NATRES CASES

2. G.R. No. 179669, June 04, 2014

SR METALS, INC., SAN R MINING AND CONSTRUCTION CORP. AND GALEO EQUIPMENT AND MINING COMPANY, INC., Petitioner, v. THE
HONORABLE ANGELO T. REYES, IN HIS CAPACITY AS SECRETARY OF DEPARTMENT ENVIRONMENT AND NATURAL RESOURCES
(DENR), Respondent.
DECISION
DEL CASTILLO, J.:
In this Petition for Review on Certiorari, SR Metals, Inc., SAN R Mining and Construction Corp., and Galeo Equipment and Mining Co., Inc. (hereinafter
referred to as 'mini corporations') assail the Decision 1 and Resolution2 dated July 4, 2007 and September 14 respectively, of the Court of Appeals (CA), in CAG.R SP No. 97127. The mining corporations fault the CA for (a) upholding the validity of the provision of Presidential Decree (PD) No. 1899 3 which limits the
annual production/extraction of mineral ore in small-scale mining to 50,000 metric tons (MT) despite its being violative of the equal protection clause, and (b)
adopting the Mines and Geosciences Bureau's (MGB) definition of 'ore,' which led the said court to conclude that the mining corporation had exceeded the
aforesaid 50,000-MT limit.
Factual Antecedents
On March 9, 2006, each of the petitioners was awarded a 2-year Small-Scale Mining Permit 4 (SSMP) by the Provincial Mining Regulatory Board of Agusan del
Norte; they were allowed to extract Nickel and Cobalt (Ni-Co) in a 20-hectare mining site in Sitio Bugnang, Brgy. La Fraternidad, Tubay, Agusan del Norte.
These permits were granted after the Environmental Management Bureau (EMB), Region XIII of the Department of Environment and Natural Resources
(DENR) issued on March 2, 2006 Environmental Compliance Certificates 5 with a validity period of one year.
The mining corporations ECCs contain a restriction that the amount of Ni-Co ore they are allowed to extract annually should not exceed 50,000 MTs pursuant
to Section 1 of PD 1899 which provides:ChanRoblesVirtualawlibrary
Section 1. Small-scale mining refers to any single unit mining operation having an annual production of not more than 50,000 metric tons of ore x x x.
Subsequently, however, Agusan del Norte Governor, Erlpe John M. Amante (Governor Amante), questioned the quantity of ore that had been mined and
shipped by the mining corporations. In reply, the mining corporations denied having exceeded the extraction limit of 50,000 MTs. 6 They explained that an
extracted mass contains only a limited amount/percentage of Ni-Co as the latter is lumped with gangue, i.e., the unwanted rocks and minerals. And it is only
after the Ni-Co is separated from the gangue by means of a scientific process should amount of the Ni-Co be measured and considered as ore. Excluding the
gangue, the mining corporations pegged the volume of Ni-Co ore they had extracted from the time they start shipping the same in August 2006 until they filed
their Petition before the CA in December 2006 at 1,699.66 MTs of Ni-Co ore only.7cralawred
Having reservations with the mining corporations interpretation of the 50,000-MT restriction, Governor Amante sought the opinion of the Department of Justice
(DOJ) on the matter.
Meanwhile, the EMB sent the mining corporations a Notice of Violation 8 informing them that they had exceeded the allowed annual volume of 150,000 MTs
combined production as their stockpile inventory of Nickeliferous ore had already total 177,297 dry metric tons (DMT). This was based on the August 10, 2006
Inspection Report9 of the MGB Monitoring Team which conducted an inspection after the DENR received complaints of violations of small-scale mining laws
and policies by the mining corporations. A technical conference was thereafter held to hear the side of the mining corporations anent their alleged overextraction.
On November 26, 2004, DENR Secretary Angelo T. Reyes issued a Cease and Desist Order 10 (CDO) against the mining corporations suspending their
operations for their operations for the following reasons:ChanRoblesVirtualawlibrary

1. The excess in 1) annual production of SR Metals, Inc., 2) maximum capitalization, and, 3) labor cost to equipment utilization of 1:1 is, by itself, a violation of
existing laws.
2. The ECCs issued in favor of San R Construction Corporation and Galeo Equipment Corporation have no legal basis and [are] therefore considered null and
void from the beginning. Similarly, the small scale mining permits that were issued by reason of such ECCs are likewise null and void. 11
A few days later or on November 30, 2006, DOJ Secretary Raul M. Gonzalez replied to Governor Amante citing DOJ Opinion No. 74, Series of 2006. 12 By
comparing PD 1899 to Republic Act (RA) No. 7076,13 a subsequent law that likewise defines small-scale mining, the DOJ opined that Section 1 of PD 1899 is
deemed to have been impliedly repealed by RA 7076 as nothing from the provisions of the latter law mentions anything pertaining to an annual production
quota for small-scale mining. It explained:ChanRoblesVirtualawlibrary
The definition of small scale mining under R.A. No. 7076 is clear and categorical. Any mining activity that relies heavily on manual labor without use of
explosives or heavy mining equipment falls under said definition. It does not mention any annual production quota or limitation. On the contrary, Section 12
thereof is explicit that the contractor, or, specifically, in this case, permit holders or permitees, are entitled not only to the right to [mine], but also to "extract and
dispose of mineral ores (found therein) for commercial purposes without specific limitation as to the nature of the mineral extracted or the quantity thereof.
Moreover, while Section 13 of the law imposes certain duties and obligations upon the contractor or permitee, nothing therein refers directly or otherwise to
production quota limitation. Additionally, even Section 10 thereof, which provides for the extent [of] the mining area, does not limit production but only the
mining area and depth of the tunnel or adit which, as stated in the law shall not (exceed) that recommended by the (EMB) director taking into account the
quantity of mineral deposits, among others. It is, however, silent on the extent of the minings annual quota production. Thus, anything that is not in the law
cannot be interpreted as included in the law x x x14
Even assuming that the 50,000-MT ore limit in PD 1899 is still in force, the DOJ categorically concluded that the term ore should be confined only to Ni-Co,
that is, excluding soil and other materials that are of no economic value to the mining corporations. This is considering that their ECCs explicitly specified
50,000 MTs of Ni-Co ore.
The mining corporations then filed before the CA a Petition for Certiorari with prayer for Temporary Restraining Order and/or Preliminary Injunction, imputing
grave abuse of discretion on the part of DENR in issuing the CDO. Relying on the rationalizations on the rationalization made by the DOJ in its November 30,
2006 Opinion, they vehemently denied having over-extracted Ni-Co.
The Office of the Solicitor General (OSG), for its part, claimed that the CDO was issued for ecological and health reasons and is a preventive measure against
disaster arising from multiple acts of over-extraction such as landslides, mudslides and flooding. Also to be respected is the DENRs finding of the mining
corporations over-extraction because being the agency mandated to implement the laws affecting the countrys natural resources, the DENR possesses the
necessary expertise to come up with such determination. For the same reason, the DENR's definition of small-scale mining particularly that under Mines
Administrative Order (MAO) No. MRD-41 series of 1984, 15 must also be sustained.
Furthermore, the OSG averred that the mining corporations concept of how to measure NI-CO ore is flawed as this contradicts Section 2 of MAO No. MRD-41
which confines the 50,000-MT limit to run-of-mine ore, viz.:ChanRoblesVirtualawlibrary
SECTION 2 - Who May Qualify for the Issuance of a Small Scale Mining Permit - Any qualified person as defined in Sec. 1 of these Regulations, preferably
claim owners and applicants for or holders of quarry permits and/or licenses may be issued a small scale mining permit provided that their mining operations,
whether newly-opened, existing or rehabilitated, involve:
(a) a single mining unit having an annual production not exceeding 50,0000 metric tons of run-of-mine ore, either an open cast mine working or a subsurface
mine working which is driven to such distance as safety conditions and pracatices will allow;
xxxx
The OSG emphasized that in measuring an extraction, the only deduction allowed from an extracted mass of ore is the weight of water, not the soil. It quoted a

letter16 Horacio C. Ramos of the MGB Central Office dated April 30, 2007 addressed to the OSG, which explained the definition of the phrase 50,000-metric
ton extraction limit," to wit:ChanRoblesVirtualawlibrary

50,000 metric tons of run-of-mine per year;

the run[-]of[-]mine can either be wet or dry;

traditionally, the production rate for nickel is based on dry since the water or moisture content has no value; and

thus, if the ore is wet, the weight of water is deducted from the total weight of ores in the determination of the production rate, or for shipment
purposes.17

Ruling of the Court of Appeals

The CA denied the mining corporations Petition, not only because the ECCs have been mooted by their expiration, but also due to its recognition of the power
of the DENR to issue the CDO as the agency reposed with the duty of managing and conserving the country's resources under Executive Order 192. 18 Anent
the issue of whether the imposed limit under PD 1899 should be upheld and whether there was over extraction, the CA had this to
say:ChanRoblesVirtualawlibrary
We agree with the OSGs argument that the 50,000[-]metric ton limit pertains to the mined ore in its unprocessed form, including the soil and dirt. The OSG
argued that the DOJ Opinion is not binding upon the court and that the agency which is tasked to implement the mining laws is the DENR. Citing the MGB
letter-reply, the OSG contended that the limit provided in RA 1899 subsists and RA 7076 did not impliedly repeal the latter. The provisions in both laws are not
inconsistent with each other, both recognizing the DENRs authority to promulgate rules and regulations for the implementation of mining laws. 19
Furthermore, the said court gave credence to the MGBs April 30, 2007 opinion on the definition of the 50,000-MT limit. Rejecting the claims of the mining
corporations, it said:ChanRoblesVirtualawlibrary
x x x Thus, the MAO not only buttresses the OSGs arguments as to what the extraction limit pertains to, x x x it also contravenes [the mining corporations]
assertion that the extraction limit no longer exists and that, even if the limit subsists, they [had] not exceeded the same because they [had] only extracted
around 1,600 metric tons. Indeed, for purposes of determining whether the extraction is still within the allowable limits, only the weight of water is deducted
from the run-of-mine ore.20
The mining corporations moved for partial reconsideration where they again relied heavily on the DOJ Opinion. 21 They also attacked the validity of Section 1(1)
of PD 1899 that sets the annual production limit of 50,000-MT on small-scale mining by arguing that it violates the equal protection clause of the Constitution
and that it is already repealed by RA 7076. Even granting that the said limit is still in force, the mining corporations asserted the gangue should not be included
in measuring the extraction, since their ECCs clearly provide that 50,000 MTs of Ni-Co ore, not 50,000 MTs of ore, can be extracted.
Ignoring their arguments, the CA stressed that the DENR is the primary government agency responsible for the conservation, management, development, and
proper use of the country's mineral resources. It reiterated:ChanRoblesVirtualawlibrary
This Court likewise declared that the MAO adopted the definition of small scale mining in PD 1899, including the requirement of observing the extraction limit.
Together with the MGB's interpretation of the term run-of-mine ore, the MAO supports the arguments of the OSG as to the extraction limit and controverts
[the mining corporations] assertion that no extraction limit exists and, if the same subsists, they [had] not exceeded it. 22
Hence, this Petition.

Issues
Two questions are posed before us. The first deals with the constitutionality of Section 1, PD 1899 which, according to the mining corporations violates the
equal protection clause. They argue that there is no substantial distinction between the miners covered under RA 7076, who can extract as much ore as they
can, and those covered under PD 1899 who were imposed an extraction limit.
Another issue concerns the correct interpretation of the 50,000-MT limit. The mining corporation insist on their version of how to compute the extraction.
To them, the computation of Ni-Co ore should be confined strictly to Ni-Co component from which they derive economic value.
Our Ruling
Petitioners are governed by the annual
production limit under PD 1899.
Two different laws governing small-scale mining co-exist: PD 1899 and RA 7076. 23 The controversy lies in the apparent conflicting provisions on the definition
of small-scale mining under the two laws. Section 1 of PD 1899 defines small-scale mining in this wise:ChanRoblesVirtualawlibrary
Small-scale mining refers to any single unit mining operation having an annual production of not more than 50,000 metric tons of ore and satisfying the
following requisites:
1. The working is artisanal, whether 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 existing mining laws, rules and regulations.
On the other hand, under Section 3(b) of RA 7076, 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. Significantly, this definition does not provide for annual extraction limit unlike in PD 1899.
DOJ Opinion No. 74, Series of 2006 concluded that as nothing from RA 7076 speaks of an annual production limit, Section 1 of PD 1899 should be considered
impliedly repealed by RA 7076, the later law. However, while these two laws tackle the definition of what small-scale mining is, both have different objects
upon which the laws shall be applied to. PD 1899 applies to individuals, partnerships and corporations while RA 7076 applies to cooperatives. 24 There are
other differences between the two laws, but we cannot hastily conclude that there is an implied repeal because of the omission. Both laws may stand.
Petitioners then construe the omission of the annual production limit in the later law in the that sense that small-scale miners granted mining contracts under
RA 7076 can now conduct mineral extraction as much as they can while the benefit of unlimited extraction is denied to those granted permits under PD 1899.
According to them, such situation creates an invalid classification of small-scale miners under the two laws, hence the attack on Section 1 of PD 1899 as
being violative of the equal protection clause.
We do not, however, subscribe to the mining corporations averment that the 50,000-MTs production limit does not apply to small-scale miners under RA
7076. Recognizing the DENRs mandate to regulate the countrys natural resources under EO 192, 25 both PD 1899 and RA 7076 delegated to the DENR, thru
its Secretary, the power to promulgate the necessary IRRs to give effect to the said laws. 26cralawred
Significantly, the DENR in the exercise of such power had just recently resolved the question on the production limit in small-scale mining. On July 5, 2007, it
issued DMC 2007-07 or Clarificatory Guidelines in the Implementation of the Small-Scale Mining Laws. By imposing the annual production limit of 50,000
DMT to both SSMPs issued under PD 1899 and Small-Scale Mining Contracts (SSMCs) under RA 7076, the DENR harmonized the two
laws, viz:ChanRoblesVirtualawlibrary

V. Maximum Annual Production

For metallic minerals, the maximum annual production under an SSMP/SSMC shall be 50,000 dry metric tons (DMT[s]) of ore, while for nonmetallic
minerals, the maximum annual production shall be 50,000 DMT[s] of the material itself, e.g., 50,000 DMT[s] of limestone, 50,000 DMT[s] of silica, or 50,000
DMT[s] of perlite.
The maximum annual production above shall include low-grade and/or marginal ore, and/or minerals or rocks that are intended for sampling and/or
metallurgical testing purpose/s."
With the 50,000-MT limit likewise imposed on small-scale miners under RA 7076, the issue raised on the violation of the equal protection clause is moot. The
fact is, the DENR treats all small-scale miners equally as the production limit applies to all of them. There is therefore no more reason for the mining
corporations to not recognize and comply with the said limitation. It must be stressed that the DENR is the government agency tasked with the duty of
managing and conserving the countrys resources; it is also the agency vested with the authority to promulgate rules and regulations for the implementation of
mining laws.
The DENR, being the agency mandated
to protect the environment and the country's
natural resources, is authoritative on
interpreting the 50,000- MT limit.
MAO No. MRD-41 specifies measuring the run-of-mine ore, meaning the ore as it emerges from the mine, i.e., before treatment.27 As explained by the DENRMGB Director, the ore is weighed only in DMT, excluding the water or moisture content. Simply stated, included in the measurement are other materials
lumped with the sought-after mineral.
This definition is congruent with RA 7942 or The Philippine Mining Act of 1995. Said law defines ore as naturally occurring substance or material from which
a mineral or element can be mined and/or processed for profit. 28 Clearly, the law refers to ore in its unprocessed form, i.e., before the valuable mineral is
separate from the ore itself.
Also in Section V of the earlier mentioned DMC-2007-07, the DENR clarified the 50,000-MT limit by differentiating the measurement of metallic minerals from
nonmetallic ones. Noticeably, the metallic minerals are conservatively measured compared to nonmetallic or industrial minerals for a reason. Compared to
metallic minerals, nonmetals are easily available when mined in their raw/natural state, like limestone. As nonmetallics are produced from natural aggregates,
the production limit of 50,000 DMTs will be easily met. On the other hand, metallic minerals, like Ni-Co are not easily available in their pure form since they
are sourced from ores which are mined. To extract these metals of economic value, the gangue lumped with them have to be removed by metallurgy. And in
order to produce a ton of a metallic mineral sought for, big volumes of gangue will have to be removed. As indicated by the mining corporations' Summary of
Shipments,29 it took 151,612 DMTs of ore to extract only 1,699. DMTs of Ni-Co. Thus, 149,912.34 DMTs of ore are considered waste. This means that if we
are to subscribe to the mining corporations interpretation of how to measure mined ore by measuring only the Ni-Co and excluding the gangue, small-scale
miners are virtually given the license to continuously collect large volumes of ore until the 50,000 DMTs of Ni-Co limit is met. It must be emphasized that
mining, whether small or large-scale, raises environmental concerns. To allow such a scenario will further cause damage to the environment such as erosion
and sedimentation, landslides, deforestation, acid rock drainage, etc. 30 As correctly argued by the Solicitor General, extracting millions of DMTs of run-of-mine
ore will mean irreversible degradation of the natural resources and possible landslides and flashfloods.
It may be significant to state at this point that while the annual production limit by measuring only the material itself may apply in small-scale nonmetallic
mining, the same cannot be true to metal mining for the reasons above stated. Hence, the DENR saw it proper to conservatively measure the production of
metallic minerals apparently bearing in mind the more intense of such kind of mining to the environment.
Anent the mining corporations contention that their ECCs specified that they were allowed to extract 50,000 MTs of Ni-Co, such should not be taken literally in
the sense that the measurement should only be based on the Ni-Co in their purest form. Their that they are to mine Ni-Co and not any other minerals. This
construction likewise applies to the respective SSMPs given them.
WHEREFORE, premises considered, the Petition is DENIED. The July 4, 2007 Decision and September 14, 2007 Resolution of the Court of Appeals in CA-

G.R. SP No. 97127 are hereby AFFIRMED in toto.

