate suspension or
closure of the mining activities of the contractor/permittee concerned.

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Chapter XII
Auxiliary Mining Rights

SEC. 72. Timber Rights.—Any provision of law to the contrary notwithstanding,

a contractor may be granted a right to cut trees or timber within his mining area as
may be necessary for his mining operations subject to forestry laws, rules and regula-
tions: Provided, That if the land covered by the mining area is already covered by exist-
ing 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 Secre-
tary whose decision shall be final. The contractor shall perform reforestation work
within his mining area in accordance with forestry laws, rules and regulations.
SEC. 73. Water Rights.—A contractor shall have water rights for mining opera-
tions upon approval of application with the appropriate government agency in accor-
dance with existing water laws, rules and regulations promulgated thereunder: Pro-
vided, 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 im-
paired: 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.
SEC. 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 an application with the appropri-
ate government agency in accordance with existing laws, rules and regulations promul-
gated thereunder: Provided, That the government reserves the right to regulate and
control the explosive accessories to ensure safe mining operations.
SEC. 75. Easement Rights.—When mining areas are so situated that for pur-
poses 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 infra-
structure as roads, railroads, mills, waste dump sites, tailing ponds, warehouses, stag-
ing or storage areas and port facilities, tramways, runways, airports, electric transmis-
sion, 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.
SEC. 76. Entry into Private Lands and Concession Areas.—Subject to prior noti-
fication, 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 sur-

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face owner, occupant, or concessionaire as a consequence of such operations shall be

properly compensated as may be provided for in the implementing rules and regula-
tions: 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 re-
gional director.

Chapter XIII
Settlement of Conflicts

SEC. 77. Panel of Arbitrators.—There shall be a panel of arbitrators in the re-

gional 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;
b. Disputes involving mineral agreements or permits;
c. Disputes involving surface owners, occupants and claimholders/ concession-
aires; and
d. Disputes pending before the Bureau and the Department at the date of the ef-
fectivity of this Act.
SEC. 78. Appellate Jurisdiction.—The decision or order of the panel of arbitra-
tors 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.
SEC. 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 func-
tions:

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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 re-
quiring 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 tes-
tify 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 hearing 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 appro-
priate penalties therefore; 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 pro-
cedure, 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 conclu-
sive 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 ag-
grieved party with the Supreme Court within thirty (30) days from receipt of the order
or decision of the Board.

Chapter XIV
Government Share

SEC. 80. Government Share in Mineral Production Sharing Agreement.—The to-

tal government share in a mineral production sharing agreement shall be the excise tax

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88
on mineral products as provided in Republic Act No. 7729, amending Section 151(a) of
the National Internal Revenue Code, as amended.
SEC. 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 compensation for its other contributions
which shall be agreed upon by the parties, and shall consist [of], 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 allow-
ance, withholding tax due from the contractor’s foreign stockholders arising from divi-
dend 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.
SEC. 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.

Chapter XV
Taxes and Fees

SEC. 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.
_______________________
88
An Act reducing the Excise Tax Rates on Metallic and Nonmetallic Minerals and Quarry
Resources (2 June 1994).

386
 PHILIPPINE MINING ACT

SEC. 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.
SEC. 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 re-
sources, 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.
The Secretary is authorized to increase mine wastes and tailings fees, when public
interest so requires, upon the recommendation of the Director.
SEC. 86. Occupation Fees.—There shall be collected from any holder of a min-
eral agreement, financial or technical assistance agreement or exploration permit on
public or private lands, an annual occupation fee in accordance with the following
schedule:
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.
SEC. 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 municipal-
ity or city where the onshore mining area is located, a complete list of all onshore min-
ing 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 percent (25%).

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SEC. 88. Allocation of Occupation Fees.—Thirty percent (30%) of all occupa-

tional fees collected from holders of mining rights in onshore mining areas shall accrue
to the province and seventy percent (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.
SEC. 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.

Chapter XVI
Incentives

SEC. 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 Om-
nibus 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.
SEC. 91. Incentives for Pollution Control Devices.—Pollution control devices ac-
quired, 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.
SEC. 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.
SEC. 93. Income Tax-Accelerated Depreciation.—Fixed assets may be depreci-
ated 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

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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 con-
tractor may, at his option, deduct exploration and development expenditures accumu-
lated at cost as of the date of the prospecting or exploration and development expendi-
tures paid or incurred during the taxable year: Provided, That the total amount de-
ductible for exploration and development expenditures shall not exceed twenty-five
percent (25%) of the net income from mining operations. The actual exploration and
development expenditures minus the twenty-five percent (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 prop-
erties directly used in the mining operations. This paragraph shall not apply to expen-
ditures for the acquisition or improvement of property of a character which is subject to
the allowances for depreciation.
SEC. 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 prevail-
ing 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 prop-
erty 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

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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 pur-
suant 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

SEC. 95. Late or Non-filing of Requirements.—Failure of the permittee or con-

tractor to comply with any of the requirements provided in this Act or in its implement-
ing rules and regulations, without a valid reason, shall be sufficient ground for the
suspension of any permit or agreement provided under this Act.
SEC. 96. Violation of the Terms and Conditions of Permit or Agreements.—
Violation of the terms and conditions of the permits or agreements shall be a sufficient
ground for cancellation of the same.
SEC. 97. Non-payment of Taxes and Fees.—Failure to pay 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 reopening of the area subject thereof to new applicants.
SEC. 98. Suspension or Cancellation of Tax Incentives and Credits.—Failure to
abide by the terms and conditions of tax incentives and credits shall cause the suspen-
sion or cancellation of said incentives and credits.
SEC. 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 false-
hood in said statements or omission of facts therein which may alter, change or affect
substantially the facts set forth in said statements may cause the revocation and termi-
nation of the exploration permit, mining agreement and financial or technical assis-
tance agreement.

Chapter XVIII
Organizational and Institutional Arrangements

SEC. 100. From Staff Bureau to Line Bureau.—The Mines and Geosciences Bu-
reau 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.

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Chapter XIX
Penal Provisions

SEC. 101. False Statements.—Any person who knowingly presents any false ap-
plication, declaration, or evidence to the government or publishes or causes to be pub-
lished 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 not exceeding ten
thousand pesos (P10,000.00).
SEC. 102. Illegal Exploration.—Any person undertaking exploration work with-
out the necessary exploration permit shall, upon conviction, be penalized by a fine not
exceeding fifty thousand pesos (P50,000.00).
SEC. 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, partner-
ships, or corporations, the president and each of the directors thereof shall be responsi-
ble for the acts committed by such association, corporation, or partnership.
SEC. 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 convic-
tion, 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.
SEC. 105. Mines Arson.—Any person who wilfully sets fire to any mineral stock-
pile, 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 Re-
vised Penal Code and shall, in addition, pay compensation for the damages caused
thereby.
SEC. 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.
SEC. 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

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appropriate court, by a fine not exceeding Five Thousand Pesos (P5,000.00) or impris-
onment not exceeding one (1) year, or both, at the discretion of the court.
SEC. 108. Violation of the Terms and Conditions of the Environmental Compli-
ance Certificate.—Any person who wilfully 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.
SEC. 109. Illegal Obstruction to Government Officials.—Any person who ille-
gally 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.
SEC. 110. Other Violations.—Any other violation of this Act and its implement-
ing rules and regulations shall constitute an offense punishable with a fine not exceed-
ing Five Thousand Pesos (P5,000.00).
SEC. 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

SEC. 112. Non-Impairment of Existing Mining/Quarrying Rights.—All valid

and existing mining lease contracts, permits/licenses, leases pending renewal, mineral
89
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-

_______________________
89
Authorizing the Secretary of Environment and Natural Resources to negotiate and con-
clude joint venture, co-production, or production sharing agreements for the exploration, devel-
opment and utilization of mineral resources, and prescribing the guidelines for such agreements
and those agreements involving technical and financial assistance by foreign-owned corporations
for large-scale operation, development and utilization of minerals. (E.O. 279, 25 July 1987).

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sharing agreements, financial or technical assistance agreements shall comply with the
applicable provisions of this Act and its implementing rules and regulations.
SEC. 113. Recognition of Valid and Existing Mining Claims and Lease/Quarry
Application.—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.
SEC. 114. Separability Clause.—If any of the provision of this Act is held or de-
clared 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.
SEC. 115. Repealing and Amending Clause.—All laws, executive orders, presi-
dential decrees, rules, and regulations or parts thereof which are inconsistent with any
of the provisions of this Act are hereby repealed or amended accordingly.
SEC. 116. Effectivity Clause.—This Act shall take effect thirty (30) days follow-
ing its complete publication in two (2) newspapers of general circulation in the Philip-
pines.
Approved: March 3, 1995.

Mining Agreements May be Changed

Facts: In the exercise of her interim legislative powers, former President Cora-
zon Aquino’s Executive Order Nos. 211 and 279. Executive Order No. 211 prescribes the
interim procedures in the processing and approval of applications for the exploration,
development and utilization of minerals pursuant to Section 2, Article XII of the 1987
Constitution. Executive Order No. 279 authorizes the DENR Secretary to negotiate and
conclude joint-venture, co-production, or production-sharing agreements for the explo-
ration, development, and utilization of mineral resources.
The Miners Association of the Philippines (MAP), an organization composed of
mining prospectors and claim owners or claimholders, assails the constitutionality of
two department administrative orders (DAOs) issued by then Secretary of Environment
and Natural Resources Fulgencio Factoran Jr. pursuant to those two executive orders.
Department Administrative Orders No. 57 declares “all existing mining leases or
agreements which were granted after the effectivity of the 1987 Constitution…shall be
converted into production-sharing agreements within one (1) year from the effectivity of
these guidelines.” Related thereto, Department Administrative Order No. 82 provides
that a failure to submit Letter of Intent (LOI) and Mineral Production-Sharing Agree-
ment (MPSA) within 2 years from the effectivity of Department Administrative Order
No. 57 shall cause the abandonment of mining, quarry, and sand and gravel claims.

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Aside from being unconstitutional, MAP alleges that the department administra-
tive orders are issued in excess of jurisdiction and are inconsistent with the executive
orders. Moreover, it claims that Department Administrative Order No. 57 violates the
non-impairment of contract clause in the Constitution for unduly pre-terminating exist-
ing mining leases and other mining agreements and automatically converting them into
production -sharing agreements within one (1) year from its effectivity.
Issue: Are the two department administrative orders valid?
Held: Yes. “Petitioner’s insistence on the application of Presidential Decree No.
463, as amended, as the governing law for the exploration, development, and utilization
of mineral resources is erroneous. Presidential Decree No. 463 pertains to the old sys-
tem of exploration, development and utilization of natural resources through ‘license,
concession or lease’ which has already been disallowed by Section 2, Article XII of the
1987 Constitution. By virtue of the new constitutional mandate and its implementing
law, Executive Order No. 279, the provisions for the ‘license, concession, or lease’ of
mineral resources under Presidential Decree No. 463 and other existing mining laws
are deemed repealed.
Moreover, the Court said that notwithstanding the absence of any reservation
clause or any law amending a private contract, “mining leases or agreements granted
by the State, such as those granted pursuant to Executive Order No. 211 referred to in
this petition, are subject to alterations through a reasonable exercise of the police power
of the State.” “Accordingly, the State, in the exercise of its police power in this regard,
may not be precluded by the constitutional restriction on non-impairment of contract
from altering, modifying and amending the mining leases or agreements granted under
Presidential Decree No. 463, as amended, pursuant to Executive Order No. 211. Police
power, being co-extensive with the necessities of the case and the demands of public
interest, extends to all the vital public needs.”

Miners Association of the Philippines v. Factoran

240 SCRA 100, G. R. No. 98332, January 16, 1995

Mining, An Extractive Industry

• Mining is essentially an extractive industry resulting in the depletion of nonrenew-

able resources. Thus, revenues derived from this industry must not be treated as
revenue but as a cost to the country’s natural capital. At the very least, the revenue
must be discounted by the social and environmental cost of mining to arrive at a
more realistic picture of the benefit derived from the mining industry. Basic and
simple accounting principles demands no less.

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• If extraction must be done, it must be with utmost and deliberate care to ensure its
long-term availability. Also, its naturally polluting tendency must be controlled very
strictly.

• Thus, the policy of incentives to extract mineral resources must be removed and the
policy to encourage indiscriminate and hastened extraction of the natural capital
reversed. It is even worse if foreigners are allowed, even encouraged, to extract
these mineral resources.

THE FINANCIAL AND TECHNICAL ASSISTANCE AGREEMENT

(IN MINING) IS CONSTITUTIONAL

Facts: The Petition for Prohibition and Mandamus before the Court challenges
the constitutionality of (1) Republic Act No. [RA] 7942 (The Philippine Mining Act of
1995); (2) its Implementing Rules and Regulations (DENR Administrative Order No.
[DAO] 96-40); and (3) the FTAA dated March 30, 1995, executed by the government
with Western Mining Corporation (Philippines), Inc. (WMCP).
On January 27, 2004, the Court en banc promulgated its Decision granting the Petition
and declaring the unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well as
of the entire FTAA executed between the government and WMCP, mainly on the finding that
FTAAs are service contracts prohibited by the 1987 Constitution.
The Decision struck down the subject FTAA for being similar to service contracts,
which, though permitted under the 1973 Constitution, were subsequently denounced for
being antithetical to the principle of sovereignty over our natural resources, because
they allowed foreign control over the exploitation of our natural resources, to the preju-
dice of the Filipino nation.
The Decision quoted several legal scholars and authors who had criticized service
contracts for, inter alia, vesting in the foreign contractor exclusive management and
control of the enterprise, including operation of the field in the event petroleum was
discovered; control of production, expansion and development; nearly unfettered control
over the disposition and sale of the products discovered/extracted; effective ownership of
the natural resource at the point of extraction; and beneficial ownership of our economic
resources. According to the Decision, the 1987 Constitution (Section 2 of Article XII)
effectively banned such service contracts.
Subsequently, respondents filed separate Motions for Reconsideration. (Editor’s
Note: Below is the Court’s summary of a very extensive decision which reversed its
original decision by 180 degrees.)

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The Meaning of “Agreements Involving

Either Technical or Financial Assistance”

Applying familiar principles of constitutional construction to the phrase agree-

ments involving either technical or financial assistance, the framers’ choice of words
does not indicate the intent to exclude other modes of assistance, but rather implies
that there are other things being included or possibly being made part of the agreement,
apart from financial or technical assistance. The drafters avoided the use of restrictive
and stringent phraseology; a verba legis scrutiny of Section 2 of Article XII of the Con-
stitution discloses not even a hint of a desire to prohibit foreign involvement in the
management or operation of mining activities, or to eradicate service contracts. Such
moves would necessarily imply an underlying drastic shift in fundamental economic
and developmental policies of the State. That change requires a much more definite and
irrefutable basis than mere omission of the words “service contract” from the new Con-
stitution.
Furthermore, a literal and restrictive interpretation of this paragraph leads to logi-
cal inconsistencies. A constitutional provision specifically allowing foreign-owned corpo-
rations to render financial or technical assistance in respect of mining or any other
commercial activity was clearly unnecessary; the provision was meant to refer to more
than mere financial or technical assistance.
Also, if paragraph 4 permits only agreements for financial or technical assistance,
there would be no point in requiring that they be “based on real contributions to the
economic growth and general welfare of the country.” And considering that there were
various long-term service contracts still in force and effect at the time the new Charter
was being drafted, the absence of any transitory provisions to govern the termination
and closing-out of the then existing service contracts strongly militates against the
theory that the mere omission of “service contracts” signaled their prohibition by the
new Constitution.
Resort to the deliberations of the Constitutional Commission is therefore unavoid-
able, and a careful scrutiny thereof conclusively shows that the ConCom members dis-
cussed agreements involving either technical or financial assistance in the same sense as
service contracts and used the terms interchangeably. The drafters in fact knew that the
agreements with foreign corporations were going to entail not mere technical or finan-
cial assistance but, rather, foreign investment in and management of an enterprise for
large-scale exploration, development and utilization of minerals.
The framers spoke about service contracts as the concept was understood in the 1973
Constitution. It is obvious from their discussions that they did not intend to ban or eradi-
cate service contracts. Instead, they were intent on crafting provisions to put in place safe-
guards that would eliminate or minimize the abuses prevalent during the martial law re-
gime. In brief, they were going to permit service contracts with foreign corporations as con-
tractors, but with safety measures to prevent abuses, as an exception to the general norm

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established in the first paragraph of Section 2 of Article XII, which reserves or limits to
Filipino citizens and corporations at least 60 percent owned by such citizens the explora-
tion, development and utilization of mineral or petroleum resources. This was prompted by
the perceived insufficiency of Filipino capital and the felt need for foreign expertise in
the EDU of mineral resources.
Despite strong opposition from some ConCom members during the final voting, the
Article on the National Economy and Patrimony—including paragraph 4 allowing ser-
vice contracts with foreign corporations as an exception to the general norm in para-
graph 1 of Section 2 of the same Article—was resoundingly and overwhelmingly ap-
proved.
The drafters, many of whom were economists, academicians, lawyers, businessper-
sons and politicians knew that foreign entities will not enter into agreements involving
assistance without requiring measures of protection to ensure the success of the venture
and repayment of their investments, loans and other financial assistance, and ulti-
mately to protect the business reputation of the foreign corporations. The drafters, by
specifying such agreements involving assistance, necessarily gave implied assent to
everything that these agreements entailed or that could reasonably be deemed neces-
sary to make them tenable and effective -- including management authority with re-
spect to the day-to-day operations of the enterprise, and measures for the protection of
the interests of the foreign corporation, at least to the extent that they are consistent
with Philippine sovereignty over natural resources, the constitutional requirement of
State control, and beneficial ownership of natural resources remaining vested in the
State.
From the foregoing, it is clear that agreements involving either technical or finan-
cial assistance referred to in paragraph 4 are in fact service contracts, but such new
service contracts are between foreign corporations acting as contractors on the one
hand, and on the other hand government as principal or “owner” (of the works),
whereby the foreign contractor provides the capital, technology and technical know-
how, and managerial expertise in the creation and operation of the large-scale min-
ing/extractive enterprise, and government through its agencies (DENR, MGB) actively
exercises full control and supervision over the entire enterprise.
Such service contracts may be entered into only with respect to minerals, petro-
leum and other mineral oils. The grant of such service contracts is subject to several
safeguards, among them: (1) that the service contract be crafted in accordance with a
general law setting standard or uniform terms, conditions and requirements; (2) the
President be the signatory for the government; and (3) the President report the exe-
cuted agreement to Congress within thirty days.

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Ultimate Test:
Full State Control

To repeat, the primacy of the principle of the State’s sovereign ownership of all
mineral resources, and its full control and supervision over all aspects of exploration,
development and utilization of natural resources must be upheld. But “full control and
supervision” cannot be taken literally to mean that the State controls and supervises
everything down to the minutest details and makes all required actions, as this would
render impossible the legitimate exercise by the contractor of a reasonable degree of
management prerogative and authority, indispensable to the proper functioning of the
mining enterprise. Also, government need not micro-manage mining operations and
day-to-day affairs of the enterprise in order to be considered as exercising full control
and supervision.
Control, as utilized in Section 2 of Article XII, must be taken to mean a degree of
control sufficient to enable the State to direct, restrain, regulate and govern the affairs
of the extractive enterprises. Control by the State may be on a macro level, through the
establishment of policies, guidelines, regulations, industry standards and similar meas-
ures that would enable government to regulate the conduct of affairs in various enter-
prises, and restrain activities deemed not desirable or beneficial, with the end in view of
ensuring that these enterprises contribute to the economic development and general
welfare of the country, conserve the environment, and uplift the well-being of the local
affected communities. Such a degree of control would be compatible with permitting the
foreign contractor sufficient and reasonable management authority over the enterprise
it has invested in, to ensure efficient and profitable operation.

Government Granted Full Control

by RA 7942 and DAO 96-40

Baseless are petitioners’ sweeping claims that RA 7942 and its Implementing
Rules and Regulations make it possible for FTAA contracts to cede full control and
management of mining enterprises over to fully foreign owned corporations. Equally
wobbly is the assertion that the State is reduced to a passive regulator dependent on
submitted plans and reports, with weak review and audit powers and little say in the
decision-making of the enterprise, for which reasons “beneficial ownership” of the min-
eral resources is allegedly ceded to the foreign contractor.
As discussed hereinabove, the State’s full control and supervision over mining op-
erations are ensured through the following provisions in RA 7942: Sections 8, 9, 16, 19,
24, 35[(b), (e), (f), (g), (h), (k), (l), (m) and (o)], 40, 57, 66, 69, 70, and Chapters XI and
XVII; as well as the following provisions of DAO 96-40: Sections7[(d) and (f)], 35(a-2),
53[(a-4) and (d)], 54, 56[(g), (h), (l), (m) and (n)], 56(2), 60, 66, 144, 168, 171 and 270,
and also Chapters XV, XVI and XXIV.

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Through the foregoing provisions, the government agencies concerned are empow-
ered to approve or disapprove -- hence, in a position to influence, direct, and change --
the various work programs and the corresponding minimum expenditure commitments
for each of the exploration, development and utilization phases of the enterprise. Once
they have been approved, the contractor’s compliance with its commitments therein will
be monitored. Figures for mineral production and sales are regularly monitored and
subjected to government review, to ensure that the products and by-products are dis-
posed of at the best prices; copies of sales agreements have to be submitted to and regis-
tered with MGB.
The contractor is mandated to open its books of accounts and records for scrutiny,
to enable the State to determine that the government share has been fully paid. The
State may likewise compel compliance by the contractor with mandatory requirements
on mine safety, health and environmental protection, and the use of anti-pollution tech-
nology and facilities. The contractor is also obligated to assist the development of the
mining community, and pay royalties to the indigenous peoples concerned. And viola-
tion of any of the FTAA’s terms and conditions, and/or non-compliance with statutes or
regulations, may be penalized by cancellation of the FTAA. Such sanction is significant
to a contractor who may have yet to recover the tens or hundreds of millions of dollars
sunk into a mining project.
Overall, the State definitely has a pivotal say in the operation of the individual en-
terprises, and can set directions and objectives, detect deviations and non-compliances
by the contractor, and enforce compliance and impose sanctions should the occasion
arise. Hence, RA 7942 and DAO 96-40 vest in government more than a sufficient degree
of control and supervision over the conduct of mining operations.
Section 3(aq) of RA 7942 was objected to as being unconstitutional for allowing a
foreign contractor to apply for and hold an exploration permit. During the exploration
phase, the permit grantee (and prospective contractor) is spending and investing heav-
ily in exploration activities without yet being able to extract minerals and generate
revenues. The exploration permit issued under Sections 3(aq), 20 and 23 of RA 7942,
which allows exploration but not extraction, serves to protect the interests and rights of
the exploration permit grantee (and would-be contractor), foreign or local. Otherwise,
the exploration works already conducted, and expenditures already made, may end up
only benefiting claim-jumpers. Thus, Section 3(aq) of RA 7942 is not unconstitutional.

