Stone v. Mississippi, 101 U.S.

814 (1879)

Stone v. Mississippi

101 U.S. 814

ERROR TO THE SUPREME COURT

OF THE STATE OF MISSISSIPPI

Syllabus

1. In 1867, the Legislature of Mississippi granted a charter to a lottery

company for twenty-five years in consideration of a stipulated sum in cash, an
annual payment of a further sum, and a percentage of receipts from the sale of
tickets. A provision of the constitution adopted in 1868 declares that

"The legislature shall never authorize any lottery, nor shall the sale of lottery
tickets be allowed, nor shall any lottery heretofore authorized be permitted to
be drawn, or tickets therein to be sold."

Held:

1. That this provision is not in conflict with sec. 10, art. 1, of the Constitution
of the United States, which prohibits a State from "passing a law impairing the
obligation of contracts."

2. That such a charter is in legal effect nothing more than a license to enjoy the
privilege conferred for the time, and on the terms specified, subject to future
legislative or constitutional control or withdrawal.
 United States Supreme Court
STONE v. STATE OF MISSISSIPPI, (1879)

Argued: Decided: October 1, 1879

ERROR to the Supreme Court of the State of Mississippi.

The legislature of Mississippi passed an act, approved Feb. 16, 1867, entitled
'An Act incorporating the Mississippi Agricultural and Manufacturing Aid
Society.' Its provisions, so far as they bear upon the questions involved, are as
follows:--

'The corporation shall have power to receive subscriptions, and sell and
dispose of certificates of subscriptions which shall entitle the holders
thereof to any articles that may be awarded to them, and the distribution
of the awards shall be fairly made in public, after advertising, by the
casting of lots, or by lot, chance, or otherwise, in such manner as shall
be directed by the by-laws of said corporation; . . . and the said
corporation shall have power to offer premiums or prizes in money, for
the best essays on agriculture, manufactures, and education, written by
a citizen of Mississippi, or to the most deserving works of art executed by
citizens of Mississippi, or the most useful inventions in mechanics,
science, or art, made by citizens of Mississippi.'

Sect. 7 provides that the articles to be distributed or awarded may consist of

lands, books, paintings, statutes, antiques, scientific [101 U.S. 814,
815] instruments or apparatus, or any other property or thing that may be
ornamental, valuable, or useful.

Sect. 8 requires the corporation to pay, before the commencement of business,

to the treasurer of the State, for the use of the University, the sum of $5,000,
and to give bond and security for the annual payment of $ 1,000, together with
one-half per cent on the amount of receipts derived from the sale of certificates.

Sect. 9 declares that any neglect or refusal to comply with the provisions of the
act shall work a forfeiture of all the privileges granted, and subject any officer
or agent failing to carry out its provisions or committing any fraud in selling
tickets at drawing of lottery to indictment, the penalty being a 'fine not l than
$1,000, and imprisonment not less than six months.'

Sect. 11 enacts that, as soon as the sum of $100,000 is subscribed, and the
sum of $25,000 paid into the capital stock, the company shall go into operation
under their charter and not before, and the act of incorporation shall continue
and be in force for the space of twenty-five years from its passage, and that all
laws and parts of laws in conflict with its provisions be repealed, and that the
act shall take effect from and after its passage.

The Constitution of the State, adopted in convention May 15, 1868, and ratified
by the people Dec. 1, 1869, declares that 'the legislature shall never authorize
any lottery; nor shall the sale of lottery-tickets be allowed; nor shall any lottery
heretofore authorized be permitted to be drawn, or tickets therein to be sold.'
The legislature passed an act, approved July 16, 1870, entitled 'An Act
enforcing the provisions of the Constitution of the State of Mississippi,
prohibiting all kinds of lotteries within said State, and making it unlawful to
conduct one in this State.'

The Attorney-General of Mississippi filed, March 17, 1874, in the Circuit Court
of Warren County in that State, an information in the nature of a quo
warranto, against John B. Stone and others, alleging that, without authority or
warrant of law, they were then, and for the preceding twelve months had been,
carrying on a lottery or gift enterprise within said county and State under the
name of 'The Mississippi Agricultural, Educational, [101 U.S. 814, 816] and
Manufacturing Aid Society.' The information alleges that said society obtained
from the legislature a charter, but sets up the aforesaid constitutional provision
and the act of July 16, 1870, and avers that the charter was thereby virtually
and in effect repealed.

By their answer the respondents admit that they were carrying on a lottery
enterprise under the name mentioned. They aver that in so doing they were
exercising the rights, privileges, and franchises conferred by their charter, and
that they have in all things complied with its provisions. They further aver that
their rights and franchises were not impaired by the constitutional provision
and legislative enactment aforesaid.
The State replied to the answer by admitting that the respondents had in every
particular conformed to the provisions of their charter.

The court, holding that the act of incorporation had been abrogated and
annulled by the Constitution of 1868 and the legislation of July 16, 1870,
adjudged that the respondents be ousted of and from all the liberties and
privileges, franchises and emoluments, exercised by them under and by virtue
of the said act.

The judgment was, on error, affirmed by the Supreme Court, and Stone and
others sued out this writ.

Mr. Philip Phillips for the plaintiffs in error.

Mr. A. M. Clayton and Mr. Van H. Manning for the defendant in error.

MR. CHIEF, JUSTICE WAITE delivered the opinion of the court.

It is now too late to contend that any contract which a State actually enters
into when granting a charter to a private corporation is not within the
protection of the clause in the Constitution of the United States that prohibits
States from passing laws impairing the obligation of contracts. Art. 1, sect. 10.
The doctrines of Trustees of Dartmouth College v. Woodward (4 Wheat. 518),
announced by this court more than sixty years ago, have become so imbedded
in the jurisprudence of the United States as to make them to all intents and
purposes a part of the Constitution itself. In this connection, however, [101
U.S. 814, 817] it is to be kept in mind that it is not the charter which is
protected, but only any contract the charter may contain. If there is no
contract, there is nothing in the grant on which the Constitution can act.
Consequently, the first inquiry in this class of cases always is, whether a
contract has in fact been entered into, and if so, what its obligations are.

In the present case the question is whether the tate of Mississippi, in its
sovereign capacity, did by the charter now under consideration bind itself
irrevocably by a contract to permit 'the Mississippi Agricultural, Educational,
and Manufacturing Aid Society,' for twenty-five years, 'to receive subscriptions,
and sell and dispose of certificates of subscription which shall entitle the
holders thereof to' 'any lands, books, paintings, antiques, scientific
instruments or apparatus, or any other property or thing that may be
ornamental, valuable, or useful,' 'awarded to them' 'by the casting of lots, or by
lot, chance, or otherwise.' There can be no dispute but that under this form of
words the legislature of the State chartered a lottery company, having all the
powers incident to such a corporation, for twenty-five years, and that in
consideration thereof the company paid into the State treasury $5,000 for the
use of a university, and agreed to pay, and until the commencement of this suit
did pay, an annual tax of $1,000 and 'one-half of one per cent on the amount of
receipts derived from the sale of certificates or tickets.' If the legislature that
granted this charter had the power to bind the people of the State and all
succeeding legislatures to allow the corporation to continue its corporate
business during the whole term of its authorized existence, there is no doubt
about the sufficiency of the language employed to effect that object, although
there was an evident purpose to conceal the vice of the transaction by the
phrases that were used. Whether the alleged contract exists, therefore, or not,
depends on the authority of the legislature to bind the State and the people of
the State in that way.