SO ORDERED.
Carpio, (Chairperson), Brion, and Perlas-Bernabe, JJ. concur.
3. [G.R. No. 63528. September 9, 1996]
ATOK BIG-WEDGE MINING COMPANY, PETITIONER, VS. HON. INTERMEDIATE APPELLATE COURT and TUKTUKAN SAINGAN, respondents.
DECISION
HERMOSISIMA, JR., J.:
In the face of two sets of divergent rulings of the Supreme Court on the nature of the rights of mining claimants over the land where their claim is located,
the parties herein seek a definitive ruling on the issue: What is actually the right of a locator of a mining claim located and perfected under the Philippine Bill of
1902 over the land where the claim is found? Does he have an absolute right of ownership thereof or does he have the mere right to possess and claim the
same? Whose right to the land should, therefore, prevail: the mining claimants or that of an applicant for land registration? Does the mere recording or location
of a mining claim ipso facto and irreversibly convert the land into mineral land, notwithstanding the fact that the mining claimant failed to comply with the strict
work requirement under the Philippine Bill of 1902?
Petitioner Atok Big Wedge Mining Company appeals from the decision [1] of the Court of Appeals[2] which reversed the decision[3] of the then Court of First
Instance of Baguio City[4] in a land registration case. [5] The court a quo denied and correspondingly dismissed the application for registration of title filed by
private respondent Tuktukan Saingan, finding no merit in Saingans claim of adverse, open and continuous possession in concept of an owner of the tract of
land applied for by him, which happened to be claimed by petitioner as part of its mining claim duly recorded by the Mining Recorder of Benguet. Respondent
appellate court found petitioner to have abandoned its mining claim over the said tract of land and, on the other hand, adjudged private respondent to be the
owner thereof by virtue of his having possessed the same under a bona fide claim of ownership for at least thirty (30) years prior to the filing of his land
registration application in 1965.
The court a quo made the following findings of fact:
Applicant [private respondent] seeks the registration of a parcel of land with an area of 41,296 square meters situated in the barrio of Lucnab, Itogon,
Benguet, which is shown in survey plan Psu-209851 x x x.
The evidence for the applicant [private respondent] who was 70 years old at the time he testified shows that he acquired the land from his father-in-law,
Dongail, when he married his daughter; that he was then 18 years old; that at the time of his acquisition, it was planted with camotes, casava [sic], langka,
gabi, coffee and avocados; that he lived on the land since his marriage up to the present; that he has been paying the taxes during the Japanese occupation
and even before it; that he was never disturbed in his possession. Supporting his oral testimony, applicant [private respondent] submitted tax declarations x x
x both dated March 20, 1948, the former for a rural land and the latter for urban land and improvement therein. The receipt showing payment of the taxes on
such tax declarations is datedFeb. 8, 1949 x x x. The said tax declarations x x x show that they cancel tax declaration No. 439 dated Feb. 10, 1947 which was
presented by the Oppositor [petitioner] Atok Big Wedge Mining Company as its Exhibit 14, and the land tax under Exh. 14 was paid by applicant [private
respondent] in 1947 x x x. Applicant [private respondent] has also submitted Exh. `C, which indicates that all pre-war records of tax declarations and real
property receipts of the municipality of Itogon where the property is located were burned and destroyed during the last world war.

The Bureau of Lands and Bureau of Forestry, represented by the Provincial fiscal, oppose [sic] application. The Atok Big Wedge Mining Company came in
also as oppositor claiming that the land in question is within its mineral claims - Sally, Evelyn and Ethel x x x Atok Big Wedge Mining Company submitted
Exhibits 6, 7 and 8, all showing that the annual assessment work of these mineral claims were maintained from 1932 to 1967 for Sally and Evelyn and from
1946 to 1967 for Ethel. It was likewise shown that these mineral claims were recorded in the mining recorders office; Sally and Evelyn on Jan. 2, 1931 and
Ethel on March 18, 1921 x x x.[6]
The respondent appellate court additionally found that the tract of land in question according to the evidence, Exh. 2, covers portion of mineral claims,
Sally, Evelyn, and Ethel, the first two located by one Reynolds in 1931 and the last, also by Reynolds in 1921 [7] but Atok x x x has not even been shown how
connected with locator Reynolds.[8] Private respondent reiterates this fact in his Comment:
x x x (T)he mining claims have become vested rights and properties of the locators, Messrs. H. I. Reynolds and E. J. Harrison.
However, the locators, Reynolds and Harrison, or the PETITIONERS herein, assuming that there is any relation between Atok Big Wedge Mining Co., and the
locators, Reynolds and Harrison, have never shown that their rights have been preserved or remain vested.
xxx
Furthermore, when the land in question was registered in the office of the Mining Recorder in 1921, and 1931, respectively, the mineral claims covering the
land in question namely: Sally, Evelyn and Ethel were in the name of the Locators E. J. Harrison and H. I. Reynolds. No evidence was ever presented as to
how Petitioner herein obtained ownership over said claims during the hearing of this case in theLower Court up to this time. It was not even shown how
Petitioner herein, Atok Big Wedge Mining Co., is connected or related to locator Reynolds. x x x [9]
Significantly, nothing in the subsequent pleadings filed by petitioner rebuts, disputes or proves otherwise, the aforecited issue raised by private
respondent with regard to its personality, interests and authority to oppose the application for registration filed by private respondent respecting land to which
petitioner claims rights but as to which it is not the duly recorded mining locator.
The Director of Lands, thru the Office of the Solicitor General, opposed private respondents application on the ground that the applicant did not have title
in fee simple over the questioned land and that he had not exercised continuous, exclusive and notorious possession and occupation over the said land for at
least thirty (30) years immediately preceding the filing of the application. However, the Solicitor General no longer joined petitioner in this ultimate appeal, the
Solicitor General later conceding existence of private respondents rights.
Petitioners presentation of evidence proving registration of the mining claims of petitioner in the Mining Recorder of Benguet dating back to 1931, at the
latest, notably about sixteen (16) years before private respondent declared the land in question for taxation purposes and thirty four (34) years before private
respondent filed the land registration proceedings in 1965, apparently impressed the court a quo. And so it ruled in favor of petitioner as oppositor in the land
registration proceedings, the court a quo ratiocinating in this wise:
x x x (T)he mining claims were recorded ahead of the time when the applicant [private respondent] declared the land for taxation purposes based on his
documentary exhibits. So the evidence of the applicant[private respondent] cannot prevail over the documentary exhibits of the oppositor Atok Big Wedge
Mining Company. The government oppositors adopted the evidence of the mining company.
Moreover, if applicant [private respondent] was already in possession and occupation of the land in the concept of owner, as claimed, it is strange that he did
not oppose its survey when the mining company surveyed the area preparatory to its recording in the mining recorders office. The conclusion is that he was
not yet there when the survey by the mining company was conducted or if he was already there the nature of his occupation was not in the concept of owner
for otherwise he could have asserted it at the time.

The foregoing facts show that the mining company had established its rights long before applicant [private respondent] asserted ownership over the land. The
perfection of mining claims over the mineral lands involved segregate [sic] them from the public domain and the beneficial ownership thereof became vested
in the locator.[10]
The trial court having dismissed private respondents application for registration on the ground that petitioners had already acquired a vested right over
the subject land, private respondent appealed to the respondent court. The Director of Lands, thru the Solicitor General, adopted as his own, the appellees
brief filed by petitioner.
The respondent appellate court, on its part, correctly considered inadequate, however, the mere recording of petitioners mining claims in the Mining
Recorder of Benguet and the corresponding, albeit religious, payment of annual assessment fees therefor, to vest in petitioner ownership rights over the land
in question. Truly, under Executive Order No. 141 [11], the payment of annual assessment fees is only proof of compliance with the charges imposed by law and
does not constitute proof of actual assessment work on the mining land concerned.Respondent court ruled in this connection:
x x x (I)t must be conceded that the same having been located and existing since 1921 and 1931, the rights of locator if correspondingly preserved, remained
vested, - but as this Court also examines the evidence, what has been shown is that affidavits of assessment work had been filed, yes, from 1932 in
connection with claim Sally and from 1933 as to Evelyn, and from 1936 as to claim Ethel, but tsn. would not show that in truth and in fact, there had been that
assessment work on the claims, [sic] witness Pelayo of Atok admits that he had not gone over the area x x x in fact he joined the company in 1962 only,[sic] in
other words, all that Atok has shown as to assessment work is the affidavit thereon, but as Ex. Order 141 of 1 August, [sic] 1968 has said:
(W)hat matters is [sic] maintaining and preserving possessory rights to the claims is the continuous performance of the required assessment work, not the
filing of an affidavit which may be disproved by findings of [sic] the ground,'
and here, the very fact that applicant has possessed continuously apparently without protest from Atok x x x must disprove the truth that locator or Atok had
indeed done assessment work x x x.[12]
Private respondent, in support of respondent courts quoted findings, points out in his pleadings that:
x x x The APPLICANT [private respondent] constructed various improvements on the land consisting of his 3 residential houses, fruit trees, ricefields and
other permanent improvements. x x x
xxx
On the other hand, the PETITIONER Mining company has not shown that it has introduced a single improvement (assessment work) on the property. It has
only paid the minimum annual assessment required by law of P200.00 a year. There was no evidence, whatsoever, of its alleged `factual possession of the
property. No assessment work was shown during the ocular inspection ordered by the Honorable Trial Court neither during the ocular inspection conducted by
the Bureau of Forestry.
THIS ritual of paying the uniform sum of P200.00 a year for alleged assessment work is not enough evidence that such assessment work was actually
made. It is precisely for this reason that Executive Order 141 dated August 1, 1968 was issued by the President of the Philippines. This order made it
mandatory that it is not enough to pay P200.00 a year but there must be actual continuous assessment work done on the surface of the mineral claims. x x
x [Underscoring supplied by private respondent.][13]
Also, private respondent also additionally informs this court that:

x x x PETITIONER Atok Big Wedge Mining Company has, on October 12, 1978, converted its application on mineral claims in question (SALLY, EVELYN and
ETHEL) into mining lease only in compliance with Presidential Decree 1214. PETITIONER mining company is now a mere lessee of the mining claims. And
as such lessee, it has no right on the surface rights of such mineral claims. An official certification to that effect by the Bureau of Mines & Geo-Sciences,
Regional Office No. 1 of the City of Baguio is hereby attached as Annex `A and made integral part hereof. x x x.[14]
an allegation which obviously clinches this case in his favor.
Respondent court having reversed the trial courts decision on the ground that private respondent had, by sufficient evidence, shown his right to
registration over the contested parcel of land, petitioner elevated its cause to this court. The Director of Lands, however, did not join in petitioners
appeal. Thus, in a Manifestation and Motion, dated June 21, 1983, [15] the Director of Lands, thru the Solicitor General, acknowledged that the respondent
Courts decision has become final with respect to the Director of Lands. [16]
Petitioner, left to its own by the Director of Lands, cites the following grounds for the grant of the instant petition:
I
THAT THE LAND IN QUESTION HAD LONG BEEN SEGREGATED FROM THE PUBLIC DOMAIN AND OWNERSHIP THERETO HAD LONG BECOME
VESTED IN HEREIN PETITIONER WHEN ITS MINING CLAIMS IN QUESTION WERE REGISTERED IN THE OFFICE OF THE MINING RECORDER IN
1921 AND 1931 RESPECTIVELY.
II
THAT THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN FINDING THAT THE APPLICANT WAS IN CONTINUOUS OPEN
AND ADVERSE POSSESSION OF THE LAND IN QUESTION.[17]
We find these arguments to be devoid of merit.
The records bear out that private
respondent has been in possession of
subject parcel of land in concept of owner
for more than thirty (30) years
---------------------------------------------------The court a quo made the following factual findings based on the testimony of private respondent:
The evidence x x x shows that he [private respondent] acquired the land from his father-in-law, Dongail, when he married his daughter; that he was then 18
years old; that at the time of his acquisition, it was planted with camotes, casava [sic], langka, gabi, coffee and avocados; that he lived on the land since his
marriage up to the present; that he has been paying the taxes during the Japanese occupation and even before it; that he was never disturbed in his
possession. Supporting his oral testimony, applicant submitted tax declarations x x x both dated March 20, 1948, the former for a rural land and the latter for
urban land and improvement therein.[18]

Substantiating the aforecited testimonial evidence of private respondents actual, adverse and continuous possession of the subject land for more than
thirty (30) years are the observations of the court commissioner during the ocular inspection of the subject land on February 1, 1969, pertinent transcribed
portions of which read as follows:
Upon verification of the extent of the area applied for by the applicant which tallies with the plan on record, we find the following improvements;
The land applied for is almost 90% improved with numerous irrigated rice terraces newly planted to palay at the time of the ocular inspection and others
planted to vegetables such as potatoes, banana plants, flowering plants and fruit trees such as mangoes, jackfruits, coffee plants, avocados and citrus - all
fruit bearing.
Most of the fruit trees such as the mango trees are about one half (1/2) meter in diameter.
There are four houses owned by the applicant [private respondent] and his children.
There is a creek traversing the middle portion of the land which serves as irrigation for the numerous rice paddies.
Upon verification of the surrounding area which we did by hiking all the way, there are no assessment tunnels or any sign of mining activities.
xxx
There are earthen dikes and fences surrounding the property applied for.
It also appears that the surrounding area of the land applied for is also fully cultivated especially on the western portion, southern portion and also on the
northern portion.
On the northwestern ridge are numerous terraces planted to various vegetables and on the edges of the property is a plantation of tiger grass used for
brooms.
On the eastern slope are also numerous terraces planted to flowering plants and numerous banana plants.
There are only two (2) pine trees growing situated on the eastern slope of the land in question.
On the northern portion are terraces and ricefields and mango tree as well as banana plants.
At the northern slope of the land applied for is [sic] fully cultivated with the exception of whatever portions are planted to bananas and tiger grass.
The terraces at the time of the ocular inspection is planted to vegetables and flowering plants such as African dishes [sic].
On the northwestern portion of the land are numerous terraces planted to seasonal vegetable crops. The rest are planted to banana except the small steep
portion planted to tiger grass to prevent the land from eroding.
On the western portion is a big irrigation canal with plenty of water which serve [sic] as a water supply to irrigate the ricefields which are found around the
property.

An estimate of around 90 to 120 big and small trees are scattered all over the property. Around the houses are full of fruit trees.
xxx
The mining compound of Itogon is very far from this place and this land is at the boundary of Baguio City and Itogon. That is why it is more suitable for
residential and agricultural purposes. Nowhere do we find any mining work done, any cable or anything that would show any mining operation in this area.
Around the yard of the houses of the applicant are numerous coffee trees, jackfruits, pomelos, papaya, pineapples, banana plants, guava trees and carrots.
The orchard is fully planted to coffee trees. The area is estimated to be more than one hectare which is planted to coffee trees and other plants. [19]
Private respondent, it must be emphasized, offered in evidence in the land registration proceedings before the court a quo, tax declarations, dated March
20, 1948, and tax payment receipts, dated February 8, 1949.
Significantly, petitioner did not present any evidence in rebuttal of private respondents aforestated claims of having acquired the subject land from his
wifes father and having lived on the land since his marriage at the age of eighteen (18). Neither has petitioner taken exception to the aforecited observations
of the court commissioner during the ocular inspection of the subject land. There is nary a showing in petitioners numerous pleadings filed before us that there
exists substantial basis for us not to believe petitioners claims, and this is understandable, for petitioner largely anchored its cause on its alleged vested rights
to its mining claims under the mandate of the Philippine Bill of 1902 and our rulings in McDaniel vs. Apacible and Cuisia[20] and the catena of cases subsequent
thereto.
Considering the aforestated evidence borne out by the records of the instant case, their credibleness and the lack of adequate opposition thereto, we
agree with respondent Court of Appeals that a reading of tsn. would rather persuade that applicant [private respondent] had shown quite well that subject
property had been in (the) continuous and adverse possession, first, of his predecessor-in-interest, Dongail and, after the death of the latter, (by respondent)
himself, years before, that is, long before the outbreak of the last war.[21]
Petitioner is deemed to have abandoned
his mining claims under E.O. No. 141 and
P.D. No. 1214
------------------------------------------All mineral lands, as part of the countrys natural resources, belong to the Philippine State. This concept of jura regalia enshrined in past and present
Philippine constitutions, has not always been the prevailing principle in this jurisdiction, however, the abundant resources within our coastal frontiers having in
the past filled not just one colonizers booty haul. Indeed, there was a time in our history when the mining laws prevailing in this jurisdiction were compromising,
to say the least, of the Filipino peoples inherent rights to their natural wealth.
Before the cession of the Philippine Islands to the United States under the Treaty of Paris, the prevailing mining law in the colony was the Royal Decree
of May, 1867, otherwise known as The Spanish Mining Law.
In the advent of American occupation, the Philippines was governed by means of organic acts which were in the nature of charters serving as a
Constitution of the occupied territory from 1900 to 1935. [22] Among the principal organic acts of the Philippines was the Act of Congress of July 1, 1902 through
which the United States Congress assumed the administration of the Philippine Islands.

The Philippine Bill of 1902 contained provisions for, among many other things, the open and free exploration, occupation and purchase of mineral
deposits and the land where they may be found. It declared all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and
unsurveyed x x x to be free and open to exploration, occupation, and purchase, and the land in which they are found to occupation and purchase, by citizens
of the United States, or of said Islands x x x. [23]
Any qualified person desiring to locate a mineral claim may enter upon the same and locate a plot of ground measuring, where possible, but not
exceeding, one thousand feet in length by one thousand feet in breadth, in as nearly as possible a rectangular form. [24] Under the Philippine Bill of 1902, the
holder of the mineral claim so located is entitled to all the minerals which may lie within his claim, but he may not mine outside the boundary lines of his claim.
[25]
The mine claim locator must have his claim recorded in the mining recorder within thirty (30) days after the location thereof; otherwise, he will be deemed to
have abandoned the same.[26]
One of the continuing requirements for the subsistence of the mining claim is performance of not less than one hundred dollars worth of labor or
undertaking of improvements of the same value every year. [27] This is a strict requisite, the locators failure to comply with which shall operate to open the claim
or mine to relocation in the same manner as if no location of the same had even been made. [28] Unequivocal is the mandatory nature of the work or labor
requirement on the mine that the Philippine Bill specifically designates the time when the work or labor required to be done annually on all unpatented mineral
claims, shall commence.[29]
Subsequently, among a few laws passed amending the Philippine Bill of 1902 was Act No. 624 passed by the United States Philippine Commission and
approved on February 7, 1903.Said Act prescribed regulations to govern the location and the manner of recording mining claims and the amount of work
necessary to hold possession thereof. Such regulations reinforced the annual work or labor requirement of not less than one hundred dollars worth as
provided for in the Philippine Bill of 1902, in accordance with Section 36 thereof which limits the power of the United States Philippine Commission to make
regulations but not in conflict with the provision of this Act [i.e., the Philippine Bill of 1902], governing the location, manner of recording, and amount of work
necessary to hold possession of a mining claim x x x.
On November 15, 1935, the Constitution of the Commonwealth took effect. The 1935 Constitution declared all natural resources of the Philippines,
including mineral lands and minerals, to be property belonging to the State. [30] However, as it turned out, not really all of the Philippines natural resources were
considered part of the public domain. Those natural resources, and for that matter, those mineral lands and minerals with respect to which there already was
any existing right, grant, lease, or concession at the time of the inauguration of the Government established under this Constitution, were then considered
outside the application of the jura regalia doctrine or at least not unconditionally or totally within the contemplation of said doctrine.
On November 7, 1936, the First National Assembly enacted Commonwealth Act No. 137, otherwise known as the Mining Act. In contradistinction with the
Philippine Bill of 1902 which was patterned after the United States Federal Mining Acts which rejected the regalian doctrine, the Mining Act expressly adopted
the regalian doctrine following the provisions of the 1935 Constitution. Since said Constitution necessarily prohibits the alienation of mining lands, the Mining
Act granted only lease rights to mining claimants who are proscribed from purchasing the mining claim itself. These provisions of the Mining Act, however,
were expressly inapplicable to mining claimants who had located and recorded their claims under the Philippine Bill of 1902.
The nationalism underlying the adoption of the regalian doctrine in the 1935 Constitution was further eroded by the amendment thereto which was
adopted by the First Congress on September 18, 1946 and approved by a majority at the elections held on March 11, 1947. This amendment which came in
the form of an Ordinance Appended to the Constitution is what is known as the Parity Rights amendment. It provided that, notwithstanding the adoption in the
Constitution of the regalian doctrine and the proscription against aliens participating in the natural wealth of the nation, excepted therefrom were the citizens of
the United States and its business enterprises which would have the equal right in the disposition, exploitation, development and utilization of our natural
resources, among them, our mining lands and minerals for the period from July 4, 1946 to July 3, 1974.
In the meantime, the provisions of the Philippine Bill of 1902 regarding mining claims, insofar as the mining lands and mining claims acquired before
the effectivity of the 1935 Constitution are concerned, continued to be in effect. Annual performance of labor or undertaking of improvements on the mine
remained an annual requirement, non-compliance with which resulted in the mine becoming again open to relocation but now subject to the lease provisions