WMCP FTAA Likewise Gives the

State Full Control and Supervision

The WMCP FTAA obligates the contractor to account for the value of production
and sale of minerals (Clause 1.4); requires that the contractor’s work program, activities
and budgets be approved by the State (Clause 2.1); gives the DENR secretary power to
extend the exploration period (Clause 3.2-a); requires approval by the State for incorpo-

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ration of lands into the contract area (Clause 4.3-c); requires Bureau of Forest Devel-
opment approval for inclusion of forest reserves as part of the FTAA contract area
(Clause 4.5); obligates the contractor to periodically relinquish parts of the contract area
not needed for exploration and development (Clause 4.6); requires submission of a dec-
laration of mining feasibility for approval by the State (Clause 4.6-b); obligates the
contractor to report to the State the results of its exploration activities (Clause 4.9);
requires the contractor to obtain State approval for its work programs for the succeed-
ing two year periods, containing the proposed work activities and expenditures budget
related to exploration (Clause 5.1); requires the contractor to obtain State approval for
its proposed expenditures for exploration activities (Clause 5.2); requires the contractor
to submit an annual report on geological, geophysical, geochemical and other informa-
tion relating to its explorations within the FTAA area (Clause 5.3-a); requires the con-
tractor to submit within six months after expiration of exploration period a final report
on all its findings in the contract area (Clause 5.3-b); requires the contractor after con-
ducting feasibility studies to submit a declaration of mining feasibility, along with a
description of the area to be developed and mined, a description of the proposed mining
operations and the technology to be employed, and the proposed work program for the
development phase, for approval by the DENR secretary (Clause 5.4); obligates the
contractor to complete the development of the mine, including construction of the pro-
duction facilities, within the period stated in the approved work program (Clause 6.1);
requires the contractor to submit for approval a work program covering each period of
three fiscal years (Clause 6.2); requires the contractor to submit reports to the secretary
on the production, ore reserves, work accomplished and work in progress, profile of its
work force and management staff, and other technical information (Clause 6.3); subjects
any expansions, modifications, improvements and replacements of mining facilities to
the approval of the secretary (Clause 6.4); subjects to State control the amount of funds
that the contractor may borrow within the Philippines (Clause 7.2); subjects to State
supervisory power any technical, financial and marketing issues (Clause 10.1-a); obli-
gates the contractor to ensure 60 percent Filipino equity in the contractor within ten
years of recovering specified expenditures unless not so required by subsequent legisla-
tion (Clause 10.1); gives the State the right to terminate the FTAA for unremedied
substantial breach thereof by the contractor (Clause 13.2); requires State approval for
any assignment of the FTAA by the contractor to an entity other than an affiliate
(Clause 14.1).
In short, the aforementioned provisions of the WMCP FTAA, far from constituting
a surrender of control and a grant of beneficial ownership of mineral resources to the
contractor in question, vest the State with control and supervision over practically all
aspects of the operations of the FTAA contractor, including the charging of pre-
operating and operating expenses, and the disposition of mineral products.
There is likewise no relinquishment of control on account of specific provisions of
the WMCP FTAA. Clause 8.2 provides a mechanism to prevent the mining operations

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from grinding to a complete halt as a result of possible delays of more than 60 days in
the government‘s processing and approval of submitted work programs and budgets.
Clause 8.3 seeks to provide a temporary, stop-gap solution in case a disagreement be-
tween the State and the contractor (over the proposed work program or budget submit-
ted by the contractor) should result in a deadlock or impasse, to avoid unreasonably
long delays in the performance of the works.
The State, despite Clause 8.3, still has control over the contract area, and it may,
as sovereign authority, prohibit work thereon until the dispute is resolved, or it may
terminate the FTAA, citing substantial breach thereof. Hence, the State clearly retains
full and effective control.
Clause 8.5, which allows the contractor to make changes to approved work pro-
grams and budgets without the prior approval of the DENR secretary, subject to certain
limitations with respect to the variance/s, merely provides the contractor a certain
amount of flexibility to meet unexpected situations, while still guaranteeing that the
approved work programs and budgets are not abandoned altogether. And if the secre-
tary disagrees with the actions taken by the contractor in this instance, he may also
resort to cancellation/termination of the FTAA as the ultimate sanction.
Clause 4.6 of the WMCP FTAA gives the contractor discretion to select parts of the
contract area to be relinquished. The State is not in a position to substitute its judg-
ment for that of the contractor, who knows exactly which portions of the contract area
do not contain minerals in commercial quantities and should be relinquished. Also,
since the annual occupation fees paid to government are based on the total hectarage of
the contract area, net of the areas relinquished, the contractor’s self-interest will assure
proper and efficient relinquishment.
Clause 10.2(e) of the WMCP FTAA does not mean that the contractor can compel
government to use its power of eminent domain. It contemplates a situation in which
the contractor is a foreign-owned corporation, hence, not qualified to own land. The
contractor identifies the surface areas needed for it to construct the infrastructure for
mining operations, and the State then acquires the surface rights on behalf of the for-
mer. The provision does not call for the exercise of the power of eminent domain (or
determination of just compensation); it seeks to avoid a violation of the anti-dummy
law.
Clause 10.2(l) of the WMCP FTAA giving the contractor the right to mortgage and
encumber the mineral products extracted may have been a result of conditions imposed
by creditor-banks to secure the loan obligations of WMCP. Banks lend also upon the
security of encumbrances on goods produced, which can be easily sold and converted
into cash and applied to the repayment of loans. Thus, Clause 10.2(l) is not something
out of the ordinary. Neither is it objectionable, because even though the contractor is
allowed to mortgage or encumber the mineral end-products themselves, the contractor

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is not thereby relieved of its obligation to pay the government its basic and additional
shares in the net mining revenue. The contractor’s ability to mortgage the minerals
does not negate the State’s right to receive its share of net mining revenues.
Clause 10.2(k) which gives the contractor authority “to change its equity structure
at any time,” means that WMCP, which was then 100 percent foreign owned, could
permit Filipino equity ownership. Moreover, what is important is that the contractor,
regardless of its ownership, is always in a position to render the services required under
the FTAA, under the direction and control of the government.
Clauses 10.4(e) and (i) bind government to allow amendments to the FTAA if re-
quired by banks and other financial institutions as part of the conditions of new lend-
ings. There is nothing objectionable here, since Clause 10.4(e) also provides that such
financing arrangements should in no event reduce the contractor’s obligations or the
government’s rights under the FTAA Clause 10.4(i) provides that government shall
“favourably consider” any request for amendments of this agreement necessary for the
contractor to successfully obtain financing. There is no renunciation of control, as the
proviso does not say that government shall automatically grant any such request. Also,
it is up to the contractor to prove the need for the requested changes. The government
always has the final say on whether to approve or disapprove such requests.
In fine, the FTAA provisions do not reduce or abdicate State control.

No Surrender of
Financial Benefits

The second paragraph of Section 81 of RA 7942 has been denounced for allegedly
limiting the State’s share in FTAAs with foreign contractors to just taxes, fees and du-
ties, and depriving the State of a share in the after-tax income of the enterprise. How-
ever, the inclusion of the phrase “among other things” in the second paragraph of Sec-
tion 81 clearly and unmistakably reveals the legislative intent to have the State collect
more than just the usual taxes, duties and fees.
Thus, DAO 99-56, the “Guidelines Establishing the Fiscal Regime of Financial or
Technical Assistance Agreements,” spells out the financial benefits government will
receive from an FTAA, as consisting of not only a basic government share, comprised of
all direct taxes, fees and royalties, as well as other payments made by the contractor
during the term of the FTAA, but also an additional government share, being a share in
the earnings or cash flows of the mining enterprise, so as to achieve a fifty-fifty sharing
of net benefits from mining between the government and the contractor.
The additional government share is computed using one of three (3) options or
schemes detailed in DAO 99-56, viz., (1) the fifty-fifty sharing of cumulative present
value of cash flows; (2) the excess profit-related additional government share; and (3)
the additional sharing based on the cumulative net mining revenue. Whichever option

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or computation is used, the additional government share has nothing to do with taxes,
duties, fees or charges. The portion of revenues remaining after the deduction of the
basic and additional government shares is what goes to the contractor.
The basic government share and the additional government share do not yet take
into account the indirect taxes and other financial contributions of mining projects,
which are real and actual benefits enjoyed by the Filipino people; if these are taken into
account, total government share increases to 60 percent or higher (as much as 77 per-
cent, and 89 percent in one instance) of the net present value of total benefits from the
project.
The third or last paragraph of Section 81 of RA 7942 is slammed for deferring the
payment of the government share in FTAAs until after the contractor shall have recov-
ered its pre-operating expenses, exploration and development expenditures. Allegedly,
the collection of the State’s share is rendered uncertain, as there is no time limit in RA
7942 for this grace period or recovery period. But although RA 7942 did not limit the
grace period, the concerned agencies (DENR and MGB) in formulating the 1995 and
1996 Implementing Rules and Regulations provided that the period of recovery, reck-
oned from the date of commercial operation, shall be for a period not exceeding five
years, or until the date of actual recovery, whichever comes earlier.
And since RA 7942 allegedly does not require government approval for the pre-
operating, exploration and development expenses of the foreign contractors, it is feared
that such expenses could be bloated to wipe out mining revenues anticipated for 10
years, with the result that the State’s share is zero for the first 10 years. However, the
argument is based on incorrect information.
Under Section 23 of RA 7942, the applicant for exploration permit is required to
submit a proposed work program for exploration, containing a yearly budget of proposed
expenditures, which the State passes upon and either approves or rejects; if approved,
the same will subsequently be recorded as pre-operating expenses that the contractor
will have to recoup over the grace period.
Under Section 24, when an exploration permittee files with the MGB a declaration
of mining project feasibility, it must submit a work program for development, with cor-
responding budget, for approval by the Bureau, before government may grant an FTAA
or MPSA or other mineral agreements; again, government has the opportunity to ap-
prove or reject the proposed work program and budgeted expenditures for development
works, which will become the pre-operating and development costs that will have to be
recovered. Government is able to know ahead of time the amounts of pre-operating and
other expenses to be recovered, and the approximate period of time needed therefor.
The aforecited provisions have counterparts in Section 35, which deals with the terms
and conditions exclusively applicable to FTAAs. In sum, the third or last paragraph of
Section 81 of RA 7942 cannot be deemed defective.

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Section 80 of RA 7942 allegedly limits the State’s share in a mineral production-

sharing agreement (MPSA) to just the excise tax on the mineral product, i.e., only 2
percent of market value of the minerals. The colatilla in Section 84 reiterates the same
limitation in Section 80. However, these two provisions pertain only to MPSAs, and
have no application to FTAAs. These particular provisions do not come within the is-
sues defined by this Court. Hence, on due process grounds, no pronouncement can be
made in this case in respect of the constitutionality of Sections 80 and 84.
Section 112 is disparaged for reverting FTAAs and all mineral agreements to the
old “license, concession or lease” system, because it allegedly effectively reduces the
government share in FTAAs to just the 2 percent excise tax which pursuant to Section
80 comprises the government share in MPSAs. However, Section 112 likewise does not
come within the issues delineated by this Court, and was never touched upon by the
parties in their pleadings. Moreover, Section 112 may not properly apply to FTAAs. The
mining law obviously meant to treat FTAAs as a breed apart from mineral agreements.
There is absolutely no basis to believe that the law intends to exact from FTAA contrac-
tors merely the same government share (i.e., the 2 percent excise tax) that it apparently
demands from contractors under the three forms of mineral agreements.
While there is ground to believe that Sections 80, 84 and 112 are indeed unconsti-
tutional, they cannot be ruled upon here. In any event, they are separable; thus, a later
finding of nullity will not affect the rest of RA 7942.
In fine, the challenged provisions of RA 7942 cannot be said to surrender financial
benefits from an FTAA to the foreign contractors.
Moreover, there is no concrete basis for the view that, in FTAAs with a foreign
contractor, the State must receive at least 60 percent of the after-tax income from the
exploitation of its mineral resources, and that such share is the equivalent of the consti-
tutional requirement that at least 60 percent of the capital, and hence 60 percent of the
income, of mining companies should remain in Filipino hands. Even if the State is enti-
tled to a 60 percent share from other mineral agreements (CPA, JVA and MPSA), that
would not create a parallel or analogous situation for FTAAs. We are dealing with an
essentially different equation. Here we have the old apples and oranges syndrome.
The Charter did not intend to fix an iron-clad rule of 60 percent share, applicable
to all situations, regardless of circumstances. There is no indication of such an intention
on the part of the framers. Moreover, the terms and conditions of petroleum FTAAs
cannot serve as standards for mineral mining FTAAs, because the technical and opera-
tional requirements, cost structures and investment needs of off-shore petroleum explo-
ration and drilling companies do not have the remotest resemblance to those of on-shore
mining companies.
To take the position that government‘s share must be not less than 60 percent of
after-tax income of FTAA contractors is nothing short of this Court dictating upon the
government. The State resultantly ends up losing control. To avoid compromising the

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 PHILIPPINE MINING ACT

State’s full control and supervision over the exploitation of mineral resources, there
must be no attempt to impose a “minimum 60 percent” rule. It is sufficient that the
State has the power and means, should it so decide, to get a 60 percent share (or
greater); and it is not necessary that the State does so in every case.

Invalid Provisions of
the WMCP FTAA

Section 7.9 of the WMCP FTAA clearly renders illusory the State’s 60 percent
share of WMCP’s revenues. Under Section 7.9, should WMCP’s foreign stockholders
(who originally owned 100 percent of the equity) sell 60 percent or more of their equity
to a Filipino citizen or corporation, the State loses its right to receive its share in net
mining revenues under Section 7.7, without any offsetting compensation to the State.
And what is given to the State in Section 7.7 is by mere tolerance of WMCP’s foreign
stockholders, who can at any time cut off the government‘s entire share by simply sell-
ing 60 percent of WMCP’s equity to a Philippine citizen or corporation.
In fact, the sale by WMCP’s foreign stockholder on January 23, 2001 of the entire
outstanding equity in WMCP to Sagittarius Mines, Inc., a domestic corporation at least
60 percent Filipino owned, can be deemed to have automatically triggered the operation
of Section 7.9 and removed the State’s right to receive its 60 percent share. Section 7.9
of the WMCP FTAA has effectively given away the State’s share without anything in
exchange.
Moreover, it constitutes unjust enrichment on the part of the local and foreign
stockholders in WMCP, because by the mere act of divestment, the local and foreign
stockholders get a windfall, as their share in the net mining revenues of WMCP is
automatically increased, without having to pay anything for it.
Being grossly disadvantageous to government and detrimental to the Filipino peo-
ple, as well as violative of public policy, Section 7.9 must therefore be stricken off as
invalid. The FTAA in question does not involve mere contractual rights but, being im-
pressed as it is with public interest, the contractual provisions and stipulations must
yield to the common good and the national interest. Since the offending provision is
very much separable from the rest of the FTAA, the deletion of Section 7.9 can be done
without affecting or requiring the invalidation of the entire WMCP FTAA itself.
Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the sums
spent by government for the benefit of the contractor to be deductible from the State’s
share in net mining revenues, it results in benefiting the contractor twice over. This
constitutes unjust enrichment on the part of the contractor, at the expense of govern-
ment. For being grossly disadvantageous and prejudicial to government and contrary to
public policy, Section 7.8(e) must also be declared without effect. It may likewise be
stricken off without affecting the rest of the FTAA.

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LAND

EPILOGUE

AFTER ALL IS SAID AND DONE, it is clear that there is unanimous agreement
in the Court upon the key principle that the State must exercise full control and super-
vision over the exploration, development and utilization of mineral resources.
The crux of the controversy is the amount of discretion to be accorded the Executive
Department, particularly the President of the Republic, in respect of negotiations over the
terms of FTAAs, particularly when it comes to the government share of financial benefits
from FTAAs. The Court believes that it is not unconstitutional to allow a wide degree of
discretion to the Chief Executive, given the nature and complexity of such agreements,
the humongous amounts of capital and financing required for large-scale mining opera-
tions, the complicated technology needed, and the intricacies of international trade, cou-
pled with the State’s need to maintain flexibility in its dealings, in order to preserve and
enhance our country’s competitiveness in world markets.
We are all, in one way or another, sorely affected by the recently reported scandals
involving corruption in high places, duplicity in the negotiation of multi-billion peso
government contracts, huge payoffs to government officials, and other malfeasances;
and perhaps, there is the desire to see some measures put in place to prevent further
abuse. However, dictating upon the President what minimum share to get from an
FTAA is not the solution. It sets a bad precedent since such a move institutionalizes the
very reduction if not deprivation of the State’s control. The remedy may be worse than
the problem it was meant to address. In any event, provisions in such future agree-
ments which may be suspected to be grossly disadvantageous or detrimental to govern-
ment may be challenged in court, and the culprits haled before the bar of justice.
Verily, under the doctrine of separation of powers and due respect for co-equal and
coordinate branches of government, this Court must restrain itself from intruding into
policy matters and must allow the President and Congress maximum discretion in us-
ing the resources of our country and in securing the assistance of foreign groups to
eradicate the grinding poverty of our people and answer their cry for viable employment
opportunities in the country.
“The judiciary is loath to interfere with the due exercise by coequal branches of gov-
90
ernment of their official functions.” As aptly spelled out seven decades ago by Justice
George Malcolm, “Just as the Supreme Court, as the guardian of constitutional rights,
should not sanction usurpations by any other department of government, so should it as
strictly confine its own sphere of influence to the powers expressly or by implication con-
91
ferred on it by the Organic Act.” Let the development of the mining industry be the
responsibility of the political branches of government. And let not this Court interfere
inordinately and unnecessarily.
_______________________
90
Decena v. Malayaon, AM No. RTJ-02-1669, April 14, 2004, per Tinga, J.
91
Manila Electric Co. v. Pasay Transportation, 57 Phil. 600, 605, November 25, 1932, per
Malcolm, J.

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 PHILIPPINE MINING ACT

The Constitution of the Philippines is the supreme law of the land. It is the re-
pository of all the aspirations and hopes of all the people. We fully sympathize with the
plight of Petitioner La Bugal B’laan and other tribal groups, and commend their efforts
to uplift their communities. However, we cannot justify the invalidation of an otherwise
constitutional statute along with its implementing rules, or the nullification of an oth-
erwise legal and binding FTAA contract.
We must never forget that it is not only our less privileged brethren in tribal and
cultural communities who deserve the attention of this Court; rather, all parties con-
cerned—including the State itself, the contractor (whether Filipino or foreign), and the
vast majority of our citizens—equally deserve the protection of the law and of this
Court. To stress, the benefits to be derived by the State from mining activities must
ultimately serve the great majority of our fellow citizens. They have as much right and
interest in the proper and well-ordered development and utilization of the country’s
mineral resources as the petitioners.
Whether we consider the near term or take the longer view, we cannot overempha-
size the need for an appropriate balancing of interests and needs -- the need to develop
our stagnating mining industry and extract what NEDA Secretary Romulo Neri esti-
mates is some US$840 billion (approx. PhP47.04 trillion) worth of mineral wealth lying
hidden in the ground, in order to jumpstart our floundering economy on the one hand,
and on the other, the need to enhance our nationalistic aspirations, protect our indige-
nous communities, and prevent irreversible ecological damage.
This Court cannot but be mindful that any decision rendered in this case will ul-
timately impact not only the cultural communities which lodged the instant Petition,
and not only the larger community of the Filipino people now struggling to survive
amidst a fiscal/budgetary deficit, ever increasing prices of fuel, food, and essential com-
modities and services, the shrinking value of the local currency, and a government
hamstrung in its delivery of basic services by a severe lack of resources, but also count-
less future generations of Filipinos.
For this latter group of Filipinos yet to be born, their eventual access to education,
health care and basic services, their overall level of well-being, the very shape of their
lives are even now being determined and affected partly by the policies and directions
being adopted and implemented by government today. And in part by this Resolution
rendered by this Court today.
Verily, the mineral wealth and natural resources of this country are meant to
benefit not merely a select group of people living in the areas locally affected by mining
activities, but the entire Filipino nation, present and future, to whom the mineral
wealth really belong. This Court has therefore weighed carefully the rights and inter-
ests of all concerned, and decided for the greater good of the greatest number. JUSTICE
FOR ALL, not just for some; JUSTICE FOR THE PRESENT AND THE FUTURE, not
just for the here and now.

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LAND

WHEREFORE, the Court RESOLVES to GRANT the respondents’ and the inter-
venors’ Motions for Reconsideration; to REVERSE and SET ASIDE this Court’s Janu-
ary 27, 2004 Decision; to DISMISS the Petition; and to issue this new judgment declar-
ing CONSTITUTIONAL (1) Republic Act No. 7942 (the Philippine Mining Law), (2) its
Implementing Rules and Regulations contained in DENR Administrative Order (DAO)
No. 9640—insofar as they relate to financial and technical assistance agreements re-
ferred to in paragraph 4 of Section 2 of Article XII of the Constitution; and (3) the Fi-
nancial and Technical Assistance Agreement (FTAA) dated March 30, 1995 executed by
the government and Western Mining Corporation Philippines Inc. (WMCP), except
Sections 7.8 and 7.9 of the subject FTAA which are hereby INVALIDATED for being
contrary to public policy and for being grossly disadvantageous to the government.

La Bugal-B’laan Tribal Association vs. Victor O. Ramos

G.R. No. 127882. December 1, 2004

MINING AND THE STORY OF MY RICH GRANDFATHER

The case above is a perfect example of the dictum that “law begins with desire.”
More important, however, is this deci-
sion reflects the misguided policy of
the present administration (2001- ?)
that mining and the exploitation of
mineral resources contributes to the
real wealth of the economy.
Let me tell you a story:
My grandfather was a rich man.
When we buried him, his lawyer whis-
pers to me that he would like to see me
the day after. When I went to his of-
fice, he told me that my grandfather
saved up 20 million pesos throughout
his lifetime of 81 years and is leaving
that amount with me. I thanked the
lawyer, laughed my way to the bank,
and opened an account.
Everyday for the next 20 days, I
withdrew P1 million a day, gambled it
in the casino, squandered the amount
in wine, and in living a generally reck-
less life for 20 days. (A. Oposa)

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That is not bad enough. What is even worse is that after every day that I lost the
money, I went back to my accounting books and recorded all my losses as income.
Is that correct?
Of course, not. But let us transpose the elements of this allegorical story. Grandfa-
ther time took all of 50 million years for the Philippines to have the minerals that we
find underneath our earth’s crust. About a hundred years ago, literally a wink in the
eyes of Time, we discovered that the Philippines held useful minerals. The Arroyo ad-
ministration comes around only last 2001, barely 5 years ago, a fraction of a wink, and
begins the policy of the intensive liquidation of the country’s mineral resources.
What is even worse is that it calls it income or revenue for the government. Is it?
Or is it a depreciation, no, a depletion, of the country’s natural wealth. And yet, the
President who declares this policy is supposed to have a doctorate in economics.
The story of my rich grandfather is a work of fiction. What we are doing to the
earth applying that wrong-headed kind of economic thinking is a fact. We are scraping
the earth of life, disemboweling it of priceless soil for a few pieces of worthless metal.
And then, we call it income, progress and development.
Role of the Law
What about the role of the Courts? Law is nothing more than policy distilled in le-
gal form and language. And Law begins with desire. Where the policy desired by the
Government is to liquidate the mineral wealth of the country as fast as possible, the
Courts will seek the legal interpretation that will best suit the desired policy.
Is this Governmental policy wrong or right? As the Zen philosophy teaches, it is
not wrong or right, it just IS. One thing is certain though: When we violate the Laws of
Nature, there are no rewards nor punishments, no right nor wrong; there are only con-
sequences.
One need not look far to see what the social, financial, and environmental conse-
quences are. What happened to the mining towns in the Cordilleras, in Marinduque,
Toledo (Cebu), etc.? What happened to countries like Nauru? Mining is essentially an
extractive and destructive industry. It is also an inherently boom and bust affair.
Have we learned? Will the Government insist on pursuing a destructive policy that
will, in the end, not make a real contribution to the country’s economy but will instead
lead to the impoverishment of our natural and social capital?
One day, fifty or a hundred years from now, our descendants will laugh at this
generation for our short-sightedness. Laugh at us, dear descendants. Better yet, be-
cause we have pursued and legitimized the reckless liquidation of our natural wealth,
go ahead, SPIT on our graves.

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LAND

This is the fire that will help generations to come.

If they use it in sacred manner.
But if they do not use it well.
Fire will have the power to do them great harm.