All agree that the legislature cannot bargain away the police power of a State.
'Irrevocable grants of property and franchises may be made if they do not
impair the supreme authority to make laws for the right government of the
State; but [101 U.S. 814, 818] no legislature can curtail the power of its
successors to make such laws as they may deem proper in matters of police.'
Metropolitan Board of Excise v. Barrie, 34 N. Y. 657; Boyd v. Alabama, 94 U.S.
645 . Many attempts have been made in this court and elsewhere to define the
police power, but never with entire success. It is always easier to determine
whether a particular case comes within the general scope of the power, than to
give an abstract definition of the power itself which will be in all respects
accurate. No one denies, however, that it extends to all matters affecting the
public health or the public morals. Beer Company v. Massachusetts, 97 id. 25;
Patterson v. Kentucky, id. 501. Neither can it be denied that lotteries are proper
subjects for the exercise of this power. We are aware that formerly, when the
sources of public revenue were fewer than now, they were used in some or all of
the States, and even in the District of Columbia, to raise money for the erection
of public buildings, making public improvements, and not unfrequently for
educational and religious purposes; but this court said, more than thirty years
ago, speaking through Mr. Justice Grier, in Phalen v. Virginia (8 How. 163,
168), that 'experience has shown that the common forms of gambling are
comparatively innocuous when placed in contrast with the wide- spread
pestilence of lotteries. The former are confined to a few persons and places, but
the latter infests the whole community; it enters every dwelling; it reaches
every class; it preys upon the hard earnings of the poor; and it plunders the
ignorant and simple.' Happily, under the influence of restrictive legislation, the
evils are not so apparent now; but we very much fear that with the same
opportunities of indulgence the same results would be manifested.

If lotteries are to be tolerated at all, it is no doubt better that they should be

regulated by law, so that the people may be protected as far as possible against
the inherent vices of the system; but that they are demoralizing in their effects,
no matter how carefully regulated, cannot dmit of a doubt. When the
government is untrammelled by any claim of vested rights or chartered
privileges, no one has ever supposed that lotteries could not lawfully be
suppressed, and those who manage them punished severely as violators of the
rules of social [101 U.S. 814, 819] morality. From 1822 to 1867, without any
constitutional requirement, they were prohibited by law in Mississippi, and
those who conducted them punished as a kind of gamblers. During the
provisional government of that State, in 1867, at the close of the late civil war,
the present act of incorporation, with more of like character, was passed. The
next year, 1868, the people, in adopting a new constitution with a view to the
resumption of their political rights as one of the United States, provided that
'the legislature shall never authorize any lottery, nor shall the sale of lottery-
tickets be allowed, nor shall any lottery heretofore authorized be permitted to
be drawn, or tickets therein to be sold.' Art. 12, sect. 15. There is now scarcely
a State in the Union where lotteries are tolerated, and Congress has enacted a
special statute, the object of which is to close the mails against them. Rev.
Stat., sect. 3894; 19 Stat. 90, sect. 2.
The question is therefore directly presented, whether, in view of these facts, the
legislature of a State can, by the charter of a lottery company, defeat the will of
the people, authoritatively expressed, in relation to the further continuance of
such business in their midst. We think it cannot. No legislature can bargain
away the public health or the public morals. The people themselves cannot do
it, much less their servants. The supervision of both these subjects of
governmental power is continuing in its nature, and they are to be dealt with
as the special exigencies of the moment may require. Government is organized
with a view to their preservation, and cannot divest itself of the power to
provide for them. For this purpose the largest legislative discretion is allowed,
and the discretion cannot be parted with any more than the power itself. Beer
Company v. Massachusetts, supra.

In Trustees of Dartmouth College v. Woodward (4 Wheat. 518), it was argued

that the contract clause of the Constitution, if given the effect contended for in
respect to corporate franchises, 'would be an unprofitable and vexatious
interference with the internal concerns of a State, would unnecessarily and
unwisely embarrass its legislation, and render immutable those civil
institutions which are established for the purpose of internal government, and
which, to subserve those purposes, ought[101 U.S. 814, 820] to vary with
varying circumstances' (p. 628); but Mr. Chief Justice Marshall, when he
announced the opinion of the court, was careful to say ( p. 629), 'that the
framers of the Constitution did not intend to restrain States in the regulation of
their civil institutions, adopted for internal government, and that the
instrument they have given us is not to be so construed.' The present case, we
think, comes within this limitation. We have held, not, however, without strong
opposition at times, that this clause protected a corporation in its charter
exemptions from taxation. While taxation is in general necessary for the
support of government, it is not part of the government itself. Government was
not organized for the purposes of taxation, but taxation may be necessary for
the purposes of government. As such, taxation becomes an incident to the
exercise of the legitimate functions of government, but nothing more. No
government dependent on taxation for support can bargain away its whole
power of taxation, for that would be substantially abdication. All that has been
determined thus far is, that for a consideration it may, in the exercise of a
reasonable discretion, and for the public good, surrender a part of its powers in
this particular.

But the power of governing is a trust committed by the people to the

government, no part of which can be granted away. The people, in their
sovereign capacity, have establish d their agencies for the preservation of the
public health and the public morals, and the protection of public and private
rights. These several agencies can govern according to their discretion, if within
the scope of their general authority, while in power; but they cannot give away
nor sell the discretion of those that are to come after them, in respect to
matters the government of which, from the very nature of things, must 'vary
with varying circumstances.' They may create corporations, and give them, so
to speak, a limited citizenship; but as citizens, limited in their privileges, or
otherwise, these creatures of the government creation are subject to such rules
and regulations as may from time to time be ordained and established for the
preservation of health and morality.