of the Mining Act. The intention for this annual work requirement to be a strict prerequisite to maintenance of a claimants rights under the Philippine Bill of
1902 apparently not lost on subsequent legislators, they took the same as an absolute prerequisite with grave consequences and believed it necessary to
expressly enact a law[31] waiving this requirement during the period from January 1, 1952 to January 1, 1954 as the circumstances then necessitated the
same.
The Philippine Bill of 1902 clearly required the annual performance of work on the mine or the undertaking of improvements thereon in order for the mine
claim locator to continue enjoying all the rights accruing to him as such under the said Bill. This and nothing short of this was the requirement. The filing of
affidavits of annual assessment work, which procedure is not even provided for in the Philippine Bill of 1902, is required only for purposes of proving that there
had actually been work or improvements done. Such filing could not have been intended to replace the actual work requirement, and nary is there a basis in
law to support any conclusion to the contrary, notwithstanding what was appearing to be the practice of mine claim locators of annually filing affidavits of
annual assessment but willfully not undertaking actual work or tangible improvement on the mine site.
On August 1, 1968, then President Marcos issued Executive Order (E.O.) No. 141. Whereas mining claim holders under the Philippine Bill of 1902 x x x
are of the impression that they may hold on to their claims indefinitely by the mere filing of affidavits of annual assessment work x x x, E.O. No. 141 precisely
declared that such impression is not correct, for what matters in maintaining and preserving possessory title to the claim is the continuous performance of the
required assessment work, not the filing of an affidavit which may be disproved by findings on the ground. Consequently, E.O. No. 141 established the status
of such unpatented mining claims which have not complied with the annual work requirement, as having been abandoned and open for relocation, their
declarations of location being accordingly cancelled.
On January 17, 1973, the 1973 Constitution came into force and effect. Unlike the former Charter, the 1973 Constitution did not expressly qualify the
application of the regalian doctrine as being subject to any right granted before the effectivity of the 1935 Constitution or the 1973 Constitution for that
matter. It provided:
SEC. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other
natural resources of the Philippines belong to the State. x x x. [32]
But the conditional application of the regalian doctrine under the 1973 Constitution could be found in Presidential Decree (P.D.) No. 463, enacted on May
17, 1974, which revised the Mining Act (C.A. No. 137). While the said decree declares that x x x all mineral deposits in public or private lands x x x belong to
the State, inalienably and imprescriptively x x x, it also recognizes whatever rights or reservations had already been existing with respect to certain mining
lands,[33] apparently alluding to the rights of mining claim holders under the Philippine Bill of 1902.
Under the Philippine Bill of 1902, the procedure was that a mining claim locator need not apply for a patent soon after locating the mine. The patent may
come later, and the said locator, for as long as he complies with the annual actual work requirement, enjoyed possessory rights with respect to such mining
claim with or without a patent therefor. It has already been stated that under E.O. No. 141, unpatented mining claims shall be deemed abandoned upon a
finding that the holders thereof had not been actually performing any work or labor or undertaking any improvement at the mine site notwithstanding their
having religiously filed annual affidavits of assessment.
Even under P.D. 463 which was enacted in 1974, the possessory rights of mining claim holders under the Philippine Bill of 1902 remained effective for as
long as said holders complied with the annual actual work requirement. But on October 14, 1977, P.D. No. 1214 required all the holders of unpatented mining
claims to secure mining lease contracts under P.D. No. 463.Faced with the grave consequence of forfeiture of all their rights to their claims, holders of
subsisting and valid patentable mining claims located under the Philippine Bill of 1902 were to file mining lease applications therefor within one (1) year from
the effectivity of the said decree. [34] The filing of such mining lease applications was considered a waiver of the holders rights to the issuance of mining patents
for their claims.[35] Corollarily, non-filing of applications for mining lease by the holders thereof within the one-year period would cause the forfeiture of all their
rights to their claims.[36]

Against the backdrop of the afore-chronicled evolution of the pertinent mining laws, past and present, in this jurisdiction, we now proceed to resolve the
controlling issue in this case:Whether or not the ownership of subject land had long been vested on petitioner after it had allegedly located and recorded its
mining claim in accordance with the pertinent provisions of the Philippine Bill of 1902.
This issue is certainly not a novel one. It has been first ruled upon by this court in the 1922 case of McDaniel vs. Apacible and Cuisia.[37] There, applying
American precedents, we stated:
The moment the locator discovered a valuable mineral deposit on the lands located, and perfected his location in accordance with law, the power of the United
States Government to deprive him of the exclusive right to the possession and enjoyment of the located claim was gone, the lands had become mineral lands
and they were exempted from lands that could be granted to any other person. The reservations of public lands cannot be made so as to include prior mineral
perfected located locations; and of course, if a valid mining location is made upon public lands afterward included in a reservation, such inclusion or
reservation does not affect the validity of the former location. By such location and perfection, the land located is segregated from the public domain even as
against the Government. x x x.[38]
We reiterated this ruling in the subsequent cases of Gold Creek Mining vs. Rodriguez (1938),[39] Salacot Mining Company vs. Abadilla (1939),[40] Salacot
Mining Company vs. Rodriguez (1939),[41] Bambao vs. Lednicky (1961),[42] Comilang vs. Buendia (1967),[43] Benguet Consolidated, Inc. vs. Republic (1986),
[44]
Republic vs. Court of Appeals (1988)[45] and Atok-Big Wedge Mining Co., Inc. vs. Court of Appeals (1991).[46]
Notwithstanding our ruling in the aforecited cases, however, there came about thereafter a catena of cases where we declared that the rights of the
holder of a mining claim located under the Philippine Bill of 1902, are not absolute or are not strictly of ownership. This declaration was a necessary premise in
our affirmation of the constitutionality of P.D. No. 1214 in the 1987 case of Santa Rosa Mining Co., Inc. vs. Leido, Jr.[47] where we stated:
Mere location does not mean absolute ownership over the affected land or mining claim. It merely segregates the located land or area from the public domain
by barring other would-be locators from locating the same and appropriating for themselves the minerals found therein. To rule otherwise would imply that
location is all that is needed to acquire and maintain rights over a located mining claim. This, we cannot approve or sanction because it is contrary to the
intention of the lawmaker that the locator should faithfully and consistently comply with the requirements for annual work and improvements in the located
mining claim.[48]
And our ruling there was upheld in the tradition of stare decisis in the subsequent cases of Director of Lands vs. Kalahi Investments, Inc. (1989), [49] Zambales
Chromite Mining Company, Inc. vs. Leido, Jr. (1989),[50] Poe Mining Association vs. Garcia (1991),[51] United Paracale Mining Company, Inc. vs. De la Rosa
(1993),[52] and Manuel vs. Intermediate Appellate Court (1995).[53]
While petitioner adamantly insists that there is only one construction of the provisions of the Philippine Bill of 1902 as regards his mining claim rights, and
this is that the same are absolute and in the nature of ownership, private respondent posits the ultimate question of which between the aforecited seemingly
inconsistent rulings is the correct interpretation of the Philippine Bill of 1902 in relation to E.O. No. 141 and P.D. 1214 insofar as the rights of mining claim
holders under the said Bill are concerned.
This is not the first time either that we are asked to, in all awareness of the precedents, resolve these postulations of this court that are perceived to be
contradictory. In the 1994 case of United Paracale Mining Company vs. Court of Appeals,[54] posed before us by petitioner therein was the same question that
herein private respondent asks us to resolve in the ultimate.We noted in that case:
"The query of petitioner: What is actually the right of a locator of mining claim located and perfected under the Philippine Bill of 1902. Does he have an
absolute right of ownership, or merely a right to possess and claim?

Petitioner contends that there are two (2) conflicting rulings made by this Court on the same issue. In Director of Lands vs. Kalahi Investments, Inc. (169
SCRA 683), a locator of mining claims perfected under the Philippine Bill of 1902 has been held not to have an absolute right of ownership over said claims
but merely a possessory right thereto. In Atok-Big Wedge Mining Company, Inc. vs. Court of Appeals and Liwan Consi (193 SCRA 71), however, a locator of
mining claim perfected under the Philippine Bill of 1902, the Court has ruled, does have an absolute right of ownership over his claim being thereby removed
from the public domain.[55]
In that case of United Paracale Mining, it would have been premature for us to rule on the query, not all indispensable parties therein having been joined. That
is not the situation in this present controversy, however, and so we shall forthwith resolve the matter at hand once and for all.
The earlier chronicle of the evolution of the mining laws, past and present, in this jurisdiction was not without a predetermined purpose. The detailing of
the provisions of those laws, especially of the Philippine Bill of 1902, was certainly deliberate. It is undeniable at this point that the determination of the rights
of a mining claim holder under the said Bill is best undertaken on the basis of the very source of those rights, that is, the Bill itself. And any alteration or
change in the nature of those rights must be conceded for as long as such is statutorily and constitutionally sanctioned, for even vested rights may be taken
away by the State in the exercise of its absolute police power.
Under the Philippine Bill of 1902, the mining claim holder, upon locating and recording of his claim, has the right to acquire for himself all mineral deposits
found within his claim to the exclusion of everyone, including the Government. Such rights are necessarily possessory as they are essentially utilitarian and
exploitative. Such rights accruing to the mining claim locator are personal to him in the sense that no conclusion as to the nature of the land may definitively be
made based solely on the fact that a mining claim has been recorded as regards a particular land. However, insofar as his rights are exclusive and no other
person may undertake mining activities on a recorded mining claim, unless the same has been abandoned or the works thereon not done, the mining locators
rights are also protected against adverse mining claims of third persons. He also has the right to immediately or eventually secure a patent on his mining claim
and in the event that he postpones securing a patent, his rights to exclusive possession and exploitation of his mining claim subsist for as long as he complies
with the continuing requirement of annually performing work or undertaking improvements at the mine site. Insofar as the Philippine Bill of 1902 does not
provide a specific time within which the mining claim holder must secure a patent, his rights to possession and use of the mining land appear to be
unconditional, the option not at all to secure a patent being available to him in the absence of a deadline or ultimatum therefor. The Philippine Bill of 1902,
however, did not foreclose a subsequent act on the part of the State to limit the time within which the said patent must be secured under threat of forfeiture of
rights provided for under the Philippine Bill of 1902. Thus, in the sense that the rights of a mining claim holder may in the future be curtailed by failure to obtain
a patent, especially if we recall that Section 36 of the said Bill itself foretold the subsequent promulgation of regulations regarding mining claims, such rights
cannot also be said to be truly unconditional or absolute.
We also learn from our reading of our past and present mining laws in their proper historical perspectives, that the process of recording mining claims
could not have been intended to be the operative act of classifying lands into mineral lands. The recording of a mining claim only operates to reserve to the
registrant exclusive rights to undertake mining activities upon the land subject of the claim. The power to classify lands into mineral lands could not have been
intended under the Philippine Bill of 1902 to be vested in just anyone who records a mining claim. In fact, this strengthens our holding that the rights of a
mining claimant are confined to possessing the land for purposes of extracting therefrom minerals in exclusion of any or all other persons whose claims are
subsequent to the original mining locator. Thus, if no minerals are extracted therefrom, notwithstanding the recording of the claim, the land is not mineral land
and registration thereof is not precluded by such recorded claim. Thus, in the case at bench, the mining claimant, who had failed to comply with the annual
minimum labor requirement, could not, all the more, be expected to have extracted minerals from the mining location. Utter lack of proof of even its potential
deposits on the part of the petitioner, thus, does not surprise us at all.
Thus, it can be said (1) that the rights under the Philippine Bill of 1902 of a mining claim holder over his claim has been made subject by the said Bill itself
to the strict requirement that he actually performs work or undertakes improvements on the mine every year and does not merely file his affidavit of annual
assessment, which requirement was correctly identified and declared in E.O. No. 141; and (2) that the same rights have been terminated by P.D. No. 1214, a
police power enactment, under which non-application for mining lease amounts to waiver of all rights under the Philippine Bill of 1902 and application for
mining lease amounts to waiver of the right under said Bill to apply for patent. In the light of these substantial conditions upon the rights of a mining claim

holder under the Philippine Bill of 1902, there should remain no doubt now that such rights were not, in the first place, absolute or in the nature of ownership,
and neither were they intended to be so.
Applying the aforecited ruling to the facts of this case, we find that, not only has petitioner failed to sufficiently show compliance with actual annual work
requirement on its mining claims but also that credible are the transcribed observations of the trial commissioner that nowhere on the subject land could be
found tangible works or improvements of an extent that would have existed had petitioner really complied with the annual work requirement from 1931 when it
allegedly first located said mining claims. In fact, no mining infrastructure or equipment of any sort can be found on the area. Understandable thus is the action
of the Director of Lands not to further appeal from respondent courts decision, Director of Lands eventually conceding the subject land to be registrable,
considering petitioners non-performance of mining works thereon, private respondents adverse possession of the subject land more than thirty (30) years and
its use thereof for as many years solely for agricultural purposes.
Equally borne out by the records is the fact that petitioner has indeed applied for a mining lease under P.D. No. 1214. For that reason, it has, in effect,
waived its right to secure a patent and it shall have been governed, if private respondents claim of adverse and open possession of the subject land for more
than 30 years were not established, by P.D. No. 463 in its activities respecting its mining lease.
WHEREFORE, the petition is HEREBY DISMISSED, with costs against petitioner.
SO ORDERED.
Padilla (Chairman), Bellosillo, Vitug, and Kapunan, JJ., concur.
4. FIRST DIVISION

DIDIPIO
EARTH-SAVERS
MULTI-PURPOSE
ASSOCIATION,
INCORPORATED
(DESAMA),
MANUEL BUTIC, CESAR MARIANO, LAURO
ABANCE, BEN TAYABAN, ANTONIO DINGCOG,
TEDDY B. KIMAYONG, ALONZO ANANAYO,
ANTONIO MALAN-UYA, JOSE BAHAG, ANDRES
INLAB, RUFINO LICYAYO, ALFREDO CULHI,
CATALILNA INABYUHAN, GUAY DUMMANG,
GINA PULIDO, EDWIN ANSIBEY, CORAZON
SICUAN, LOPEZ DUMULAG, FREDDIE AYDINON,
VILMA JOSE, FLORENTINA MADDAWAT, LINDA
DINGCOG, ELMER SICUAN, GARY ANSIBEY,
JIMMY MADDAWAT, JIMMY GUAY, ALFREDO
CUT-ING, ANGELINA UDAN, OSCAR INLAB,
JUANITA CUT-ING, ALBERT PINKIHAN, CECILIA
TAYABAN, CRISTA BINWAK, PEDRO DUGAY, SR.,
EDUARDO ANANAYO, ROBIN INLAB, JR.,
LORENZO PULIDO, TOMAS BINWAG, EVELYN
BUYA, JAIME DINGCOG, DINAOAN CUT-ING,
PEDRO DONATO, MYRNA GUAY, FLORA
ANSIBEY, GRACE
DINAMLING,
EDUARDO
MENCIAS, ROSENDA JACOB, SIONITA DINGCOG,

G.R. No. 157882

Present:
PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

GLORIA JACOB, MAXIMA GUAY, RODRIGO

PAGGADUT, MARINA ANSIBEY, TOLENTINO
INLAB, RUBEN DULNUAN, GERONIMO LICYAYO,
LEONCIO CUMTI, MARY DULNUAN, FELISA
BALANBAN, MYRNA DUYAN, MARY MALAN-UYA,
PRUDENCIO ANSIBEY, GUILLERMO GUAY,
MARGARITA CULHI, ALADIN ANSIBEY, PABLO
DUYAN, PEDRO PUGUON, JULIAN INLAB,
JOSEPH NACULON, ROGER BAJITA, DINAON
GUAY, JAIME ANANAYO, MARY ANSIBEY, LINA
ANANAYO,
MAURA
DUYAPAT,
ARTEMEO
ANANAYO, MARY BABLING, NORA ANSIBEY,
DAVID DULNUAN, AVELINO PUGUON, LUCAS
GUMAWI, LUISA ABBAC, CATHRIN GUWAY,
CLARITA TAYABAN, FLORA JAVERA, RANDY
SICOAN,
FELIZA
PUTAKI,
CORAZON
P.
DULNUAN, NENA D. BULLONG, ERMELYN
GUWAY, GILBERT
BUTALE,
JOSEPH
B.
BULLONG,
FRANCISCO
PATNAAN,
JR.,
SHERWIN DUGAY, TIRSO GULLINGAY, BENEDICT
T. NABALLIN, RAMON PUN-ADWAN, ALFONSO
DULNUAN, CARMEN D. BUTALE, LOLITA
ANSIBEY, ABRAHAM DULNUAN, ARLYNDA
BUTALE, MODESTO A. ANSIBEY, EDUARDO
LUGAY, ANTONIO HUMIWAT, ALFREDO PUMIHIC,
MIKE TINO, TONY CABARROGUIS, BASILIO
TAMLIWOK, JR., NESTOR TANGID, ALEJO
TUGUINAY, BENITO LORENZO, RUDY BAHIWAG,
ANALIZA BUTALE, NALLEM LUBYOC, JOSEPH
DUHAYON,
RAFAEL
CAMPOL,
MANUEL
PUMALO, DELFIN AGALOOS, PABLO CAYANGA,
PERFECTO SISON, ELIAS NATAMA, LITO
PUMALO,
SEVERINA
DUGAY,
GABRIEL
PAKAYAO, JEOFFREY SINDAP, FELIX TICUAN,
MARIANO S. MADDELA, MENZI TICAWA,
DOMINGA DUGAY, JOE BOLINEY, JASON
ASANG, TOMMY ATENYAYO, ALEJO AGMALIW,
DIZON AGMALIW, EDDIE ATOS, FELIMON
BLANCO, DARRIL DIGOY, LUCAS BUAY,
ARTEMIO BRAZIL, NICANOR MODI, LUIS
REDULFIN, NESTOR JUSTINO, JAIME CUMILA,
BENEDICT GUINID, EDITHA ANIN, INOH-YABAN
BANDAO,
LUIS
BAYWONG,
FELIPE
DUHALNGON, PETER BENNEL, JOSEPH T.
BUNGGALAN, JIMMY B. KIMAYONG, HENRY
PUGUON, PEDRO BUHONG, BUGAN NADIAHAN,
SR., MARIA EDEN ORLINO, SPC, PERLA
VISSORO, and BISHOP RAMON VILLENA,
Petitioners,

- versus ELISEA GOZUN, in her capacity as SECRETARY

of the DEPARTMENT OF ENVIRONMENT and
NATURAL RESOURCES (DENR), HORACIO
RAMOS, in his capacity as Director of the Mines
and Geosciences Bureau (MGB-DENR), ALBERTO
ROMULO, in his capacity as the Executive
Secretary of the Office of the President, RICHARD
N. FERRER, in his capacity as Acting
Undersecretary of the Office of the President, IAN
HEATH SANDERCOCK, in his capacity as
President
of
CLIMAX-ARIMCO MINING
CORPORATION.
Respondents.