—Sioux Indian

Energy
Department of Energy (Republic Act 7638)

Chapter I
General Provisions

SECTION 1. Short Title.— This Act

“A clear breeze has no price, the bright
moon no owner.” — Song Hun
(Digital Vision)
productivity in power energy without sacrificing ecological concerns.
SEC. 3. Definition of Terms.—
shall be known as the “Department of En-
ergy Act of 1992.”
SEC. 2. Declaration of Policy.— It is
hereby declared the policy of the State:
a. to ensure a continuous, adequate,
and economic supply of energy with the end
in view of ultimately achieving self-reliance
in the country’s energy requirements through
the integrated and intensive exploration,
production, management, and development of
the country’s indigenous energy resources,
and through the judicious conservation, re-
newal, and efficient utilization of energy to
keep pace with the country’s growth and
economic development and taking into con-
sideration the active participation of the
private sector in the various areas on energy
resource development; and
b. to rationalize, integrate, and coor-
dinate the various programs of the govern-
ment towards self-sufficiency and enhanced

410
 ENERGY

a. Energy projects shall mean activities or projects relative to the exploration, ex-
traction, production, importation, exportation, processing, transportation, marketing,
distribution, utilization, conservation, stockpiling, or storage of all forms of energy pro-
ducts and resources.
b. Board shall mean the Energy Regulatory Board.
SEC. 4. Department of Energy.—To carry out the above declared policy, there is
hereby created the Department of Energy, hereinafter referred to as the Department,
which shall prepare, integrate, coordinate, supervise, and control all plans, programs,
projects, and activities of the government relative to energy exploration, development,
utilization, distribution, and conservation.
SEC. 5. Powers and Functions.—The Department shall have the following pow-
ers and functions:
a. Formulate policies for the planning and implementation of a comprehensive
program for the efficient supply and economical use of energy consistent with the ap-
proved national economic plan and with the policies on environmental protection and
conservation and maintenance of ecological balance, and provide a mechanism for the
integration, rationalization, and coordination of the various energy programs of the
government;
b. Develop and update the existing Philippine energy program which shall pro-
vide for an integrated and comprehensive exploration, development, utilization, distri-
bution, and conservation of energy resources, with preferential bias for environment-
friendly, indigenous, and low-cost sources of energy. The program shall include a policy
direction towards the privatization of government agencies related to energy, deregula-
tion of the power and energy industry, and reduction of dependency on oil fired plants.
Said program shall be updated within nine (9) months from the effectivity of this Act
and submitted to Congress within ten (10) days from its completion and not later than
the fifteenth day of September every year thereafter;
c. Establish and administer programs for the exploration, transportation, mar-
keting, distribution, utilization, conservation, stockpiling, and storage of energy re-
sources of all forms, whether conventional or non conventional;
d. Exercise supervision and control over all government activities relative to en-
ergy projects in order to attain the goals embodied in Section 2 of this Act;
e. Regulate private sector activities relative to energy projects as provided for
under existing laws: Provided, That the Department shall endeavor to provide for an
environment conducive to free and active private sector participation and investment in
all energy activities.
At the end of four (4) years from the effectivity of this Act, the Department shall,
upon approval of the President, institute the programs and timetable of deregulation of
appropriate energy projects and activities of the energy industry;

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f. Assess the requirements of, determine priorities for, provide direction to, and
disseminate information resulting from energy research and development programs for
the optimal development of various forms of energy production and utilization technolo-
gies;
g. Formulate and implement programs, including a system of providing incen-
tives and penalties, for the judicious and efficient use of energy in all energy consisting
sectors of the economy;
h. Formulate and implement a program for the accelerated development of non
conventional energy systems and the promotion and commercialization of its applica-
tions;
i. Devise ways and means of giving direct benefit to the province, city, or munici-
pality, especially the community and people affected, and equitable preferential benefit
to the region that hosts the energy resource and/or the energy generating facility: Pro-
vided, however, That the other provinces, cities, municipalities, or regions shall not be
deprived of their energy requirements;
j. Encourage private enterprises engaged in energy projects, including corpora-
tions, cooperatives, and similar collective organizations, to broaden the base of their
ownership and thereby encourage the widest public ownership of energy-oriented corpo-
rations;
k. Formulate such rules and regulations as may be necessary to implement the
objectives of this Act; and
l. Exercise such other powers as may be necessary or incidental to attain the ob-
jectives of this Act.

Chapter II
The Department Proper

SEC. 6. Composition.—The Department Proper shall be composed of the Office

of the Secretary and the Offices of the Undersecretaries and Assistant Secretaries, and
the bureaus and services of the Department.
SEC. 7. Office of the Secretary.—The Office of the Secretary shall consist of the
Secretary and his immediate staff.
SEC. 8. The Secretary.—The Secretary shall be appointed by the President, sub-
ject to confirmation by the Commission on Appointments.
No officer, external auditor, accountant, or legal counsel of any private company or
enterprise primarily engaged in the energy industry shall be eligible for appointment as
Secretary within two (2) years from his retirement, resignation, or separation there-
from.
The Secretary shall have the following functions:

412
 ENERGY

a. Establish policies and standards for the effective, efficient and economical op-
eration of the Department in accordance with the programs of the government;
b. Exercise direct supervision and control over all functions and activities of the
Department, as well as all its officers and personnel;
c. Devise a program of international information on the geological and contrac-
tual conditions obtaining in the Philippines for oil and gas exploration in order to ad-
vance the industry;
d. Create regional offices and such other service units and divisions as may be
necessary;
e. Create regional or separate grids as may be necessary or beneficial; and
f. Perform such other functions as may be necessary or proper to attain the objec-
tives of this Act.
The Secretary shall be an ex-officio member of the Board of the National Economic
and Development Authority (NEDA). He shall also be a member of the NEDA’s Com-
mittee on Infrastructure (INFRACOM) and the Investment Coordinating Council (ICC).
For this purpose, the provisions of Executive Order No. 292, otherwise known as the
Administrative Code of 1987, relative to the creation and organization of the NEDA and
its component agencies and offices are hereby modified accordingly.
The Secretary shall also be a member of the body authorized to formulate, pre-
scribe, or amend the necessary guidelines for the financing, construction, operation, and
maintenance of infrastructure projects by the private sector, under Republic Act No.
6957, otherwise known as the Build-Operate-Transfer Law.
SEC. 9. The Undersecretaries.—The Secretary shall be assisted by three (3) un-
dersecretaries who shall be appointed by the President upon the recommendation of the
Secretary. They shall have the powers and functions as provided for in Section 10,
Chapter 2, Book 4 of the Administrative Code of 1987.
The Offices of the Undersecretaries shall consist of the undersecretaries and their
respective immediate staff.
SEC. 10. Assistant Secretaries.—The Secretary shall also be assisted by three (3)
Assistant Secretaries, one (1) for operations, one (1) for policy and programs, and an-
other for administrative services. The assistant secretaries shall be appointed by the
President upon the recommendation of the Secretary.
SEC. 11. Qualifications.—No person shall be appointed Secretary, Undersecre-
tary, or Assistant Secretary of the Department unless he is a citizen and resident of the
Philippines, of good moral character, and of proven competence in any of the following
fields: (a) energy or utility economics; (b) public administration; (c) physical or engineer-
ing sciences; (d) management; or (e) law.
SEC. 12. Bureaus and Services.—Subject to the power of the Secretary, with the
approval of the President, to reorganize, restructure, and redefine the functions of the

413
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bureaus and services for the effective discharge of the powers and functions of the De-
partment under this Act, the Department shall have the following bureaus and services:
Energy Resource Development Bureau; Energy Utilization Management Bureau; En-
ergy Industry Administration Bureau; Energy Planning and Monitoring Bureau; and
Administrative Support Services.
The bureaus and services shall have the following powers and functions:
a. Energy Resource Development Bureau—
1. Assist in the formulation and implementation of policies to develop and
increase the domestic supply of local
energy resources like fossil fuels, nuclear
fuels, and geothermal resources;
2. Assist in the formulation of sec-
toral programs and plans relative to the
exploration, development, and extraction
of local energy resources and implement,
monitor, and regularly review said pro-
grams;
3. Conduct energy research and
studies in support of the aforementioned
activities;
4. Provide consultative training and
advisory services to practitioners and
institutions in the areas of regulated ac-
tivities; and
5. Assist in the formulation of finan-
cial and fiscal policies, rules, guidelines,
Power wastage is a cross to bear. and requirements relative to the opera-
(R. Castillo) tions of service contractors and implement
and enforce said policies.
b. Energy Utilization Management Bureau—
1. Assist in the formulation and implementation of policies for the efficient
and economical transformation, conversion, processing, refining, marketing, dis-
tribution, transportation, and storage of petroleum, coal, natural gas, geothermal,
and other non-conventional energy resources such as wind, solar, biomass, and
others; and ensure their efficient and judicious utilization;
2. Monitor sectoral energy consumption and conduct energy audits, techni-
cal training, energy management advisory services, and technology application
projects on efficient energy utilization;

414
 ENERGY

3. Develop, promote, and commercialize applications of biomass, solar,

small hydro, wind, wood, and charcoal and other non-conventional energy systems
including new and more efficient and economical transformation, conversion, proc-
essing, refining, marketing, distribution, transportation, and storage technologies
for conventional energy resources;
4. Assist in the formulation of an integrated rural energy program to effecti-
vely address the needs of rural development and environmental programs and im-
plement, monitor, and regularly review said program;
5. Assist in the formulation of an operational plan for the allocation of oil,
fuel, and energy sources in the event of the declaration of critically low energy
supply provided for in Section 25 of this Act;
6. Provide information on energy technology and develop middle and long-
term energy technology development strategies in cooperation with the Depart-
ment of Science and Technology;
7. Monitor the implementation of energy projects in coordination with the
Department of Environment and Natural Resources to ensure compliance with
prescribed environmental standards;
8. Recommend appropriate courses of action to resolve major issues which
may impede energy project siting or result in adverse environmental impact;
9. Require industrial, commercial, and transport establishments to collect
or cause the collection of waste oil for recycling as fuel or lubricating oil; and
10. Develop and implement a continuing energy conservation program de-
signed to optimize energy utilization, including a nationwide information cam-
paign on energy conservation.
c. Energy Industry Administration Bureau—
1. Assist in the formulation of regulatory policies to encourage and guide
the operations of both government and private entities involved in energy resource
supply activities such as independent power production, electricity distribution, as
well as the importation, exportation, stockpiling, storage, shipping, transportation,
refinement, processing, marketing, and distribution of all forms of energy and en-
ergy products, whether conventional or non-conventional;
2. Draw up plans to cope with contingencies of energy supply interruptions;
and
3. Assist in the formulation of financial and fiscal policies, rules, guidelines,
and requirements relative to the operations of entities involved in the supply of
energy resources such as oil companies, petroleum product dealers, coal importing
and distributing companies, natural gas distributing companies, independent
power producers, and all other entities involved in conventional energy supply ac-
tivities and implement and enforce said policies.

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d. Energy Planning and Monitoring Bureau—

1. Assist in the development and updating of an integrated energy plan for
the short, medium, and long-term periods to provide a comprehensive assessment
on the demand scenarios and supply options as well as the impacts of energy poli-
cies on the economy, poverty, and environment;
2. Develop and maintain a centralized, comprehensive, and unified data and
information program to ensure the efficient collection, evaluation, analysis, and
dissemination of data and information on reserves of various energy resources,
production, demand, development technology, and related economic and statistical
information which are required for policy formulation, program planning, and im-
plementation;
3. Supervise, coordinate, and integrate the formulation, monitoring, and re-
view of programs and plans for energy supply development such as power devel-
opment, local energy resource development and production, and energy importa-
tion;
4. Regularly review and analyze past and current patterns of energy con-
sumption vis-à-vis growth and development performance of the country’s various
economic sectors to evaluate current and foreseeable trends in energy demand;
and conduct energy supply demand balancing studies to define energy supply and
utilization strategies, estimate the resources required, and assess the energy pro-
gram’s economic, environmental, social, and political impact;
5. Assure the incorporation of national environmental goals in the formula-
tion and implementation of energy programs, and to advance the goals of restor-
ing, protecting, and enhancing environmental quality; and assuring public health
and safety; and
6. Conduct studies on international energy issues that have a direct impact
on supply and utilization of energy and provide technical advice on international
negotiations involving energy resources and technologies.
e. Administrative Support Services.—The Administrative Support Services shall
be composed of the Office of the Legal Counsel and the Financial and Management
Services.
The Office of the Legal Counsel shall be responsible for providing legal advice and
services on all policies, programs, and operational matters of the Department. It shall
provide legal counseling services in cases where the Department is a party and shall
also handle administrative cases against any personnel of the Department and submit
recommendations pertaining to them.
The Financial and Management Services, which shall consist of the Human Re-
sources Management Division, General Services Divisions, and the Financial Manage-
ment Division, shall be responsible for providing the Department with services relative
to personnel information, records, supplies, equipment, collection and disbursements,

416
 ENERGY

security and custodial works. It shall also be responsible for providing the Department
with staff advice and assistance on budgetary, financial, and management improvement
matters.

“Not only will atomic power be released, but someday we will harness
the rise and fall of the tides and imprison the rays of the sun.” — Tho-
mas Edison
(Digital Vision)

Chapter III
Attached Agencies and Corporations

SEC. 13. Attached Agencies and Corporations.—The Philippine National Oil

Company (PNOC), the National Power Corporation (NPC), and the National Electrifica-
tion Administration (NEA) are hereby placed under the supervision of the Department,
but shall continue to perform their respective functions insofar as they are not inconsis-
tent with the provisions of this Act. Their annual budget shall be submitted to Congress
for approval. The Secretary shall, in a concurrent capacity, be the ex officio chairman of
the respective boards of the PNOC, NPC, and NEA, unless otherwise directed by the
President: Provided, That in no case shall the Secretary be the chief executive officer or
chief operating officer of the said agencies or their subsidiaries, any law to the contrary
notwithstanding.
To this end, Section 6, paragraph (3) of Presidential Decree No. 927 and Section 8
of Presidential Decree No. 334, providing that the Chairman of the PNOC shall also be
the president and chief executive officer thereof, are accordingly repealed.

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The Secretary may recommend to the President the reorganization of the boards of
directors of the PNOC, NPC, and NEA.
SEC. 14. Council of Advisers on Energy Affairs.—A council of advisers on energy
affairs consisting of five (5) members and appointed from the industry, labor, and con-
sumer sectors shall advise the President on the overall energy program, especially on
private sector initiatives and proposals.
The President shall convene the Council within thirty (30) days upon approval of
this Act.

Chapter IV
Transitory Provisions

SEC. 15. Abolition of Agencies.—The Office of Energy Affairs and the Energy
Coordinating Council are hereby abolished subject to Sec. 17 of this Act.
SEC. 16. Transfer of Powers and Functions.—The powers and functions of the
Energy Coordinating Council and the Office of Energy Affairs are hereby transferred to
the Department.
The foregoing transfer of powers and functions shall include all applicable funds
and appropriations, records, equipment, property, and personnel as may be necessary.
The same shall apply to agencies and government units which have not been abol-
ished but whose functions have been transferred to the Department.
As the successor in office of the Office of Energy Affairs, the Department shall ad-
minister the activities of the Technology Transfer for Energy Management (TTEM)
project. For this purpose, the Department shall continue the utilization of all funds,
monies, interests, reflows, and properties outstanding and accruing from the TTEM
project upon its termination for the following purposes:
a. To finance energy conservation projects of industrial and commercial estab-
lishments;
b. To monitor implemented subprojects and document the actual energy savings
generated; and
c. To disseminate information on implemented subprojects through case studies
and seminars/workshops so as to encourage replication by other industrial and commer-
cial establishments.
SEC. 17. Transfer of Rights, Assets, and Liabilities.—The Department shall, by
virtue of this Act, be subrogated to all the rights and assume all the liabilities of the
Office of Energy Affairs, the Energy Coordinating Council, and all other agencies, or
government units whose functions and powers have been transferred to the Depart-
ment, and all their funds, records, property, assets, equipment, and such personnel as
necessary, including the unexpended appropriations and/or allocations. All contracts

418
 ENERGY

and liabilities of said offices, agencies, and government units are hereby transferred to
and assumed by the Department and shall be acted upon in accordance with the Audit-
ing Code and other pertinent laws, rules, and regulations: Provided, That the officers
and employees of said offices, agencies, and government units shall continue in a hold-
over capacity until such time as the new officers and employees of the Department shall
have been duly appointed pursuant to the provisions of this Act.
SEC. 18. Rationalization or Transfer of Functions of Attached or Related Agen-
cies.—The non-price regulatory jurisdiction, powers and functions of the Energy Regulatory
92
Board as provided for in Section 3 of Executive Order No. 172 are hereby transferred to
the Department.
The foregoing trans-
fer of powers and functions
shall include all applicable
funds and appropriations,
records, equipment, prop-
erty, and such personnel
as may be necessary: Pro-
vided, That only such
amount of funds and ap-
propriations of the Board
as well as only the person-
nel thereof that are com-
pletely or primarily in-
volved in the exercise by
said Board of its non-price
regulatory powers and
functions shall be affected
by such transfer.
The power of the NPC
to determine, fix, and pre- “Nature does nothing without purpose or uselessly.” — Jo-
scribe the rates being seph Addison
charged to its customers (A. Oposa)
under Section 4 of Repub-
93
lic Act No. 6395, as amended, as well as the power of electric cooperatives to fix rates
under Section 16 (o), Chapter 2 of Presidential Decree No. 269, as amended, are hereby
transferred to the Energy Regulatory Board. The Board shall exercise its new powers
only after due notice and hearing and under the same procedure provided for in Execu-
tive Order No. 172.

_______________________
92
Creating the Energy Regulatory Board [E.O. 172 (8 May 1987)].
93
An Act revising the charter of the National Power Corporation (10 September 1971).

419
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SEC. 19. Structure and Staffing Pattern.—The organizational framework and

staffing pattern of the Department shall be prescribed and approved by the Secretary
within sixty (60) days after the approval of this Act and the authorized positions created
therein shall be filled by regular appointments by the President or the Secretary as the
case may be: Provided, That, in the filling of positions created, preference shall be given
to the personnel of the Office of Energy Affairs, the Energy Coordinating Council, and
the Energy Regulatory Board: Provided, however, That such individuals comply with
the qualification standards set by the Civil Service Commission for the positions that
they shall be appointed to: Provided, finally, That if such individuals possess the same
qualifications, seniority shall be given priority.
SEC. 20. Separation from Service.—Employees separated from the service as a
result of this reorganization shall, within six (6) months from their separation from the
service, receive the retirement benefits to which they may be entitled under existing
laws, rules, and regulations.

Chapter V
Appropriations

SEC. 21. Appropriations.—Such sums as may be necessary for the implementa-

tion of this Act shall be taken from the current fiscal year appropriations of the Office of
Energy Affairs, the Office of Energy Affairs’ special fund created under Section 8 of
94
Presidential Decree No. 910, and such amounts as the President of the Philippines
may allocate from other resources in accordance with law: Provided, That the total
amount shall not exceed Three hundred million pesos (P300,000,000). Thereafter, the
amount needed for the operation and maintenance of the Department shall be included
in the annual General Appropriations Act.
Subject to existing rules and regulations, the funds and monies collected or which
otherwise come into the possession of the Department and its bureaus from fees, sur-
charges, fines, and penalties which the Department and its bureaus may impose and
collect under this Act, as well as an amount to be determined at the beginning of every
calendar year representing twenty percent (20%) of the outstanding balance of the
funds and monies forming part of the special fund under Section 8 of Presidential De-
cree No. 910, shall be disbursed for expenses necessary for the effective discharge of the
powers and functions of the Department under this Act.

Chapter VI
Miscellaneous Provisions

SEC. 22. Disclosure and Divestment of Financial Interest.—Before assumption of

office, the Secretary of the Department, the Undersecretaries, and the Assistant Secre-
taries shall submit to the Civil Service Commission a list of all companies, partner-
_______________________
94
Creating the Energy Development Board.

420
 ENERGY

ships, or business enterprises, including non-profit organizations, in which they or any

immediate member of their families within the second degree of consanguinity or affin-
ity have any form of financial interest or employment relationship, including consul-
tancy: Provided, however, That all other forms of employment relationship held by the
heads of the offices of the Department shall be immediately terminated upon assump-
tion of office.
Within thirty (30) days thereafter, complete divestment of financial interests in
any institution, firm, or company which fall under the supervisory or regulatory juris-
diction of the Department shall be made: Provided, however, That, in cases where con-
firmation of appointments by the Commission on Appointments is required, the divest-
ment mandated herein shall be complied with within thirty (30) days after such confir-
mation.
The divestment provided in the preceding paragraph shall likewise apply to the
members of the immediate family within the second degree of consanguinity having
interest in any institution or activity which falls under the regulatory jurisdiction or
supervision of the Department and the attached agencies.
SEC. 23. Relationship with Other Government Departments.—The Department
and its priority projects shall enjoy preferential attention from the Department of Envi-
ronment and Natural Resources relative to the exploration, development, exploitation,
and extraction of petroleum, coal, and geothermal resources, and in the matter of pro-
viding technical support necessary for the establishment of power generating plants.
Upon request of the Department or any of its bureaus, all government agencies
with functions relative to the approval of the projects of the Department or its duly
authorized and endorsed entities, whether government or private, shall act upon and
resolve the matter within ten (10) calendar days. Toward this end, the Secretary, with
the approval of the President, may establish an inter-agency secretariat for the purpose
of expediting the approval of said projects.
SEC. 24. Visitorial Powers.—The Secretary of the Department or his represen-
tatives shall have visitorial and examining authority over non-government entities with
contracts for the exploration, development, or utilization of the natural resources for
energy purposes in order to determine the share of the government in the revenue or
product thereof, and to ascertain all funds collectible and products due the government,
and that all such funds collectible and products due the government, have actually been
collected or delivered.
During such examination, the non-government entity concerned shall produce all
the reports, records, books of accounts, and other papers that may be required.
The refusal by any such non government entity to allow an examination of its
books of accounts and pertinent records or its concealment of any material information
concerning its financial status shall be a breach of its contract with the government and
shall constitute a legal ground for the cancellation thereof.

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SEC. 25. Contingency Powers.—In time of critically low-energy supply or immi-

nent danger thereof, the President may, upon the determination and recommendation
of the Secretary, issue a declaration of the same. Thereafter, the Secretary is hereby
authorized to implement the fuel and energy allocation plan provided for in Section 12
(b)(5) of this Act, and to formulate and implement other measures for the conservation
of energy including, but not limited to, power or fuel rationing, load curtailment, and
restrictions on the use of government vehicles and resources.
SEC. 26. Repealing Clause.—
All laws, presidential decrees, execu-
tive orders, and rules and regu-
lations, or parts thereof, inconsistent
with the provisions of this Act are
hereby repealed or modified accor-
dingly.
However, in no case are the
95
provisions of Republic Act No. 6969
repealed, amended, or modified by
the provisions of this Act.
SEC. 27. Separability
Clause.—If, for any reason, any
section or provision of this Act is
held unconstitutional or invalid, the
other Sections or provisions hereof
shall not be affected thereby.
SEC. 28. Effectivity Clause. “To the dull mind nature is leaden; To the illumi-
—This Act shall take effect after its nated mind the whole world burns and sparkles
complete publication in at least two with light.”—Ralph Waldo Emerson
(2) national newspapers of general (Digital Vision)
circulation.
Approved: December 9, 1992.

Mini-Hydroelectric Power Developers (Republic Act 7196)

SECTION 1. Title.—This Act shall be known as the “Mini-Hydroelectric Power
Incentive Act.”
SEC. 2. Declaration of Policy.—It is hereby declared the policy of the State to
strengthen and enhance the development of the country’s indigenous and self-reliant
scientific and technological resources and capabilities and their adaptation to the coun-
_______________________
95
An Act to Control Toxic Substances and Hazardous and Nuclear Wastes (26 October
1990).