The contracts which the Constitution protects are those that relate to property
rights, not governmental. It is not always [101 U.S. 814, 821] easy to tell on
which side of the line which separates governmental from property rights a
particular case is to be put; but in respect to lotteries there can be no difficulty.
They are not, in the legal acceptation of the term, mala in se, but, as we have
just seen, may properly be made mala prohibita. They are a species of
gambling, and wrong in their influences. They disturb the checks and balances
of a well- ordered community. Society built on such a foundation would almost
of necessity bring forth a population of speculators and gamblers, living on the
expectation of what, 'by the casting of lots, or by lot, chance, or otherwise,'
might be 'awarded' to them from the accumulations of others. Certainly the
right to suppress them is governmental, to be exercised at all times by those in
power, at their discretion. Any one, therefore, who accepts a lottery charter
does so with the implied understanding that the people, in their sovereign
capacity, and through their properly constituted agencies, may resume it at any
time when the public good shall require, whether it be paid for or not. All that
one can get by such a charter is a suspension of certain governmental rights in
his favor, subject to withdrawal at will. He has in legal effect nothing more than
a license to enjoy the privilege on the terms named for the specified time,
unless it be sooner abrogated by the sovereign power of the State. It is a permit,
good as against existing laws, but subject to future legislative and
constitutional control or withdrawal.

On the whole, we find no error in the record.

Judgment affirmed.

RUTTER vs. ESTEBAN

G.R. No. L-3708; May 18, 1953; 93 Phil. 68
Ponente: Bautista Angelo

Doctrine: Inherent powers of the State; Police Power; The national economy

FACTS:
In August 20, 1941, Rutter sold to Esteban 2 parcels of land in Manila.
Esteban paid 3/4ths of the purchase price and they constituted a mortgage
over one of the parcels to secure the payment of the balance.

However, the war broke out and somehow, Esteban was not able to pay the
balance of the purchase price on the due date and so, on August 2, 1949,
Rutter instituted an action to recover the balance with the CFI.

Esteban admitted the averments of the complaint but as a defense, he claimed

that his obligation was a pre-war obligation covered by the moratorium
embodied in R.A. No. 342.

Section 2 of Republic Act No. 342 provides that all debts and other monetary
obligations contracted before December 8, 1941, any provision in the contract
creating the same or any subsequent aggreement affecting such obligation to
the contrary notwithstanding, shall not due and demandable for a period of
eight (8) years from and after settlement of the war damage claim of the debtor
by the Philippine War Damage Commission.

The CFI ruled in favor of the debtor Esteban. This brings us to the sole issue
raised by petitioner on appeal
ISSUE:
Whether or not R.A. No. 342, which declared a moratorium on certain pre-war
obligations, is unconstitutional for violation of the Constitutional provision
prohibiting the impairment of the obligation of contracts.

HELD:
Yes. R.A. No. 342 is unconstitutional.

Statutes declaring a moratorium on obligations are generally

constitutional
Statutes declaring a moratorium on obligations are not new: For some 1,400
years western civilization has made use of extraordinary devices for saving the
credit structure, devices generally known as moratoria. The moratorium is
postponement of fulfillment of obligations decreed by the state through the
medium of the courts or the legislature. Its essence is the application of the
sovereign power.

Such laws were often passed during or after times of financial distress such as
wars and disasters. Similar laws were passed in some US states after the civil
war and they have been declared constitutional. Some laws however, were
declared unconstitutional where the period of moratorium prescribed is
indefinite or unreasonable.

The argument that moratorium laws impair the obligation of contracts does not
hold water. It is justified as a valid exercise of the state of it's police power.

In the US case, Home Building and Loan Association vs. Blaisdell, it was held
that:

The economic interests of the State may justify the exercise of its continuing
and dominant protective power notwithstanding interference with
contracts. . . .

xxx

Similarly, where the protective power of the State is exercised in a manner

otherwise appropriate in the regulation of a business it is no objection that the
performance of existing contracts may be frustrated by the prohibition of
injurious practices. . . .

. . . . The question is not whether the legislative action affects contracts

incidentally, or directly or indirectly, but whether the legislation is addressed to
a legitimate end and the measures taken are reasonable and appropriate to
that end.

Thus the true test of constitutionality of a moratorium statute lies in

the determination of the period of a suspension of the remedy. It is
required that such suspension be definite and reasonable, otherwise it
would be violative of the constitution.

R.A. No. 342 is unconstitutional for being unreasonable

The moratorium law, enacted in 1948, came on the heels of executive orders
likewise declaring moratoriums. With its 8 year moratorium period, it is clearly
unreasonable for creditors who have to observe a vigil of 12 years to collect on
debts which have become demandable as early as 1941. And the injustice is
more patent when, under the law, the debtor is not even required to pay
interest during the operation of the relief.

The court also noted that the reconstruction is paying off and that the
Philippines is headed to better times. Hence the Supreme Court declared R.A.
No. 342 unreasonable and oppressive and hence, null and void and without
effect.

Disposition:
Esteban was ordered to pay the balance with interest at the rate of 7% per
annum with 12% attorneys fees.
TITLE
: PHILIPPINE NATION BANK VS FILEMON REMIGIOGR
NO.78508VITUG,J.:
FACTS
: On 25 August 1967, Remigio obtained from PNB aP65,000 loan secured by a
real estate mortgage covering 5parcels of land in Isabela. On November 17,
1970
Remigiod e f a u l t e d h e n c e P N B e x t r a j u d i c i a l l y f o r e c l o s e d o n t h e
mortgage and acquired the encumbered assets for P87,082.However the
sher iff s sale was only registered with t heregister of deeds on October
11, 1972, two years after thesaid sale.On Oct 21, 1972, P.D. No. 27 was
enacted into lawwhich mandated an agrarian reform. Pursuant thereto,
an" O p e r a t i o n L a n d T r a n s f e r P r o g r a m " w a s l a u n c h e d a n d among
the areas it covered were the parcels of land in themortgage contract between
Remigio and PNB. This in
effectt r a n s f e r r e d t h e r i g h t s o f t h e p l a i n t i ff t o t h e t e n a n t s -
beneficiaries in favor of the Land Bank of the Philippines.
ISSUE
:1. WON the said mortgaged lands were still under Remigiosright of redemption
when PD 27 was enacted.2. WON application of PD 27 in the case at bar would
be aviolation of the non-impairment clause of the Constitution
HELD
:1. Yes, when P.D. No. 27, was enacted on 21 October 1972,the parcels of
land in dispute were clearly still subject toRemigios r ight
of redemption. In t he foreclosure
of realp r o p e r t y b y b a n k i n g i n s t i t u t i o n s , a s w e l l a s i n t
h e e x t r a j u d i c i a l f o r e c l o s u r e b y a n y o t h e r m o r t g a g e e , t h e mortg
agor could redeem the property within one year fromdate of registration of
t he deed of sale in the appropr iate Registry of Deeds and not on date
of foreclosure
2. No, although P.D. No. 27 had the effect of impairing theobligation of the
duly executed mortgage contracts affectingsaid lands. There is no
question, however, t hat t he land reform program of the government under
P.D. No. 27), wasundertaken in the exercise of the police power of the state.It
is settled that t he one limitation on the contract clause arises from the
police power; the reason being that publicwelfare is superior to private rights.
The situation here, islike that in eminent domain proceedings, where
t he stateexpropr iates pr ivate proper ty for public use, and the
onlyc o n d i t i o n t o b e c o m p l i e d w i t h i s t h e p a y m e n t o f j u
s t compensation. Technically, the condemnation proceedingsdo not impair
t he contract to destroy its obligations, but merely appropriate or take for
public use. As the Land Bankis obliged to settle the obligations secured by
the mortgage,the mortgagee is not left without any compensation.This Court,
likewise, in a number of cases has expressed the
dictum
that police power subordinates the non-impairmentclause of the Constitution.