Promulgated:

March 30, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

This petition for prohibition and mandamus under Rule 65 of the Rules of Court assails the constitutionality of Republic Act No. 7942 otherwise known as the
Philippine Mining Act of 1995, together with the Implementing Rules and Regulations issued pursuant thereto, Department of Environment and Natural
Resources (DENR) Administrative Order No. 96-40, s. 1996 (DAO 96-40) and of the Financial and Technical Assistance Agreement (FTAA) entered into on 20
June 1994 by the Republic of the Philippines and ArimcoMining Corporation (AMC), a corporation established under the laws of Australia and owned by its
nationals.
.
On 25 July 1987, then President Corazon C. Aquino promulgated Executive Order No. 279 which authorized the DENR Secretary to accept, consider and
evaluate proposals from foreign-owned corporations or foreign investors for contracts of agreements involving either technical or financial assistance for largescale exploration, development, and utilization of minerals, which, upon appropriate recommendation of the Secretary, the President may execute with the
foreign proponent.
On 3 March 1995, then President Fidel V. Ramos signed into law Rep. Act No. 7942 entitled, An Act Instituting A New System of Mineral Resources
Exploration, Development, Utilization and Conservation, otherwise known as the Philippine Mining Act of 1995.
On 15 August 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No. 23, Series of 1995, containing the implementing
guidelines of Rep. Act No. 7942. This was soon superseded by DAO No. 96-40, s. 1996, which took effect on 23 January 1997 after due publication.
Previously, however, or specifically on 20 June 1994, President Ramos executed an FTAA with AMC over a total land area of 37,000 hectares covering the
provinces of NuevaVizcaya and Quirino. Included in this area is Barangay Dipidio, Kasibu, Nueva Vizcaya.
Subsequently, AMC consolidated with Climax Mining Limited to form a single company that now goes under the new name of Climax-Arimco Mining
Corporation (CAMC), the controlling 99% of stockholders of which are Australian nationals.
On 7 September 2001, counsels for petitioners filed a demand letter addressed to then DENR Secretary Heherson Alvarez, for the cancellation of
the CAMC FTAA for the primary reason that Rep. Act No. 7942 and its Implementing Rules and Regulations DAO 96-40 are unconstitutional. The Office of the
Executive Secretary was also furnished a copy of the said letter. There being no response to both letters, another letter of the same content dated 17 June

2002 was sent to President Gloria Macapagal Arroyo. This letter was indorsed to the DENR Secretary and eventually referred to the Panel of Arbitrators of the
Mines and Geosciences Bureau (MGB), Regional Office No. 02, Tuguegarao,Cagayan, for further action.
On 12 November 2002, counsels for petitioners received a letter from the Panel of Arbitrators of the MGB requiring the petitioners to comply with the Rules of
the Panel of Arbitrators before the letter may be acted upon.
Yet again, counsels for petitioners sent President Arroyo another demand letter dated 8 November 2002. Said letter was again forwarded to the DENR
Secretary who referred the same to the MGB, Quezon City.
In a letter dated 19 February 2003, the MGB rejected the demand of counsels for petitioners for the cancellation of the CAMC FTAA.
Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a temporary restraining order. They pray that the Court issue an
order:
1.

enjoining public respondents from acting on any application for FTAA;

2.

declaring unconstitutional the Philippine Mining Act of 1995 and its Implementing Rules and Regulations;

3.

canceling the FTAA issued to CAMC.

In their memorandum petitioners pose the following issues:

I
WHETHER OR NOT REPUBLIC ACT NO. 7942 AND THE CAMC FTAA ARE VOID BECAUSE THEY ALLOW THE UNJUST AND
UNLAWFUL TAKING OF PROPERTY WITHOUT PAYMENT OF JUST COMPENSATION , IN VIOLATION OF SECTION 9, ARTICLE III OF
THE CONSTITUTION.
II
WHETHER OR NOT THE MINING ACT AND ITS IMPLEMENTING RULES AND REGULATIONS ARE VOID AND UNCONSTITUTIONAL
FOR SANCTIONING AN UNCONSTITUTIONAL ADMINISTRATIVE PROCESS OF DETERMINING JUST COMPENSATION.

III
WHETHER OR NOT THE STATE, THROUGH REPUBLIC ACT NO. 7942 AND THE CAMC FTAA, ABDICATED ITS PRIMARY
RESPONSIBILITY TO THE FULL CONTROL AND SUPERVISION OVER NATURAL RESOURCES.

IV
WHETHER OR NOT THE RESPONDENTS INTERPRETATION OF THE ROLE OF WHOLLY FOREIGN AND FOREIGN-OWNED
CORPORATIONS IN THEIR INVOLVEMENT IN MINING ENTERPRISES, VIOLATES PARAGRAPH 4, SECTION 2, ARTICLE XII OF THE
CONSTITUTION.
V
WHETHER OR NOT THE 1987 CONSTITUTION PROHIBITS SERVICE CONTRACTS. [1]

Before going to the substantive issues, the procedural question raised by public respondents shall first be dealt with. Public respondents are of the
view that petitioners eminent domain claim is not ripe for adjudication as they fail to allege that CAMC has actually taken their properties nor do they allege
that their property rights have been endangered or are in danger on account of CAMCs FTAA. In effect, public respondents insist that the issue of eminent
domain is not a justiciable controversy which this Court can take cognizance of.
A justiciable controversy is defined as a definite and concrete dispute touching on the legal relations of parties having adverse legal interests which may be
resolved by a court of law through the application of a law.[2] Thus, courts have no judicial power to review cases involving political questions and as a rule, will
desist from taking cognizance of speculative or hypothetical cases, advisory opinions and cases that have become moot. [3] The Constitution is quite explicit on
this matter.[4] It provides that judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable
and enforceable. Pursuant to this constitutional mandate, courts, through the power of judicial review, are to entertain only real disputes between conflicting
parties through the application of law. For the courts to exercise the power of judicial review, the following must be extant (1) there must be an actual case
calling for the exercise of judicial power; (2) the question must be ripe for adjudication; and (3) the person challenging must have the standing. [5]
An actual case or controversy involves a conflict of legal rights, an assertion of opposite legal claims, susceptible of judicial resolution as distinguished
from a hypothetical or abstract difference or dispute. [6] There must be a contrariety of legal rights that can be interpreted and enforced on the basis of existing
law and jurisprudence.
Closely related to the second requisite is that the question must be ripe for adjudication. A question is considered ripe for adjudication when the act being
challenged has had a direct adverse effect on the individual challenging it. [7]
The third requisite is legal standing or locus standi. It is defined as a personal or substantial interest in the case such that the party has sustained or will
sustain direct injury as a result of the governmental act that is being challenged, alleging more than a generalized grievance. [8] The gist of the question of
standing is whether a party alleges such personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court depends for illumination of difficult constitutional questions. [9] Unless a person is injuriously affected in any of his
constitutional rights by the operation of statute or ordinance, he has no standing. [10]
In the instant case, there exists a live controversy involving a clash of legal rights as Rep. Act No. 7942 has been enacted, DAO 96-40 has been approved
and an FTAAs have been entered into. The FTAA holders have already been operating in various provinces of the country. Among them is CAMC which

operates in the provinces of Nueva Vizcayaand Quirino where numerous individuals including the petitioners are imperiled of being ousted from their
landholdings in view of the CAMC FTAA. In light of this, the court cannot await the adverse consequences of the law in order to consider the controversy
actual and ripe for judicial intervention.[11] Actual eviction of the land owners and occupants need not happen for this Court to intervene. As held in Pimentel, Jr.
v. Hon. Aguirre[12]:
By the mere enactment of the questioned law or the approval of the challenged act, the dispute is said to have ripened into a judicial
controversy even without any other overt act. Indeed, even a singular violation of the Constitution and/or the law is enough to awaken judicial
duty.[13]

Petitioners embrace various segments of the society. These include Didipio Earth-Savers Multi-Purpose Association, Inc., an organization of farmers
and indigenous peoples organized under Philippine laws, representing a community actually affected by the mining activities of CAMC, as well as other
residents of areas affected by the mining activities of CAMC. These petitioners have the standing to raise the constitutionality of the questioned FTAA as they
allege a personal and substantial injury.[14] They assert that they are affected by the mining activities of CAMC. Likewise, they are under imminent threat of
being displaced from their landholdings as a result of the implementation of the questioned FTAA. They thus meet the appropriate case requirement as they
assert an interest adverse to that of respondents who, on the other hand, claim the validity of the assailed statute and the FTAA of CAMC.
Besides, the transcendental importance of the issues raised and the magnitude of the public interest involved will have a bearing on the countrys
economy which is to a greater extent dependent upon the mining industry. Also affected by the resolution of this case are the proprietary rights of numerous
residents in the mining contract areas as well as the social existence of indigenous peoples which are threatened. Based on these considerations, this Court
deems it proper to take cognizance of the instant petition.
Having resolved the procedural question, the constitutionality of the law under attack must be addressed squarely.
First Substantive Issue: Validity of Section 76 of Rep. Act No. 7942 and DAO 96-40

In seeking to nullify Rep. Act No. 7942 and its implementing rules DAO 96-40 as unconstitutional, petitioners set their sight on Section 76 of Rep. Act
No. 7942 and Section 107 of DAO 96-40 which they claim allow the unlawful and unjust taking of private property for private purpose in contradiction with
Section 9, Article III of the 1987 Constitution mandating that private property shall not be taken except for public use and the corresponding payment of just
compensation. They assert that public respondent DENR, through the Mining Act and its Implementing Rules and Regulations, cannot, on its own, permit entry
into a private property and allow taking of land without payment of just compensation.
Interpreting Section 76 of Rep. Act No. 7942 and Section 107 of DAO 96-40, juxtaposed with the concept of taking of property for purposes of eminent domain
in the case ofRepublic v. Vda. de Castellvi,[15] petitioners assert that there is indeed a taking upon entry into private lands and concession areas.

Republic v. Vda. de Castellvi defines taking under the concept of eminent domain as entering upon private property for more than a momentary period, and,
under the warrant or color of legal authority, devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such a way as to
substantially oust the owner and deprive him of all beneficial enjoyment thereof.
From the criteria set forth in the cited case, petitioners claim that the entry into a private property by CAMC, pursuant to its FTAA, is for more than a
momentary period, i.e., for 25 years, and renewable for another 25 years; that the entry into the property is under the warrant or color of legal authority
pursuant to the FTAA executed between the government and CAMC; and that the entry substantially ousts the owner or possessor and deprives him of all
beneficial enjoyment of the property. These facts, according to the petitioners, amount to taking. As such, petitioners question the exercise of the power of
eminent domain as unwarranted because respondents failed to prove that the entry into private property is devoted for public use.
Petitioners also stress that even without the doctrine in the Castellvi case, the nature of the mining activity, the extent of the land area covered by the CAMC
FTAA and the various rights granted to the proponent or the FTAA holder, such as (a) the right of possession of the Exploration Contract Area, with full right of
ingress and egress and the right to occupy the same; (b) the right not to be prevented from entry into private lands by surface owners and/or occupants
thereof when prospecting, exploring and exploiting for minerals therein; (c) the right to enjoy easement rights, the use of timber, water and other natural
resources in the Exploration Contract Area; (d) the right of possession of the Mining Area, with full right of ingress and egress and the right to occupy the
same; and (e) the right to enjoy easement rights, water and other natural resources in the Mining Area, result in a taking of private property.
Petitioners quickly add that even assuming arguendo that there is no absolute, physical taking, at the very least, Section 76 establishes a legal easement
upon the surface owners, occupants and concessionaires of a mining contract area sufficient to deprive them of enjoyment and use of the property and that
such burden imposed by the legal easement falls within the purview of eminent domain.
To further bolster their claim that the legal easement established is equivalent to taking, petitioners cite the case of National Power Corporation v.
Gutierrez[16] holding that the easement of right-of-way imposed against the use of the land for an indefinite period is a taking under the power of eminent
domain.
Traversing petitioners assertion, public respondents argue that Section 76 is not a taking provision but a valid exercise of the police power and by virtue of
which, the state may prescribe regulations to promote the health, morals, peace, education, good order, safety and general welfare of the people. This
government regulation involves the adjustment of rights for the public good and that this adjustment curtails some potential for the use or economic
exploitation of private property. Public respondents concluded that to require compensation in all such circumstances would compel the government to
regulate by purchase.

Public respondents are inclined to believe that by entering private lands and concession areas, FTAA holders do not oust the owners thereof nor
deprive them of all beneficial enjoyment of their properties as the said entry merely establishes a legal easement upon surface owners, occupants and
concessionaires of a mining contract area.
Taking in Eminent Domain Distinguished from Regulation in Police Power

The power of eminent domain is the inherent right of the state (and of those entities to which the power has been lawfully delegated) to condemn
private property to public use upon payment of just compensation. [17] On the other hand, police power is the power of the state to promote public welfare by
restraining and regulating the use of liberty and property.[18] Although both police power and the power of eminent domain have the general welfare for their
object, and recent trends show a mingling [19] of the two with the latter being used as an implement of the former, there are still traditional distinctions between
the two.
Property condemned under police power is usually noxious or intended for a noxious purpose; hence, no compensation shall be paid. [20] Likewise, in
the exercise of police power, property rights of private individuals are subjected to restraints and burdens in order to secure the general comfort, health, and
prosperity of the state. Thus, an ordinance prohibiting theaters from selling tickets in excess of their seating capacity (which would result in the diminution of
profits of the theater-owners) was upheld valid as this would promote the comfort, convenience and safety of the customers. [21] In U.S. v. Toribio,[22] the court
upheld the provisions of Act No. 1147, a statute regulating the slaughter of carabao for the purpose of conserving an adequate supply of draft animals, as a
valid exercise of police power, notwithstanding the property rights impairment that the ordinance imposed on cattle owners. A zoning ordinance prohibiting the
operation of a lumber yard within certain areas was assailed as unconstitutional in that it was an invasion of the property rights of the lumber yard owners
in People v. de Guzman.[23] The Court nonetheless ruled that the regulation was a valid exercise of police power. A similar ruling was arrived at in Seng Kee S
Co. v. Earnshaw and Piatt[24] where an ordinance divided the City of Manila into industrial and residential areas.
A thorough scrutiny of the extant jurisprudence leads to a cogent deduction that where a property interest is merely restricted because the continued
use thereof would be injurious to public welfare, or where property is destroyed because its continued existence would be injurious to public interest, there is
no compensable taking.[25] However, when a property interest is appropriated and applied to some public purpose, there is compensable taking. [26]
According to noted constitutionalist, Fr. Joaquin Bernas, SJ, in the exercise of its police power regulation, the state restricts the use of private property,
but none of the property interests in the bundle of rights which constitute ownership is appropriated for use by or for the benefit of the public. [27] Use of the
property by the owner was limited, but no aspect of the property is used by or for the public. [28] The deprivation of use can in fact be total and it will not
constitute compensable taking if nobody else acquires use of the property or any interest therein. [29]

If, however, in the regulation of the use of the property, somebody else acquires the use or interest thereof, such restriction constitutes compensable
taking. Thus, in City Government of Quezon City v. Ericta,[30] it was argued by the local government that an ordinance requiring private cemeteries to reserve
6% of their total areas for the burial of paupers was a valid exercise of the police power under the general welfare clause. This court did not agree in the
contention, ruling that property taken under the police power is sought to be destroyed and not, as in this case, to be devoted to a public use. It further
declared that the ordinance in question was actually a taking of private property without just compensation of a certain area from a private cemetery to benefit
paupers who are charges of the local government. Being an exercise of eminent domain without provision for the payment of just compensation, the same
was rendered invalid as it violated the principles governing eminent domain.
In People v. Fajardo,[31] the municipal mayor refused Fajardo permission to build a house on his own land on the ground that the proposed structure
would destroy the view or beauty of the public plaza. The ordinance relied upon by the mayor prohibited the construction of any building that would destroy the
view of the plaza from the highway.The court ruled that the municipal ordinance under the guise of police power permanently divest owners of the beneficial
use of their property for the benefit of the public; hence, considered as a taking under the power of eminent domain that could not be countenanced without
payment of just compensation to the affected owners. In this case, what the municipality wanted was to impose an easement on the property in order to
preserve the view or beauty of the public plaza, which was a form of utilization of Fajardos property for public benefit.[32]
While the power of eminent domain often results in the appropriation of title to or possession of property, it need not always be the case. Taking may
include trespass without actual eviction of the owner, material impairment of the value of the property or prevention of the ordinary uses for which the property
was intended such as the establishment of an easement. [33] In Ayala de Roxas v. City of Manila,[34] it was held that the imposition of burden over a private
property through easement was considered taking; hence, payment of just compensation is required. The Court declared:
And, considering that the easement intended to be established, whatever may be the object thereof, is not merely a real right that will
encumber the property, but is one tending to prevent the exclusive use of one portion of the same, by expropriating it for public use which, be
it what it may, can not be accomplished unless the owner of the property condemned or seized be previously and duly indemnified, it is proper
to protect the appellant by means of the remedy employed in such cases, as it is only adequate remedy when no other legal action can be
resorted to, against an intent which is nothing short of an arbitrary restriction imposed by the city by virtue of the coercive power with which the
same is invested.

And in the case of National Power Corporation v. Gutierrez,[35] despite the NPCs protestation that the owners were not totally deprived of the use of the
land and could still plant the same crops as long as they did not come into contact with the wires, the Court nevertheless held that the easement of right-ofway was a taking under the power of eminent domain. The Court said:
In the case at bar, the easement of right-of-way is definitely a taking under the power of eminent domain. Considering the nature and
effect of the installation of 230 KV Mexico-Limaytransmission lines, the limitation imposed by NPC against the use of the land for an indefinite
period deprives private respondents of its ordinary use.

A case exemplifying an instance of compensable taking which does not entail transfer of title is Republic v. Philippine Long Distance Telephone Co.
[36]

Here, the Bureau of Telecommunications, a government instrumentality, had contracted with the PLDT for the interconnection between the Government

Telephone System and that of the PLDT, so that the former could make use of the lines and facilities of the PLDT. In its desire to expand services to
government offices, the Bureau of Telecommunications demanded to expand its use of the PLDT lines. Disagreement ensued on the terms of the contract for
the use of the PLDT facilities. The Court ruminated:
Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated
property; but no cogent reason appears why said power may not be availed of to impose only a burden upon the owner of the condemned
property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement
right of way.[37]

In Republic v. Castellvi,[38] this Court had the occasion to spell out the requisites of taking in eminent domain, to wit:
(1)

the expropriator must enter a private property;

(2)

the entry must be for more than a momentary period.

(3)

the entry must be under warrant or color of legal authority;

(4)

the property must be devoted to public use or otherwise informally appropriated or injuriously affected;

(5)

the utilization of the property for public use must be in such a way as to oust the owner and deprive him of beneficial enjoyment of
the property.

As shown by the foregoing jurisprudence, a regulation which substantially deprives the owner of his proprietary rights and restricts the beneficial use
and enjoyment for public use amounts to compensable taking. In the case under consideration, the entry referred to in Section 76 and the easement rights
under Section 75 of Rep. Act No. 7942 as well as the various rights to CAMC under its FTAA are no different from the deprivation of proprietary rights in the
cases discussed which this Court considered as taking. Section 75 of the law in question reads:
Easement Rights. - When mining areas are so situated that for purposes 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 infrastructure as roads, railroads,
mills, waste dump sites, tailing ponds, warehouses, staging or storage areas and port facilities, tramways, runways, airports, electric
transmission, 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.

Section 76 provides:

Entry into private lands and concession areas Subject to prior notification, 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.