422
 MINI-HYDROELECTRIC POWERS DEVELOPERS

try in order to attain energy self-sufficiency and thereby minimize dependence on out-
side source of energy supply. In pursuance thereof, it is further declared that mini-
hydroelectric power developers shall be granted the necessary incentives and privileges
to provide an environment conducive to the development of the country’s hydroelectric
power resources to their full potential.
SEC. 3. Declaration of Objectives.—The objectives of the framework being estab-
lished for the development of mini-hydroelectric power generation are as follows:
1. To encourage entrepreneurs to develop potential sites for hydroelectric power
existing in their respective localities;
2. To encourage entrepreneurs to develop potential sites for hydroelectric power
existing in the country by granting the necessary incentives which will provide a rea-
sonable rate of return;
3. To facilitate hydroelectric power development by eliminating overlapping ju-
risdiction of the many government agencies whose permits, licenses, clearances and
other similar authorizations issued by various government agencies as presently re-
quired for such development, and by vesting in one agency the exclusive authority and
responsibility for the development of mini-hydroelectric power;
4. To apportion a part of the realty and special privilege taxes and other eco-
nomic benefits of the hydroelectric power potential to the respective localities where
they are established; and
5. To provide a contractual framework wherein some stability of conditions can
be relied upon for long-term financing purposes.
SEC. 4. Definition of Terms.—As used in this Act, the following terms shall be
understood, applied, and construed as follows:
1. Hydroelectric power shall refer to the electric power produced by utilizing the
kinetic energy of falling or running water to turn a turbine generator;
2. Mini-hydroelectric power plant shall refer to an electric power-generating
plant which: (a) utilizes the kinetic energy of falling or running water (run-of-river
hydro plants) to turn a turbine generator producing electricity; and (b) has an installed
capacity of not less than 101 kilowatts nor more than 10,000 kilowatts.
3. Mini-hydroelectric power development shall refer to the construction and in-
stallation of a hydroelectric power-generating plant and its auxiliary facilities such as
transmission, substation and machine shop with an installed capacity of not less that
101 kilowatts nor more than 10,000 kilowatts;
4. Mini-hydroelectric power developer or developer shall refer to any individual,
cooperative, corporation or association engaged in the construction and installation of a
hydroelectric power-generating plant with an installed capacity of not less than 101
kilowatts nor more than 10,000 kilowatts;

423
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5. Domestic use shall refer to the utilization of water for drinking, washing, bath-
ing, cooking or other household needs, home gardens and watering of lawns or for do-
mestic animals;
6. Municipal use shall refer to the utilization of water for supplying the water re-
quirements of the community; and
7. Irrigation use shall refer to the utilization of water for producing agricultural
crops.
96
SEC. 5. Agency in Charge.—The Office of Energy Affairs, hereinafter referred
to as the OEA, shall be the sole and exclusive authority responsible for the regulation,
promotion and administration of mini-hydroelectric power development and the imple-
mentation of the provisions of this Act.
SEC. 6. Powers and Duties of the OEA.—The OEA shall exercise the following
powers and duties:
1. Within six (6) months from approval of this Act, promulgate, in consultation
with the National Water Resources Board (NWRB), such rules and regulations as may
be necessary for the proper implementation and administration of this Act;
2. Process and approve applications for mini-hydroelectric power development,
imposing such terms and conditions as it may deem necessary to promote the objectives
of this Act, subject to the following standards, namely:
The applicant must be a citizen of the Philippines or a corporation, partnership,
association or joint stock company, constituted and organized under the laws of the
Philippines, at least sixty percent (60%) of the stock or paid-up capital of which belongs
to citizens of the Philippines;
The applicant must prove that the operation of the proposed mini-hydroelectric
project and the authorization to do business will promote the public interest in a proper
and suitable manner and, for this purpose, within six (6) months from approval of this
Act, formulate, in consultation with the National Economic and Development Authority
(NEDA), the National Electrification Administration (NEA), and the Department of
Trade and Industry (DTI), standards to measure the technical and financial capability
of the developer; and
The applicant must be financially capable of undertaking the proposed mini-
hydroelectric project and meeting the responsibilities incident to its operations;
3. Charge reasonable fees in connection with the filing, processing, evaluation,
and approval of applications for mini-hydroelectric power development in all suitable
sites in the country;
4. Exclusive authority to issue permits and licenses relative to mini-hydroelectric
power development;
_______________________
96
Now the Department of Energy.

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 MINI-HYDROELECTRIC POWERS DEVELOPERS

5. Require the developer to post a bond or other guarantee of sufficient amount in

favor of the government and with surety or sureties satisfactory to the OEA upon the
faithful performance by the contractor of any or all of the obligations under and pursu-
ant to the contract within sixty (60) days after the effective date of the contract; and
6. Generally, exercise all the powers necessary or incidental to attain the pur-
poses of this Act and other laws vesting additional powers on the OEA.
SEC. 7. Sale of Power.—The mini-hydroelectric power developer must first offer
to sell electric power to either the National Power Corporation (NPC), franchised pri-
vate electric utilities or electric cooperatives at a price per kilowatt-hour based on the
NPC’s or the utility’s avoided cost which shall refer to the costs of the affected grids had
NPC generated the equivalent electric power itself before disposing the power to third
parties. The NPC shall allow the mini-hydroelectric developer to deliver its generated
electricity to the developer’s customers through existing NPC lines so as to serve such
third parties under terms which are to be mutually agreed upon or, if no agreement can
be reached, under terms set by the OEA.
SEC. 8. Nonexclusive Development.—Development of less than fifty percent
(50%) of the hydroelectric power potential of the proposed site shall be nonexclusive.
The OEA, after a thorough review and evaluation of its technical and economic viabil-
ity, may grant the development of the site to its full power potential to any qualified
developer; Provided, That first option shall be given to the original developer; Provided,
further, That in case the original developer forfeits his option to pursue development of
the hydroelectric power resource to its full potential, it shall be reimbursed by the suc-
cess or developer of the value of its investment based on the declared value of the devel-
opment for real estate tax purposes over the immediately preceding three (3) years or,
in case the declared value over said period differs, on the average value thereof.
SEC. 9. Mandatory Restoration Work.—In all cases where the proposed mini-
hydroelectric power development entails the closure or stoppage of existing water out-
lets, passageways, connections, conduits, apertures or the like from the water source, it
shall be mandatory for the developer to restore or re-engineer such water outlets, pas-
sageways, connections, conduits, apertures or the like on its account or expense, and in
such manner that existing users or appropriators shall not be permanently deprived of
their use or appropriation.
SEC. 10. Tax Incentives.—Any person, natural or juridical, authorized to engage
in mini-hydroelectric power development shall be granted the following tax incentives
or privileges:
1. Special Privilege Tax Rates.—The tax payable by grantees to develop potential
sites for hydroelectric power and to generate, transmit and sell electric power shall be
two percent (2%) of their gross receipts from the sale of electric power and from transac-
tions incident to the generation, transmission and sale of electric power. Such privilege
tax shall be made payable to the Commissioner of Internal Revenue or his duly author-

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ized representative on or before the 20th day of the month following the end of each
calendar or fiscal quarter;
2. Tax and Duty free Importation of Machinery, Equipment and Materials.—
Within seven (7) years from the date of award, importation of machinery and equip-
ment, materials and parts shipped with such machinery and equipment including con-
trol and communication equipment shall not be subject to tariff duties and value added
tax; Provided, That the said machinery, equipment, materials and parts: (a) are not
manufactured domestically in reasonable quantity and quality at reasonable prices; (b)
are directly and actually needed and will be used exclusively in the construction and
impounding of water, transformation into energy, and transmission of electric energy to
the point of use; and (c) are covered by shipping documents in the name of the duly
registered developer to whom the shipment will be directly delivered by customs au-
thorities; Provided, further, That prior approval of the OEA was obtained before the
importation of such machinery, equipment, materials and parts was made;
3. Tax Credit on Domestic Capital Equipment.—A tax credit equivalent to one
hundred percent (100%) of the value of the value added tax and customs duties that
would have been paid on the machinery, equipment, materials and parts had these
items been imported shall be given to an awardee developer who purchases machinery,
equipment, materials and parts from a domestic manufacturer; Provided, That such
machinery, equipment, materials and parts are directly needed and will be used exclu-
sively by the awardee developer; Provided, further, That prior approval by the OEA was
obtained by the local manufacturer; Provided, finally, That the sale of such machinery,
equipment, materials and parts shall be made within seven (7) years from the date of
award;
4. Special Realty Tax Rates on Equipment and Machinery.—Any provision of the
Real Property Tax Code or any other law to the contrary notwithstanding, realty and
other taxes on civil works, equipment, machinery and other improvements of a regis-
tered mini-hydroelectric power developer shall not exceed two and a half percent (2.5%)
of their original cost;
5. Value Added Tax Exemption.—Exemption from the ten percent (10%) value
added tax on the gross receipts derived from the sale of electric power whether through
the NPC grid or through existing electric utility lines; and
6. Income Tax Holiday.—For seven (7) years from the start of commercial opera-
tion, a registered mini-hydroelectric power developer shall be fully exempt from income
taxes levied by the National Government.
SEC. 11. Disposition and Allotment of Special Privilege Taxes.—If the mini-
hydroelectric power development is located in a city, sixty percent (60%) of the special
privilege taxes collected shall accrue to the city and forty percent (40%) to the national
government.

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 NON-CONVENTIONAL ENERGY RESOURCES

If the mini-hydroelectric power development is located in a municipality, thirty

percent (30%) of the special privilege taxes collected shall accrue to the municipality,
thirty percent (30%) to the province and forty percent (40%) to the national government.
SEC. 12. Term of Contract.—The term of contract shall be for a period of twenty-
five (25) years extendible for another twenty-five (25) years under the same original
terms and conditions; Provided, That said awardee has complied faithfully with all
terms and conditions of the award.
SEC. 13. Official Development Assistance.—The provision of Executive Order
97
No. 230 of 1987, on the power of the NEDA Board, and rules and regulations govern-
ing the evaluation and authorization for the availment of Official Development Assis-
tance notwithstanding, the privatization of the mini-hydroelectric power plants as pro-
vided for in this Act shall be eligible for foreign loans and grants without further
evaluation by the NEDA Board, subject to Section 21, Article 12 of the Constitution.
SEC. 14. Reporting Requirements.—The OEA shall submit an annual report to
the Congress of the Philippines with respect to the implementation of this Act.
SEC. 15. Repealing Clause.— All laws, decrees, executive orders, rules and regu-
lations, or parts thereof, inconsistent with this Act are hereby repealed, amended or
modified accordingly.
SEC. 16. Effectivity.—This Act shall take effect fifteen (15) days after its publica-
tion in at least two (2) newspapers of general circulation.
Approved: September 12, 1991.

Non-Conventional Energy Resources (Presidential Decree No. 1068)

Whereas, it is imperative to accelerate the development not only of indigenous
conventional energy resources but also of those non-conventional alternatives which
have great potential for immediate and future applications such as but not limited to
solar, wind, tidal and biomass energy;
Whereas, it is essential in the interest of efficiency, economy and effectiveness to
integrate in a single governmental entity the planning, coordination and control of the
research, development and utilization efforts and programs in non-conventional forms
of energy resources of the various government agencies and instrumentalities, including
government owned and controlled corporations;
Now, Therefore, I, Ferdinand E. Marcos, President of the Philippines, by virtue of
the powers and functions vested in me by the Constitution, do hereby order and decree
the following as part of the law of the land:
SECTION 1. Declaration of Policy.—It is the declared policy of the State to
achieve self-reliance in the country’s energy requirements primarily through the inten-
_______________________
97
Creating the Energy Development Board.

427
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sified exploration, development, exploitation and utilization of indigenous conventional

energy resources such as petroleum, coal, natural gas and liquids, water and geother-
mal resources and nuclear fuel resources; and non-conventional alternatives such as
solar, wind, tidal and biomass energy which have great potential for immediate and
future applications. In furtherance of this policy there is an urgent need to coordinate,
integrate and control the pursuit of research, development and utilization efforts of all
government agencies and instrumentalities pursuant to and in accordance with a com-
prehensive national energy program.
SEC. 2. Definition of Terms.—As used in this Decree, the following words and
phrases shall have the following respective meanings:
a. Non-conventional
energy resources refers to
those energy resources in
which the conversion or uti-
lization technology for
large-scale (megawatt le-
vel) applications are not as
well-developed and/or wide-
ly used as those for fossil
fuels, hydrogeothermal and
conventional nuclear. In
general, these resources
would include the direct
and indirect forms of solar,
tidal, nuclear converter and
breeder reactors and fu-
sion.
b. Direct solar energy
means the energy content
“Nature goes her own way and all that to us seems an exception is
of solar radiation harnes- really according to order.” — Johann Wolfgangvon Goethe
sed by collecting sunlight in
(A. Oposa)
manmade devices such as
flatplate or focusing solar collectors.
c. Indirect solar energy means the energy content of solar radiation harnessed by
initially collecting sunlight in a natural manner such as absorption by land, atmos-
phere, ocean surface and plants. This natural collection mode gives rise to winds (by
thermal gradients in the atmosphere), produces organic matter or biomass and creates
ocean thermal gradients between the surface and its depths.
d. Biomass refers to organic matter, whether living or not. This would include,
among others, trees, algae, animal and agricultural wastes and decaying plants in
swamps.

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 NON-CONVENTIONAL ENERGY RESOURCES

e. Bioconversion to fuels refers to the various processes, natural or synthetic, by

which a solid, liquid or gaseous fuel is produced by utilizing biomass feedstock, for ex-
ample, anaerobic fermentation of animal manure to yield biogas; combustion of firewood
to yield heat, steam or power, fermentation of agricultural crops or byproducts to yield
substitute fuels such as alcohol.
f. Biogas is a fuel gas consisting of 50 to 70 percent methane and the rest non-
combustible gases produced by the anaerobic fermentation of organic waste.
g. Energy plantation is a scheme whereby fast-growing crops or trees such as
ipil-ipil are deliberately and systematically planted in order to continuously provide
fuel to a power generating station located at the site.
h. Comprehensive national energy program for purposes of this Decree is a pro-
gram of research, development or utilization of non-conventional energy resources duly
approved by the Energy Development Board.
SEC. 3. Powers and Functions of the Energy Development Board.—In addition to
its powers and functions enumerated in Presidential Decree No. 910 and other laws,
rules and regulations, the Energy Development Board shall exercise the following pow-
ers and functions:
1. Formulate and direct the implementation of a comprehensive national energy
program, subject to periodic review and revisions on non-conventional energy research,
development and utilization.
2. Integrate, coordinate, direct and control all research, development and utiliza-
tion efforts, programs and projects in non-conventional energy resources of all govern-
ment agencies and instrumentalities including government-owned and controlled corpo-
rations.
3. Review and approve all ongoing or planned research, development and utiliza-
tion projects on non-conventional energy whether basic or applied in nature, supported
or planned to be supported by government funds or funds obtainable elsewhere through
government intercession or assistance.
4. Formulate criteria for determining priority for proposed research, development
and utilization projects on non-conventional energy resources and accordingly identify
and select execution, financing and funding schemes.
5. Designate project implementors, coordinate and monitor the progress of all
projects and activities, ongoing or planned projects, in the implementation of the com-
prehensive national energy program.
6. Provide necessary and appropriate supportive efforts to the non-conventional
energy research, development and utilization program such as the launching of a vigor-
ous information and promotions drive assistance and entry of suitable foreign expertise
in order to accelerate the pace of local research, development and utilization and the
training of qualified Filipino personnel in the various aspects of non-conventional en-
ergy, proliferation of those applications in which technologies have proven viable, such

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as biogas generation, windmills for water, pumping and power generation from agricul-
tural and industrial wastes, establishment of demonstration systems like solar water
heaters, solar air-conditioning and energy plantations.
7. Develop and implement specific programs requiring the participation not only
of government agencies and instrumentalities but also the private sector.
8. Grant incentives provided for
herein and propose and recommend the
grant of such other incentives as shall be
necessary and appropriate to enter-
prises, industries and individuals who
shall conduct their own or participate in
research and development or apply
currently available non-conventional
energy technology to their industrial
processes or homes.
9. Promulgate such rules and
regulations as may be necessary to im-
plement the objectives and provisions of
this Decree.
SEC. 4. Incentives.—The provi-
sions of any law to the contrary notwith-
standing any person, whether natural or
juridical, who will directly participate in
the national program to accelerate re-
search, development and utilization of
non-conventional energy sources shall
have the following privileges:
a. Costs incurred in the estab-
lishment and construction of non-
conventional energy conversion facilities
or equipment duly certified by the En-
ergy Development Board may, at the
option of the taxpayer, be directly
“Whatever it is you can do or dream you can, chargeable to expense and shall be fully
begin it. In boldness there is genius, power, deductible as such from gross income in
and magic.”— Johann Wolfgang Von the year wherein such expenses were
Goethe
incurred.
(A. Oposa, Sunrise in Bantayan
Island) b. Exemption from payment of
) tariff duties and compensating tax on
the importation of machinery and equipment, and spare parts and all materials re-
quired in the establishment and construction of non-conventional energy facilities or
equipment subject to the conditions that said machinery, equipment, spare parts and

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 NON-CONVENTIONAL ENERGY RESOURCES

materials of comparable price and quality are not manufactured domestically; are di-
rectly and actually needed and will be used exclusively by the taxpayer in the estab-
lishment and construction of non-conventional facilities or equipment; are covered by
shipping documents in the name of the taxpayer to whom the shipment will be deliv-
ered direct by the customs authorities; and prior approval of the Energy Development
Board was obtained by the taxpayer before the importation of such machinery, equip-
ment spare parts and materials which approval shall not be unreasonably withheld:
Provided, however, that the taxpayer may not sell, transfer or dispose of these machin-
ery, equipment, spare parts or materials without the prior approval of the Energy De-
velopment Board and payment of taxes due the government: Provided, further, That
should the taxpayer sell, transfer, or dispose of these machinery, equipment, spare
parts or materials without the prior consent of the Energy Development Board, it shall
be twice the amount of the tax exemption granted: Provided, finally, That the Energy
Development Board shall allow and approve the sale, transfer, or disposition of the said
items without tax, if made: (1) to another taxpayer who will establish and construct
non-conventional energy conversion facilities or equipment; (2) for reason of technical
obsolescence; or (3) for purposes of replacement to improve and/or expand the opera-
tions of the taxpayer.
c. Government financial institutions such as the Development Bank of the Phil-
ippines, the Philippine National Bank, the Government Service Insurance System, the
Land Bank of the Philippines and such other government institutions as are now en-
gaged or may hereafter engage in financing of investment operations shall, in accor-
dance with and to the extent allowed by the enabling provisions of their respective char-
ters or applicable laws, accord high priority to applications for financial assistance by
individual s/enterprises/industries participating in the national program to accelerate
the research, development and utilization of non-conventional energy sources, as duly
recommended and endorsed by the Development Board.
SEC. 5. Assistance by Other Government Agencies/ Offices and Corporations.—
All government agencies and instrumentalities including government owned or con-
trolled corporations in addition to being implementors of the comprehensive national
energy program when so designated, shall extend whatever assistance that may be
required by the Energy Development Board, including but not limited to the detail to
the Board of such of their employees, scientists and technical personnel.
SEC. 6. Appropriations.—The sum of ten million pesos (P10,000,000.00) is
hereby appropriated out of any available funds in the National Treasury not otherwise
appropriated as operating funds of the Energy Development Board to fully carry out
and implement the functions and objectives provided in this Decree for the period from
the effective date of this Decree up to and including the fiscal year ending December 31,
1977. Thereafter, amounts required by the Energy Development Board shall be in-
cluded annually in the General Appropriation Decree.
SEC. 7. Repealing Clause.—All laws, decrees, orders, rules and regulations or
parts thereof which are inconsistent with any of the provisions of this Decree are hereby
repealed or modified accordingly.

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SEC. 8. Effectivity.—This Decree shall take effect immediately.

Done in the City of Manila, this 13th day of January, 1977.

BIOFUELS ACT (RA 9367)

REPUBLIC ACT NO. 9367—AN ACT TO DIRECT THE USE OF BIOFUELS, ESTAB-
LISHING FOR THIS PURPOSE THE BIOFUEL PROGRAM, APPROPRIATING
FUNDS THEREFOR, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Con-

gress assembled:

SECTION 1. Short Title.—This Act shall be known as the “Biofuels Act of 2006”.
SEC. 2. Declaration of
Policy.—It is hereby declared
the policy of the State to
reduce dependence on impor-
ted fuels with due regard to
the protection of public health,
the environment, and natural
ecosystems consistent with the
country’s sustainable economic
growth that would expand
opportunities for livelihood by
mandating the use of biofuels
as a measure to:
a) develop and utilize
indigenous renewable and sus-
tainably sourced clean energy
sources to reduce dependence
on imported oil;
b) mitigate toxic and
greenhouse gas (GHG) emis-
sions;
c) increase rural em- (A. Oposa)
ployment and income; and
d) ensure the availability of alternative and renewable clean energy without any
detriment to the natural ecosystem, biodiversity and food reserves of the country.
SEC. 3. Definition of Terms.—As used in this Act, the following terms shall be
taken to mean as follows:

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 BIOFUELS ACT

a) AFTA—shall refer to the ASEAN Free Trade Agreement initiated by the Asso-
ciation of Southeast Asian Nations;
b) Alternative Fuel Vehicles/Engines—shall refer to vehicles/engines that use al-
ternative fue1s such as biodiesel, bioethanol, natural gas, electricity, hydrogen and
automotive LPG, instead of gasoline and diesel;
c) Bioethanol—shall refer to ethanol (C2H5OH) produced from feedstock and
other biomass;
d) Biodiesel—shall refer to Fatty Acid Methyl Ester (FAME) or mono-alkylesters
derived from vegetable oils or animal fats and other biomass-derived oils that shall be
technically proven and approved by the DOE for use in diesel engines, with quality
specifications in accordance with the Philippine National Standards (PNS);
d) Bioethanol Fuel—shall refer to hydrous or anhydrous bioethanol suitably de-
natured for use as motor fuel, with quality specifications in accordance with the PNS;
e) Biofuel—shall refer to bioethanol and biodiesel and other fuels made from bio-
mass and primarily used for motive, thermal and power generation, with quality speci-
fications in accordance with the PNS;
f) Biomass—shall refer to any organic matter, particularly cellulosic or ligno-
cellulosic matter, which is available on a renewable or recurring basis, including trees,
crops and associated residues, plant fiber, poultry litter and other animal wastes, in-
dustrial wastes, and the biodegradable component of solid waste;
g) DA—shall refer to the Department of Agriculture created under Executive Or-
der No. 116, as amended;
h) Diesel—shall refer to refined petroleum distillate, which may contain small
amounts of hydrocarbon or non-hydrocarbon additives to improve ignition quality or
other characteristics, suitable for compression ignition engine and other suitable types
of engines with quality specifications in accordance with the PNS;
i) DENR—shall refer to the Department of Environment and Natural Resources
created under Executive Order No. 192, as amended;
j) DOE—shall refer to the Department of Energy created under Republic Act No.
7638, as amended;
k) DOLE—shall refer to the Department of Labor and Employment created under
Executive Order No. 126, as amended;
l) DOF—shall refer to the Department of Finance created under Administrative
Order Nos. 127 and 127-A;
m) DOST—shall refer to the Department of Science and Technology created under
Republic Act No. 2067;
n) DOTC—shall refer to the Department of Transportation and Communications
created under Executive Order No. 125-A, as amended;

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o) DTI—shall refer to the Department of Trade and Industry created under Ex-
ecutive Order No. 133;
p) Feedstock—shall refer to organic sources such as molasses, sugarcane, cassava,
coconut, jatropha, sweet sorghum or other biomass used in the production of biofue1s;
q) Gasoline—shall refer to volatile mixture of liquid hydrocarbon, generally con-
taining small amounts of additives, suitable for use as a fuel in spark-ignition internal
combustion engines with quality specifications in accordance with the PNS;
r) Motor fuel—shall refer to all volatile and inflammable liquids and gas pro-
duced, blended or compounded for the purpose of which are suitable or practicable for,
operating motor vehicles;
s) MTBE—shall refer to Methyl Tertiary Butyl Ether;
t) NBB or Board—shall refer to the National Biofuel Board created under Sec-
tion 8 of this Act;
u) Oil Company—shall refer to any entity that distributes and sells petroleum
fuel products;
v) Oxygenate—shall refer to substances, which, when added to gasoline, increase
the amount of oxygen in that gasoline blend;
w) PNS—shall refer to the Philippine National Standards, consistent with Sec-
tion 26 of R.A. No. 8749, otherwise known as the “Philippine Clean Air Act of 1999”;
x) Renewable Energy Sources—shall refer to energy sources that do not have an
upper limit on the total quantity to be used. Such resources are renewable on a regular
basis; and
y) WID—shall refer to the World Trade Organization.
SEC. 4. Phasing Out of the Use of Harmful Gasoline Additives and/or Oxygen-
ates.—Within six months from the effectivity of this Act, the DOE, according to duly
accepted international standards, shall gradually phase out the use of harmful gasoline
additives such as, but not limited to, MTBE.
SEC. 5. Mandatory Use of Biofuels.—Pursuant to the above policy, it is hereby
mandated that all liquid fuels for motors and engines sold in the Philippines shall con-
tain locally-sourced biofuels components as follows:
5. 1 Within two years from the effectivity of this Act, at least five percent (5%)
bioethanol shall comprise the annual total volume of gasoline fuel actually sold and
distributed by each and every oil company in the country, subject to the requirement
that all bioethanol blended gasoline shall contain a minimum of five percent (5%) bio-
ethanol fuel by volume: Provided, That the ethanol blend conforms to PNS.
5.2 Within four years from the effectivity of this Act, the NBB created under this
Act is empowered to determine the feasibility and thereafter recommend to DOE to
mandate a minimum of ten percent (10%) blend of bioethanol by volume into all gaso-
line fuel distributed and sold by each and every oil company in the country.