Ortigas Vs. Feati Bank Case DigestOrtigas Vs. Feati Bank94 SCRA 533No.L-
24670December 14, 1979FACTS: Plaintiff is a limited partnership and
defendant Feati Bank and Trust Co., is a corporation dulyorganized and
existing in accordance with the laws of the Philippines. Plaintiff is engaged in
real estatebusiness, developing and selling lots to the public, particularly the
Highway Hills Subdivision along EDSA,Mandaluyong, Rizal. On March 4, 1952,
plaintiff, as vendor, and Augusto Padilla and Natividad Angeles,as vendees,
entered into separate agreements of sale on installments over two parcels of
land. On July19, 1962, the said vendees transferred their rights and interests
over the aforesaid lots in favor of oneEmma Chavez. Upon completion of
payment of the purchase price, the plaintiff executed thecorresponding deeds
of sale in favor of Emma Chavez. Both the agreements (of sale on installment)
andthe deeds of sale contained some stipulations or restrictions which were
later annotated in TCT Nos.101509 and 101511 of the Register of Deeds of
Rizal, covering the said lots and issued in the name ofEmma Chavez.
Eventually, defendant-appellee acquired Lots Nos. 5 and 6, with TCT Nos.
101613 and106092 issued in its name, respectively and the building
restrictions were also annotated therein.Defendant-appellee bought Lot No. 5
directly from Emma Chavez, "free from all liens and encumbrancesas stated in
Annex 'D', 5 while Lot No. 6 was acquired from Republic Flour Mills through
a "Deed ofExchange," Annex "E". TCT No. 101719 in the name of Republic
Flour Mills likewise contained the samerestrictions, although defendant-
appellee claims that Republic Flour Mills purchased the said Lot No. 6"in good
faith. free from all liens and encumbrances," as stated in the Deed of
Sale, Annex "F" betweenit and Emma Chavez.Plaintiff-appellant claims that the
restrictions annotated on TCT Nos. 101509, 101511, 101719, 101613,and
106092 were imposed as part of its general building scheme designed for the
beautification anddevelopment of the Highway Hills Subdivision which forms
part of the big landed estate of plaintiff-appellant where commercial and
industrial sites are also designated or established.Defendant-appellee, upon
the other hand, maintains that the area along the western part of
EDSA fromShaw Boulevard to Pasig River, has been declared a commercial and
industrial zone, per Resolution No.27, dated February 4, 1960 of the Municipal
Council of Mandaluyong, Rizal. It alleges that plaintiff-

appellant 'completely sold and transferred to third persons all lots in said
subdivision facing EDSA" andthe subject lots thereunder were acquired by it
"only on July 23, 1962 or more than two (2) years afterthe area ... had been
declared a commercial and industrial zone. On or about May 5, 1963,
defendant-appellee began laying the foundation and commenced the
construction of a building on Lots Nos. 5 and6, to be devoted to banking
purposes, but which defendant-appellee claims could also be devoted to,and
used exclusively for, residential purposes. The following day, plaintiff-appellant
demanded in writingthat defendant-appellee stop the construction of the
commerical building on the said lots. The latterrefused to comply with the
demand, contending that the building was being constructed in
accordancewith the zoning regulations, defendant-appellee having filed
building and planning permit applicationswith the Municipality of
Mandaluyong, and it had accordingly obtained building and planning permits
toproceed with the construction.ISSUE: Whether or not Resolution No. 27 s-
1960 is a valid exercise of police power; and whether or notthe said Resolution
can nullify or supersede the contractual obligations assumed by defendant-
appellee.RULING: The validity of the resolution was admitted at least impliedly,
in the stipulation of facts belowwhen plaintiff-appellant did not dispute the
same. Granting that Resolution No. 27 is not an ordinance,it certainly is a
regulatory measure within the intendment or ambit of the word "regulation"
under theprovision. As a matter of fact the same section declares that the
power exists "(A)ny provision of law tothe contrary notwithstanding ... "With
regard to the contention that said resolution cannot nullify the contractual
obligations assumed bythe defendant-appellee referring to the restrictions
incorporated in the deeds of sale and later in thecorresponding Transfer
Certificates of Title issued to defendant-appellee, it should be stressed,
thatwhile non-impairment of contracts is constitutionally guaranteed, the rule
is not absolute, since it has tobe reconciled with the legitimate exercise of
police power.Resolution No. 27, s-1960 declaring the western part of highway ,
now EDSA, from Shaw Boulevard tothe Pasig River as an industrial and
commercial zone, was obviously passed by the Municipal Council
ofMandaluyong, Rizal in the exercise of police power to safeguard or promote
the health, safety, peace,good order and general welfare of the people in the
locality. Judicial notice may be taken of theconditions prevailing in the area,
especially where lots Nos. 5 and 6 are located. The lots themselves notonly
front the highway; industrial and commercial complexes have flourished about
the place. EDSA, amain traffic artery which runs through several cities and
municipalities in the Metro Manila area,supports an endless stream of traffic
and the resulting activity, noise and pollution are hardly conduciveto the
health, safety or welfare of the residents in its route. Having been expressly
granted the power to

adopt zoning and subdivision ordinances or regulations, the municipality of

Mandaluyong, through itsMunicipal 'council, was reasonably, if not perfectly,
justified under the circumstances, in passing thesubject resolution.The motives
behind the passage of the questioned resolution being reasonable, and it
being a "legitimate response to a felt public need," not whimsical or oppressive,
the non-impairment of contractsclause of the Constitution will not bar
the municipality's proper exercise of the power.It is, therefore, clear that even if
the subject building restrictions were assumed by the defendant-appellee as
vendee of Lots Nos. 5 and 6, in the corresponding deeds of sale, and later, in
TransferCertificates of Title Nos. 101613 and 106092, the contractual
obligations so assumed cannot prevail overResolution No. 27, of the
Municipality of Mandaluyong, which has validly exercised its police
powerthrough the said resolution. Accordingly, the building restrictions, which
declare Lots Nos. 5 and 6 asresidential, cannot be enforced

Lozano v. Martinez, 146 SCRA 323

The constitutionality of Batas Pambansa Bilang 22 (BP 22 for short),

popularly known as the Bouncing Check Law, which was approved on
April 3, 1979, is the sole issue presented by these petitions for decision.
The question is definitely one of first impression in our jurisdictio

We need not detain ourselves lengthily in the examination of the other

constitutional objections raised by petitioners, some of which are rather
flimsy.