The CAMC FTAA grants in favor of CAMC the right of possession of the Exploration Contract Area, the full right of ingress and egress and the right to
occupy the same.It also bestows CAMC the right not to be prevented from entry into private lands by surface owners or occupants thereof when prospecting,
exploring and exploiting minerals therein.
The entry referred to in Section 76 is not just a simple right-of-way which is ordinarily allowed under the provisions of the Civil Code. Here, the holders
of mining rights enter private lands for purposes of conducting mining activities such as exploration, extraction and processing of minerals. Mining right holders
build mine infrastructure, dig mine shafts and connecting tunnels, prepare tailing ponds, storage areas and vehicle depots, install their machinery, equipment
and sewer systems. On top of this, under Section 75, easement rights are accorded to them where they may build warehouses, port facilities, electric
transmission, railroads and other infrastructures necessary for mining operations. All these will definitely oust the owners or occupants of the affected areas
the beneficial ownership of their lands. Without a doubt, taking occurs once mining operations commence.
Section 76 of Rep. Act No. 7942 is a Taking Provision
Moreover, it would not be amiss to revisit the history of mining laws of this country which would help us understand Section 76 of Rep. Act No. 7942.
This provision is first found in Section 27 of Commonwealth Act No. 137 which took effect on 7 November 1936, viz:
Before entering private lands the prospector shall first apply in writing for written permission of the private owner, claimant, or holder
thereof, and in case of refusal by such private owner, claimant, or holder to grant such permission, or in case of disagreement as to the
amount of compensation to be paid for such privilege of prospecting therein, the amount of such compensation shall be fixed by agreement
among the prospector, the Director of the Bureau of Mines and the surface owner, and in case of their failure to unanimously agree as to the
amount of compensation, all questions at issue shall be determined by the Court of First Instance.

Similarly, the pertinent provision of Presidential Decree No. 463, otherwise known as The Mineral Resources Development Decree of 1974, provides:
SECTION 12. Entry to Public and Private Lands. A person who desires to conduct prospecting or other mining operations within public lands
covered by concessions or rights other than mining shall first obtain the written permission of the government official concerned before
entering such lands. In the case of private lands, the written permission of the owner or possessor of the land must be obtained before
entering such lands. In either case, if said permission is denied, the Director, at the request of the interested person may intercede with the
owner or possessor of the land. If the intercession fails, the interested person may bring suit in the Court of First Instance of the province
where the land is situated. If the court finds the request justified, it shall issue an order granting the permission after fixing the amount of
compensation and/or rental due the owner or possessor: Provided, That pending final adjudication of such amount, the court shall upon
recommendation of the Director permit the interested person to enter, prospect and/or undertake other mining operations on the disputed land
upon posting by such interested person of a bond with the court which the latter shall consider adequate to answer for any damage to the
owner or possessor of the land resulting from such entry, prospecting or any other mining operations.

Hampered by the difficulties and delays in securing surface rights for the entry into private lands for purposes of mining operations, Presidential Decree No.
512 dated 19 July 1974 was passed into law in order to achieve full and accelerated mineral resources development. Thus, Presidential Decree No. 512
provides for a new system of surface rights acquisition by mining prospectors and claimants. Whereas in Commonwealth Act No. 137 and Presidential Decree
No. 463 eminent domain may only be exercised in order that the mining claimants can build, construct or install roads, railroads, mills, warehouses and other
facilities, this time, the power of eminent domain may now be invoked by mining operators for the entry, acquisition and use of private lands, viz:
SECTION 1. Mineral prospecting, location, exploration, development and exploitation is hereby declared of public use and benefit, and for
which the power of eminent domain may be invoked and exercised for the entry, acquisition and use of private lands. x x x.
The evolution of mining laws gives positive indication that mining operators who are qualified to own lands were granted the authority to exercise eminent
domain for the entry, acquisition, and use of private lands in areas open for mining operations. This grant of authority extant in Section 1 of Presidential Decree
No. 512 is not expressly repealed by Section 76 of Rep. Act No. 7942; and neither are the former statutes impliedly repealed by the former. These two
provisions can stand together even if Section 76 of Rep. Act No. 7942 does not spell out the grant of the privilege to exercise eminent domain which was
present in the old law.
It is an established rule in statutory construction that in order that one law may operate to repeal another law, the two laws must be inconsistent. [39] The former
must be so repugnant as to be irreconciliable with the latter act. Simply because a latter enactment may relate to the same subject matter as that of an earlier
statute is not of itself sufficient to cause an implied repeal of the latter, since the new law may be cumulative or a continuation of the old one. As has been the
ruled, repeals by implication are not favored, and will not be decreed unless it is manifest that the legislature so intended. [40] As laws are presumed to be
passed with deliberation and with full knowledge of all existing ones on the subject, it is but reasonable to conclude that in passing a statute it was not
intended to interfere with or abrogate any former law relating to the same matter, unless the repugnancy between the two is not only irreconcilable, but also
clear and convincing, and flowing necessarily from the language used, unless the later act fully embraces the subject matter of the earlier, or unless the
reason for the earlier act is beyond peradventure removed. [41] Hence, every effort must be used to make all acts stand and if, by any reasonable construction,
they can be reconciled, the latter act will not operate as a repeal of the earlier.
Considering that Section 1 of Presidential Decree No. 512 granted the qualified mining operators the authority to exercise eminent domain and since this grant
of authority is deemed incorporated in Section 76 of Rep. Act No. 7942, the inescapable conclusion is that the latter provision is a taking provision.
While this Court declares that the assailed provision is a taking provision, this does not mean that it is unconstitutional on the ground that it allows taking of
private property without the determination of public use and the payment of just compensation.
The taking to be valid must be for public use. [42] Public use as a requirement for the valid exercise of the power of eminent domain is now synonymous with
public interest, public benefit, public welfare and public convenience. [43] It includes the broader notion of indirect public benefit or advantage. Public use as
traditionally understood as actual use by the public has already been abandoned. [44]

Mining industry plays a pivotal role in the economic development of the country and is a vital tool in the governments thrust of accelerated recovery. [45] The
importance of the mining industry for national development is expressed in Presidential Decree No. 463:
WHEREAS, mineral production is a major support of the national economy, and therefore the intensified discovery, exploration, development
and wise utilization of the countrys mineral resources are urgently needed for national development.

Irrefragably, mining is an industry which is of public benefit.

That public use is negated by the fact that the state would be taking private properties for the benefit of private mining firms or mining contractors is
not at all true. In Heirs of Juancho Ardona v. Reyes,[46] petitioners therein contended that the promotion of tourism is not for public use because private
concessionaires would be allowed to maintain various facilities such as restaurants, hotels, stores, etc., inside the tourist area. The Court thus contemplated:
The rule in Berman v. Parker [348 U.S. 25; 99 L. ed. 27] of deference to legislative policy even if such policy might mean taking from one
private person and conferring on another private person applies as well in the Philippines.
. . . Once the object is within the authority of Congress, the means by which it will be attained is also for Congress to
determine. Here one of the means chosen is the use of private enterprise for redevelopment of the area. Appellants argue
that this makes the project a taking from one businessman for the benefit of another businessman. But the means of
executing the project are for Congress and Congress alone to determine, once the public purpose has been established.
x x x[47]

Petitioners further maintain that the states discretion to decide when to take private property is reduced contractually by Section 13.5 of the CAMC FTAA,
which reads:
If the CONTRACTOR so requests at its option, the GOVERNMENT shall use its offices and legal powers to assist in the acquisition at
reasonable cost of any surface areas or rights required by the CONTRACTOR at the CONTRACTORs cost to carry out the Mineral
Exploration and the Mining Operations herein.
All obligations, payments and expenses arising from, or incident to, such agreements or acquisition of right shall be for the account of the
CONTRACTOR and shall be recoverable as Operating Expense.

According to petitioners, the government is reduced to a sub-contractor upon the request of the private respondent, and on account of the foregoing provision,
the contractor can compel the government to exercise its power of eminent domain thereby derogating the latters power to expropriate property.
The provision of the FTAA in question lays down the ways and means by which the foreign-owned contractor, disqualified to own land, identifies to the
government the specific surface areas within the FTAA contract area to be acquired for the mine infrastructure. [48] The government then acquires ownership of
the surface land areas on behalf of the contractor, through a voluntary transaction in order to enable the latter to proceed to fully implement the FTAA. Eminent

domain is not yet called for at this stage since there are still various avenues by which surface rights can be acquired other than expropriation. The FTAA
provision under attack merely facilitates the implementation of the FTAA given to CAMC and shields it from violating the Anti-Dummy Law. Hence, when
confronted with the same question in La Bugal-BLaan Tribal Association, Inc. v. Ramos,[49] the Court answered:

Clearly, petitioners have needlessly jumped to unwarranted conclusions, without being aware of the rationale for the said provision.
That provision does not call for the exercise of the power of eminent domain -- and determination of just compensation is not an issue -- as
much as it calls for a qualified party to acquire the surface rights on behalf of a foreign-owned contractor.
Rather than having the foreign contractor act through a dummy corporation, having the State do the purchasing is a better alternative.
This will at least cause the government to be aware of such transaction/s and foster transparency in the contractors dealings with the local
property owners. The government, then, will not act as a subcontractor of the contractor; rather, it will facilitate the transaction and enable the
parties to avoid a technical violation of the Anti-Dummy Law.

There is also no basis for the claim that the Mining Law and its implementing rules and regulations do not provide for just compensation in
expropriating private properties. Section 76 of Rep. Act No. 7942 and Section 107 of DAO 96-40 provide for the payment of just compensation:
Section 76. xxx Provided, that any damage to the property of the surface owner, occupant, or concessionaire as a consequence of
such operations shall be properly compensated as may be provided for in the implementing rules and regulations.
Section 107. Compensation of the Surface Owner and Occupant- Any damage done to the property of the surface owners, occupant, or
concessionaire thereof as a consequence of the mining operations or as a result of the construction or installation of the infrastructure
mentioned in 104 above shall be properly and justly compensated.
Such compensation shall be based on the agreement entered into between the holder of mining rights and the surface owner, occupant or
concessionaire thereof, where appropriate, in accordance with P.D. No. 512. (Emphasis supplied.)
Second Substantive Issue: Power of Courts to Determine Just Compensation

Closely-knit to the issue of taking is the determination of just compensation. It is contended that Rep. Act No. 7942 and Section 107 of DAO 96-40
encroach on the power of the trial courts to determine just compensation in eminent domain cases inasmuch as the same determination of proper
compensation are cognizable only by the Panel of Arbitrators.
The question on the judicial determination of just compensation has been settled in the case of Export Processing Zone Authority v. Dulay[50] wherein
the court declared that the determination of just compensation in eminent domain cases is a judicial function. Even as the executive department or the
legislature may make the initial determinations, the same cannot prevail over the courts findings.

Implementing Section 76 of Rep. Act No. 7942, Section 105 of DAO 96-40 states that holder(s) of mining right(s) shall not be prevented from entry into
its/their contract/mining areas for the purpose of exploration, development, and/or utilization. That in cases where surface owners of the lands, occupants or
concessionaires refuse to allow the permit holder or contractor entry, the latter shall bring the matter before the Panel of Arbitrators for proper
disposition. Section 106 states that voluntary agreements between the two parties permitting the mining right holders to enter and use the surface owners
lands shall be registered with the Regional Office of the MGB. In connection with Section 106, Section 107 provides that the compensation for the damage
done to the surface owner, occupant or concessionaire as a consequence of mining operations or as a result of the construction or installation of the
infrastructure shall be properly and justly compensated and that such compensation shall be based on the agreement between the holder of mining rights and
surface owner, occupant or concessionaire, or where appropriate, in accordance with Presidential Decree No. 512. In cases where there is disagreement to
the compensation or where there is no agreement, the matter shall be brought before the Panel of Arbitrators. Section 206 of the implementing rules and
regulations provides an aggrieved party the remedy to appeal the decision of the Panel of Arbitrators to the Mines Adjudication Board, and the latters decision
may be reviewed by the Supreme Court by filing a petition for review on certiorari.[51]
An examination of the foregoing provisions gives no indication that the courts are excluded from taking cognizance of expropriation cases under the
mining law. The disagreement referred to in Section 107 does not involve the exercise of eminent domain, rather it contemplates of a situation wherein the
permit holders are allowed by the surface owners entry into the latters lands and disagreement ensues as regarding the proper compensation for the allowed
entry and use of the private lands. Noticeably, the provision points to a voluntary sale or transaction, but not to an involuntary sale.
The legislature, in enacting the mining act, is presumed to have deliberated with full knowledge of all existing laws and jurisprudence on the
subject. Thus, it is but reasonable to conclude that in passing such statute it was in accord with the existing laws and jurisprudence on the jurisdiction of courts
in the determination of just compensation and that it was not intended to interfere with or abrogate any former law relating to the same matter. Indeed, there is
nothing in the provisions of the assailed law and itsimplementing rules and regulations that exclude the courts from their jurisdiction to determine just
compensation in expropriation proceedings involving mining operations.Although Section 105 confers upon the Panel of Arbitrators the authority to decide
cases where surface owners, occupants, concessionaires refuse permit holders entry, thus, necessitating involuntary taking, this does not mean that the
determination of the just compensation by the Panel of Arbitrators or the Mines Adjudication Board is final and conclusive. The determination is only
preliminary unless accepted by all parties concerned. There is nothing wrong with the grant of primary jurisdiction by the Panel of Arbitrators or the Mines
Adjudication Board to determine in a preliminary matter the reasonable compensation due the affected landowners or occupants. [52] The original and exclusive
jurisdiction of the courts to decide determination of just compensation remains intact despite the preliminary determination made by the administrative
agency. As held in Philippine Veterans Bank v. Court of Appeals[53]:
The jurisdiction of the Regional Trial Courts is not any less original and exclusive because the question is first passed upon by the
DAR, as the judicial proceedings are not a continuation of the administrative determination.
Third Substantive Issue: Sufficient Control by the State Over Mining Operations

Anent the third issue, petitioners charge that Rep. Act No. 7942, as well as its Implementing Rules and Regulations, makes it possible for FTAA
contracts to cede over to a fully foreign-owned corporation full control and management of mining enterprises, with the result that the State is allegedly
reduced to a passive regulator dependent on submitted plans and reports, with weak review and audit powers. The State is not acting as the supposed owner
of the natural resources for and on behalf of the Filipino people; it practically has little effective say in the decisions made by the enterprise. In effect,
petitioners asserted that the law, the implementing regulations, and the CAMC FTAA cede beneficial ownership of the mineral resources to the foreign
contractor.

It must be noted that this argument was already raised in La Bugal-BLaan Tribal Association, Inc. v. Ramos,[54] where the Court answered in the
following manner:

RA 7942 provides for the states control and supervision over mining operations. The following provisions thereof establish the
mechanism of inspection and visitorial rights over mining operations and institute reportorial requirements in this manner:

1.

Sec. 8 which provides for the DENRs power of over-all supervision and periodic review for the conservation, management,
development and proper use of the States mineral resources;

2.

Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the DENR to exercise direct charge in the
administration and disposition of mineral resources, and empowers the MGB to monitor the compliance by the contractor
of the terms and conditions of the mineral agreements, confiscate surety and performance bonds, and deputize whenever
necessary any member or unit of the Phil. National Police, barangay, duly registered non-governmental organization
(NGO) or any qualified person to police mining activities;

3.

Sec. 66 which vests in the Regional Director exclusive jurisdiction over safety inspections of all installations, whether
surface or underground, utilized in mining operations.

4.

Sec. 35, which incorporates into all FTAAs the following terms, conditions and warranties:
(g)

Mining operations shall be conducted in accordance with the provisions of the Act and its IRR.

(h)

Work programs and minimum expenditures commitments.

xxxx
(k)

Requiring proponent to effectively use appropriate anti-pollution technology and facilities to protect the
environment and restore or rehabilitate mined-out areas.

(l)

The contractors shall furnish the Government records of geologic, accounting and other relevant data for its
mining operation, and that books of accounts and records shall be open for inspection by the
government. x x x.

(m)

Requiring the proponent to dispose of the minerals at the highest price and more advantageous terms and
conditions.

xxxx

(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 welfare of the Filipino people.

The foregoing provisions of Section 35 of RA 7942 are also reflected and implemented in Section 56 (g), (h), (l), (m) and (n) of the
Implementing Rules, DAO 96-40.
Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the governments control over mining enterprises:
The contractor is to relinquish to the government those portions of the contract area not needed for mining operations and not covered
by any declaration of mining feasibility (Section 35-e, RA 7942; Section 60, DAO 96-40).
The contractor must comply with the provisions pertaining to mine safety, health and environmental protection (Chapter XI, RA 7942;
Chapters XV and XVI, DAO 96-40).
For violation of any of its terms and conditions, government may cancel an FTAA. (Chapter XVII, RA 7942; Chapter XXIV, DAO 96-40).
An FTAA contractor is obliged to open its books of accounts and records for 0inspection by the government (Section 56-m, DAO 96-40).
An FTAA contractor has to dispose of the minerals and by-products at the highest market price and register with the MGB a copy of the
sales agreement (Section 56-n, DAO 96-40).
MGB is mandated to monitor the contractors compliance with the terms and conditions of the FTAA; and to deputize, when necessary,
any member or unit of the Philippine National Police, the barangay or a DENR-accredited nongovernmental organization to police mining
activities (Section 7-d and -f, DAO 96-40).
An FTAA cannot be transferred or assigned without prior approval by the President (Section 40, RA 7942; Section 66, DAO 96-40).
A mining project under an FTAA cannot proceed to the construction/development/utilization stage, unless its Declaration of Mining
Project Feasibility has been approved by government (Section 24, RA 7942).
The Declaration of Mining Project Feasibility filed by the contractor cannot be approved without submission of the following documents:
1.
2.
3.
4.
5.
6.