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 BIOFUELS ACT

In the event of supply shortage of locally produced bioethanol during the four-year
period, oil companies shall be allowed to import bioethanol but only to the extent of the
shortage as may be determined by the NBB.
5.3 Within three months from the effectivity of this Act, a minimum of one per-
cent (1%) biodiesel by volume shall be blended into all diesel engine fuels sold in the
country: Provided, That the biodiesel blend conforms to PNS for biodiesel.
Within two years from the effectivity of this Act, the NBB created under this Act is
empowered to determine the feasibility and thereafter recommend to DOE to mandate a
minimum of two percent (2%) blend of biodiesel by volume which may be increased
taking into account considerations including but not limited to domestic supply and
availability of locally-sourced biodiesel component.
SEC. 6. Incentive Scheme.—To encourage investments in the production, distri-
bution and use of locally produced biofuels at and above the minimum mandated
blends, and without prejudice to enjoying applicable incentives and benefits under ex-
isting laws, rules and regulations, the following additional incentives are hereby pro-
vided under this Act.
a) Specific tax
The specific tax on local or imported biofuels component, per liter of volume shall
be zero (0). The gasoline and diesel fuel component shall remain subject to the prevail-
ing specific tax rates.
b) Value Added Tax
The sale of raw material used in the production of biofuels such as, but, not limited
to, coconut, jatropha, sugarcane, cassava, corn, and sweet sorghum shall be exempt
from the value added tax.
c) Water Effluents
All water effluents, such as but not limited to distillery slops from the production
of biofuels used as liquid fertilizer and for other agricultural purposes are considered
“reuse”, and are therefore, exempt from wastewater charges under the system provided
under Section 13 of RA No. 9275, also known as the Philippine Clean Water Act: Pro-
vided, however, That such application shall be ill accordance with the guidelines issued
pursuant to RA No. 9275, subject to the monitoring and evaluation by DENR and ap-
proved by DA.
d) Financial Assistance
Government financial institutions, such as the Development Bank of the Philip-
pines, Land Bank of the. Philippines, Quedancor and other government institutions
providing financial services shall, in accordance with and to the extent allowed by the
enabling provisions of their respective charters or applicable laws, accord high priority
to extend financing to Filipino citizens or entities, at least sixty percent (60%) of the
capital stock of which belongs to citizens of the Philippines that shall engage in activi-

435
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ties involving production, storage, handling and transport of biofuel and biofuel feed-
stock, including the blending of biofuels with petroleum, as certified by the DOE.
SEC. 7. Powers and Functions of the DOE.—In addition to its existing powers
and functions, the DOE is hereby mandated to take appropriate and necessary actions
to implement the provisions of this Act. In pursuance thereof, it shall within three
months from the effectivity of this Act:
a) Formulate the implementing rules and regulations under Section 15 of this
Act;
b) Prepare the Philippine Biofuel Program consistent with the Philippine Energy
Plan and taking into consideration the DOE’s existing biofuels program;
c) Establish technical fuel quality standards for biofuels and biofuel-blended
gasoline and diesel which comply with the PNS;
d) Establish guidelines for the transport, storage and handling of biofuels;
e) Impose fines and penalties against persons or entities found to have commit-
ted any of the prohibited acts under Section 12 (b) to (e) of this Act;
f) Stop the sale of biofuels and biofuel-blended gasoline and diesel that are not in
conformity with the specifications provided for under Section 5 of this Act, the PNS and
corresponding issuances of the Department; and
g) Conduct an information campaign to promote the use of biofuels.
SEC. 8. Creation of the National Biofuel Board (NBB).
The National Biofuel Board is hereby created. It shall be composed of the Secre-
tary of the DOE as Chairman and the Secretaries of the DTI, DOST, DA, DOF, DOLE,
and the Administrators of the PCA, and the SRA, as members.
The DOE Secretary, in his capacity as Chairperson, shall, within one month from
the effectivity of this Act, convene the NBB.
The Board shall be assisted by a Technical Secretariat attached to the Office of the
Secretary of the DOE. It shall be headed by a Director to be appointed by the Board.
The number of staff of the Technical Secretariat and the corresponding positions shall
be determined by the Board, subject to approval by the Department of Budget and
Management (DBM) and existing civil service rules and regulations.
SEC. 9. Powers and Functions of the NBB.—The NBB shall have the following
powers and functions:
a) Monitor the implementation of, and evaluate for further expansion, the Na-
tional Biofuel Program (NBP) prepared by the DOE pursuant to Section 7 (b) of this
Act;
b) Monitor the supply and utilization of biofuels and biofuel-blends and recom-
mend appropriate measures in cases of shortage of feedstock supply for approval of the
Secretary of DOE. For this purpose:

436
 BIOFUELS ACT

1. The NBB is empowered to require all entities engaged in the production,

blending and distribution of biofuels to submit reports of their actual and projected
sales and inventory of biofuels, in a format to be prescribed for this purpose; and
2. The NBB shall determine availability of locally-sourced biofuels and rec-
ommend to DOE the appropriate level or percentage of locally-sourced biofuels to
the total annual volume of gasoline and diesel sold and distributed in the country.
c) Review and recommend to DOE the adjustment in the minimum mandated
biofuel-blends subject to the availability of locally-sourced biofuels: Provided, That the
minimum blend may be decreased only within the first four years from the effectivity of
this Act. Thereafter, the minimum blends of five percent (5%) and two percent (2%) for
bioethanol and biodiesel, respectively, shall not be decreased;
d) Recommend to DOE a program that will ensure the availability of alternative
fuel technology for vehicles, engines and parts in consonance with the mandated mini-
mum biofuel-blends, and to maximize the utilization of biofuels, including other biofu-
els;
e) Recommend to DOE the use of biofuel-blends in air transport taking into ac-
count safety and technical viability; and
f) Recommend specific actions to be executed by the DOE and other appropriate
government agencies concerning the implementation of the NBP, including its eco-
nomic, technical, environment and social impact.
SEC. 10. Security of Domestic Sugar Supply.—Any provision of this Act to the
contrary notwithstanding, the SRA, pursuant to its mandate, shall, at all times, ensure
that the supply of sugar is sufficient to meet the domestic demand and that the price of
sugar is stable.
To this end, the BRA shall recommend and the proper agencies shall undertake
the importation of sugar whenever necessary and shall make appropriate adjustments
to the minimum access volume parameters for sugar in the Tariff and Customs Code.
SEC. 11. Role of Government Agencies.—To ensure the effective implementation
of the NBP, concerned agencies shall perform the following functions:
a) The DOF shall monitor the production and importation of biofuels through the
Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC);
b) The DOBT and the DA shall coordinate in identifying and developing viable
feedstock for the production of biofuels;
c) The DOST, through the Philippine Council for Industry and Energy Research
and Development (PCIERD), shall develop and implement a research and development
program supporting a sustainable improvement in biofuel production and utilization
technology. It shall also publish and promote related technologies developed locally and
abroad;
d) The DA through its relevant agencies shall:

437
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(1) Within three months from the effectivity of this Act, develop a national
program for the production of crops for use as feedstock supply. For this purpose,
the Administrators of the SRA and the PCA, and other DA, attached agencies
shall, within their authority, develop and implement policies supporting the Phil-
ippine Biofuel Program and submit the same to the Secretary of the DA for consi-
deration;
(2) Ensure increased productivity and sustainable supply of biofuel feed-
stocks. It shall institute a program that would guarantee that a sufficient and reli-
able supply of feedstocks is allocated for biofuel production; and
(3) Publish information on available and suitable areas for cultivation and
production of such crops.
e) The DOLE shall:
(1) Promote gainful livelihood opportunities and facilitate productive em-
ployment through effective employment services and regulation;
(2) Ensure the access of workers to productive resources and social protec-
tion coverage; and
(3) Recommend plans, policies and programs that will enhance the social
impact of the NBP.
f) The Tariff Commission, in coordination with the appropriate government agen-
cies, shall create and classify a tariff line for biofuels and biofuel-blends in consideration
of WTO and AFTA agreements; and
g) The local government units (LGUs) shall assist the DOE in monitoring the dis-
tribution, sale and use of biofuels and biofuel-blends.
SEC. 12. Prohibited Acts.—The following acts shall be prohibited:
a) Diversion of biofuels, whether locally produced or imported, to purposes other
than those envisioned in this Act;
b) Sale of biofuel-blended gasoline or diesel that fails to comply with the minimum
biofuel-blend by volume in violation of the requirement under Section 5 of this Act;
c) Distribution, sale and use of automotive fuel containing harmful additives
such as, but not limited to, MTBE at such concentration exceeding the limits to be de-
termined by the NBB;
d) Noncompliance’ with the established guidelines of the PNS and DOE adopted
for the implementation of this Act; and
e) False labeling of gasoline, diesel, biofuels and biofuel-blended gasoline and die-
sel.
SEC. 13. Penal Provisions.—Any person, who willfully aids or abets in the com-
mission of a crime prohibited herein or who causes the commission of any such act by
another shall be liable in the same manner as the principal.

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 BIOFUELS ACT

In the case of association, partnership or corporations, the penalty shall be im-

posed on the partner, president, chief operating officer, chief executive officer, directors
or officers, responsible for the violation.
The commission of an act enumerated in Section 12, upon conviction thereof, shall
suffer the penalty of one year to five years imprisonment and a fine ranging from a
minimum of One million pesos (P1,000,000.00) to Five million pesos (P5,000,000.00).
In addition, the DOE shall confiscate any amount of such products that fail to
comply with the requirements of Sections 4 and 5 of this Act, and implementing issu-
ances of the DOE. The DOE shall determine the appropriate process and the manner of
disposal and utilization of the confiscated products. The DOE is also empowered to stop
and suspend the operation of businesses for refusal to comply with any order or instruc-
tion of the DOE Secretary in the exercise of his functions under this Act.
Further, the DOE is empowered to impose administrative fines and penalties for
any violation of the provisions of this Act, implementing rules and regulations and other
issuances relative to this Act.
SEC. 14. Appropriations.—Such sums as may be necessary for the initial im-
plementation of this Act shall be taken from the current appropriations of the DOE.
Thereafter, the fund necessary to carry out the provisions of this Act shall be included
in the annual General Appropriations Act.
SEC. 15. Implementing Rules and Regulations (IRR).—The DOE, in consultation
with the NBB, the stakeholders and other agencies concerned, shall within three months
from the effectivity of this Act, promulgate the IRR of this Act: Provided, That prior to its
effectivity, the draft of the IRR shall be posted at the DOE website for at least one month,
and shall be published in at least two newspapers of general circulation.
SEC. 16. Congressional Oversight Committee.—Upon the effectivity of this Act, a
Congressional Committee, hereinafter referred to as the Biofuels Oversight Committee,
is hereby constituted. The Biofuels Oversight Committee shall be composed of fourteen
(14) members, with the Chairmen of the Committees on Energy of both Houses of Con-
gress as co-chairmen. The Chairmen of the Committees on Agriculture and Trade and
Industry shall be ex-officio members. An additional four members from each House, to
be designated by the Senate President and the Speaker of the House of Representatives,
respectively. The minority shall be entitled to pro-rata representation but shall have at
least one representative in the Biofuels Oversight Committee.
SEC. 17. Benefits of Biofuel Workers.—This Act shall not in any way result in
the forfeiture or diminution of the existing benefits enjoyed by the sugar workers as
prescribed under R.A. No. 6982, or the Sugar Amelioration Act of 1991, in case sugar-
cane shall be used as feedstock.
The NBB shall establish a mechanism similar to that provided under the Sugar
Amelioration Act of 1991 for the benefit of other biofuel workers.

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SEC. 18. Special Clause.—This Act shall not be interpreted as prejudicial to

clean development mechanism (CDM) projects that cause carbon dioxide (CO2) and
greenhouse gases (GHG) emission reductions by means of biofuels use.
SEC. 19. Repealing Clause.—The provisions of Section 148 (d) of R.A No. 8424,
otherwise known as Tax Reform Act of 1997, and all other laws, presidential decrees or
issuances, executive orders, presidential proclamations, rules and regulations or parts
thereof inconsistent with the provisions of this Act, are hereby repealed, modified or
amended accordingly.
SEC. 20. Separability Clause.—If any provision of this Act is declared unconstitu-
tional, the same shall not affect the validity and effectivity of the other provisions hereof.
SEC. 21. Effectivity.—This Act shall take effect fifteen (15) days after its publi-
cation in at least two newspapers of general circulation.
Approved.

Geothermal Resources (Presidential Decree No. 1442)

WHEREAS, it is necessary for the economic and industrial development of the
country to reduce our dependence
on imported energy supplies and
accelerate the development of
geothermal resources, which have
been identified as a viable and
untapped economical source of
energy;
WHEREAS, it is in the na-
tional interest to allow service
contracts for financial, technical,
management or other forms of
assistance with qualified domes-
tic and foreign entities, for the
exploration, development, exploi-
tation, or utilization of the coun-
try’s geothermal resources;
NOW, THEREFORE, I,
FERDINAND E. MARCOS,
President of the Philippines, by “The clearest way into the universe is through a forest
virtue of the powers vested in me wilderness.” — John Muir
by the Constitution of the Philip- (N. Oshima)
pines, do hereby order and decree
as follows:

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 GEOTHERMAL RESOURCES

SECTION 1. Exploration of and Development of Geothermal Resources by the

Government.—Subject to existing private rights, the Government may directly explore
for, exploit and develop geothermal resources. It may also indirectly undertake the
same under service contracts awarded through public bidding or concluded through
negotiation, with a domestic or foreign contractor who must be technically and finan-
cially capable of undertaking the operations required in the service contract; Provided,
that if the service contractor shall furnish the necessary services, technology and fi-
nancing, the service contractor may be paid a fee not exceeding forty per centum (40%)
of the balance of the gross value of the geothermal operations after deducting the neces-
sary expenses incurred in the operations; Provided, further, that the execution of the
activities and operations subject of the service contract, including the implementation of
the work program and accounting procedures agreed upon, shall at all times be subject
to direct supervision of the Government, through the Bureau of Energy Development
Service contracts as above authorized shall be subject to the approval of the Secretary of
Energy.
Geothermal resources mean—
a. all products of geothermal processes, embracing indigenous steam, hot water
and hot brines;
b. steam and other gases, hot water and hot brines resulting from water, gas, or
other fluids artificially introduced into geothermal formations;
c. heat or other associated energy found in geothermal formations; and
d. any by-product derived from them.
SEC. 2. Geothermal Contract Areas.—Service contracts, as herein authorized,
may cover public lands, government geothermal reservations, including those presently
administered or unappropriated areas, as well as areas covered by exploration permits
or leases granted under Republic Act No. 5092.
Service contracts for exploration and development of geothermal resources may
also cover private lands, or other lands subject of agricultural, mining, petroleum or
other rights or devoted to purposes other than the exploration or use of geothermal
energy; Provided, that the right to enter private lands, and to established easements
over such lands shall, in the absence of a voluntary agreement with the private land-
owner, upon application of the contractor to the Court of First Instance of the province
or the municipal court of the municipality where the land is situated, and upon posting
of the necessary bond as may be fixed by the same court, be allowed by the court subject
to payment of reasonable compensation.
SEC. 3. Conversion of Geothermal Exploration Permits and Leases to Service
Contract.—Holders of valid and subsisting geothermal exploration permits and geo-
thermal leases granted by the Government prior to January 17, 1973, pursuant to Re-
public Act No. 5092, shall enter into service contracts as herein provided relative to the
areas covered by their respective permits or leases within six months from the effective

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date of this Decree; and, in default thereof, the geothermal exploration permits and
geothermal leases shall be deemed automatically canceled and the area covered thereby
shall revert back to the State.
All geothermal exploration permit application filed under Republic Act No. 5092
shall be deemed withdrawn and no effect as of the effective date of this Decree.
SEC. 4. Privileges of Service Contractors.—The provisions of any law to the con-
trary notwithstanding, a service contract executed under this Act may provide that the
contractor shall have the following privileges:
a. Exemption from payment of tariff duties and compensating tax on the impor-
tation of machinery and equipment, and spare parts and all materials required for geo-
thermal operations subject to such conditions as may be imposed by the Director of
Energy Development; Provided, that should the contractor or its sub-contractor sell,
transfer or dispose of the machinery, equipment, spare parts or materials without the
prior consent of the Bureau of Energy Development, it shall pay twice the amount of the
taxes and duties not paid because of the exemption granted;
b. Entry, upon the sole approval of the Bureau of Energy Development which
shall not be unreasonably withheld, and subject to such conditions as it may impose, of
alien technical and specialized personnel (including the immediate members of their
families), who may exercise their professions solely for the operations of the contractor
as prescribed in its contract with the Government under this Act;
c. Subject to the regulations of the Central Bank, repatriation of capital invest-
ment and remittance of earnings derived from its service contract operations, as well as
such sums as may be necessary to cover principal and interest of foreign obligations
incurred for the geothermal operations.
d. Other privileges provided in Section 12 of Presidential Decree no. 87 as may be
applied to the geothermal operation.
SEC. 5. Exploitation Permits.—In cases where discovered geothermal resources
are deemed inappropriate for service contracts arrangements in view of economic and/or
technical reasons, the Bureau of Energy Development may issue development and ex-
ploitation permits for such resources and formulate the applicable rules and regulations
to govern the same.
SEC. 6. Rules and Regulations.—The Director of Energy Development shall be
vested with the authority to promulgate such rules and regulations as may be necessary
to implement the provisions of this Act, subject to approval by the Secretary of Energy.
SEC. 7. Repealing Clause.—The provisions of Republic Act No. 5092 and other
laws, rules and regulations inconsistent with this Decree are hereby repealed.
SEC. 8. Effectivity.—This Decree shall take effect immediately upon approval.
Done in the City of Manila, June 11, 1978.

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 GEOTHERMAL WATERSHEDS

Geothermal Watersheds (Executive Order No. 223)

Whereas, indigenous geothermal resource is an energy alternative that can pro-
vide a principal energy supply to boost the country’s economy;
Whereas, the government has declared some geothermal rich areas of the country
as geothermal reservations under the jurisdiction and control of the Office of Energy
Affairs (OEA) through the National Power Corporation (NPC) pursuant to Presidential
Decree 1515 and 1749;
Whereas, PNOC has subs-
tantially invested in the
development of the Tongonan,
Palinpinon and Bacon Manito
geothermal fields and presently
supplies geothermal steam to
the geothermal power plants in
Tongonan and Palinpinon;
Whereas, being a major de-
veloper of this vital energy al-
ternatives, it is the inherent
responsibility of PNOC to
protect and manage the
watershed areas surrounding
the geothermal resource to
ensure the sustained steam
supply to government power
plants;
Whereas, PNOC was depu-
tized by OEA under MOE Order
830615 in conjunction with “We cannot command nature except by obeying her.”—
Presidential Decree 1749 to Francis Bacon
undertake the management, (N. Oshima)
protection, development and
rehabilitation of the watershed areas of Tongonan, Palinpinon, and Bacon Manito Geo-
thermal Reservations;
Whereas, PNOC has in place an efficient logistics network and an established and
qualified watershed management body currently undertaking the protection, rehabilita-
tion, and development of these reservations;
Now, Therefore, I, Corazon C. Aquino, President of the Philippines, do hereby direct:
SECTION 1. PNOC shall have jurisdiction, control and management, and shall
be responsible for the protection, development and rehabilitation of the watershed areas
surrounding the following geothermal reservations:

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a. Tongonan Geothermal Reservation pursuant to Presidential Proclamation No.

112;
b. Palinpinon Geothermal Reservation pursuant to Presidential Decree No. 1413;
c. Bacon-Manito Geothermal Reservation pursuant to Presidential Proclamation
No. 2036A; and
d. Other geothermal reservations as may be discovered, identified, determined,
and to be developed by PNOC, and proclaimed by the President of the Philippines.
SEC. 2. To effectively accomplish this mandate, PNOC shall exercise jurisdiction
and control over the aforesaid watershed areas including but not limited to the per-
formance of the following acts:
a. Enforcement of forestry laws, rules and regulations within said watershed ar-
eas;
b. Identification of areas which require immediate rehabilitation and develop-
ment;
c. Preparation of plans and programs for the maximum utilization of watershed
resources;
d. Formulation and/or implementation of measures to prevent denudation of wa-
tershed cover;
e. Public education and information drive to create awareness among the popu-
lace of the importance of forests and uses of watershed areas;
f. Promotion of the development and conservation of existing vegetative cover;
g. Formulation of plans and development programs for resettlement and reloca-
tion;
h. Coordination with other government agencies/instrumentalities religious and
civic groups in undertaking forest conservation measures in watershed areas;
i. Afforestation, reforestation and physical rehabilitation measures in critically
denuded watershed areas.
SEC. 3. The provisions of existing laws, decrees, orders, rules and regulations as
are inconsistent herewith are hereby repealed, amended or modified accordingly.
SEC. 4. This Order shall take effect immediately.
Done in the City of Manila, this 16th day of July, 1987.

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 GEOTHERMAL WATERSHEDS

The Stillborn Nuclear Power Plant

Background:

One of the most controversial projects in the latter part of the Marcos regime was
the construction of a nuclear plant about 85 kilometers northwest of Metro Manila,
called the Bataan Nuclear Power Plant (BNPP). There were serious questions raised on
the safety of the plant and allegations of financial malfeasance attendant to its award.
The case below was lodged in the Supreme Court and was decided barely two weeks
before the now-famous EDSA (People Power) Revolution that toppled the Marcos gov-
ernment. To date, and despite the fact that the BNPP is non-operational and has been
mothballed, the Philippines pays some $300,000 a day to service the loan secured to
finance this project. At present exchange rates (P50 : $ 1), this amounts to a staggering
P450,000,000 a month or about P5.3 billion per year, on interest alone, an amount more
than the budget of the Department of Environment and Natural Resources.
The National Power Corporation (NPQ sought a license to operate its nuclear
power plant in Bataan from the Philippine Atomic Energy Commission (PAEC). Peti-
tioners Nuclear Free Philippine Coalition and (former Senator) Lorenzo M. Tañada
seeks to prevent Commissioners of the PAEC from resolving the issue of safety of the
Nuclear Power Plant-I in the licensing proceedings. Petitioners questioned the compe-
tence and apparent bias of the commissioners. They also assailed the validity of the
motion filed by the NPC for the conversion of its construction permit into an operating
license for the Nuclear Plant pointing out that no information was submitted on final
qualifications of NPC, its source of nuclear fuel, and its insurance coverage for nuclear
damage, all in violation of licensing rules and procedures.
Issue: Can the commissioners proceed with the licensing proceedings?
Held: No. There was apparent bias and pre-judgement shown by the Commis-
sioners in issuing several official pamphlets which portrayed the nuclear plant as safe.
Knowing this, the Court resolved to favor a course of action which would assure an
unquestionably objective inquiry by restraining the Commissioners from further acting
in PAEC licensing proceedings No. 1-77. “Respondent Commissioners would be acting
with grave abuse of discretion amounting to lack of jurisdiction were they to sit in
judgment upon the safety of the plant, absent the requisite objectivity that must char-
acterize such an important inquiry.”