We find no valid ground to sustain the contention that BP 22 impairs

freedom of contract. The freedom of contract which is constitutionally
protected is freedom to enter into lawful contracts. Contracts which
contravene public policy are not lawful. 33 Besides, we must bear in mind
that checks can not be categorized as mere contracts. It is a commercial
instrument which, in this modem day and age, has become a convenient
substitute for money; it forms part of the banking system and therefore
not entirely free from the regulatory power of the state.

Neither do we find substance in the claim that the statute in question

denies equal protection of the laws or is discriminatory, since it penalizes
the drawer of the check, but not the payee. It is contended that the
payee is just as responsible for the crime as the drawer of the check,
since without the indispensable participation of the payee by his
acceptance of the check there would be no crime. This argument is
tantamount to saying that, to give equal protection, the law should
punish both the swindler and the swindled. The petitioners posture
ignores the well-accepted meaning of the clause equal protection of the
laws. The clause does not preclude classification of individuals, who
may be accorded different treatment under the law as long as the
classification is no unreasonable or arbitrary. 34

It is also suggested that BP 22 constitutes undue or improper delegation

of legislative powers, on the theory that the offense is not completed by
the sole act of the maker or drawer but is made to depend on the will of
the payee. If the payee does not present the check to the bank for
payment but instead keeps it, there would be no crime. The logic of the
argument stretches to absurdity the meaning of delegation of legislative
power. What cannot be delegated is the power to legislate, or the power
to make laws, 35 which means, as applied to the present case, the power
to define the offense sought to be punished and to prescribe the penalty.
By no stretch of logic or imagination can it be said that the power to
define the crime and prescribe the penalty therefor has been in any
manner delegated to the payee. Neither is there any provision in the
statute that can be construed, no matter how remotely, as undue
delegation of executive power. The suggestion that the statute unlawfully
delegates its enforcement to the offended party is farfetched.

Lastly, the objection has been raised that Section 9 (2) of Article VII of
the 1973 Constitution was violated by the legislative body when it
enacted BP 22 into law. This constitutional provision prohibits the
introduction of amendments to a bill during the Third Reading. It is
claimed that during its Third Reading, the bill which eventually became
BP 22 was amended in that the text of the second paragraph of Section
1 of the bill as adopted on Second Reading was altered or changed in
the printed text of the bill submitted for approval on Third Reading.

A careful review of the record of the proceedings of the Interim Batasan

on this matter shows that, indeed, there was some confusion among
Batasan Members on what was the exact text of the paragraph in
question which the body approved on Second Reading. 36 Part of the
confusion was due apparently to the fact that during the deliberations on
Second Reading (the amendment period), amendments were proposed
orally and approved by the body or accepted by the sponsor, hence,
some members might not have gotten the complete text of the provisions
of the bill as amended and approved on Second Reading. However, it is
clear from the records that the text of the second paragraph of Section 1
of BP 22 is the text which was actually approved by the body on Second
Reading on February 7, 1979, as reflected in the approved Minutes for
that day. In any event, before the bill was submitted for final approval on
Third Reading, the Interim Batasan created a Special Committee to
investigate the matter, and the Committee in its report, which was
approved by the entire body on March 22, 1979, stated that the clause
in question was an authorized amendment of the bill and the printed
copy thereof reflects accurately the provision in question as approved on
Second Reading. 37 We therefore, find no merit in the petitioners claim
that in the enactment of BP 22 the provisions of Section 9 (2) of Article
VIII of the 1973 Constitution were violated.

WHEREFORE, judgment is rendered granting the petition in G.R. No. 75

Conference of Maritime Agencies, Inc. vs. POEA

G.R. No. 114714 April 21, 1995THE CONFERENCE OF MARITIME MANNING
AGENCIES, INC., etalvsPHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, HON.NIEVES CONFESSOR AND THE HON. FELICISIMO
JOSON,respondent.POEA Memorandum Circular No. 05. Giving more benefits
to sea-based Filipino workers
Land based and Sea-based Filipino workers are not similar

Facts:
Petitioner, Conference of Maritime Manning Agencies, Inc., is an incorporated
association of licensed Filipino manning agencies, and its co-petitioners, all
licensed manning agencies who hire and recruit Filipino seamen for and in
behalf of the irrespective foreign ship-owner-principals,seek to annul
Resolution No. 01, series of 1994, of the Governing Board of the POEA and
POEA Memorandum Circular No. 05.
Issue:
WON the resolution and the memorandum circular are unconstitutional
because they violate the equal protection and non-impairment ofobligation of
contracts clauses of the Constitution.
RULING:
Yes. There is, as well, no merit to the claim that the assailed resolution and
memorandum circular violate the equal protection and contractclauses of the
Constitution. To support its contention of in equality, the petitioners claim
discrimination against foreign shipowners and principalsemploying Filipino
seamen and in favor of foreign employers employing overseas Filipinos who are
not seamen. It is an established principle ofconstitutional law that the
guaranty of equal protection of the laws is not violated by legislation based on
reasonable classification. And for theclassification to be reasonable, it (1) must
rest on substantial distinctions; (2) must be germane to the purpose of the law;
(3) must not be limitedto existing conditions only; and (4) must apply equally to
all members of the same class. 14 There can be no dispute about the
dissimilaritiesbetween land-based and sea-based Filipino overseas workers in
terms of, among other things, work environment, safety, dangers and risks
tolife and limb, and accessibility to social, civic, and spiritual activities.

C & M TIMBER CORPORATION (CMTC), petitioner, vs. HON. ANGEL C.

ALCALA, Secretary of the Department of Environment & Natural
Resources, HON. ANTONIO T. CARPIO, Chief Presidential Legal
Counsel, and HON. RENATO C. CORONA, Assistant Executive
Secretary for Legal Affairs, respondents.
 DECISION

MENDOZA, J.:

This is a petition for certiorari by which C & M Timber Corporation seeks

the nullification of the order dated February 26, 1993 and the resolution dated
June 7, 1993 of the Office of the President, declaring as of no force and effect
Timber License Agreement (TLA) No. 106 issued to petitioner on June 30,
1972. TLA No. 106, with the expiry date June 30, 1997, covers 67,680
hectares of forest land in the municipalities of Dipaculao and Dinalongan in
the Province of Aurora and the Municipality of Maddela in Quirino province. [1]

It appears that in a letter dated July 20, 1984 to President Marcos,

[2]

Filipinas Loggers Development Corporation (FLDC), through its president and

general manager, requested a timber concession over the same area covered
by petitioners TLA No. 106, alleging that the same had been cancelled
pursuant to a presidential directive banning all forms of logging in the
area. The request was granted in a note dated August 14, 1984 by President
Marcos who wrote, as was his wont, on the margin of the letter of FLDC:
Approved. [3]

Accordingly, on September 21, 1984, the Ministry of Natural Resources, as

it was then called, issued TLA No. 360, with the expiry date September 30,
1994, to FLDC, covering the area subject of TLA No. 106. In 1985, FLDC
began logging operations.