Approved mining project feasibility study (Section 53-d, DAO 96-40)

Approved three-year work program (Section 53-a-4, DAO 96-40)
Environmental compliance certificate (Section 70, RA 7942)
Approved environmental protection and enhancement program (Section 69, RA 7942)
Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA 7942; Section 27, RA 7160)
Free and prior informed consent by the indigenous peoples concerned, including payment of royalties through a
Memorandum of Agreement (Section 16, RA 7942; Section 59, RA 8371)

The FTAA contractor is obliged to assist in the development of its mining community, promotion of the general welfare of its inhabitants,
and development of science and mining technology (Section 57, RA 7942).
The FTAA contractor is obliged to submit reports (on quarterly, semi-annual or annual basis as the case may be; per Section 270, DAO
96-40), pertaining to the following:
1. Exploration
2. Drilling
3. Mineral resources and reserves
4. Energy consumption
5. Production
6. Sales and marketing
7. Employment
8. Payment of taxes, royalties, fees and other Government Shares
9. Mine safety, health and environment
10. Land use

11. Social development

12. Explosives consumption
An FTAA pertaining to areas within government reservations cannot be granted without a written clearance from the government
agencies concerned (Section 19, RA 7942; Section 54, DAO 96-40).
An FTAA contractor is required to post a financial guarantee bond in favor of the government in an amount equivalent to its
expenditures obligations for any particular year. This requirement is apart from the representations and warranties of the contractor that
it has access to all the financing, managerial and technical expertise and technology necessary to carry out the objectives of the FTAA
(Section 35-b, -e, and -f, RA 7942).
Other reports to be submitted by the contractor, as required under DAO 96-40, are as follows: an environmental report on the
rehabilitation of the mined-out area and/or mine waste/tailing covered area, and anti-pollution measures undertaken (Section 35-a-2);
annual reports of the mining operations and records of geologic accounting (Section 56-m); annual progress reports and final report of
exploration activities (Section 56-2).
Other programs required to be submitted by the contractor, pursuant to DAO 96-40, are the following: a safety and health program
(Section 144); an environmental work program (Section 168); an annual environmental protection and enhancement program (Section
171).
The foregoing gamut of requirements, regulations, restrictions and limitations imposed upon the FTAA contractor by the statute and
regulations easily overturns petitioners contention. The setup under RA 7942 and DAO 96-40 hardly relegates the State to the role of a
passive regulator dependent on submitted plans and reports. On the contrary, the government agencies concerned are empowered to
approve or disapprove -- hence, 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 mining enterprise.
Once these plans and reports are approved, the contractor is bound to comply with its commitments therein. Figures for mineral
production and sales are regularly monitored and subjected to government review, in order to ensure that the products and by-products are
disposed of at the best prices possible; even copies of sales agreements have to be submitted to and registered with MGB. And the
contractor is mandated to open its books of accounts and records for scrutiny, so as to enable the State to determine if the government share
has been fully paid.
The State may likewise compel the contractors compliance with mandatory requirements on mine safety, health and environmental
protection, and the use of anti-pollution technology and facilities. Moreover, the contractor is also obligated to assist in the development of the
mining community and to pay royalties to the indigenous peoples concerned.
Cancellation of the FTAA may be the penalty for violation of any of its terms and conditions and/or noncompliance with statutes or
regulations. This general, all-around, multipurpose sanction is no trifling matter, especially to a contractor who may have yet to recover the
tens or hundreds of millions of dollars sunk into a mining project.
Overall, considering the provisions of the statute and the regulations just discussed, we believe that the State definitely possesses the
means by which it can have the ultimate word in the operation of the enterprise, set directions and objectives, and detect deviations and
noncompliance by the contractor; likewise, it has the capability to enforce compliance and to impose sanctions, should the
occasion therefor arise.
In other words, the FTAA contractor is not free to do whatever it pleases and get away with it; on the contrary, it will have to follow the
government line if it wants to stay in the enterprise. Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a sufficient
degree of control and supervision over the conduct of mining operations.
Fourth Substantive Issue: The Proper Interpretation of the Constitutional Phrase Agreements Involving Either Technical or Financial Assistance
In interpreting the first and fourth paragraphs of Section 2, Article XII of the Constitution, petitioners set forth the argument that foreign corporations are
barred from making decisions on the conduct of operations and the management of the mining project. The first paragraph of Section 2, Article XII reads:

x x x The exploration, development, and utilization of natural resources shall be under the full control and supervision of the
State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production sharing agreements with
Filipino citizens, or corporations or associations at least sixty percentum of whose capital is owned by such citizens. Such agreements may be
for a period not exceeding twenty five years, renewable for not more than twenty five years, and under such terms and conditions as may be
provided by law x x x.

The fourth paragraph of Section 2, Article XII provides:

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large
scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of the country x x x.

Petitioners maintain that the first paragraph bars aliens and foreign-owned corporations from entering into any direct arrangement with the
government including those which involve co-production, joint venture or production sharing agreements. They likewise insist that the fourth paragraph allows
foreign-owned corporations to participate in the large-scale exploration, development and utilization of natural resources, but such participation, however, is
merely limited to an agreement for either financial or technical assistance only.
Again, this issue has already been succinctly passed upon by this Court in La Bugal-BLaan Tribal Association, Inc. v. Ramos.[55] In discrediting such
argument, the Court ratiocinated:

Petitioners claim that the phrase agreements x x x involving either technical or financial assistance simply means technical assistance
or financial assistance agreements, nothing more and nothing else. They insist that there is no ambiguity in the phrase, and that a plain
reading of paragraph 4 quoted above leads to the inescapable conclusion that what a foreign-owned corporation may enter into with the
government is merely an agreement for either financial or technical assistance only, for the large-scale exploration, development and
utilization of minerals, petroleum and other mineral oils; such a limitation, they argue, excludes foreign management and operation of a mining
enterprise.
This restrictive interpretation, petitioners believe, is in line with the general policy enunciated by the Constitution reserving to Filipino
citizens and corporations the use and enjoyment of the countrys natural resources. They maintain that this Courts Decision of January 27,
2004 correctly declared the WMCP FTAA, along with pertinent provisions of RA 7942, void for allowing a foreign contractor to have direct and
exclusive management of a mining enterprise. Allowing such a privilege not only runs counter to the full control and supervision that the State
is constitutionally mandated to exercise over the exploration, development and utilization of the countrys natural resources; doing so also
vests in the foreign company beneficial ownership of our mineral resources. It will be recalled that the Decision of January 27, 2004 zeroed in
on management or other forms of assistance or other activities associated with the service contracts of the martial law regime, since the
management or operation of mining activities by foreign contractors, which is the primary feature of service contracts, was precisely the evil
that the drafters of the 1987 Constitution sought to eradicate.
xxxx
We do not see how applying a strictly literal or verba legis interpretation of paragraph 4 could inexorably lead to the conclusions
arrived at in the ponencia. First, the drafters choice of words -- their use of the phrase agreements x x x involving either technical or financial
assistance -- does not indicate the intent to exclude other modes of assistance. The drafters opted to use involving when they could have

simply said agreements for financial or technical assistance, if that was their intention to begin with. In this case, the limitation would be very
clear and no further debate would ensue.
In contrast, the use of the word involving signifies the possibility of the inclusion of other forms of assistance or activities having
to do with, otherwise related to or compatible with financial or technical assistance. The word involving as used in this context has three
connotations that can be differentiated thus: one, the sense of concerning, having to do with, or affecting; two, entailing, requiring, implying or
necessitating; and three, including, containing or comprising.
Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word involving, when understood in the sense of
including, as in including technical or financial assistance, necessarily implies that there are activities other than those that are being
included. In other words, if an agreement includes technical or financial assistance, there is apart from such assistance -- something else
already in, and covered or may be covered by, the said agreement.
In short, it allows for the possibility that matters, other than those explicitly mentioned, could be made part of the agreement. Thus,
we are now led to the conclusion that the use of the word involving implies that these agreements with foreign corporations are not limited to
mere financial or technical assistance. The difference in sense becomes very apparent when we juxtapose agreements for technical or
financial assistance against agreements including technical or financial assistance. This much is unalterably clear in a verba legis approach.
Second, if the real intention of the drafters was to confine foreign corporations to financial or technical assistance and nothing more,
their language would have certainly been so unmistakably restrictive and stringent as to leave no doubt in anyones mind about their true
intent. For example, they would have used the sentence foreign corporations are absolutely prohibited from involvement in the management
or operation of mining or similar ventures or words of similar import. A search for such stringent wording yields negative results. Thus, we
come to the inevitable conclusion that there was a conscious and deliberate decision to avoid the use of restrictive wording that
bespeaks an intent not to use the expression agreements x xx involving either technical or financial assistance in an exclusionary
and limiting manner.

Fifth Substantive Issue: Service Contracts Not Deconstitutionalized

Lastly, petitioners stress that the service contract regime under the 1973 Constitution is expressly prohibited under the 1987 Constitution as the term
service contracts found in the former was deleted in the latter to avoid the circumvention of constitutional prohibitions that were prevalent in the 1987
Constitution. According to them, the framers of the 1987 Constitution only intended for foreign-owned corporations to provide either technical assistance or
financial assistance. Upon perusal of the CAMC FTAA, petitioners are of the opinion that the same is a replica of the service contract agreements that the
present constitution allegedly prohibit.
Again, this contention is not well-taken. The mere fact that the term service contracts found in the 1973 Constitution was not carried over to the
present constitution, sans any categorical statement banning service contracts in mining activities, does not mean that service contracts as understood in the
1973 Constitution was eradicated in the 1987 Constitution. [56] The 1987 Constitution allows the continued use of service contracts with foreign corporations as
contractors who would invest in and operate and manage extractive enterprises, subject to the full control and supervision of the State; this time, however,
safety measures were put in place to prevent abuses of the past regime. [57] We ruled, thus:

To our mind, however, such intent cannot be definitively and conclusively established from the mere failure to carry the same
expression or term over to the new Constitution, absent a more specific, explicit and unequivocal statement to that effect. What petitioners
seek (a complete ban on foreign participation in the management of mining operations, as previously allowed by the earlier Constitutions)
is nothing short of bringing about a momentous sea change in the economic and developmental policies; and the fundamentally capitalist,

free-enterprise philosophy of our government. We cannot imagine such a radical shift being undertaken by our government, to the great
prejudice of the mining sector in particular and our economy in general, merely on the basis of the omission of the terms service contract from
or the failure to carry them over to the new Constitution. There has to be a much more definite and even unarguable basis for such a drastic
reversal of policies.
xxxx
The foregoing are mere fragments of the framers lengthy discussions of the provision dealing with agreements x x x involving either
technical or financial assistance, which ultimately became paragraph 4 of Section 2 of Article XII of the Constitution. Beyond any doubt, the
members of the ConCom were actually debating about the martial-law-era service contracts for which they were crafting appropriate
safeguards.
In the voting that led to the approval of Article XII by the ConCom, the explanations given by Commissioners Gascon, Garcia
and Tadeo indicated that they had voted to reject this provision on account of their objections to the constitutionalization of the service contract
concept.
Mr. Gascon said, I felt that if we would constitutionalize any provision on service contracts, this should always be with the
concurrence of Congress and not guided only by a general law to be promulgated by Congress. Mr. Garcia explained, Service contracts are
given constitutional legitimization in Sec. 3, even when they have been proven to be inimical to the interests of the nation, providing, as they
do, the legal loophole for the exploitation of our natural resources for the benefit of foreign interests. Likewise, Mr. Tadeo cited inter alia the
fact that service contracts continued to subsist, enabling foreign interests to benefit from our natural resources. It was hardly likely that
these gentlemen would have objected so strenuously, had the provision called for mere technical or financial assistance and
nothing more.
The deliberations of the ConCom and some commissioners explanation of their votes leave no room for doubt that the service
contract concept precisely underpinned the commissioners understanding of the agreements involving either technical or financial assistance.
xxxx
From the foregoing, we are impelled to conclude that the phrase agreements involving either technical or financial assistance, referred
to in paragraph 4, are in fact service contracts. But unlike those of the 1973 variety, the new ones are between foreign corporations acting as
contractors on the one hand; and on the other, the government as principal or owner of the works. In the new service contracts, the foreign
contractors provide capital, technology and technical know-how, and managerial expertise in the creation and operation of large-scale
mining/extractive enterprises; and the government, through its agencies (DENR, MGB), actively exercises control and supervision over the
entire operation.
xxxx
It is therefore reasonable and unavoidable to make the following conclusion, based on the above arguments. As written by the
framers and ratified and adopted by the people, the Constitution allows the continued use of service contracts with foreign corporations -- as
contractors who would invest in and operate and manage extractive enterprises, subject to the full control and supervision of the State -- sans
the abuses of the past regime. The purpose is clear: to develop and utilize our mineral, petroleum and other resources on a large scale for
the immediate and tangible benefit of the Filipino people. [58]

WHEREFORE, the instant petition for prohibition and mandamus is hereby DISMISSED. Section 76 of Republic Act No. 7942 and Section 107 of DAO
96-40; Republic Act No. 7942 and its Implementing Rules and Regulations contained in DAO 96-40 insofar as they relate to financial and technical assistance
agreements referred to in paragraph 4 of Section 2 of Article XII of the Constitution are NOT UNCONSTITUTIONAL.

SO ORDERED.

5. EN BANC

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

LA BUGAL-BLAAN TRIBAL ASSOCIATION, INC., Represented by its Chairman FLONG MIGUEL M. LUMAYONG; WIGBERTO E. TAADA; PONCIANO
BENNAGEN; JAIME TADEO; RENATO R. CONSTANTINO JR.; FLONG AGUSTIN M. DABIE; ROBERTO P. AMLOY; RAQIM L. DABIE; SIMEON
H. DOLOJO; IMELDA M. GANDON; LENY B. GUSANAN; MARCELO L. GUSANAN; QUINTOL A. LABUAYAN; LOMINGGES D. LAWAY; BENITA
P. TACUAYAN; Minors JOLY L. BUGOY, Represented by His Father UNDERO D. BUGOY and ROGER M. DADING; Represented by His Father
ANTONIO L. DADING; ROMY M. LAGARO, Represented by His Father TOTING A. LAGARO; MIKENY JONG B. LUMAYONG, Represented by
His Father MIGUEL M. LUMAYONG; RENE T. MIGUEL, Represented by His Mother EDITHA T. MIGUEL; ALDEMAR L. SAL, Represented by
His Father DANNY M. SAL; DAISY RECARSE, Represented by Her Mother LYDIA S. SANTOS; EDWARD M. EMUY; ALAN P. MAMPARAIR;
MARIO L. MANGCAL; ALDEN S. TUSAN; AMPARO S. YAP; VIRGILIO CULAR; MARVIC M.V.F. LEONEN; JULIA REGINA CULAR, GIAN CARLO
CULAR, VIRGILIO CULAR JR., Represented by Their Father VIRGILIO CULAR; PAUL ANTONIO P. VILLAMOR, Represented by His Parents
JOSE VILLAMOR and ELIZABETH PUA-VILLAMOR; ANA GININA R. TALJA, Represented by Her Father MARIO JOSE B. TALJA;
SHARMAINE R. CUNANAN, Represented by Her Father ALFREDO M. CUNANAN; ANTONIO JOSE A. VITUG III, Represented by His Mother
ANNALIZA A. VITUG, LEAN D. NARVADEZ, Represented by His Father MANUEL E. NARVADEZ JR.; ROSERIO MARALAG LINGATING,
Represented by Her Father RIO OLIMPIO A. LINGATING; MARIO JOSE B. TALJA; DAVID E. DE VERA; MARIA MILAGROS L. SAN JOSE; Sr.
SUSAN O. BOLANIO, OND; LOLITA G. DEMONTEVERDE; BENJIE L. NEQUINTO; [1] ROSE LILIA S. ROMANO; ROBERTO S. VERZOLA;
EDUARDO AURELIO C. REYES; LEAN LOUEL A. PERIA, Represented by His Father ELPIDIO V. PERIA; [2] GREEN FORUM PHILIPPINES;
GREEN FORUM WESTERN VISAYAS (GF-WV); ENVIRONMENTAL LEGAL ASSISTANCE CENTER (ELAC); KAISAHAN TUNGO SA
KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN); [3] PARTNERSHIP FOR AGRARIAN REFORM and RURAL
DEVELOPMENT SERVICES, INC. (PARRDS); PHILIPPINE PARTNERSHIP FOR THE DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL
AREAS, INC. (PHILDHRRA); WOMENS LEGAL BUREAU (WLB); CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI);
UPLAND DEVELOPMENT INSTITUTE (UDI); KINAIYAHAN FOUNDATION, INC.; SENTRO NG ALTERNATIBONG LINGAP PANLIGAL
(SALIGAN); and LEGAL RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners, vs. VICTOR O. RAMOS, Secretary,
Department of Environment and Natural Resources (DENR); HORACIO RAMOS, Director, Mines and Geosciences Bureau (MGB-DENR);
RUBEN TORRES, Executive Secretary; and WMC (PHILIPPINES), INC., [4] respondents.
RESOLUTION
PANGANIBAN, J.:
All mineral resources are owned by the State. Their exploration, development and utilization (EDU) must always be subject to the full control and
supervision of the State. More specifically, given the inadequacy of Filipino capital and technology in large-scale EDU activities, the State may secure the help
of foreign companies in all relevant matters -- especially financial and technical assistance -- provided that, at all times, the State maintains its right of full
control. The foreign assistor or contractor assumes all financial, technical and entrepreneurial risks in the EDU activities; hence, it may be given reasonable
management, operational, marketing, audit and other prerogatives to protect its investments and to enable the business to succeed.

Full control is not anathematic to day-to-day management by the contractor, provided that the State retains the power to direct overall strategy; and to set
aside, reverse or modify plans and actions of the contractor. The idea of full control is similar to that which is exercised by the board of directors of a private
corporation: the performance of managerial, operational, financial, marketing and other functions may be delegated to subordinate officers or given to
contractual entities, but the board retains full residual control of the business.
Who or what organ of government actually exercises this power of control on behalf of the State? The Constitution is crystal clear: the President. Indeed,
the Chief Executive is the official constitutionally mandated to enter into agreements with foreign owned corporations. On the other hand, Congress may
review the action of the President once it is notified of every contract entered into in accordance with this [constitutional] provision within thirty days from its
execution. In contrast to this express mandate of the President and Congress in the EDU of natural resources, Article XII of the Constitution is silent on the
role of the judiciary. However, should the President and/or Congress gravely abuse their discretion in this regard, the courts may -- in a proper case -- exercise
their residual duty under Article VIII. Clearly then, the judiciary should not inordinately interfere in the exercise of this presidential power of control over the
EDU of our natural resources.
The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate economic growth or to serve narrow, parochial interests.
Rather, it should be construed to grant the President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign investments
and expertise, as well as to secure for our people and our posterity the blessings of prosperity and peace.
On the basis of this control standard, this Court upholds the constitutionality of the Philippine Mining Law, its Implementing Rules and Regulations -- insofar
as they relate to financial and technical agreements -- as well as the subject Financial and Technical Assistance Agreement (FTAA).[5]

Background
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, [6] executed by
the government with Western Mining Corporation (Philippines), Inc. (WMCP). [7]
On January 27, 2004, the Court en banc promulgated its Decision[8] 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, [9] which, though permitted under the 1973 Constitution,[10] 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 prejudice 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. In a Resolution dated March 9, 2004, the Court required petitioners to comment
thereon. In the Resolution of June 8, 2004, it set the case for Oral Argument on June 29, 2004.
After hearing the opposing sides, the Court required the parties to submit their respective Memoranda in amplification of their arguments. In a Resolution
issued later the same day, June 29, 2004, the Court noted, inter alia, the Manifestation and Motion (in lieu of comment) filed by the Office of the Solicitor
General (OSG) on behalf of public respondents. The OSG said that it was not interposing any objection to the Motion for Intervention filed by the Chamber of
Mines of the Philippines, Inc. (CMP) and was in fact joining and adopting the latters Motion for Reconsideration.
Memoranda were accordingly filed by the intervenor as well as by petitioners, public respondents, and private respondent, dwelling at length on the three
issues discussed below. Later, WMCP submitted its Reply Memorandum, while the OSG -- in obedience to an Order of this Court -- filed a Compliance
submitting copies of more FTAAs entered into by the government.