Nuclear Free Philippine Coalition v. NPC

G.R. No. L-68474, February 11, 1986

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Oil Deregulation (Republic Act 8479)

Chapter I
General Provisions

SECTION 1. Short title.— This

Act shall be known as the
“Downstream Oil Industry Deregu-
lation Act of 1998.”
SEC. 2. Declaration of Policy.
—It shall be the policy of the State to
liberalize and deregulate the down-
stream oil industry in order to ensure
a truly competitive market under a
regime of fair prices, adequate and
continuous supply of environmentally-
clean and high-quality petroleum pro-
ducts. To this end, the State shall pro-
mote and encourage the entry of new
participants in the downstream oil in-
dustry, and introduce adequate meas-
ures to ensure the attainment of these
goals.
SEC. 3. Coverage.—This Act
shall apply to all persons or entities
engaged in any and all the activities of
Low tide and breaking dawn at a seashore
the domestic downstream oil industry, somewhere in the Visayan Sea.
as well as persons or companies di- (A. Oposa)
rectly importing refined petroleum
products for their own use.
SEC. 4. Definition of Terms.—For purposes of this Act, the following terms are
herein below defined:. Basel Convention shall refer to the international accord which
governs the trade or movement of hazardous and toxic waste across borders;
b. Board shall refer to the Energy Regulatory Board;
c. BOI shall refer to the Board of Investments;
d. Crude oil shall refer to oil in its natural state before the same has been refined
or otherwise treated, but excluding water, bottoms, sediments and foreign substances;
e. Dealer shall refer to any person, whether natural or juridical, who is engaged
in the marketing and direct selling of petroleum products to motorists, end users, and
other consumers;

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f. DOE shall refer to the Department of Energy;

g. DOJ shall refer to the Department of Justice;
h. Downstream Oil Industry (DOI) or Industry shall refer to the business of im-
porting, exporting, re-exporting, shipping, transporting, processing, refining, storing,
distributing, marketing and/or selling crude oil, gasoline, diesel, liquefied petroleum gas
(LPG), kerosene, and other petroleum products;
i. Hauler shall refer to any person, whether natural or juridical, engaged in the
transport, distribution, hauling, and carriage of petroleum products, whether in bulk or
packed form, from the oil companies and independent marketers to the petroleum deal-
ers and other consumers;
j. LPG distributor shall refer to any person or entity, whether natural or juridi-
cal, engaged in exporting, refilling, transporting, marketing, and/or selling of LPG to
end users and other consumers;
k. New industry participants shall refer to new participants in a particular sub-
sector of the downstream oil industry with investments and initial business operations
commencing after January 1, 1994;
l. Person shall refer to any person, whether natural or juridical, who is engaged
in any activity of the downstream oil industry;
m. Petroleum shall refer to the naturally occurring mixture of compounds of hy-
drogen and carbon with a small proportion of impurities and shall include any mineral
oil, petroleum gas, hydrogen gas, bitumen, asphalt, mineral wax, and all other similar
or naturally-associated substances, with the exception of coal, peat, bituminous shale
and/or other stratified mineral fuel deposits;
n. Petroleum products shall refer to products formed in the course of refining
crude petroleum through distillation, cracking, solvent refining and chemical treatment
coming out as primary stocks from the refinery such as, but not limited to: LPG, naph-
tha, gasolines, solvent, kerosenes, aviation fuels, diesel oils, fuel oils, waxes and petro-
latums, asphalt, bitumens, coke and refinery sludges, or such refinery petroleum frac-
tions which have not undergone any process or treatment as to produce separate chemi-
cally-defined compounds in a pure or commercially pure state and to which various
substances may have been added to render them suitable for particular uses: Provided,
That the resultant product contains not less than fifty percent (50%) by weight of such
petroleum products;
o. Singapore Import Parity (SIP) shall refer to the deemed landed cost of a petro-
leum product imported from Singapore at a free-on-board price equal to the average
Singapore Posting for that product at the time of loading;
p. Singapore posting shall refer to the price of petroleum products periodically
posted by oil refineries in Singapore and reported by independent international publica-
tions; and

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q. Wholesale Posted Price (WPP) shall refer to the ceiling price of petroleum prod-
ucts set by the Board based on its duly approved automatic pricing formula.

Chapter II
Liberalization of the Downstream Oil Industry and
Promotion of Free Competition

SEC. 5. Liberalization of the Industry.—Any law to the contrary notwithstand-

ing, any person or entity may import or purchase any quantity of crude oil and petro-
leum products from a foreign or domestic source, lease or own and operate refineries
and other downstream oil facilities and market such crude oil and petroleum products
either in a generic name or his or its own trade name, or use the same for his or its own
requirement: Provided, That any person or entity who shall engage in any such activity
shall give prior notice thereof to the DOE for monitoring purposes: Provided, further,
That such notice shall not exempt such person or entity from securing certificates of
quality, health and safety and environmental clearance from the proper governmental
agencies: Provided, furthermore, That such person or entity shall, for monitoring pur-
poses, report to the DOE his or its every importation/exportation: Provided, finally,
That all oil importations shall be in accordance with the Basel Convention.
SEC. 6. Tariff Treatment.—
a. Any law to the contrary notwithstanding and starting with the effectivity of
this Act, a single and uniform tariff duty shall be imposed and collected both on im-
ported crude oil and imported refined petroleum products at the rate of three percent
(3%): Provided, however, That the President of the Philippines may, in the exercise of
his powers, reduce such tariff rate when in his judgment such reduction is warranted,
pursuant to Republic Act No. 1937, as amended, otherwise known as the “Tariff and
Customs Code”; Provided, further, That beginning January 1, 2004 or upon implemen-
tation of the Uniform Tariff Program under the World Trade Organization and ASEAN
Free Trade Area commitments, the tariff rate shall be automatically adjusted to the
appropriate level notwithstanding the provisions under this Section.
b. For as long as the National Power Corporation (NPC) enjoys exemptions from
taxes and duties on petroleum products used for power generation, the exemption shall
apply to purchases through the local refineries and to the importation of fuel oil and
diesel.
SEC. 7. Promotion of Fair Trade Practices.—The Department of Trade and In-
dustry (DTI) and DOE shall take all measures to promote fair trade and prevent car-
telization, monopolies, combinations in restraint of trade, and any unfair competition in
the Industry as defined in Article 186 of the Revised Penal Code, and Articles 168 and
169 of Republic Act No. 8293, otherwise known as the “Intellectual Property Rights
Law.” The DOE shall continue to encourage certain practices in the industry which
serve the public interest and are intended to achieve efficiency and cost reduction, en-

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 OIL DEREGULATION

sure continuous supply of petroleum products, and enhance environmental protection.

These practices may include borrow-and-loan agreements, rationalized depot and
manufacturing operations, hospitality agreements, joint tanker and pipeline utilization,
and joint actions on oil spill control and fire prevention.
The DOE shall monitor the relationship between the oil companies (refiners and
importers) and their dealers, haulers and LPG distributors to help ensure the obser-
vance of fair and equitable practices and to ensure the enforcement of existing con-
tracts: Provided, That the DOE shall conciliate and arbitrate any issue that may arise
with respect to the contractual relationship between the oil companies and the dealers,
haulers and LPG distributors involving the dealers’ mark-up, the freight rate in trans-
porting petroleum products and the margins of LPG distributors for the protection of
the public and to prevent ruinous competition: Provided, further, That the arbitration
award of the DOE shall be subject to judicial review under existing law.
SEC. 8. Program to Encourage the Entry of New Participants in the Industry.—
The DOE, the Department of Foreign Affairs (DFA), and the DTI shall jointly formulate
and establish a program that will promote the entry of new participants in the industry.
Such program shall, among others, include a strategic international information cam-
paign to be implemented through selected embassies and consular offices of the Philip-
pines. This program shall commence implementation after three (3) months from the
effectivity of this Act.
In this regard, the DOE shall provide a “Philippine Downstream Oil Industry In-
vestment Guide” to new industry participants and prospective participants. This guide
shall, among others, contain:
a. An introduction to the Philippine Downstream Oil Industry and the govern-
ment‘s unwavering commitment to deregulation;
b. The entry requirements;
c. Information on the benefits and incentives for new industry participants which
shall specify: 1) all the incentives and benefits they can enjoy, and 2) the procedural and
substantive requirements needed for entitlement; and
d. Such other information the DOE may deem necessary to promote the entry of
new participants.
SEC. 9. Incentives for New Investments.—To the extent applicable, persons with
new investments as determined by the DOE and registered with the BOI in refining,
storage, marketing, and distribution of petroleum products, shall be extended the same
incentives granted to BOI-registered enterprises engaged in a preferred area of invest-
ments pursuant to Executive Order No. 226, otherwise known as the “Omnibus Invest-
ment Code of 1987.”
Such incentives shall include:
1. Income tax holiday;

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2. Additional deduction for labor expenses;

3. Minimum tax and duty of three percent (3%) and value-added tax (VAT) on
imported capital equipment;
4. Tax credit on domestic capital equipment;
5. Exemption from contractor’s tax;
6. Unrestricted use of consigned equipment;
7. Exemption from the real property tax on production equipment or machiner-
ies;
8. Exemption from taxes and duties on imported spare parts; and
9. Such other applicable incentives under Article 39 of Executive Order No. 226.
Any provision of law
to the contrary
notwithstanding, the said
incentives may be availed
by persons with new
investments for a period of
five (5) years from regis-
tration with the BOI:
Provided, however, That in
the storage, marketing and
distribution of petroleum
products, only the
investments of new
industry participants shall
be entitled to incentives
provided in the said Code.
As used herein, “marketing
of petroleum products”
shall include the
“I would feel more optimistic about a bright future for man if establishment of gasoline
he spent less time proving that he can outwit Nature and stations.
more time tasting her sweetness and respecting her seniority.”
— Elwyn Brooks White For this purpose, the
(A. Oposa)industry shall be included
in the annual Investment
Priorities Plan (IPP): Provided, That nothing herein contained shall preclude qualified
persons or entities as provided under the “Omnibus Investments Code” from applying
for or continue enjoying incentives and benefits under the said Code.
SEC. 10. Promotion of Retail Competition.—To achieve the social policy objective
of fair prices, and facilitate the attainment of a truly competitive petroleum product
market in the retail level, the DOE shall promote and encourage by way of information

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 OIL DEREGULATION

dissemination, networking, and management/skills training, the active and direct par-
ticipation of the private sector and cooperatives in the retailing of petroleum products
through joint venture/supply agreements with new industry participants for the estab-
lishment and operation of gasoline stations: Provided, That the training herein shall
include LPG retailing.
To this end, the DOE shall, in cooperation with the Technology and Livelihood Re-
source Center (TLRC) and Technical Education and Skills Development Authority
(TESDA), coordinate with new industry participants and existing petroleum dealers’
associations in the formulation and implementation of a two-fold program on manage-
ment and skills training for the establishment, operation, and maintenance of gasoline
stations.
Persons who successfully complete the two-fold program shall be entitled to gov-
ernment assistance being extended by government lending agencies, in the form of
medium-to-long-term loans with low interest rates and to the gasoline station training
and loan fund provided hereunder, to serve as capital for the establishment and opera-
tion of gasoline stations.
For these purposes, there is hereby established a gasoline station training and
loan fund with the initial amount of three hundred million pesos (P300,000,000.00) to
be provided by the Philippine Amusement Gaming Corporation (PAGCOR) and admin-
istered by the DOE under a separate account.
Of this amount, two percent (2%) plus any additional funding shall be allocated for
the two-fold program; one percent (1%) plus any additional funding shall be set aside for
administrative, maintenance, and other operating expenses; ninety-four percent (94%)
shall be used exclusively for lending and financial assistance; the remaining three per-
cent (3%) shall be utilized in accordance with the provision of Section 26 of this Act:
Provided, That the loans to be awarded herein shall be from short-to medium-term with
low interest rates: Provided, further, That these loans shall be awarded to qualified
persons who are able to comply with the conditions set forth in the next two (2) preced-
ing paragraphs.

Chapter III
Anti-Trust Safeguards, Other Prohibited Acts, and Remedies

SEC. 11. Anti-trust Safeguards.—To ensure fair competition and prevent cartels
and monopolies in the Industry, the following acts are hereby prohibited:
a. Cartelization which means any agreement, combination or concerted action by
refiners, importers and/or dealers, or their representatives, to fix prices, restrict outputs
or divide markets, either by products or by areas, or allocate markets, either by prod-
ucts or by areas, in restraint of trade or free competition, including any contractual
stipulation which prescribes pricing levels and profit margins;

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b. Predatory pricing which means selling or offering to sell any oil product at a
price below the seller’s or offeror’s average variable cost for the purpose of destroying
competition, eliminating a competitor or discouraging a potential competitor from enter-
ing the market: Provided, however, That pricing below average variable cost in order to
match the lower price of the competitor and not for the purpose of destroying competi-
tion shall not be deemed predatory pricing. For purposes of this prohibition, “variable
cost” as distinguished from “fixed cost,” refers to costs such as utilities or raw materials,
which vary as the output increases or decreases and “average variable cost” refers to the
sum of all variable costs divided by the number of units of outputs.
Any person, including but not limited to the chief operating officer, chief executive
officer or chief finance officer of the partnership, corporation or any entity involved, who
is found guilty of any of the said prohibited acts shall suffer the penalty of three (3) to
seven (7) years imprisonment, and a fine ranging from one million pesos
(P1,000,000.00) to two million pesos (P2,000,000.00).
SEC. 12. Other Prohibited Acts.—To ensure compliance with the provisions of
this Act, the refusal to comply with any of the following shall likewise be prohibited:
a. submission of any reportorial requirements;
b. use of clean and safe (environment and worker-benign) technologies;
c. any order or instruction of the DOE Secretary issued in the exercise of his en-
forcement powers under Section 15 of this Act; and
d. registration of any fuel additive with the DOE prior to its use as an additive.
Any person, including but not limited to the chief operating officer or chief execu-
tive officer of the partnership, corporation or any entity involved, who is found guilty of
any of the said prohibited acts shall suffer the penalty of imprisonment for two (2) years
and fine ranging from Two Hundred Fifty Thousand Pesos (P250,000.00) to Five Hun-
dred Thousand Pesos (P500,000.00).
SEC. 13. Remedies.—
a. Government Action.—Whenever it is determined by the Joint Task Force cre-
ated under Section 14 (d) of this Act, that there is a threatened, imminent or actual
violation of Section 11 of this Act, it shall direct the provincial or city prosecutors hav-
ing jurisdiction to institute an action to prevent or restrain such violation with the Re-
gional Trial Court of the place where the defendant or any of the defendants resides or
has his place of business. Pending hearing of the complaint and before final judgment,
the court may at any time issue a temporary restraining order or an order of injunction
as shall be deemed just within the premises, under the same conditions and principles
as injunctive relief is granted under the Rules of Court.
Whenever it is determined by the joint task force that the government or any of its
instrumentalities or agencies, including government-owned or controlled corporations,
shall suffer loss or damage in its business or property by reason of violation of Section
11 of this Act, such instrumentality, agency, or corporation may file an action to recover

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 OIL DEREGULATION

damages and the costs of suit with the Regional Trial Court which has jurisdiction as
provided above.
b. Private Complaint.—Any person or entity shall report any violation of Section
11 of this Act to the joint task force. The joint task force shall investigate such reports
in aid of which the DOE Secretary may exercise the powers granted under Section 15 of
this Act. The joint task force shall prepare a report embodying its findings and recom-
mendations as a result of any such investigation, and the report shall be made public at
the discretion of the joint task force. In the event that the joint task force determines
that there has been a violation of Section 11 of this Act, the private person or entity
shall be entitled to sue for and obtain injunctive relief, as well as damages, in the Re-
gional Trial Court having jurisdiction over any of the parties, under the same conditions
and principles as injunctive relief is granted under the Rules of Court.

Chapter IV
Powers and Functions of the DOE and DOE Secretary

SEC. 14. Monitoring—

a. The DOE shall monitor and publish daily international crude oil prices, as well
as follow the movements of domestic oil prices. It shall likewise monitor the quality of
petroleum products and stop the operation of businesses involved in the sale of petro-
leum products which do not comply with the national standards of quality that are
aligned with the national standards/protocols of quality. The Bureau of Product Stan-
dards (BPS) of the DTI, together with the Department of Environment and Natural
Resources (DENR), the DOE, the Department of Science and Technology (DOST), rep-
resentatives of the fuel and automotive industries and the consumers, shall set the
specifications for all types of fuel and fuel-related products to improve fuel composition
for increased efficiency and reduced emissions. The BPS shall also specify the allowable
content of additives in all types of fuels and fuel-related products.
b. The DOE shall monitor the refining and manufacturing processes of local pe-
troleum products to ensure that clean and safe (environment and worker-benign) tech-
nologies are applied. This shall also apply to the process of marketing local and im-
ported petroleum products.
c. The DOE shall maintain a periodic schedule of present and future total indus-
try inventory of petroleum products for the purpose of determining the level of supply.
To implement this, the importers, refiners, and marketers are hereby required to sub-
mit monthly to the DOE their actual and projected importations, local purchases, sales
and/or consumption, and inventory on a per crude/product basis.
d. Any report from any person of an unreasonable rise in the prices of petroleum
products shall be immediately acted upon. For this purpose, the creation of DOE-DOJ
Task Force is hereby mandated to determine within thirty (30) days the merits of the
report and initiate the necessary actions warranted under the circumstance: Provided,

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That nothing herein shall prevent the said task force from investigating and/or filing
the necessary complaint with the proper court or agency motu propio.
Upon the effectivity of this Act, the Secretaries of Energy and Justice shall jointly
appoint the members of a committee who shall be tasked with the drafting of rules and
guidelines to be adopted by the task force in the performance of its duty. These guide-
lines shall ensure efficiency, promptness, and effectiveness in the handling of its cases.
The task force shall be organized and its members appointed within one (1) month from
the effectivity of this Act.
e. In times of national emergency, when the public interest so requires, the DOE
may, during the emergency and under reasonable terms prescribed by it, temporarily
take over or direct the operation of any person or entity engaged in the industry.
SEC. 15. Additional Powers of the DOE Secretary.—In connection with the en-
forcement of this Act, the DOE Secretary shall have the following powers:
a. To gather and compile appropriate information concerning, and to investigate
from time to time the organization, business, conduct, practices, and management of
any person or entity in the industry;
b. To require, by general or special orders, persons and entities engaged in a par-
ticular activity of the industry: (i) to file an annual or special report or both in such form
as the Secretary may prescribe; or (ii) to answer specific questions in writing, furnishing
to the Secretary such information as he may require as to the organization, business,
conduct, practices, management, and relation to other corporations, partnerships, and
individuals of the respective persons or entities filing such reports or answer. Such
reports and/or answer shall be filed with the Secretary under oath and within such
reasonable time as the Secretary may prescribe;
c. Upon the direction of the President or either House of Congress, to investigate
and report the facts relating to any alleged violation of this Act by any person or corpo-
ration;
d. Upon the application of the Secretary of Justice, to investigate and make rec-
ommendations for the readjustment of the business of any person or entity alleged to be
violating this Act in order that such person or entity may thereafter maintain his or its
organization, management, and conduct of business in accordance with law;
e. To recommend to the proper government agency the suspension or revocation
and termination of the business permit of an offender;
f. Concomitant with the policy of ensuring a continuous, adequate, and economic
supply of energy to exercise his powers and functions as provided under Section 5 (c) of
Republic Act No. 7638;
g. To make public from time to time such portions of the information obtained by
him hereunder as are in the public interest; and to make annual and special reports to
Congress and to submit therewith recommendations for additional legislation; and to
provide for the publication of his reports and decisions in such form and manner as may

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 OIL DEREGULATION

be best adapted for public information and use: Provided, That the Secretary shall not
have any authority to make public any trade secret or any commercial or financial in-
formation which is obtained from any person or entity and which is privileged or confi-
dential, except that the Secretary may disclose such information to officers and employ-
ees of appropriate law enforcement agencies or to any officer or employee of any such
law enforcement agency upon the prior certification by an officer of any such law agency
that such information will be maintained in confidence and will be used only for official
law enforcement purposes; and
h. Whenever a final order has been entered against any defendant in any suit
brought by the government to prevent and restrain any violation of the anti-trust provi-
sions of this Act to make investigation, upon his initiative, of the manner in which the
decree has been or is being carried out, and upon the application of the Secretary of
Justice, it shall be his duty to make such investigation. He shall transmit to the Secre-
tary of Justice a report embodying his findings and recommendations as a result of any
such investigation, and the report shall be made public at the discretion of the Secre-
tary.

Chapter V
Transition Phase

SEC. 16. Phases of Deregulation.—In order to provide a smooth implementation

of deregulation, the policy shift shall be done in two (2) phases: Phase I (transition
phase) and Phase II (full deregulation phase).
SEC. 17. Buffer Fund.—The President may, when the interest of the consumers
so requires, taking into account the rise in the domestic prices of petroleum products,
use the “Reserve Control Account” as a buffer fund in an amount not exceeding two
billion nine hundred million pesos (P2,900,000,000.00) to cover increases in the prices of
petroleum products, except premium gasoline, during the Transition Phase over the
prices prevailing as of the date of the effectivity of this Act. The “Reserve Control Ac-
count” refers to a lump sum collation of reserve impositions deducted from the appro-
priations approved by Congress for the operation of the government and the implemen-
tation of projects and programs.
SEC. 18. Automatic Oil Pricing Mechanism.—To enable the domestic price of
petroleum products to approximate and promptly reflect the price of oil in the interna-
tional market, an automatic pricing mechanism shall be established. To this end, the
following laws are hereby amended:
a. Paragraph (a), Section 8 of Republic Act No. 6173, as amended by Section 3 of
Executive Order No. 172, to read as follows:
“SEC. 8. Powers of the Board Upon Notice and Hearing.—The Board shall
have the power:

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a. To set the wholesale posted price of petroleum products during the Tran-
sition Phase.
“For this purpose and for the protection of the public interest, the Board
shall, after due notice and hearing at which any consumer of petroleum products
and other parties who may be affected may appear and be heard, and within one
(1) month after the effectivity of this Act, approve a market-oriented formula to de-
termine the WPP of petroleum products based solely on the changes of either the
Singapore Posting of refined petroleum products, the SIP or the crude landed cost.
“Thereafter, the Board shall at the proper times automatically adjust the
WPP of petroleum products based on the approved formula, through appropriate
orders, without the need for notice and hearing.
“The Board shall, on the dates of effectivity of the automatic oil pricing for-
mula, the initial WPP or the adjusted WPP, publish the same, together with the
corresponding computation in two (2) national newspapers of general circulation.”
b. Paragraph 1 of Letter of Instruction No. 1441, to read as follows:
“1. To review and reset prices of domestic petroleum products up or
down as necessary on or before the third Monday of each month to reflect the
new WPP of refined petroleum products based on the approved automatic
pricing formula.”
c. Paragraph 2 of Letter of Instruction No. 1441 is hereby deleted. In lieu
thereof a new paragraph is inserted to read as follows:
“2. The price adjustment shall be reflected automatically in the ap-
proved WPP of each petroleum product.”
d. The provisions of Section 3 (a) and (c) and Section 5 of Executive Order
No. 172 to the contrary notwithstanding, the Board shall, during the transition
phase, maintain the current margin of dealers and rates charged by water trans-
port operators, haulers and pipeline concessionaires. Depending on the basis of the
APM, the Board shall, within one (1) month after the effectivity of this Act and af-
ter proper notice and full public hearing, prescribe a formula which will automati-
cally set the margins of marketers and dealers, and the rates charged by water
transport operators, haulers and pipeline concessionaires: Provided, That such
formula shall take effect simultaneously with the effectivity of the automatic oil
pricing formula. Thereafter, the Board shall set the said margins and rates based
on the approved formula without the necessity for public notice and hearing.
The Board shall, on the day of the effectivity of the aforesaid formula, publish in at
least two (2) newspapers of general circulation the mechanics of the formula for the
information of the public.