On June 26, 1986, then Minister of Natural Resources Ernesto M. Maceda

suspended TLA No. 360 for FLDCs gross violation of the terms and conditions
thereof, especially the reforestation and selective logging activities and in
consonance with the national policy on forest conservation. On July 26, 1986,
[4]

Minister Maceda issued another order cancelling the license of FLDC on the
ground that in spite of the suspension order dated June 26, 1986, said
concessionaire has continued logging operations in violation of forestry rules
and regulations.[5]

Learning of the cancellation of FLDCs TLA, petitioner, through its officer-

in-charge, wrote Minister Maceda a letter dated October 10, 1986, requesting
revalidation of its TLA No. 106. As FLDC sought a reconsideration of the
[6]

order cancelling its TLA, petitioner wrote another letter dated February 13,
1987, alleging that because of the log ban imposed by the previous
[7]

administration it had to stop its logging operations, but that when the ban was
lifted on September 21, 1984, its concession area was awarded to FLDC as a
result of [FLDCs] covetous maneuvers and unlawful machinations. (Petitioner
was later to say that those behind FLDC, among them being the former
Presidents sister, Mrs. Fortuna Barba, were very influential because of their
very strong connections with the previous Marcos regime.) Petitioner prayed
[8]

that it be allowed to resume logging operations.

In his order dated May 2, 1988, Secretary Fulgencio Factoran, Jr., of the
[9]

DENR, declared petitioners TLA No. 106 as of no more force and effect and
consequently denied the petition for its restoration, even as he denied FLDCs
motion for reconsideration of the cancellation of TLA No. 360. Secretary
Factoran, Jr. ruled that petitioners petition was barred by reason of laches,
because petitioner did not file its opposition to the issuance of a TLA to FLDC
until February 13, 1987, after FLDC had been logging under its license for
almost two years. On the other hand, FLDCs motion for reconsideration was
denied, since the findings on which the cancellation order had been based,
notably gross violation of the terms and conditions of its license, such as
reforestation and selective logging activities appear to be firmly grounded.

Both petitioner CMTC and FLDC appealed to the Office of the President.
Petitioner denied that it was guilty of laches. It alleged that it had sent a letter
to the then Minister of Natural Resources Rodolfo del Rosario dated
September 24, 1984 protesting the grant of a TLA to FLDC over the area
covered by its (petitioners) TLA and, for this reason, requesting nullification of
FLDCs TLA.

In a decision dated March 21, 1991, the Office of the President, through
[10]

then Executive Secretary Oscar Orbos, affirmed the DENRs order of May 2,
1988. Like the DENR it found petitioner guilty of laches, the alleged filing by
petitioner of a protest on September 24, 1984 not having been duly
proven. The decision of the Office of the President stated: [11]
 As disclosed by the records, this Office, in a letter of June 1, 1989, had requested
the DENR to issue a certification as to the authenticity/veracity of CMTCs
aforesaid Annex A to enable it to resolve this case judiciously and
expeditiously. Said letter-request pertinently reads:

x x x C & M Timber Corporation has attached to its Supplemental Petition For

Review, dated June 1, 1988, a xerox copy of (Annex A) of its letter to the Minister of
Natural Resources Rodolfo del Rosario, dated September 24, 1984, prepared by its
counsel, Atty. Norberto J. Quisumbing, protesting against the award of the contested
area to Filipinas Loggers Development Corporation and requesting that it be annulled
and voided.

Considering that the aforementioned Annex A constitutes a vital defense to C & M

Timber Corporation and could be a pivotal factor in the resolution by this Office of
the instant appeal, may we request your good office for a certification as to the
authenticity/veracity of said document (Annex A) to enable us to resolve the case
judiciously and expeditiously.

In reply thereto, the DENR, thru Assistant Secretary for Legal Affairs Romulo D. San
Juan, in a letter of July 7, 1989, informed this Office, thus:

xxx

Despite diligent efforts exerted to locate the alleged aforementioned Annex A, no such
document could be found or is on file in this Office.

This Office, therefore, regrets that it can not issue the desired certification as to the
authenticity/veracity of the document.

On September 10, 1990, this Office requested an updated comment of the DENR on
(a) the duplicate original copy of Annex A; (b) a xerox copy of Page 164, entry No.
2233, of the MNRs logbook tending to show that the original copy of Annex A was
received by the MNR; and (c) a xerox copy of Page 201 of the logbook of the BFD
indicating that the original copy of Annex A was received by BFD from the MNR.

On October 26, 1990, DENR Assistant Secretary San Juan endorsed to this Office the
updated comment of Director of Forest Management Bureau (FMB) in a 2nd
endorsement of October 25, 1990, which pertinently reads as follows:
Please be informed that this Office is not the addressee and repository of the letter
dated September 24, 1984 of Atty. Norberto Quisumbing. This Office was just
directed by then Minister Rodolfo del Rosario to act on the purported letter of Atty.
Quisumbing and as directed, we prepared a memorandum to the President which was
duly complied with as shown by the entries in the logbook. Annex A, which is the
main document of the letter-appeal of C & M Timber Corporation is presumed
appended to the records when it was acted upon by the BFD (now FMB) and
forwarded to the Secretary (then Minister). Therefore this Office is not in a position to
certify as to the authenticity of Annex A.

Clearly therefore, CMTCs reliance on its Annex A is misplaced, the authenticity

thereof not having been duly proven or established. Significantly, we note that in all
the pleadings filed by CMTC in the office a quo, and during the hearing conducted,
nothing is mentioned therein about its letter of September 24, 1984 (Annex
A).Jurisprudence teaches that issues neither averred in the pleadings nor raised during
the trial below cannot be raised for the first time on appeal (City of Manila vs. Ebay, 1
SCRA 1086, 1089); that issues of fact not adequately brought to the attention of the
trial court need not be considered by a reviewing court, as they cannot be raised for
the first time on appeal (Santos v. Intermediate Appellate Court, 145 SCRA 592, 595);
and that parties, may not, on appeal, adopt a position inconsistent with what they
sustained below (People v. Archilla, 1 SCRA 698, 700-701)

The Office of the President also declined to set aside the DENRs order of
July 31, 1986, cancelling FLDCs TLA No. 360, after finding the same to be
fully substantiated.

