04/02/2020 E-Library - Information At Your Fingertips: Printer Friendly R-9-040 such that respondent should have been given 30 days, after due notice, to remedy any breach or default of the provisions of the IFMA and/or that the dispute regarding the bases for the cancellation of the IFMA should have first been submitted to arbitration. Petitioner moved to reconsider the CA Decision. In the Resolution[22] dated July 24, 2003, the motion was denied for lack of merit. Hence, this petition based on the following grounds: I. The Court of Appeals gravely erred in ruling that IFMA No. R9-040 is a contract and not a mere privilege granted by the State to respondent. II. The Court of Appeals seriously erred in ordaining that respondent can rightfully invoke prior resort to arbitration or the option to mend its violations under IFMA No. R9-040.[23] In essence, petitioner argues that an IFMA is not an ordinary contract which is protected by the Constitution against impairment[24] but a mere privilege granted by the State to qualified persons by means of a permit, license, franchise, agreement, or other similar concessions, which in this case is the exploration, development and utilization of the forest lands belonging to the State under its full control and supervision. Thus, the cancellation of the IFMA does not amount to a rescission of a contract but a mere withdrawal of this privilege. As such, the due process clause under the Constitution[25] does not likewise apply since the IFMA area cannot be considered as property of respondent. According to petitioner, IFMA No. R-9-040, with the forest lands covered by it, is imbued with paramount considerations of public interest and public welfare such that whatever rights respondent may have under it must yield to the police power of the State. In this sense, respondent cannot take refuge in Sections 35 and 36 of IFMA No. R-9-040 to prevent the IFMA's cancellation. Inasmuch as the grounds cited by petitioner are interrelated, they shall be jointly discussed hereunder. The petition is impressed with merit. IFMA No. R-9-040 is a license agreement under Presidential Decree (P.D.) No. 705 (Revised Forestry Code), the law which is the very basis for its existence.[26] Under Section 3, paragraph (dd) thereof, a license agreement is defined as "a privilege[27] granted by the State to a person to utilize forest 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 conditions set forth in said agreement." This is evident in the following features, among others, of IFMA No. R9-040, to wit: 1. The State agreed to devolve to the holder of IFMA No. R-9-040 the responsibility to manage the specified IFMA area for a period of 25 years, specifically until October 14, 2019, which period is automatically renewable for another 25 years thereafter; elibrary.judiciary.gov.ph/thebookshelf/showdocsfriendly/1/46832 9/16