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Chapter VI
Full Deregulation Phase

SEC. 19. Start of Full Deregulation.—Full deregulation of the industry shall

start five (5) months following the effectivity of this Act: Provided, however, That when
the public interest so requires, the President may accelerate the start of full deregula-
tion upon the recommendation of the DOE and the Department of Finance (DOF) when
the prices of crude oil and petroleum products in the world market are declining and the
value of the peso in relation to the US dollar is stable, taking into account relevant
trends and prospects: Provided, further, That the foregoing provision notwithstanding,
the five (5)-month Transition Phase shall continue to apply to LPG, regular gasoline
and kerosene as socially sensitive petroleum products and said petroleum products
shall be covered by the automatic pricing mechanism during the said period.
Upon the implementation of full deregulation as provided herein, the transition
phase is deemed terminated and the following laws are repealed:
a. Republic Act No. 6173, as amended;
b. Section 5 of Executive Order No. 172, as amended;
c. Letter of Instruction No. 1431, dated October 15, 1984;
d. Letter of Instruction No. 1441, dated November 20, 1984, as amended;
e. Letter of Instruction No. 1460, dated May 9, 1985;
f. Presidential Decree No. 1889; and
g. Presidential Decree No. 1956, as amended by Executive Order No.137.
Provided, however, That in case full deregulation is started by the President in the
exercise of the authority provided in this Section, the foregoing laws shall continue to be
in force and effect with respect to LPG, regular gasoline, and kerosene for the rest of the
five-month period.
SEC. 20. Jurisdiction on Pricing of Piped Gas.—Section 3 of Executive Order
No. 172, is hereby amended to read as follows:
“SEC. 3. Jurisdiction, Powers and Functions of the Board.—The Board
shall, upon proper notice and hearing, fix and regulate the rate of schedule or
prices of piped gas to be charged by duly franchised gas companies which distrib-
ute gas by means of underground pipe system.”

Chapter VII
Final Provisions

SEC. 21. OPSF Balance.—All outstanding claims against OPSF as of the effec-
tivity of this Act, subject to the existing auditing rules and regulations of the Commis-
sion on Audit (COA), shall be considered as accounts payable of the National Govern-

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ment. For this purpose, and any law to the contrary notwithstanding, the reimburse-
ment certificates issued by the DOE covering the said outstanding claims shall be hon-
ored and accepted by the Bureau of Customs and the Bureau of Internal Revenue as
payment to the extent of ten percent (10%) per payment of the tariff duties and specific
taxes due from the creditor-claimants against the OPSF until such claims are settled in
full: Provided, That the reimbursement certificates shall not be transferable.
SEC. 22. Initial Public Offering.—In compliance with the constitutional man-
date to encourage private enterprises to broaden their base of ownership and in recogni-
tion of the vital role of oil in the national economy, any person or entity engaged in the
oil refinery business shall make a public offering through the stock exchange of at least
ten percent (10%) of its common stock within a period of three (3) years from the effec-
tivity of this Act or the commencement of its refinery operations: Provided, That no
single person or entity shall be allowed to own more than five percent (5%) of the stock
offering: Provided, further, That any crude oil refining company and any stockholder
thereof shall not acquire, directly or indirectly, any share of stock offered by any other
crude oil refining company pursuant to this Section: Provided, finally, That any such
company which made the requisite public offering before the effectivity of this Act shall
be exempted from the requirement.
SEC. 23. Implementing Rules and Regulations.—The DOE, in coordination with
the Board, the DENR, DFA, Department of Labor and Employment (DOLE), Depart-
ment of Health (DOH), DOF, DTI, National Economic and Development Authority
(NEDA), and TLRC, shall formulate and issue the necessary implementing rules and
regulations within sixty (60) days after the effectivity of this Act.
SEC. 24. Penal Sanction.—Any person who violates any of the provision of this
Act shall suffer the penalty of three (3) months to one (1) year imprisonment and a fine
ranging from Fifty Thousand Pesos (P50,000.00) to Three Hundred Thousand Pesos
(P300,000.00).
SEC. 25. Public Information Campaign.—The DOE, in coordination with the
Board and the Philippine Information Agency (PIA), shall undertake an information
campaign to educate the public on the deregulation program of the industry.
SEC. 26. Budgetary Appropriations—Such amount as may be necessary to effec-
tively implement this Act shall be taken by the DOE from its annual appropriations,
the DOE’s Special Fund created under Section 8 of Presidential Decree No. 910, as
amended, and such amount allocated under Section 10 of this Act.
SEC. 27. Separability Clause.—If, for any reason, any section or provision of this
Act is declared unconstitutional or invalid, such parts not affected thereby shall remain
in full force and effect.
SEC. 28. Repealing Clause.—All laws, presidential decrees, executive orders, is-
suances, rules and regulations or parts thereof, which are inconsistent with the provi-
sions of this Act are hereby repealed or immediately modified accordingly.

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 OIL DEREGULATION

SEC. 29. Effectivity.—This Act shall take effect upon its complete publication in
at least two (2) newspapers of general circulation.
Approved: February 10, 1998.

Legality of the Deregulation Policy

A policy decision of Congress to deregulate oil prices is a question of wisdom of pol-

icy and is outside of the ambit of the Supreme Court. If oligopoly is the concern, there
are other legal safeguards available to address it.

Background:

The regulation of the price of oil, and worse, its subsidy, keeps the price unrea-
sonably low and fails to take into account the full costs in the production, distribution
and environmental impact of the use of this fossil fuel. Deregulating it and removing
any form of subsidy, while short of full-cost pricing is a nevertheless step in the right
direction.
Facts: Congress enacted Republic Act No. 8479, a law regulating the down-
stream oil industry. Section 19 of Republic Act No. 8479 states in full:

“ SEC. 19. Start of Full Deregulation—Full deregulation of the oil industry shall start five
(5) months following the effectivity of this Act: Provided, however, That when the public interest
so requires, the President may accelerate the start of full deregulation upon the recommendation
of the DOE and the Department of Finance when the prices of crude oil and petroleum products
in the world market are declining and the value of the peso in relation to the US dollar is stable,
taking into account relevant trends and prospects;
Provided further, that the foregoing provision notwithstanding the five (5) month transition
phase shall continue to apply to LPG, regular gasoline and kerosene as socially-sensitive petro-
leum products and said petroleum products shall be covered by the automatic pricing mechanism
during the said period.…”Congressman Enrique T. Garcia contends that Section 19 of Republic
Act No. 8479, “which prescribes the period for the removal of price control on gasoline and other
finished products and for the full deregulation of the local downstream oil industry, is patently
contrary to public interest and therefore unconstitutional because within the short span of five
months, the market is still dominated and controlled by an oligopoly of the ‘Big 3,’ namely, Shell,
Caltex, and Petron.”

The petition states that “if the constitutional mandate against monopolies and
combinations in restraint of trade is to be obeyed, there should be indefinite and open-
ended price controls on gasoline and other oil products for as long as necessary.” This
will allegedly prevent the Big 3 from price fixing and overpricing. Garcia calls the in-
definite retention of price controls as “partial deregulation.”
Issue: Is Section 19 valid and constitutional?

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Held: Yes. The challenged provision is a policy decision of Congress and that the
wisdom of the provision is outside the authority of the Court to consider. The choice of
March 1997 as the date of full deregulation is a judgment of Congress, which cannot be
impugned by the Court.
Indefinite price control is not the only feasible legal way to enforce the constitu-
tional mandate against oligopolies. Article 186 of the Revised Penal Code punishes as a
felony the creation of monopolies and combinations in restraint of trade. Section 11 of
Republic Act No. 8479, entitled “Anti-Trust Safeguards,” defines and prohibits carteli-
zation and predatory pricing. Section 13 further provides for “Remedies” under which
the filing of actions by government prosecutors and investigation of private complaints
are provided.
“The disciplined, determined, consistent and faithful execution of the law is the function of
the President. The remedy against unreasonable price increases is not the nullification of Section
19 of Republic Act No. 8479 but the setting into motion of its various other provisions.”

Garcia v. Corona
G.R. No. 132451, December 17, 1999

Pilferage of Electricity (Republic Act 7832)

SECTION 1. Short Title.—

This Act shall be referred to as the
“Anti-Electricity and Electric
Transmission Lines/Materials
Pilferage Act of 1994.”
SEC. 2. Illegal Use of Electric-
ity.—It is hereby declared unlawful
for any person, whether natural or
juridical, public or private, to:
a. Tap, make, or cause to be
made any connection with over-
head lines, service drops, or other
electric service wires, without
previous authority or consent of
the private electric utility or rural
electric cooperative concerned;
b. Tap, make, or cause to be
made any connection to the exist-
ing electric service facilities of any
duly registered consumer without
the latter’s or the electric utility’s
consent or authority;
Breaking dawn. Sun popping out of the water.
(A. Oposa)

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 PILFERAGE OF ELECTRICITY

c. Tamper, install, or use a tampered electrical meter, jumper, current reversing

transformer, shorting or shunting wire, loop connection or any other device which inter-
feres with the proper or accurate registry or metering of electric current or otherwise re-
sults in its diversion in a manner whereby electricity is stolen or wasted;
d. Damage or destroy an electric meter, equipment, wire or conduit or allow any
of them to be so damaged or destroyed as to interfere with the proper or accurate meter-
ing of electric current; and
e. Knowingly use or receive the direct benefit of electric service obtained through
any of the acts mentioned in subsections (a), (b), (c), and (d) above.
SEC. 3. Theft of Electric Power Transmission Lines and Materials.—
a. It is hereby declared unlawful for any person to:
1. Cut, saw, slice, separate, split, severe, smelt, or remove any electric
power transmission line/material or meter from a tower, pole, or any other instal-
lation or place of installation or any other place or site where it may be rightfully
or lawfully stored, deposited, kept, stocked, inventoried, situated or located, with-
out the consent of the owner, whether or not the act is done for profit or gain;
2. Take, carry away or remove or transfer, with or without the use of a mo-
tor vehicle or other means of conveyance, any electric power transmission
line/material or meter from a tower, pole, any other installation or place of instal-
lation, or any place or site where it may be rightfully or lawfully stored, deposited,
kept, stocked, inventoried, situated or located without the consent of the owner,
whether or not the act is done for profit or gain;
3. Store, possess or otherwise keep in his premises, custody or control, any
electric power transmission line/material or meter without the consent of the
owner, whether or not the act is done for profit or gain; and
4. Load, carry, ship or move from one place to another, whether by land, air
or sea, any electrical power transmission line/material, whether or not the act is
done for profit or gain, without first securing a clearance/permit for the said pur-
pose from its owner or the National Power Corporation (NPC) or its regional office
concerned, as the case may be.
b. For purposes of this section, electrical power transmission line/material refers
to electric power transmission steel towers, woodpoles, cables, wires, insulators, line
hardwares, electrical conductors and other related items with a minimum voltage of
sixty-nine kilovolts (69 kv), such as the following:
1. Steel transmission line towers made of galvanized steel angular members
and plates or creosoted and/or lannelized woodpoles/ concrete poles and designed
to carry and support the conductors;
2. Aluminum Conductor Steel Reinforced (ACSR) in excess of one hundred
(100) MCM;

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3. Overhead ground wires made of 7 strands of galvanized steel wires, 3.08

millimeters in diameter and designed to protect the electrical conductors from
lightning strikes;
4. Insulators made of porcelain or glass shell and designed to insulate the
electrical conductors from steel towers or woodpoles; and
5. Various transmission line hardwares and materials made of aluminum
alloy or malleable steel and designed to interconnect the towers, conductors,
ground wires, and insulators mentioned in subparagraphs (1), (2), (3), and (4)
above for the safe and reliable operation of the transmission lines.
SEC. 4. Prima Facie Evidence—
a. The presence of any of the following circumstances shall constitute prima facie
evidence of illegal use of electricity, as defined in this Act, by the person benefited
thereby, and shall be the basis for: (1) the immediate disconnection by the electric util-
ity to such person after due notice, (2) the holding of a preliminary investigation by the
prosecutor and the subsequent filing in court of the pertinent information, and (3) the
lifting of any temporary restraining order or injunction which may have been issued
against a private electric utility or rural electric cooperative:
(i) The presence of a bored hole on the glass cover of the electric meter, or
at the back or any other part of said meter;
(ii) The presence inside the electric meter of salt, sugar and other ele-
ments that could result in the inaccurate registration of the meter’s internal parts
to prevent its accurate registration of consumption of electricity;
(iii) The existence of any wiring connection which affects the normal opera-
tion or registration of the electric meter;
(iv) The presence of a tampered, broken, or fake seal on the meter, or muti-
lated, altered or tampered meter recording chart or graph, or computerized chart,
graph, or log;
(v) The presence in any part of the building or its premises which is sub-
ject to the control of the consumer or on the electric meter, of a current reversing
transformer, jumper, shorting and/or shunting wire, and/or loop connection or any
other similar device;
(vi) The mutilation, alteration, reconnection, disconnection, bypassing or
tampering of instruments, transformers, and accessories;
(vii) The destruction of, or attempt to destroy, any integral accessory of the
metering device box which encases an electric meter, or its metering accessories;
and
(viii) The acceptance of money and/or other valuable consideration by any of-
ficer of employee of the electric utility concerned or the making of such an offer to
any such officer or employee for not reporting the presence of any of the circum-

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 PILFERAGE OF ELECTRICITY

stances enumerated in subparagraphs (i), (ii), (iii), (iv), (v), (vi), or (vii) hereof: Pro-
vided, however, That the discovery of any of the foregoing circumstances, in order
to constitute prima facie evidence, must be personally witnessed and attested to by
an officer of the law or a duly authorized representative of the Energy Regulatory
Board (ERB).
b. The possession or custody of electric power transmission line/material by any
person, natural or juridical, not engaged in the transformation, transmission or distri-
bution of electric power, or in the manufacture of such electric power transmission
line/material shall be prima facie evidence that such line/material is the fruit of the
offense defined in Section 3 hereof and therefore such line/material may be confiscated
from the person in possession, control or custody thereof.
SEC. 5. Incentives.—An incentive scheme by way of a monetary reward in the
minimum amount of five thousand pesos (P5,000) shall be given to any person who shall
report to the NPC or police authorities any act which may constitute a violation of Sec-
tion 3 hereof. The Department of Energy (DOE), in consultation with the NPC, shall
issue the necessary guidelines for the proper implementation of this incentive scheme
within thirty (30) days from the effectivity of this Act.
SEC. 6. Disconnection of Electric Service.—The private electric utility or rural
electric cooperative concerned shall have the right and authority to disconnect immedi-
ately the electric service after serving a written notice or warning to that effect, without
the need of a court or administrative order, and deny restoration of the same, when the
owner of the house or establishment concerned or someone acting in his behalf shall
have been caught en flagrante delicto doing any of the acts enumerated in Section 4 (a)
hereof, or when any of the circumstances so enumerated shall have been discovered for
the second time: Provided, That in the second case, a written notice or warning shall
have been issued upon the first discovery: Provided, further, That the electric service
shall not be immediately disconnected or shall be immediately restored upon the de-
posit of the amount representing the differential billing by the person denied the ser-
vice, with the private electric utility or rural electric cooperative concerned or with the
competent court, as the case may be: Provided, furthermore, That if the court finds that
illegal use of electricity has not been committed by the same person, the amount depos-
ited shall be credited against future billings, with legal interest thereon chargeable
against the private utility or rural electric cooperative, and the utility or cooperative
shall be made to immediately pay such person double the value of the payment or de-
posit with legal interest, which amount shall likewise be creditable against immediate
future billings, without prejudice to any criminal, civil or administrative action that
such person may be entitled to file under existing laws, rules and regulations: Provided,
finally, That if the court finds the same person guilty of such illegal use of electricity, he
shall, upon final judgment, be made to pay the electric utility or rural electric coopera-
tive concerned double the value of the estimated electricity illegally used which is re-
ferred to in this section as differential billing.

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For purposes of this Act, differential billing shall refer to the amount to be charged
to the person concerned for the unbilled electricity illegally consumed by him as deter-
mined through the use of methodologies which utilize, among others, as basis for deter-
mining the amount of monthly electric consumption in kilowatt-hours to be billed, either:
(a) the highest recorded monthly consumption within the five-year billing period preced-
ing the time of the discovery, (b) the estimated monthly consumption as per the report of
load inspection conducted during the time of discovery, (c) the higher consumption be-
tween the average consumptions before or after the highest drastic drop in consumption
within the five-year billing period preceding the discovery, (d) the highest recorded
monthly consumption within four (4) months after the time of discovery, or (e) the result
of the ERB test during the time of discovery and, as basis for determining the period to be
recovered by the differential billing either: (1) the time when the electric service of the
person concerned recorded an abrupt or abnormal drop in consumption, or (2) when there
was a change in his service connection such as a change of meter, change of seal or recon-
nection, or in the absence thereof, a maximum of sixty (60) billing months up to the time
of discovery: Provided, however, That such period shall, in no case, be less than one (1)
year preceding the date of discovery of the illegal use of electricity.
SEC. 7. Penalties—
a. Violation of Section 2—The penalty of prision mayor or a fine ranging from
Ten Thousand Pesos (P10,000) to Twenty Thousand Pesos (P20,000) or both, at the
discretion of the court, shall be imposed on any person found guilty of violating Section
2 hereof.
b. Violation of Section 3—The penalty of reclusion temporal or a fine ranging
from Fifty Thousand Pesos (P50,000) to One Hundred Thousand Pesos (P100,000) or
both at the discretion of the court, shall be imposed on any person found guilty of violat-
ing Section 3 hereof.
c. Provision Common to Violations of Section 2 and Section 3 Hereof—If the of-
fense is committed by, or in connivance with, an officer or employee of the power com-
pany, private electric utility or rural electric cooperative concerned, such officer or em-
ployee shall, upon conviction, be punished with a penalty one (1) degree higher than the
penalty provided herein, and forthwith be dismissed and perpetually disqualified from
employment in any public or private utility or service company and from holding any
public office.
If, in committing any of the acts enumerated in Section 4 hereof, any of the other
acts as enumerated is also committed, then the penalty next higher in degree as pro-
vided herein shall be imposed.
If the offense is committed by, or in connivance with an officer or employee of the
electric utility concerned, such officer or employee shall, upon conviction, be punished
with a penalty one (1) degree higher than the penalty provided herein, and forthwith be
dismissed and perpetually disqualified from employment in any public or private utility
or service company. Likewise, the electric utility concerned which shall have knowingly

464
 PILFERAGE OF ELECTRICITY

permitted or having knowledge of its commission shall have failed to prevent the same,
or was otherwise guilty of negligence in connection with the commission thereof, shall
be made to pay a fine not exceeding triple the amount of the ‘differential billing’ subject
to the discretion of the courts.
If the violation is committed by a partnership, firm, corporation, association or any
other legal entity, including a government-owned or controlled corporation, the penalty
shall be imposed on the president, manager and each of the officers thereof who shall
have knowingly permitted, failed to prevent or was otherwise responsible for the com-
mission of the offense.
SEC. 8. Authority to Impose Violation of Contract Surcharges.—A private elec-
tric utility or rural electric cooperative may impose surcharges, in addition to the value
of the electricity pilfered, on the bills of any consumer apprehended for tampering with
his electric meter/metering facility installed on his premises, as well as other violations
of contract like direct connection, use of jumper, and other means of illicit usage of elec-
tricity found installed in the premises of the consumer. The surcharge for the violation
of contract shall be collected from and paid by the consumer concerned as follows:
a. First apprehension—Twenty five percent (25%) of the current bill as sur-
charge;
b. Second apprehension—Fifty percent (50%) of the current bill as surcharge; and
c. Third and subsequent apprehensions—One hundred percent (100%) of the cur-
rent bill as surcharge.
The private electric utility or rural electric cooperative is authorized to discontinue
the electric service in case the consumer is in arrears in the payment of the above im-
posed surcharges.
The term apprehension as used herein shall be understood to mean the discovery
of the presence of any of the circumstances enumerated in Section 4 hereof in the estab-
lishment or outfit of the consumer concerned.
SEC. 9. Restriction on the Issuance of Restraining Orders or Writs of Injunction
—No writ of injunction or restraining order shall be used by any court against any pri-
vate electric utility or rural electric cooperative exercising the right and authority to
disconnect electric service as provided in this Act, unless there is prima facie evidence
that the disconnection was made with evident bad faith or grave abuse of authority.
If, notwithstanding the provisions of this section, a court issues an injunction or
restraining order, such injunction or restraining order shall be effective only upon the
filing of a bond with the court, which shall be in the form of cash or cashier’s check
equivalent to the “differential billing,” penalties and other charges, or to the total value
of the subject matter of the action: Provided, however, That such injunction or restrain-
ing order shall automatically be refused or, if granted, shall be dissolved upon filing by
the public utility of a counterbond similar in form and amount as that above required:
Provided, finally, That whenever such injunction is granted, the court issuing it shall,

465
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within ten (10) days from its issuance, submit a report to the Supreme Court setting
forth in detail the grounds or reason for its order.
SEC. 10. Rationalization of System Losses by Phasing out Pilferage Losses as a
Component Thereof — There is hereby established a cap on the recoverable rate of sys-
tem losses as follows:
a. For private electric utilities:
1. Fourteen and a half percent (14 1/2%) at the end of the first year follow-
ing the effectivity of this Act;
2. Thirteen and one-fourth percent (13 1/4%) at the end of the second year
following the effectivity of this Act;
3. Eleven and three-fourths percent (11 3/4%) at the end of the third year
following the effectivity of this Act; and
4. Nine and a half-percent (9 1/2%) at the end of the fourth year following
the effectivity of this Act.
Provided, That the ERB is hereby authorized to determine at the end of the fourth
year following the effectivity of this Act, and as often as necessary taking into account
the viability of private electric utilities and the interest of the consumers, whether the
caps herein or theretofore established shall be reduced further which shall, in no case,
be lower than nine percent (9%) and accordingly fix the date of the effectivity of the new
caps: Provided, further, That in the calculation of the system loss, power sold by the
NPC or any other entity that supplies power directly to a consumer and not through the
distribution system of the private electric utility shall not be counted even if the billing
for the said power used is through the private electric utility.
The term power sold by NPC or any other entity that supplies power directly to a
consumer as used in the preceding paragraph shall for purposes of this section be
deemed to be a sale directly to the consumer if: (1) the point of metering by the NPC or
any other utility is less than one thousand (1,000) meters from the consumer, or (2) the
consumer’s electric consumption is three percent (3%) or more of the total load con-
sumption of all the customers of the utility, or (3) there is no other consumer connected
to the distribution line of the utility which connects to the NPC or any other utility
point of metering to the consumer meter.
b. For rural electric cooperatives:
1. Twenty-two percent (22%) at the end of the first year following the effec-
tivity of this Act;
2. Twenty percent (20%) at the end of the second year following the effectiv-
ity of this Act;
3. Eighteen percent (18%) at the end of the third year following the effectiv-
ity of this Act;

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 PILFERAGE OF ELECTRICITY

4. Sixteen percent (16%) at the end at the fourth year following the effectiv-
ity of this Act; and
5. Fourteen percent (14%) at the end of the fifth year following the effectiv-
ity of this Act.
Provided, That the ERB is hereby authorized to determine at the end of the fifth
year following the effectivity of this Act, and as often as is necessary, taking into ac-
count the viability of rural electric cooperatives and the interest of the consumers,
whether the caps herein or theretofore established shall be reduced further which shall,
in no case, be lower than nine percent (9%) and accordingly fix the date of the effectivity
of the new caps.
Provided, finally, That in any case nothing in this Act shall impair the authority of the
ERB to reduce or phase out technical or design losses as a component of system losses.
SEC. 11. Area of Coverage.—The caps provided in Section 10 of this Act shall
apply only to the area of coverage of private electric utilities and rural electric coopera-
tives as of the date of the effectivity of this Act.
The permissible levels of recovery for system losses in areas of coverage that may
be added on by either a private electric utility or a rural electric cooperative shall be
determined by the ERB.
SEC. 12. Recovery of Pilferage Losses.—Any private electric utility or rural elec-
tric cooperative which recovers any amount of pilferage losses shall, within thirty (30)
days from said recovery, report in writing and under oath to the ERB: (a) the fact of
recovery, (b) the date thereof; (c) the name of the consumer concerned, (d) the amount
recovered, (e) the amount of pilferage loss claimed, (f) the explanation for the failure to
recover the whole amount claimed, and (g) such other particulars as may be required by
the ERB. If there is a case pending in court for the recovery of a pilferage loss, no pri-
vate electric utility or rural electric cooperative shall accept payment from the con-
sumer unless so provided in a compromise agreement duly executed by the parties and
approved by the court.
SEC. 13. Information Dissemination.—The private electric utilities, the rural
electric cooperatives, the NPC, and the National Electrification Administration (NEA)
shall, in cooperation with each other, undertake a vigorous campaign to inform their
consumers of the provisions of this Act especially Sections 2, 3, 4, 5, 6, 7, and 8 hereof,
within sixty (60) days from the effectivity of this Act and at least once a year thereafter,
and to incorporate a faithful condensation of said provisions in the contracts with new
consumers.
SEC. 14. Rules and Regulations.—The ERB shall, within thirty (30) working
days after the conduct of due hearings which must commence within thirty (30) working
days upon the effectivity of this Act, issue the rules and regulations as may be neces-
sary to ensure the efficient and effective implementation of the provisions of this Act, to
include but not limited to, the development of methodologies for computing the amount

467
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of electricity illegally used and the amount of payment or deposit contemplated in Sec-
tion 7 hereof, as a result of the presence of the prima facie evidence discovered.
The ERB shall, within the same period, also issue rules and regulations on the
submission of the reports required under Section 12 hereof and the procedure for the
distribution to or crediting of consumers for recovered pilferage losses.
SEC. 15. Separability Clause.—Any portion or provision of this Act which may
be declared unconstitutional or invalid shall not have the effect of nullifying other por-
tions or provisions hereof.
SEC. 16. Repealing Clauses.—The provisions in Presidential Decree No. 401, as
amended by Batas Pambansa Blg. 876, penalizing the unauthorized installation of elec-
trical connections, tampering and/or knowing use of tampered electrical meters or other
devices, and the theft of electricity are hereby expressly repealed. All other laws, ordi-
nances, rules, regulations, and other issuances or parts thereof, which are inconsistent
with this Act, are hereby repealed or modified accordingly.
SEC. 17. Effectivity Clause.—This Act shall take effect thirty (30) days after its
publication in the Official Gazette or in any two (2) national newspapers of general
circulation.
Approved: December 8, 1994.