Petitioner and FLDC moved for reconsideration. In its order dated January
25, 1993, the Office of the President, through Chief Presidential Legal
[12]

Counsel Antonio T. Carpio, denied petitioners motion for reconsideration. It

held that even assuming that CMTC did file regularly its letter-protest of
September 24, 1984 with MNR on September 25, 1984, CMTC failed to
protect its rights for more than two (2) years until it opposed reinstatement of
FLDCs TLA on February 13, 1987. Within that two (2) year period, FLDC
logged the area without any opposition from CMTC. In the same order, the
Office of the President, however, directed the reinstatement of FLDCs TLA No.
360, in view of the favorable report of the Bureau of Forest Development
dated March 23, 1987. Later, the Presidents office reconsidered its action
after the Secretary of Environment and Natural Resources Angel C. Alcala, on
February 15, 1993, expressed concern that reinstatement of FLDCs TLA No.
360 might negate efforts to enhance the conservation and protection of our
forest resources. In a new order dated February 26, 1993, the Office of the
[13]

President reinstated its March 21, 1991 decision.

Petitioner again moved for a reconsideration of the decision dated March

21, 1991 and for its license to be revived/restored. Petitioners motion was,
however, denied by the Office of the President on June 7, 1993 in a [14]

resolution signed by Assistant Executive Secretary for Legal Affairs Renato C.

Corona. The Presidents office ruled:

The above Order of February 26, 1993 was predicated, as stated therein, on a new
policy consideration on forest conservation and protection, unmistakably implied
from the Presidents handwritten instruction. Accordingly, this Order shall be
taken not only as an affirmation of the March 21, 1991 decision, but also as
a FINAL disposition of the case and ALL matters incident thereto, like CMTCs
motion for reconsideration, dated April 16, 1991.

Hence, this petition. Petitioner contends that laches cannot be imputed to

it because it did not incur delay in asserting its rights and even if there was
delay, the delay did not work to the prejudice of other parties, particularly
FLDC, because the cancellation of the FLDCs TLA was attributable only to its
own actions. Petitioner also denies that its license had been suspended by
reason of mediocre performance in reforestation by order of then Minister of
Natural Resources Teodoro O. Pea. It says that it did not receive any order to
this effect. Finally,petitioner claims that the denial of its petition, because of a
new policy consideration on forest conservation and protection, unmistakably
implied from the Presidents handwritten instruction, as stated in the resolution
of June 7, 1993 of the Office of the President, would deny it the due process
of law. Petitioner points out that there is no total log ban in the country; that
Congress has yet to make a pronouncement on the issue; that any notice to
this effect must be stated in good form, not implied; and that in any case, any
new policy consideration should be prospective in application and cannot
affect petitioners vested rights in its TLA No. 106.

We find the petition to be without merit.

 First. As already stated, the DENR order of May 2, 1988, declaring
petitioners TLA No. 106 as no longer of any force and effect, was based on its
finding that although TLA No. 106s date of expiry was June 30, 1997 it had
been suspended on June 3, 1983 because of CMTCs mediocre performance
in reforestation and petitioners laches in failing to protest the subsequent
award of the same area to FLDC. There is considerable dispute whether there
was really an order dated June 3, 1983 suspending petitioners TLA because
of mediocre performance in reforestation, just as there is a dispute whether
there indeed was a letter written on September 24, 1984 on behalf of
petitioner protesting the award of the concession covered by its TLA No. 106
to FLDC, so as to show that petitioner did not sleep on its rights.

The alleged order of June 3, 1983 cannot be produced. The Office of the
Solicitor General was given until May 14, 1997 to secure a copy of the order
but on May 7, 1997 the OSG manifested that the order in question could not
be found in the records of this case in which the order might be. Earlier, [15]

petitioner requested a copy of the order but the DENR, through Regional
Executive Director Antonio G. Principe, said that based from our records there
is no file copy of said alleged order.
[16]

On the other hand, the alleged letter of September 24, 1984 written by
Atty. Norberto J. Quisumbing, protesting the award of the concession in
question to FLDC cannot be found in the records of the DENR either. The
Assistant Secretary for Legal Affairs of the DENR certified that Despite diligent
efforts exerted to locate the alleged [letter], no such document could be found
or is on file in this Office. In a later certification, however, Ofelia Castro Biron
[17]

of the DENR, claimed that she was a receiving clerk at the Records and
Documents Section of the Ministry of Natural Resources and that on
September 25, 1984 she received the letter of Atty. Quisumbing and placed on
all copies thereof the stamp of the MNR. She stated that the copy in the
possession of petitioner was a faithful copy of the letter in question.[18]

The difficulty of ascertaining the existence of the two documents is indeed

a reflection on the sorry state of record keeping in an important office of the
executive department. Yet these two documents are vital to the presentation
of the evidence of both parties in this case. Fortunately, there are extant
certain records from which it is possible to determine whether these
documents even existed.

With respect to the alleged order of June 3, 1983 suspending petitioners

TLA No. 106 for mediocre performance in reforestation, the Court will
presume that there is such an order in accordance with the presumption of
regularity in the performance of official functions inasmuch as such order is
cited both in the order dated May 2, 1988 of the DENR, declaring as of no
force and effect TLA No. 106, and in the decision dated March 21, 1991 of the
Office of the President affirming the order of the DENR. It is improbable that
so responsible officials as the Secretary of the DENR and the Executive
Secretary would cite an order that did not exist.

On the other hand, with respect to the letter dated September 24, 1984,
there are circumstances indicating that it existed. In addition to the aforesaid
certification of Ofelia Castro Biron that she was the person who received the
letter for the DENR, the logbook of the Ministry of Natural Resources contains
entries indicating that the letter was received by the Bureau of Forest
Development from the MNR. DENR Assistant Secretary Romulo San Juan
[19]

likewise informed the Office of the President that the Bureau of Forest
Management prepared a memorandum on the aforesaid letter of September
24, 1984, thereby implying that there was such a letter.
[20]

On the premise that there was an order dated June 3, 1983, we find that
after suspending petitioners TLA for mediocre performance in reforestation
under this order, the DENR cancelled the TLA, this time because of a
Presidential directive imposing a log ban. The records of G.R. No. 76538,
entitled Felipe Ysmael, Jr. & Co. v. Deputy Executive Secretary, the decision
in which is reported in 190 SCRA 673 (1990), contain a copy of the
memorandum of then Director Edmundo V. Cortes of the Bureau of Forest
Development to the Regional Director of Region 2, in Tuguegarao, Cagayan,
informing the latter that pursuant to the instruction of the President and the
memorandum dated August 18, 1983 of then Minister Teodoro Q. Pea, the log
ban previously declared included the concessions of the companies
enumerated in Cortes memorandum, in consequence of which the
concessions in question were deemed cancelled. The memorandum of
Director Cortes stated:
MEMORANDUM ORDER

TO : The Regional Director

Region 2, Tuguegarao, Cagayan

FROM : The Director

DATE : 24 August 1983

SUBJECT : Stopping of all logging operations

in Nueva Vizcaya and Quirino

REMARKS :

Following Presidential Instructions and Memorandum Order of Minister Teodoro Q.

Pea dated 18 August 1983, and in connection with my previous radio message, please
be informed that the coverage of the logging ban in Quirino and Nueva Vizcaya
provinces include the following concessions which are deemed cancelled as of the
date of the previous notice:

- Felipe Ysmael Co., Inc.