Three Issues Identified by the Court

During the Oral Argument, the Court identified the three issues to be resolved in the present controversy, as follows:
1. Has the case been rendered moot by the sale of WMC shares in WMCP to Sagittarius (60 percent of Sagittarius equity is owned by Filipinos and/or
Filipino-owned corporations while 40 percent is owned by Indophil Resources NL, an Australian company) and by the subsequent transfer and registration of
the FTAA from WMCP to Sagittarius?
2. Assuming that the case has been rendered moot, would it still be proper to resolve the constitutionality of the assailed provisions of the Mining Law,
DAO 96-40 and the WMCP FTAA?
3. What is the proper interpretation of the phrase Agreements Involving Either Technical or Financial Assistance contained in paragraph 4 of Section 2 of
Article XII of the Constitution?
Should the Motion for Reconsideration
Be Granted?
Respondents and intervenors Motions for Reconsideration should be granted, for the reasons discussed below. The foregoing three issues identified by
the Court shall now be taken up seriatim.
First Issue:
Mootness
In declaring unconstitutional certain provisions of RA 7942, DAO 96-40, and the WMCP FTAA, the majority Decision agreed with petitioners contention
that the subject FTAA had been executed in violation of Section 2 of Article XII of the 1987 Constitution. According to petitioners, the FTAAs entered into by the
government with foreign-owned corporations are limited by the fourth paragraph of the said provision to agreements involving only technical or financial
assistance for large-scale exploration, development and utilization of minerals, petroleum and other mineral oils. Furthermore, the foreign contractor is
allegedly permitted by the FTAA in question to fully manage and control the mining operations and, therefore, to acquire beneficial ownership of our mineral
resources.
The Decision merely shrugged off the Manifestation by WMPC informing the Court (1) that on January 23, 2001, WMC had sold all its shares in WMCP to
Sagittarius Mines, Inc., 60 percent of whose equity was held by Filipinos; and (2) that the assailed FTAA had likewise been transferred from WMCP to
Sagittarius.[11] The ponencia declared that the instant case had not been rendered moot by the transfer and registration of the FTAA to a Filipino-owned
corporation, and that the validity of the said transfer remained in dispute and awaited final judicial determination. [12] Patently therefore, the Decision is
anchored on the assumption that WMCP had remained a foreign corporation.
The crux of this issue of mootness is the fact that WMCP, at the time it entered into the FTAA, happened to be wholly owned by WMC Resources
International Pty., Ltd. (WMC), which in turn was a wholly owned subsidiary of Western Mining Corporation Holdings Ltd., a publicly listed major Australian
mining and exploration company.
The nullity of the FTAA was obviously premised upon the contractor being a foreign corporation. Had the FTAA been originally issued to a Filipino-owned
corporation, there would have been no constitutionality issue to speak of. Upon the other hand, the conveyance of the WMCP FTAA to a Filipino corporation
can be likened to the sale of land to a foreigner who subsequently acquires Filipino citizenship, or who later resells the same land to a Filipino citizen. The
conveyance would be validated, as the property in question would no longer be owned by a disqualified vendee.
And, inasmuch as the FTAA is to be implemented now by a Filipino corporation, it is no longer possible for the Court to declare it unconstitutional. The
case pending in the Court of Appeals is a dispute between two Filipino companies (Sagittarius and Lepanto), both claiming the right to purchase the foreign
shares in WMCP. So, regardless of which side eventually wins, the FTAA would still be in the hands of a qualified Filipino company. Considering that there is
no longer any justiciable controversy, the plea to nullify the Mining Law has become a virtual petition for declaratory relief, over which this Court has no original
jurisdiction.
In their Final Memorandum, however, petitioners argue that the case has not become moot, considering the invalidity of the alleged sale of the shares in
WMCP from WMC to Sagittarius, and of the transfer of the FTAA from WMCP to Sagittarius, resulting in the change of contractor in the FTAA in question. And
even assuming that the said transfers were valid, there still exists an actual case predicated on the invalidity of RA 7942 and its Implementing Rules and

Regulations (DAO 96-40). Presently, we shall discuss petitioners objections to the transfer of both the shares and the FTAA. We shall take up the alleged
invalidity of RA 7942 and DAO 96-40 later on in the discussion of the third issue.

No Transgression of the Constitution

by the Transfer of the WMCP Shares
Petitioners claim, first, that the alleged invalidity of the transfer of the WMCP shares to Sagittarius violates the fourth paragraph of Section 2 of Article XII
of the Constitution; second,that it is contrary to the provisions of the WMCP FTAA itself; and third, that the sale of the shares is suspect and should therefore
be the subject of a case in which its validity may properly be litigated.
On the first ground, petitioners assert that paragraph 4 of Section 2 of Article XII permits the government to enter into FTAAs only with foreign-owned
corporations. Petitioners insist that the first paragraph of this constitutional provision limits the participation of Filipino corporations in the exploration,
development and utilization of natural resources to only three species of contracts -- production sharing, co-production and joint venture -- to the exclusion of
all other arrangements or variations thereof, and the WMCP FTAA may therefore not be validly assumed and implemented by Sagittarius. In short, petitioners
claim that a Filipino corporation is not allowed by the Constitution to enter into an FTAA with the government.
However, a textual analysis of the first paragraph of Section 2 of Article XII does not support petitioners argument. The pertinent part of the said provision
states: Sec. 2. x x x The exploration, development and utilization of natural resources shall be under the full control and supervision of the State. The State
may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations
or associations at least sixty per centum of whose capital is owned by such citizens. x x x. Nowhere in the provision is there any express limitation or
restriction insofar as arrangements other than the three aforementioned contractual schemes are concerned.
Neither can one reasonably discern any implied stricture to that effect. Besides, there is no basis to believe that the framers of the Constitution, a majority
of whom were obviously concerned with furthering the development and utilization of the countrys natural resources, could have wanted to restrict Filipino
participation in that area. This point is clear, especially in the light of the overarching constitutional principle of giving preference and priority to Filipinos and
Filipino corporations in the development of our natural resources.
Besides, even assuming (purely for arguments sake) that a constitutional limitation barring Filipino corporations from holding and implementing an FTAA
actually exists, nevertheless, such provision would apply only to the transfer of the FTAA to Sagittarius, but definitely not to the sale of WMCs equity stake in
WMCP to Sagittarius. Otherwise, an unreasonable curtailment of property rights without due process of law would ensue. Petitioners argument must therefore
fail.

FTAA Not Intended

Solely for Foreign Corporation
Equally barren of merit is the second ground cited by petitioners -- that the FTAA was intended to apply solely to a foreign corporation, as can allegedly
be seen from the provisions therein. They manage to cite only one WMCP FTAA provision that can be regarded as clearly intended to apply only to a foreign
contractor: Section 12, which provides for international commercial arbitration under the auspices of the International Chamber of Commerce, after local
remedies are exhausted. This provision, however, does not necessarily imply that the WMCP FTAA cannot be transferred to and assumed by a Filipino
corporation like Sagittarius, in which event the said provision should simply be disregarded as a superfluity.

No Need for a Separate

Litigation of the Sale of Shares

Petitioners claim as third ground the suspicious sale of shares from WMC to Sagittarius; hence, the need to litigate it in a separate case. Section 40 of RA
7942 (the Mining Law) allegedly requires the Presidents prior approval of a transfer.
A re-reading of the said provision, however, leads to a different conclusion. 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 date of
the approval thereof.
Section 40 expressly applies to the assignment or transfer of the FTAA, not to the sale and transfer of shares of stock in WMCP . Moreover, when the
transferee of an FTAA is another foreign corporation, there is a logical application of the requirement of prior approval by the President of the Republic and
notification to Congress in the event of assignment or transfer of an FTAA. In this situation, such approval and notification are appropriate safeguards,
considering that the new contractor is the subject of a foreign government.
On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need for such safeguard is not critical; hence, the lack of
prior approval and notification may not be deemed fatal as to render the transfer invalid. Besides, it is not as if approval by the President is entirely absent in
this instance. As pointed out by private respondent in its Memorandum,[13] the issue of approval is the subject of one of the cases brought by Lepanto against
Sagittarius in GR No. 162331. That case involved the review of the Decision of the Court of Appeals dated November 21, 2003 in CA-GR SP No. 74161, which
affirmed the DENR Order dated December 31, 2001 and the Decision of the Office of the President dated July 23, 2002, both approving the assignment of the
WMCP FTAA to Sagittarius.
Petitioners also question the sale price and the financial capacity of the transferee. According to the Deed of Absolute Sale dated January 23, 2001,
executed between WMC and Sagittarius, the price of the WMCP shares was fixed at US$9,875,000, equivalent to P553 million at an exchange rate of 56:1.
Sagittarius had an authorized capital stock of P250 million and a paid up capital of P60 million. Therefore, at the time of approval of the sale by the DENR, the
debt-to-equity ratio of the transferee was over 9:1 -- hardly ideal for an FTAA contractor, according to petitioners.
However, private respondents counter that the Deed of Sale specifically provides that the payment of the purchase price would take place only after
Sagittarius commencement of commercial production from mining operations, if at all. Consequently, under the circumstances, we believe it would not be
reasonable to conclude, as petitioners did, that the transferees high debt-to-equity ratio per se necessarily carried negative implications for the enterprise; and
it would certainly be improper to invalidate the sale on that basis, as petitioners propose.

FTAA Not Void,

Thus Transferrable
To bolster further their claim that the case is not moot, petitioners insist that the FTAA is void and, hence cannot be transferred; and that its transfer does
not operate to cure the constitutional infirmity that is inherent in it; neither will a change in the circumstances of one of the parties serve to ratify the void
contract.
While the discussion in their Final Memorandum was skimpy, petitioners in their Comment (on the MR) did ratiocinate that this Court had declared the
FTAA to be void because, at the time it was executed with WMCP, the latter was a fully foreign-owned corporation, in which the former vested full control and
management with respect to the exploration, development and utilization of mineral resources, contrary to the provisions of paragraph 4 of Section 2 of Article
XII of the Constitution. And since the FTAA was per se void, no valid right could be transferred; neither could it be ratified, so petitioners conclude.
Petitioners have assumed as fact that which has yet to be established. First and foremost, the Decision of this Court declaring the FTAA void has not yet
become final. That was precisely the reason the Court still heard Oral Argument in this case. Second, the FTAA does not vest in the foreign corporation full
control and supervision over the exploration, development and utilization of mineral resources, to the exclusion of the government. This point will be dealt with
in greater detail below; but for now, suffice it to say that a perusal of the FTAA provisions will prove that the government has effective overall direction and
control of the mining operations, including marketing and product pricing, and that the contractors work programs and budgets are subject to its review and
approval or disapproval.
As will be detailed later on, the government does not have to micro-manage the mining operations and dip its hands into the day-to-day management of
the enterprise in order to be considered as having overall control and direction. Besides, for practical and pragmatic reasons, there is a need for government

agencies to delegate certain aspects of the management work to the contractor. Thus the basis for declaring the FTAA void still has to be revisited,
reexamined and reconsidered.
Petitioners sniff at the citation of Chavez v. Public Estates Authority,[14] and Halili v. CA,[15] claiming that the doctrines in these cases are wholly
inapplicable to the instant case.
Chavez clearly teaches: Thus, the Court has ruled consistently that where a Filipino citizen sells land to an alien who later sells the land to a Filipino, the
invalidity of the first transfer is corrected by the subsequent sale to a citizen. Similarly, where the alien who buys the land subsequently acquires Philippine
citizenship, the sale is validated since the purpose of the constitutional ban to limit land ownership to Filipinos has been achieved. In short, the law disregards
the constitutional disqualification of the buyer to hold land if the land is subsequently transferred to a qualified party, or the buyer himself becomes a qualified
party.[16]
In their Comment, petitioners contend that in Chavez and Halili, the object of the transfer (the land) was not what was assailed for alleged
unconstitutionality. Rather, it was the transaction that was assailed; hence subsequent compliance with constitutional provisions would cure its infirmity. In
contrast, in the instant case it is the FTAA itself, the object of the transfer, that is being assailed as invalid and unconstitutional. So, petitioners claim that the
subsequent transfer of a void FTAA to a Filipino corporation would not cure the defect.
Petitioners are confusing themselves. The present Petition has been filed, precisely because the grantee of the FTAA was a wholly owned subsidiary of a
foreign corporation. It cannot be gainsaid that anyone would have asserted that the same FTAA was void if it had at the outset been issued to a Filipino
corporation. The FTAA, therefore, is not per se defective or unconstitutional. It was questioned only because it had been issued to an allegedly non-qualified,
foreign-owned corporation.
We believe that this case is clearly analogous to Halili, in which the land acquired by a non-Filipino was re-conveyed to a qualified vendee and the original
transaction was thereby cured. Paraphrasing Halili, the same rationale applies to the instant case: assuming arguendo the invalidity of its prior grant to a
foreign corporation, the disputed FTAA -- being now held by a Filipino corporation -- can no longer be assailed; the objective of the constitutional provision -- to
keep the exploration, development and utilization of our natural resources in Filipino hands -- has been served.
More accurately speaking, the present situation is one degree better than that obtaining in Halili, in which the original sale to a non-Filipino was clearly
and indisputably violative of the constitutional prohibition and thus void ab initio. In the present case, the issuance/grant of the subject FTAA to the then
foreign-owned WMCP was not illegal, void or unconstitutional at the time. The matter had to be brought to court, precisely for adjudication as to whether the
FTAA and the Mining Law had indeed violated the Constitution. Since, up to this point, the decision of this Court declaring the FTAA void has yet to become
final, to all intents and purposes, the FTAA must be deemed valid and constitutional. [17]
At bottom, we find completely outlandish petitioners contention that an FTAA could be entered into by the government only with a foreign
corporation, never with a Filipino enterprise. Indeed, the nationalistic provisions of the Constitution are all anchored on the protection of Filipino interests. How
petitioners can now argue that foreigners have the exclusive right to FTAAs totally overturns the entire basis of the Petition -- preference for the Filipino in the
exploration, development and utilization of our natural resources. It does not take deep knowledge of law and logic to understand that what the Constitution
grants to foreigners should be equally available to Filipinos.

Second Issue:
Whether the Court Can Still Decide the Case,
Even Assuming It Is Moot
All the protagonists are in agreement that the Court has jurisdiction to decide this controversy, even assuming it to be moot.
Petitioners stress the following points. First, while a case becomes moot and academic when there is no more actual controversy between the parties or
no useful purpose can be served in passing upon the merits, [18] what is at issue in the instant case is not only the validity of the WMCP FTAA, but also the
constitutionality of RA 7942 and its Implementing Rules and Regulations. Second, the acts of private respondent cannot operate to cure the law of its alleged
unconstitutionality or to divest this Court of its jurisdiction to decide. Third, the Constitution imposes upon the Supreme Court the duty to declare invalid any
law that offends the Constitution.

Petitioners also argue that no amendatory laws have been passed to make the Mining Act of 1995 conform to constitutional strictures (assuming that, at
present, it does not); that public respondents will continue to implement and enforce the statute until this Court rules otherwise; and that the said law continues
to be the source of legal authority in accepting, processing and approving numerous applications for mining rights.
Indeed, it appears that as of June 30, 2002, some 43 FTAA applications had been filed with the Mines and Geosciences Bureau (MGB), with an
aggregate area of 2,064,908.65 hectares -- spread over Luzon, the Visayas and Mindanao [19] -- applied for. It may be a bit far-fetched to assert, as petitioners
do, that each and every FTAA that was entered into under the provisions of the Mining Act invites potential litigation for as long as the constitutional issues are
not resolved with finality. Nevertheless, we must concede that there exists the distinct possibility that one or more of the future FTAAs will be the subject of yet
another suit grounded on constitutional issues.
But of equal if not greater significance is the cloud of uncertainty hanging over the mining industry, which is even now scaring away foreign investments.
Attesting to this climate of anxiety is the fact that the Chamber of Mines of the Philippines saw the urgent need to intervene in the case and to present its
position during the Oral Argument; and that Secretary General Romulo Neri of the National Economic Development Authority (NEDA) requested this Court to
allow him to speak, during that Oral Argument, on the economic consequences of the Decision of January 27, 2004. [20]
We are convinced. We now agree that the Court must recognize the exceptional character of the situation and the paramount public interest involved, as
well as the necessity for a ruling to put an end to the uncertainties plaguing the mining industry and the affected communities as a result of doubts cast upon
the constitutionality and validity of the Mining Act, the subject FTAA and future FTAAs, and the need to avert a multiplicity of suits. Paraphrasing Gonzales v.
Commission on Elections,[21] it is evident that strong reasons of public policy demand that the constitutionality issue be resolved now. [22]
In further support of the immediate resolution of the constitutionality issue, public respondents cite Acop v. Guingona,[23] to the effect that the courts will
decide a question -- otherwise moot and academic -- if it is capable of repetition, yet evading review.[24] Public respondents ask the Court to avoid a situation in
which the constitutionality issue may again arise with respect to another FTAA, the resolution of which may not be achieved until after it has become too late
for our mining industry to grow out of its infancy. They also recall Salonga v. Cruz Pao,[25] in which this Court declared that (t)he Court also has the duty to
formulate guiding and controlling constitutional principles, precepts, doctrines or rules. It has the symbolic function of educating the bench and bar on the
extent of protection given by constitutional guarantees. x x x.
The mootness of the case in relation to the WMCP FTAA led the undersigned ponente to state in his dissent to the Decision that there was no more
justiciable controversy and the plea to nullify the Mining Law has become a virtual petition for declaratory relief. [26] The entry of the Chamber of Mines of the
Philippines, Inc., however, has put into focus the seriousness of the allegations of unconstitutionality of RA 7942 and DAO 96-40 which converts the case to
one for prohibition[27] in the enforcement of the said law and regulations.
Indeed, this CMP entry brings to fore that the real issue in this case is whether paragraph 4 of Section 2 of Article XII of the Constitution is contravened by
RA 7942 and DAO 96-40, not whether it was violated by specific acts implementing RA 7942 and DAO 96-40. [W]hen an act of the legislative department is
seriously alleged to have infringed the Constitution, settling the controversy becomes the duty of this Court. By the mere enactment of the questioned law or
the approval of the challenged action, the dispute is said to have ripened into a judicial controversy even without any other overt act. [28] This ruling can be
traced from Taada v. Angara,[29] in which the Court said:
In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt raises a justiciable
controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of
the judiciary to settle the dispute.
xxxxxxxxx
As this Court has repeatedly and firmly emphasized in many cases, it will not shirk, digress from or abandon its sacred duty and authority to uphold the
Constitution in matters that involve grave abuse of discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality or
department of the government.[30]
Additionally, the entry of CMP into this case has also effectively forestalled any possible objections arising from the standing or legal interest of the
original parties.
For all the foregoing reasons, we believe that the Court should proceed to a resolution of the constitutional issues in this case.