Electric Power Industry Reform Act of 2001 (EPIRA Law)

(Republic Act 9136)

SEC. 34. Universal Charge.—Within one (1) year from the effectivity of this Act,
a universal charge to be determined, fixed and approved by the ERC., shall be imposed
on all electricity end-users for the following purposes:
a. Payment for the stranded debts in excess of the amount assumed by the Na-
tional Government and stranded contract costs of NPC and as well as qualified
stranded contract costs of distribution utilities resulting from the restructuring of the
industry;
b. Missionary electrification;
c. The equalization of the taxes and royalties applied to indigenous or renewable
sources of energy vis-a-vis imported energy fuels;
d. An environmental charge equivalent to one-fourth of one centavo per kilo-
watt-hour (P0.0025/kWh), which shall accrue to an environmental fund to be used
solely for watershed rehabilitation and management. Said fund shall be managed
by NPC under existing arrangements; and
e. A charge to account for all forms of cross-subsidies for a period not exceeding
three (3) years.

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 ELECTRIC POWER INDUSTRY REFORM ACT OF 2001
(EPIRA LAW)

The universal charge shall be non-bypassable charge which shall be passed on and
collected from all end-users on a monthly basis by the distribution utilities. Collections
by the distribution utilities and the TRANSCO in any given month shall be remitted to
the PSALM Corp. on or before the fifteenth (15th) of the succeeding month, net of any
amount due to the
distribution utility.
Any end-user or
self-generating
entity not con-
nected to a distri-
bution utility shall
remit its corres-
ponding universal
charge directly to
the TRANSCO.
The PSALM
Corp., as adminis-
trator of the fund,
shall create a Spe-
cial Trust Fund
which shall be dis-
bursed only for the
purposes specified
herein in an open
and transparent “Great things are done when men and mountain meet.”—William
manner. All Blake
amounts collected (A. Oposa)
for the universal
charge shall be distributed to the respective beneficiaries within a reasonable period to
be provided by the ERC.
SEC. 35. Royalties, Returns and Tax Rates for Indigenous Energy Resources.—
The provisions of Section 79 of Commonwealth Act No. 137 (C.A. No. 137) and any law
to the contrary notwithstanding, the President of the Philippines shall reduce the royal-
ties, returns and taxes collected for the exploitation of all indigenous sources of energy,
including but not limited to, natural gas and geothermal steam, so as to effect parity of
tax treatment with the existing rates for imported coal, crude oil, bunker fuel and other
imported fuels.
To ensure lower rates for end-users, the ERC shall forthwith reduce the rates of
power from all indigenous sources of energy.
SEC. 65. Environmental Protection.—Participants in the generation, distribu-
tion and transmission sub-sectors of the industry shall comply with all environmental
laws, rules, regulations and standards promulgated by the Department of Environment

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and Natural Resources including, in appropriate cases, the establishment of an envi-

ronmental guarantee fund.
Approved: June 08 2001.

Implementing the Natural Gas Vehicle Program

for Public Transport
(Executive Order No. 290)
WHEREAS, Republic Act No. (RA) 7638, otherwise known as the “Department of
Energy Act of 1992”, declares that it is the policy of the State to ensure continuous ade-
quate and economic supply of energy through the integrated and intensive exploration,
production, management and development of the country’s indigenous energy resources,
with due regard to ecological concerns;
WHEREAS, RA No.
8749, also known as the “Man has been endowed with reason, with the power to cre-
“Philippine Clean Air Act ate, so that he can add to what he’s been given. But up to now
of 1999”, declares as a he hasn’t been a creator, only a destroyer. Forests keep disap-
policy the promotion and pearing, rivers dry up, wild life’s become extinct, the climate’s
protection of the environ- ruined and the land grows poorer and uglier every day.”—
Uncle Vanya, 1897)
ment against pollution
(A. Oposa)
from mobile sources;
WHEREAS, the Malampaya Gas-to-Power Project represents the beginning of the
natural gas industry in the Philippines with three gas-fired power plants with a total
installed capacity of 2,760 MW as initial customers;
WHEREAS, apart from its application in the power sector, natural gas may be
used as fuel for vehicles in the transport sector and as a source of energy in the indus-
trial and commercial sectors;
WHEREAS, the launching on October 16, 2002 of the Natural Gas Vehicle Pro-
gram for Public Transport saw the unveiling of a portfolio of incentives to encourage
active participation of the private sector to provide the necessary support, logistics, and
infrastructure;
WHEREAS, the NGVPPT is envisioned to enhance the energy supply security in
the transport sector through fuel diversification using indigenous natural gas;
WHEREAS, natural gas is a clean burning alternative fuel for vehicles which has
the potential to produce substantially lower pollutant emissions and can provide a solu-
tion to the pressing environmental problems in urban areas.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Public
Transport (NGVPPT) shall have the following objectives:
SECTION 1. Program Objectives.—The Natural Gas Vehicle Program for Public
Transport (NGVPPT) shall have the following objectives:

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 IMPLEMENTING THE NATURAL GAS VEHICLE
PROGRAM FOR PUBLIC TRANSPORT

1.1 To enhance energy supply security in the transport sector through fuel diver-
sification using indigenous natural gas; and –
1.2 To use compressed natural gas (CNG) as a clean alternative fuel for transport.
SEC. 2. Coverage.—The NGVPPT, as an integral part of the Philippine Natural
Gas Industry, shall cover the following key components:
2.1 Gas Supply. Natural gas shall be supplied as CNG in the transport sector
through: I) the use of indigenous gas resource, i.e. the Malampaya gas from Palawan,
for the NGVPPT and other local gas that will be explored for additional demand; and II)
the importation of liquefied natural gas (LNG) from gas producers around the world to
supplement existing indigenous gas supply.
2.2 Infrastructure development. CNG refueling stations and all related facilities
shall be established in strategic locations along major thoroughfares in Metro Manila
and Luzon to serve the fuel needs of CNG-powered public utility vehicles (PUVs). The
CNG refueling stations may involve a combination of a “mother-daughter” system
and/or an on-line station where the required gas pipeline is already available. In the
absence of a pipeline at the initial phase of the NGVPPT, the refueling set up shall be a
“mother-daughter” scheme where a high-pressure mother station shall be built inside
the Malampaya Onshore Gas Plant (MOGP) and the Daughter stations shall be estab-
lished in identified strategic locations.
2.3 Market Development. The public transport sector, which includes public util-
ity buses (PUBs), public utility jeepneys (PUJs), taxis and other PUVs, shall be encour-
aged to use natural gas fuel.
2.4 Technology. Existing NGV technology in the world for refueling systems and
transport vehicles shall be adopted locally in compliance with applicable local and in-
ternational standards. For transport vehicles, available NGV technology shall include
Original Equipment Manufactured (OEM) – NGVs, retrofit system and conversion op-
tions.
The use of OEM-NGvs shall be strongly recommended as the technology to be
adopted during the initial phase of the NGVPPT followed by the retrofit system and con-
version option when the same shall have become technically and commercially feasible.
2.5 Incentives and Financial Assistance. The NGVPPT shall develop and offer in-
centive packages for all NGV industry stakeholders.
2.6 Manpower Development. Local technical capability and expertise on NGV ret-
rofitting; conversion; fabrication of conversion systems; NGV and refueling station op-
eration and maintenance; and other related activities as well as the capability to locally
produce NGV chassis, bodies and engines shall be pursued through technology transfer
and training.
2.7 Standards and Other Regulatory Concerns. The standards, codes of practice
and other regulatory procedures shall be established by the relevant agencies to ensure
the integrity of the NGVPPT and public safety.

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2.8 Information Education Communication (IEC). An IEC program shall inform

and educate stakeholders and the general public on the benefits of using natural gas
particularly in the transport sector.
SEC. 3. Lead Implementing Agency.—Consistent with Executive Order No. 66,
series of 2002, designating the DOE as the lead agency in developing the Philippine
natural gas industry, the DOE shall be the lead implementing agency for the NGVPPT.
In coordination with different government agencies, institutions and the private sector,
the DOE shall:
(I) Take the lead in implementing the NGVPPT, including pilot projects to spur
accelerated development, to encourage the use of CNG-powered PUVs and establish-
ment of the necessary refueling infrastructure;
(II) Develop an implementation plan to ensure the success, synergy and continu-
ity of all activities related to the NGVPPT; (III) Develop and implement the necessary
guidelines for the accomplishment of the objectives of this Executive Order;
(IV) Develop a CNG Masterplan in coordination/cooperation with concerned gov-
ernment agencies/institutions and in consultation with all stakeholders; and
(V) Facilitate program participants’ access to privileges and incentives.
SEC. 4. Co-Implementing Agencies.—The following government agencies/insti-
tutions shall work with the DOE to implement the NGVPPT:
4.1 The Department of Environment and Natural Resources (DENR), through its
Environmental Management Bureau (EMB), shall fast track the issuance of Environ-
mental Compliance Certificates (ECC) for NGV facilities and refueling stations and
shall formulate emission standards for CNG.
4.2 The Department of Finance (DOF) shall create a pricing environment conduc-
tive to the use of CNG vis-à-vis diesel and shall formulate tax policies relative to the
NGVPPT, and through (I) The Bureau of Internal Revenue (BIR), develop revenue regu-
lations for the implementation of time-bound tax incentives for CNG, NGVs and related
facilities and infrastructure; and (II) The Bureau of Customs (BOC), implement guide-
lines on reduced tariffs on NGVs, NGV engines and other NGV industry related equip-
ment, facilities parts and components duly certified by the DOE.
4.3 The Department of Science and Technology (DOST) shall develop and pro-
mote locally manufactured NGV conversion kits, parts and components; develop train-
ing modules on NGV conversion operation and maintenance and refueling station op-
eration and maintenance; and establish testing centers for NGV systems, components
and related equipment and facilities together with the DOE.
4.4 The Department of Trade and Industry (DTI), through (I) The Bureau of
Product Standards (BPS), shall establish Philippine National Standards for Natural
Gas Utilization in the Transport Sector and certify the safety of CNG fuel, NGVs, NGV
systems and components and related equipment and facilities; and (II) The Board of
Investments (BOI), shall enhance existing incentive packages for land transportation

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PROGRAM FOR PUBLIC TRANSPORT

using CNG, conversion shops, terminals with CNG refueling stations and the manufac-
ture/assembly of NGVs and provide incentives to the other NGV industry related activi-
ties.
4.5 The Department of Transportation and Communications (DOTC) shall work
with the DOE to develop an implementation plan for a gradual shift to CNG fuel utili-
zation in PUVs and promote NGVs in Metro Manila and Luzon through the issuance of
directives/orders providing preferential franchises in present day major routes and
exclusive franchises to NGVs in newly opened routes, compliance with emission stan-
dards and other preferential incentives though (I) The Land Transportation Office
(LTO), which shall issue Certificates of Compliance (COC) with emission standards to
NGVs; (II) The Land Transportation Franchising and Regulatory Board (LTFRB),
which shall grant preferential and exclusive Certificates of Public Convenience (CPC) or
franchises to operators of NGVs based on the results of the DOTC surveys.
4.6 The Department of Interior and Local Government (LTFRB) shall formulate
safety measures relative to NGV industry practices and apprehend violators of stan-
dards and safety rules and regulations.
4.7 The Metro Manila Development Authority (MMDA) shall provide regulatory
and administrative support and introduce traffic schemes favoring NGVs to enhance
the use of such NGVs in Metro Manila, and shall integrate the location of CNG refuel-
ing stations within the overall plan/rationalization of its intermodal terminal program.
4.8 The Tariff Commission (TC) shall reduce tariffs on NGVs, NGV engines, con-
version kits/systems, refueling equipment and other NGV industry related equipment,
facilities, parts and components.
4.9 The Technical Education and Skills Development Authority (TESDA) shall
develop training modules and conduct training for NGV conversion/retrofit/main-
tenance engineers, mechanics and technicians and certify the same after training.
4.10 Government financing institutions (GFIs) such as, but not limited to, the
Development Bank of the Philippines (DBP), Landbank of the Philippines (LBP), Trade
and Investment Development Corp. of the Philippines (TIDCORP) and the Small Busi-
ness Guarantee Fund Corporation (SBGFC) shall develop separate financing windows
for the NGV industry which provide affordable and commercially tenable financing to
NGV, refueling station and related infrastructure operators.
4.11 The Philippine National Oil Company (PNOC), together with its subsidiary,
PNOC-Exploration Corporation, shall provide the necessary support for infrastructure
development such as, but not limited to, the gas supply for performance testing of demo
NGVs.
SEC. 5. Privileges.—The following privileges and incentives may be availed of by
the NGVPPT participants.

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5.1 Income tax holiday for pioneering projects qualifying under the BOI’s In-
vestments Priorities Plan;
5.2 One percent (1%) rate of duty on imported NGVs, NGV engines and other
NGV industry related equipment, facilities, parts and components as certified by the
DOE;

Taxicab in India. By order of the Supreme Court of India, all public vehicles – taxis,
buses, etc. in New Delhi are now fueled by natural gas.
(A. Oposa)

5.3 Issuance by the LTO of Certificates of Compliance with Emissions Standards

to NGVs;
5.4 Preferential and exclusive franchises from the LTFRB for NGVs to newly
opened routes;
5.5 Accelerated issuance by the DENR of ECC for NGV facilities and refueling
stations;
5.6 Affordable and commercially tenable financial packages from GFIs;
5.7 Manpower development and capability building through training and tech-
nology transfer programs;
5.8 Attractive CNG prices which translate to a discount to diesel price;
5.9 Other privileges and incentives that may be subsequently provided.
SEC. 6. Pilot Project.—A Pilot Project shall be established to demonstrate and
showcase the initial operation of natural gas buses for public transport in the Batangas-

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PROGRAM FOR PUBLIC TRANSPORT

Manila and/or Metro Manila routes using indigenous natural gas from the MOGP in
Batangas.
The overall objective of the Pilot Project is to promote the use of CNG as an in-
digenous clean alternative fuel to diesel and improve air quality. The Pilot Project will
evaluate the commercial viability, technical requirements, market demand, impact of
incentives and public acceptance for natural gas in the public transport sector.
The components of the Pilot Project include I) launching of 100 OEM natural gas
buses; II) construction/operation of mother-daughter CNG refueling stations; III) appli-
cation/operationalization of newly designed incentives and financing packages; and IV)
IEC campaigns.
SEC. 7. Creation of the Executive Forum.—A NGVPPT Executive Forum (execu-
tive Forum) is hereby created to function as a regular and permanent body to provide
effective leadership, coordination and proper direction in the implementation of the
NGVPPT.
SEC. 8. Composition of the Executive Forum
8.1 The Executive Forum shall be composed of the lead implementing and co-
implementing agencies with the Undersecretary of the Department of Energy as Chair-
person and senior officials of the co-implementing agencies as members.
8.2 Representatives from the private sector may be invited to serve as members
and/or resource participants of the Forum to promote an environment conducive to
active private sector participation in the NGVPPT. Such private sector representatives
may include representatives from infrastructure developers, refueling station operators,
the transport sector, non-governmental organizations and other similar entities.
8.3 The Chairperson and each of the members shall designate a permanent al-
ternate.
SEC. 9. Powers and Functions
9.1 The Executive Forum shall accelerate, integrate and coordinate interagency ac-
tivities that include the implementation of existing privileges and incentives and formula-
tion of additional fiscal and nonfiscal incentives, financial packages and standards;
9.2 The Executive Forum shall develop its own programs, plans and activities in
pursuit of the objectives of this Executive Order. Monitor the implementation of agency
actions and recommendations arising therefrom and recommend the necessary meas-
ures that will enhance competitiveness of the NGV industry;
9.3 The Executive Forum shall develop its own internal rules that shall govern
the conduct of its meetings and other deliberations or proceedings;
9.4 The Executive Forum shall meet as often as necessary but in no case less
than once every quarter to discuss or deliberate on any action, recommendation and/or
proposal.

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SEC. 10. Secretariat.—Technical and secretariat support to the Executive Fo-

rum shall be provided by the DOE.
SEC. 11. Separability Clause.—In the event that any of the provisions of this
Executive Order is declared unconstitutional with finality by a court of competent juris-
diction, the validity of the other provisions shall not be affected by such declaration.
SEC. 12. Effectivity.—This Executive Order shall take effect immediately.
IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the
Republic of the Philippines to be affixed.
DONE in the City of Manila, this 24th day of February 2004.

Energy Conservation Program (Administrative Order No. 126)

Strengthening measures to address the extraordinary increase in world oil prices,
directing the enhanced implementation of the government’s energy conservation pro-
gram, and for other purposes (Admin. Order No. 126)
WHEREAS, pursuant to Republic Act No. 7638, it is declared the policy of the
State to ensure a continuous, adequate, reliable and economic supply of energy through
the judicious conservation, renewal and efficient utilization of energy, to keep pace with
the country’s growth and economic development.
WHEREAS, the continuous rise in the prices of oil in the world market has drasti-
cally affected the prices of fuel and other domestic products in the country;
WHEREAS, it is imperative that measures be immediately adopted to minimize, if
not forestall any adverse effect of the world prices of oil on the country’s economy:
WHEREAS, to cushion the effects of increasing oil prices on the domestic economy,
there is a need for the government to exert efforts to promote the judicious use of our
energy resources through intensified conservation effort and efficient utilization thereof;
WHEREAS, on 31 August 2004, the President issued Administrative Order No.
103 (s. 2004), which, among others, required all government agencies, including gov-
ernment-owned and controlled corporations, government financial institutions and
other government instrumentalities to adopt austerity measures including the reduc-
tion of at least ten percent (10%) in the cost of the consumption of fuel, electricity and
other utilities.
WHEREAS, on 25 October 2004, the President also issued Administrative Order
No. 110 (s. 2004) directing the institutionalization of a Government Energy Manage-
ment Program (GEMP);
WHEREAS, the energy conservation program of the government should also be
disseminated to the public in order to create a sustained and intensive program of in-
formation and education on energy conservation measures and the efficient utilization
of energy;

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 ENERGY CONSERVATION PROGRAM

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Phil-

ippines, by virtue of the powers vested in me by law, do hereby order:
SECTION 1. All government agencies, including government-owned and control-
led corporations, government financial institutions and other government instrumentali-
ties are hereby required to
adopt additional measures to
limit the use of their petro-
leum products supplies to
essential activities properly
authorized by their respec-
tive heads.
Pursuant to Adminis-
trative Order No. 103 (s.
2004) and Administrative
Order No. 110 (s. 2004), all
government agencies and
offices are hereby mandated
to adopt and implement a
program that will reduce
their fuel consumption for
transport by ten percent
(10%) of their average
monthly consumption for the
st
1 semester of 2005.
SEC. 2. All govern-
ment agencies and offices
are prohibited from using “Man has lost the capacity to foresee and to forestall. He will
government vehicles, aircraft end by destroying the earth.”—Albert Schweitzer
and water craft for purposes (Digital Vision)
other than official business:
Provided, That in every case, the trip ticket authorizing the use of the vehicle shall be
displayed on the windshield or in another conspicuous place on the vehicle: Provided,
further, that vehicles used by intelligence and investigative agencies of the government
shall not be covered by the foregoing proviso.
The use of government vehicles on Sundays, legal holidays, or out of the regular of-
fice hours or outside the route of the officials or employees authorized to use them, or by
any person other than such officials or employees, shall unless properly authorized, be
prima facie evidence of violation of this Section in the administrative proceeding
against the officials or employees responsible of such violation.
All government agencies and offices shall limit the use of government vehicles to
essential activities and shall review their travel program and schedules to minimize
unnecessary trips.

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SEC. 3. Where adequate ventilation is available, all government agencies and

offices shall discontinue the use of their air conditioning facilities, especially during the
cooler months from August to February.
In cases where air conditioning units are to be used, they shall be switching on not
earlier than 9:00 a.m. switched off not later than 4:00 p.m. During lunch breaks, the air
conditioning units shall be switched on “FAN” mode.
SEC. 4. The Energy Conservation Officer (ECO) mandated under Administra-
tive order No. 110 (S. 2004) shall be responsible for his/her government entity’s compli-
ance with Administrative Order No. 103 (s. 2004), Administrative Order No. 110 (s.
2004) and this executive order, as well as the development and implementation of other
energy conservation measures.
th
A report of compliance shall be submitted monthly, not later than the 16 day fol-
lowing the reporting month, to the Department of Energy which shall prepare and submit
a summary report to the President within five (5) days after the last reporting day.
SEC. 5. The Department of Trade and Industry and the Department of Energy
shall, in consultation with appropriate trade and industry associations, develop volun-
tary energy conservation programs for their respective members which shall target
levels of reduction in electricity and petroleum products consumption similar to those
imposed on government agencies and offices and pinpoint responsibility for monitoring
and reporting of performance.
SEC. 6. The Department of Environment and Natural Resources shall in coordi-
nation with appropriate law enforcement agencies, enforce strictly the smoke belching
law for all vehicles. Smoke belching caused by improper vehicle maintenance results in
very inefficient use of fuel not to mention its adverse impact on the environment.
SEC. 7. The Office of the Communications Director and the Department of En-
ergy shall launch a nationwide information campaign on energy conservation through
the media. It shall coordinate with all forms of media to ensure accurate and current
dissemination of information on the oil situation, its implications and the course of
actions they entail specifying the type of energy conservation measures that can be
adapted at the family, community and industry levels.
SEC. 8. All government agencies and offices are directed to cooperate fully in
this national energy conservation effort.
The other branches of the government, local government units, and the private
sector are strongly urged to adopt similar measures as those provided in this Order.
SEC. 9. The Office of the Executive Secretary shall monitor the implementation
of the foregoing measures.
SEC. 10. The Executive Order shall take effect immediately.
th
DONE in the City of Manila, this 13 day of August, 2005.

——o0o——

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