- Industries Dev. Corp.

- Luzon Loggers, Inc.

- C & M Timber Corporation

- Buzon Industrial Dev. Corporation

- Dominion Forest Resources Corp.

- FCA Timber Development Corp.

- Kasibu Logging Corp.

- RCC Timber Company

- Benjamin Cuaresma

You are hereby reminded to insure full compliance with this order to stop logging
operations by all licensees above mentioned and submit a report on the pullout of
equipment and inventory of logs within five days upon receipt hereof.

ACTION

DESIRED : For your immediate implementation.

EDMUNDO V. CORTES

(Emphasis added)

It thus appears that petitioners license had been cancelled way back in
1983, a year before its concession was awarded to FLDC. It is noteworthy that
petitioner admits that at the time of the award to FLDC in 1984 petitioner was
no longer operating its concession because of a log ban although it claims
that the suspension of operations was only temporary. As a result of the log
ban, the TLA of petitioner, along with those of other loggers in the region, were
cancelled and petitioner and others were ordered to stop
operations. Petitioner also admits that it received a telegram sent on August
24, 1983 by Director Cortes of the BFD, directing it to stop all logging
operations to conserve our remaining forests. It is then not true, as Atty.
[21]

Quisumbing stated in protesting the award of the concession to FLDC, that

the logging ban did not cancel [petitioners] timber license agreement.

Now petitioner did not protest the cancellation of its TLA. Consequently,
even if consideration is given to the fact that a year later, on September 24,
1984, its counsel protested the grant of the concession to another party
(FLDC), this failure of petitioner to contest first the suspension of its license on
June 3, 1983 and later its cancellation on August 24, 1983 must be deemed
fatal to its present action.

Second. Except for the letter of its counsel to the Minister of Natural
Resources, which it reiterated in its letter to the President of the Philippines,
petitioner took no legal steps to protect its interest. After receiving no
favorable response to its two letters, petitioner could have brought the
necessary action in court for the restoration of its license. It did not. Instead it
waited until FLDCs concession was cancelled in 1986 by asking for the
revalidation of its (petitioners) on TLA No. 106.

Petitioners excuse before the DENR is that it did not pursue its protest
because its president, Ricardo C. Silverio, had been told by President Marcos
that the area in question had been awarded to the Presidents sister, Mrs.
Fortuna Barba, and petitioner was afraid to go against the wishes of the
former President. This is a poor excuse for petitioners inaction. In Felipe
[22]

Ysmael, Jr. & Co., Inc. v. Deputy Executive Secretary, a similar excuse was
[23]

given that Ysmael & Cos license had been cancelled and its concession
awarded to entities controlled or owned by relatives or cronies of then
President Marcos. For this reason, after the EDSA Revolution, Ysmael & Co.
sought in 1986the reinstatement of its timber license agreement and the
revocation of those issued to the alleged presidential cronies. As its request
was denied by the Office of the President, Ysmael & Co. filed a petition
for certiorari with this Court. On the basis of the facts stated, this Court denied
the petition: (1) because the August 25, 1983 order of the Bureau of Forest
Development, cancelling petitioners timber license agreement had become
final and executory. Although petitioner sent a letter dated September 19,
1983 to President Marcos seeking reconsideration of the 1983 order of
cancellation of the BFD, the grounds stated there were different from those
later relied upon by petitioner for seeking its reinstatement; (2) because the
fact that petitioner failed to seasonably take judicial recourse to have the
earlier administrative actions [cancelling its license and granting another one
covering the same concession to respondent] reviewed by the court through a
petition for certiorari is prejudicial to its cause. Such special civil action
of certiorari should have been filed within a reasonable time. And since none
was filed within such period, petitioners action was barred by laches; and (3)
because executive evaluation of timber licenses and their consequent
cancellation in the process of formulating policies with regard to the utilization
of timber lands is a prerogative of the executive department and in the
absence of evidence showing grave abuse of discretion courts will not
interfere with the exercise of that discretion.
 This case is governed by the decision in Felipe Ysmael, Jr. & Co., Inc. v.
Deputy Executive Secretary.

Third. It is finally contended that any policy consideration on forest

conservation and protection justifying the decision of the executive
department not to reinstate petitioners license must be formally enunciated
and cannot merely be implied from the Presidents instruction to his
subordinates and that, at all events, the new policy cannot be applied to
existing licenses such as petitioners.

The Presidents order reconsidering the resolution of the Presidential Legal

Adviser (insofar as it reinstated the license of FLDC) was prompted by
concerns expressed by the then Secretary of Environment and Natural
Resources that said reinstatement [of FLDCs license] may negate our efforts
to enhance conservation and protection of our forest resources. There was
really no new policy but, as noted in Felipe Ysmael, Jr. & Co., Inc., a mere
reiteration of a policy of conservation and protection. The policy is contained
in Art. II, 16 of the Constitution which commands the State to protect and
promote the right of the people to a balanced and healthful ecology in accord
with the rhythm and harmony of nature. There is therefore no merit in
petitioners contention that no new policy can be applied to existing licenses.

As to petitioners contention that the cancellation of its license constitutes

an impairment of the obligation of its contract, suffice it for us to quote what
we held in Felipe Ysmael, Jr. & Co. Inc. v. Deputy Executive Secretary: [24]

A cursory reading of the assailed orders issued by public respondent Minister Maceda
of the MNR, which were affirmed by the Office of the President, will disclose public
policy considerations which effectively forestall judicial interference in the case at
bar.

Public respondents herein, upon whose shoulders rests the task of implementing the
policy to develop and conserve the countrys natural resources, have indicated an
ongoing department evaluation of all timber license agreements entered into, and
permits or licenses issued, under the previous dispensation. . . .
The ongoing administrative reassessment is apparently in response to the renewed and
growing global concern over the despoliation of forest lands and the utter disregard of
their crucial role in sustaining a balanced ecological system. The legitimacy of such
concern can hardly be disputed, most especially in this country. . . .

Thus, while the administration grapples with the complex and multifarious problems
caused by unbridled exploitation of these resources, the judiciary will stand clear. . . .
More so where, as in the present case, the interests of a private logging company are
pitted against that of the public at large on the pressing public policy issue of forest
conservation. . . . Timber licenses, permits and license agreements are the principal
instruments by which the State regulates the utilization and disposition of forest
resources to the end that public welfare is promoted. And it can hardly be gainsaid
that they merely evidence a privilege granted by the State to qualified entities, and do
not vest in the latter a permanent or irrevocable right to the particular concession area
and the forest products therein. They may be validly amended, modified, replaced or
rescinded by the Chief Executive when national interests so require. Thus, they are
not deemed contracts within the purview of the due process of law clause
[See Sections 3(33) 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].

WHEREFORE, the petition is DISMISSED.

SO ORDERED.