Third Issue:
The Proper Interpretation of the Constitutional Phrase
Agreements Involving Either Technical or Financial Assistance
The constitutional provision at the nucleus of the controversy is paragraph 4 of Section 2 of Article XII of the 1987 Constitution. In order to appreciate its
context, Section 2 is reproduced in full:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development and utilization of natural resources shall be under the full control and supervision of the State. The State may directly
undertake such activities, or it may enter into co-production, joint venture or production-sharing agreements with Filipino citizens or corporations or
associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nations marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays and lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. [31]

No Restriction of Meaning by
a Verba Legis Interpretation
To interpret the foregoing provision, petitioners adamantly assert that the language of the Constitution should prevail; that the primary method of
interpreting it is to seek the ordinary meaning of the words used in its provisions. They rely on rulings of this Court, such as the following:
The fundamental principle in constitutional construction however is that the primary source from which to ascertain constitutional intent or purpose is the
language of the provision itself. The presumption is that the words in which the constitutional provisions are couched express the objective sought to be
attained. In other words, verba legis prevails. Only when the meaning of the words used is unclear and equivocal should resort be made to extraneous aids of
construction and interpretation, such as the proceedings of the Constitutional Commission or Convention to shed light on and ascertain the true intent or
purpose of the provision being construed.[32]
Very recently, in Francisco v. The House of Representatives,[33] this Court indeed had the occasion to reiterate the well-settled principles of constitutional
construction:
First, verba legis, that is, wherever possible, the words used in the Constitution must be given their ordinary meaning except where technical terms are
employed. x x x.

xxxxxxxxx
Second, where there is ambiguity, ratio legis est anima. The words of the Constitution should be interpreted in accordance with the intent of its framers. x x x.
xxxxxxxxx
Finally, ut magis valeat quam pereat. The Constitution is to be interpreted as a whole. [34]
For ease of reference and in consonance with verba legis, we reconstruct and stratify the aforequoted Section 2 as follows:
1. All natural resources are owned by the State. Except for agricultural lands, natural resources cannot be alienated by the State.
2. The exploration, development and utilization (EDU) of natural resources shall be under the full control and supervision of the State.
3. The State may undertake these EDU activities through either of the following:
(a) By itself directly and solely
(b) By (i) co-production; (ii) joint venture; or (iii) production sharing agreements with Filipino citizens or corporations, at least 60 percent of the capital of which
is owned by such citizens
4. Small-scale utilization of natural resources may be allowed by law in favor of Filipino citizens.
5. For large-scale EDU of minerals, petroleum and other mineral oils, the President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance according to the general terms and conditions provided by law x x x.
Note that in all the three foregoing mining activities -- exploration, development and utilization -- the State may undertake such EDU activities by itself
or in tandem with Filipinos or Filipino corporations, except in two instances: first, in small-scale utilization of natural resources, which Filipinos may be allowed
by law to undertake; and second, in large-scale EDU of minerals, petroleum and mineral oils, which may be undertaken by the State via agreements with
foreign-owned corporations involving either technical or financial assistance as provided by law.
Petitioners claim that the phrase agreements x x x involving either technical or financial assistance simply means technical assistance or financial
assistance agreements, nothing more and nothing else. They insist that there is no ambiguity in the phrase, and that a plain reading of paragraph 4 quoted
above leads to the inescapable conclusion that what a foreign-owned corporation may enter into with the government is merely an agreement
for either financial or technical assistance only, for the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils; such
a limitation, they argue, excludes foreign management and operation of a mining enterprise. [35]
This restrictive interpretation, petitioners believe, is in line with the general policy enunciated by the Constitution reserving to Filipino citizens and
corporations the use and enjoyment of the countrys natural resources. They maintain that this Courts Decision [36] of January 27, 2004 correctly declared the
WMCP FTAA, along with pertinent provisions of RA 7942, void for allowing a foreign contractor to have direct and exclusive management of a mining
enterprise. Allowing such a privilege not only runs counter to the full control and supervision that the State is constitutionally mandated to exercise over the
exploration, development and utilization of the countrys natural resources; doing so also vests in the foreign company beneficial ownership of our mineral
resources. It will be recalled that the Decision of January 27, 2004 zeroed in on management or other forms of assistance or other activities associated with
the service contracts of the martial law regime, since the management or operation of mining activities by foreign contractors, which is the primary feature of
service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate.
On the other hand, the intervenor[37] and public respondents argue that the FTAA allowed by paragraph 4 is not merely an agreement for supplying limited
and specific financial or technical services to the State. Rather, such FTAA is a comprehensive agreement for the foreign-owned
corporations integrated exploration, development and utilization of mineral, petroleum or other mineral oils on a large-scale basis. The agreement, therefore,

authorizes the foreign contractors rendition of a whole range of integrated and comprehensive services, ranging from the discovery to the development,
utilization and production of minerals or petroleum products.
We do not see how applying a strictly literal or verba legis interpretation of paragraph 4 could inexorably lead to the conclusions arrived at in
the ponencia. First, the drafters choice of words -- their use of the phrase agreements x x x involving either technical or financial assistance -- does not
indicate the intent to exclude other modes of assistance. The drafters opted to use involving when they could have simply said agreements for financial or
technical assistance, if that was their intention to begin with. In this case, the limitation would be very clear and no further debate would ensue.
In contrast, the use of the word involving signifies the possibility of the inclusion of other forms of assistance or activities having to do with,
otherwise related to or compatible with financial or technical assistance. The word involving as used in this context has three connotations that can be
differentiated thus: one, the sense of concerning, having to do with, or affecting; two, entailing, requiring, implying or necessitating; and three, including,
containing or comprising.[38]
Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word involving, when understood in the sense of including, as
in including technical or financial assistance, necessarily implies that there are activities other than those that are being included. In other words, if an
agreement includes technical or financial assistance, there is apart from such assistance -- something else already in, and covered or may be covered by, the
said agreement.
In short, it allows for the possibility that matters, other than those explicitly mentioned, could be made part of the agreement. Thus, we are now led to the
conclusion that the use of the word involving implies that these agreements with foreign corporations are not limited to mere financial or technical assistance.
The difference in sense becomes very apparent when we juxtapose agreements for technical or financial assistance against agreements including technical
or financial assistance. This much is unalterably clear in a verba legis approach.
Second, if the real intention of the drafters was to confine foreign corporations to financial or technical assistance and nothing more, their language would
have certainly been so unmistakably restrictive and stringent as to leave no doubt in anyones mind about their true intent. For example, they would have
used the sentence foreign corporations are absolutely prohibited from involvement in the management or operation of mining or similar ventures or words of
similar import. A search for such stringent wording yields negative results. Thus, we come to the inevitable conclusion that there was a conscious and
deliberate decision to avoid the use of restrictive wording that bespeaks an intent not to use the expression agreements x x x involving either
technical or financial assistance in an exclusionary and limiting manner.

Deletion of Service Contracts to

Avoid Pitfalls of Previous Constitutions,
Not to Ban Service Contracts Per Se
Third, we do not see how a verba legis approach leads to the conclusion that the management or operation of mining activities by foreign contractors,
which is the primary feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate. Nowhere in the abovequoted Section can be discerned the objective to keep out of foreign hands the management or operation of mining activities or the plan to eradicate service
contracts as these were understood in the 1973 Constitution. Still, petitioners maintain that the deletion or omission from the 1987 Constitution of the term
service contracts found in the 1973 Constitution sufficiently proves the drafters intent to exclude foreigners from the management of the affected enterprises.
To our mind, however, such intent cannot be definitively and conclusively established from the mere failure to carry the same expression or term over to
the new Constitution, absent a more specific, explicit and unequivocal statement to that effect. What petitioners seek (a complete ban on foreign participation
in the management of mining operations, as previously allowed by the earlier Constitutions) is nothing short of bringing about a momentous sea change in the
economic and developmental policies; and the fundamentally capitalist, free-enterprise philosophy of our government. We cannot imagine such a radical
shift being undertaken by our government, to the great prejudice of the mining sector in particular and our economy in general, merely on the basis of
the omission of the terms service contract from or the failure to carry them over to the new Constitution. There has to be a much more definite and even
unarguable basis for such a drastic reversal of policies.
Fourth, a literal and restrictive interpretation of paragraph 4, such as that proposed by petitioners, suffers from certain internal logical inconsistencies that
generate ambiguities in the understanding of the provision. As the intervenor pointed out, there has never been any constitutional or statutory provision that

reserved to Filipino citizens or corporations, at least 60 percent of which is Filipino-owned, the rendition of financial or technical assistance to companies
engaged in mining or the development of any other natural resource. The taking out of foreign-currency or peso-denominated loans or any other kind of
financial assistance, as well as the rendition of technical assistance -- whether to the State or to any other entity in the Philippines -- has never been restricted
in favor of Filipino citizens or corporations having a certain minimum percentage of Filipino equity. Such a restriction would certainly be preposterous and
unnecessary. As a matter of fact, financial, and even technical assistance, regardless of the nationality of its source, would be welcomed in the mining industry
anytime with open arms, on account of the dearth of local capital and the need to continually update technological know-how and improve technical skills.
There was therefore no need for a constitutional provision specifically allowing foreign-owned corporations to render financial or technical assistance,
whether in respect of mining or some other resource development or commercial activity in the Philippines. The last point needs to be emphasized: if
merely financial or technical assistance agreements are allowed, there would be no need to limit them to large-scale mining operations, as there
would be far greater need for them in the smaller-scale mining activities (and even in non-mining areas). Obviously, the provision in question was
intended to refer to agreements other than those for mere financial or technical assistance.
In like manner, there would be no need to require the President of the Republic to report to Congress, if only financial or technical assistance agreements
are involved. Such agreements are in the nature of foreign loans that -- pursuant to Section 20 of Article VII [39] of the 1987 Constitution -- the President may
contract or guarantee, merely with the prior concurrence of the Monetary Board. In turn, the Board is required to report to Congress within thirty days from the
end of every quarter of the calendar year, not thirty days after the agreement is entered into.
And if paragraph 4 permits only agreements for loans and other forms of financial, or technical assistance, what is the point of requiring that they
be based on real contributions to the economic growth and general welfare of the country ? For instance, how is one to measure and assess the real
contributions to the economic growth and general welfare of the country that may ensue from a foreign-currency loan agreement or a technical-assistance
agreement for, say, the refurbishing of an existing power generating plant for a mining operation somewhere in Mindanao? Such a criterion would make more
sense when applied to a major business investment in a principal sector of the industry.
The conclusion is clear and inescapable -- a verba legis construction shows that paragraph 4 is not to be understood as one limited only to foreign loans
(or other forms of financial support) and to technical assistance. There is definitely more to it than that. These are provisions permitting participation by
foreign companies; requiring the Presidents report to Congress; and using, as yardstick, contributions based on economic growth and general
welfare. These were neither accidentally inserted into the Constitution nor carelessly cobbled together by the drafters in lip service to shallow
nationalism. The provisions patently have significance and usefulness in a context that allows agreements with foreign companies to include more than mere
financial or technical assistance.
Fifth, it is argued that Section 2 of Article XII authorizes nothing more than a rendition of specific and limited financial service or technical assistance by a
foreign company. This argument begs the question To whom or for whom would it be rendered? or Who is being assisted? If the answer is The State, then it
necessarily implies that the State itself is the one directly and solely undertaking the large-scale exploration, development and utilization of a mineral resource,
so it follows that the State must itself bear the liability and cost of repaying the financing sourced from the foreign lender and/or of paying compensation to the
foreign entity rendering technical assistance.
However, it is of common knowledge, and of judicial notice as well, that the government is and has for many many years been financially strapped, to the
point that even the most essential services have suffered serious curtailments -- education and health care, for instance, not to mention judicial services -have had to make do with inadequate budgetary allocations. Thus, government has had to resort to build-operate-transfer and similar arrangements with the
private sector, in order to get vital infrastructure projects built without any governmental outlay.
The very recent brouhaha over the gargantuan fiscal crisis or budget deficit merely confirms what the ordinary citizen has suspected all along. After the
reality check, one will have to admit the implausibility of a direct undertaking -- by the State itself -- of large-scale exploration, development and utilization of
minerals, petroleum and other mineral oils. Such an undertaking entails not only humongous capital requirements, but also the attendant risk of never finding
and developing economically viable quantities of minerals, petroleum and other mineral oils. [40]
It is equally difficult to imagine that such a provision restricting foreign companies to the rendition of only financial or technical assistance to the
government was deliberately crafted by the drafters of the Constitution, who were all well aware of the capital-intensive and technology-oriented nature of
large-scale mineral or petroleum extraction and the countrys deficiency in precisely those areas. [41] To say so would be tantamount to asserting that the
provision was purposely designed to ladle the large-scale development and utilization of mineral, petroleum and related resources with impossible conditions;
and to remain forever and permanently reserved for future generations of Filipinos.

A More Reasonable Look

at the Charters Plain Language
Sixth, we shall now look closer at the plain language of the Charter and examining the logical inferences. The drafters chose to emphasize and
highlight agreements x x x involving either technical or financial assistance in relation to foreign corporations participation in large-scale EDU. The inclusion of
this clause on technical or financial assistance recognizes the fact that foreign business entities and multinational corporations are the ones with the resources
and know-how to provide technical and/or financial assistance of the magnitude and type required for large-scale exploration, development and utilization of
these resources.
The drafters -- whose ranks included many academicians, economists, businessmen, lawyers, politicians and government officials -- were not unfamiliar
with the practices of foreign corporations and multinationals.
Neither were they so nave as to believe that these entities would provide assistance without conditionalities or some quid pro quo. Definitely, as business
persons well know and as a matter of judicial notice, this matter is not just a question of signing a promissory note or executing a technology transfer
agreement. Foreign corporations usually require that they be given a say in the management, for instance, of day-to-day operations of the joint venture. They
would demand the appointment of their own men as, for example, operations managers, technical experts, quality control heads, internal auditors or
comptrollers. Furthermore, they would probably require seats on the Board of Directors -- all these to ensure the success of the enterprise and the repayment
of the loans and other financial assistance and to make certain that the funding and the technology they supply would not go to waste. Ultimately, they would
also want to protect their business reputation and bottom lines. [42]
In short, the drafters will have to be credited with enough pragmatism and savvy to know that these foreign entities will not enter into such agreements
involving assistance without requiring arrangements for the protection of their investments, gains and benefits.
Thus, by specifying such agreements involving assistance, the drafters necessarily gave implied assent to everything that these agreements necessarily
entailed; or that could reasonably be deemed necessary to make them tenable and effective, including management authority with respect to the day-to-day
operations of the enterprise and measures for the protection of the interests of the foreign corporation, PROVIDED THAT Philippine sovereignty over natural
resources and full control over the enterprise undertaking the EDU activities remain firmly in the State.

Petitioners Theory Deflated by the

Absence of Closing-Out Rules or Guidelines
Seventh and final point regarding the plain-language approach, one of the practical difficulties that results from it is the fact that there is nothing by way of
transitory provisions that would serve to confirm the theory that the omission of the term service contract from the 1987 Constitution signaled the demise of
service contracts.
The framers knew at the time they were deliberating that there were various service contracts extant and in force and effect, including those in the
petroleum industry. Many of these service contracts were long-term (25 years) and had several more years to run. If they had meant to ban service contracts
altogether, they would have had to provide for the termination or pretermination of the existing contracts. Accordingly, they would have supplied the specifics
and the when and how of effecting the extinguishment of these existing contracts (or at least the mechanics for determining them); and of putting in place the
means to address the just claims of the contractors for compensation for their investments, lost opportunities, and so on, if not for the recovery thereof.
If the framers had intended to put an end to service contracts, they would have at least left specific instructions to Congress to deal with these closing-out
issues, perhaps by way of general guidelines and a timeline within which to carry them out. The following are some extant examples of such transitory
guidelines set forth in Article XVIII of our Constitution:
Section 23. Advertising entities affected by paragraph (2), Section 11 of Article XVI of this Constitution shall have five years from its ratification to comply on a
graduated and proportionate basis with the minimum Filipino ownership requirement therein.
xxxxxxxxx

Section 25. After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of America concerning military bases,
foreign military bases, troops, or facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate and, when the
Congress so requires, ratified by a majority of the votes cast by the people in a national referendum held for that purpose, and recognized as a treaty by the
other contracting State.
Section 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill-gotten wealth
shall remain operative for not more than eighteen months after the ratification of this Constitution. However, in the national interest, as certified by the
President, the Congress may extend such period.
A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order and the list of the sequestered or frozen properties shall
forthwith be registered with the proper court. For orders issued before the ratification of this Constitution, the corresponding judicial action or proceeding shall
be filed within six months from its ratification. For those issued after such ratification, the judicial action or proceeding shall be commenced within six months
from the issuance thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is commenced as herein provided.

[43]

It is inconceivable that the drafters of the Constitution would leave such an important matter -- an expression of sovereignty as it were -- indefinitely
hanging in the air in a formless and ineffective state. Indeed, the complete absence of even a general framework only serves to further deflate petitioners
theory, like a childs balloon losing its air.
Under the circumstances, the logical inconsistencies resulting from petitioners literal and purely verba legis approach to paragraph 4 of Section 2 of
Article XII compel a resort to other aids to interpretation.

Petitioners Posture Also Negated

by Ratio Legis Et Anima
Thus, in order to resolve the inconsistencies, incongruities and ambiguities encountered and to supply the deficiencies of the plain-language approach,
there is a need for recourse to the proceedings of the 1986 Constitutional Commission. There is a need for ratio legis et anima.

Service Contracts Not

Deconstitutionalized
Pertinent portions of the deliberations of the members of the Constitutional Commission (ConCom) conclusively show that they discussed agreements
involving either technical or financial assistance in the same breadth as service contracts and used the terms interchangeably. The following exchange
between Commissioner Jamir (sponsor of the provision) and Commissioner Suarez irrefutably proves that the agreements involving technical or financial
assistance were none other than service contracts.
THE PRESIDENT. Commissioner Jamir is recognized. We are still on Section 3.
MR. JAMIR. Yes, Madam President. With respect to the second paragraph of Section 3, my amendment by substitution reads: THE PRESIDENT
MAY ENTER INTO AGREEMENTS WITH FOREIGN-OWNED CORPORATIONS INVOLVING EITHER TECHNICAL OR FINANCIAL
ASSISTANCE FOR LARGE-SCALE EXPLORATION, DEVELOPMENT AND UTILIZATION OF NATURAL RESOURCES ACCORDING TO THE
TERMS AND CONDITIONS PROVIDED BY LAW.
MR. VILLEGAS. The Committee accepts the amendment. Commissioner Suarez will give the background.

MR. JAMIR. Thank you.

THE PRESIDENT. Commissioner Suarez is recognized.
MR. SUAREZ. Thank you, Madam President.
Will Commissioner Jamir answer a few clarificatory questions?
MR. JAMIR. Yes, Madam President.
MR. SUAREZ. This particular portion of the section has reference to what was popularly known before as service contracts, among other things,
is that correct?
MR. JAMIR. Yes, Madam President.
MR. SUAREZ. As it is formulated, the President may enter into service contracts but subject to the guidelines that may be promulgated by
Congress?
MR. JAMIR. That is correct.
MR. SUAREZ. Therefore, that aspect of negotiation and consummation will fall on the President, not upon Congress?
MR. JAMIR. That is also correct, Madam President.
MR. SUAREZ. Except that all of these contracts, service or otherwise, must be made strictly in accordance with guidelines prescribed by
Congress?
MR. JAMIR. That is also correct.
MR. SUAREZ. And the Gentleman is thinking in terms of a law that uniformly covers situations of the same nature?
MR. JAMIR. That is 100 percent correct.
MR. SUAREZ. I thank the Commissioner.
MR. JAMIR. Thank you very much.[44]
The following exchange leaves no doubt that the commissioners knew exactly what they were dealing with: service contracts.
THE PRESIDENT. Commissioner Gascon is recognized.
MR. GASCON. Commissioner Jamir had proposed an amendment with regard to special service contracts which was accepted by the Committee.
Since the Committee has accepted it, I would like to ask some questions.
THE PRESIDENT. Commissioner Gascon may proceed.
MR. GASCON. As it is proposed now, such service contracts will be entered into by the President with the guidelines of a general law on service
contract to be enacted by Congress. Is that correct?
MR. VILLEGAS. The Commissioner is right, Madam President.
MR. GASCON. According to the original proposal, if the President were to enter into a particular agreement, he would need the concurrence of
Congress. Now that it has been changed by the proposal of Commissioner Jamir in that Congress will set the general law to which the
President shall comply, the President will, therefore, not need the concurrence of Congress every time he enters into service contracts. Is that
correct?
MR. VILLEGAS. That is right.
MR. GASCON. The proposed amendment of Commissioner Jamir is in indirect contrast to my proposed amendment, so I would like to object and
present my proposed amendment to the body.

xxxxxxxxx
MR. GASCON. Yes, it will be up to the body.
I feel that the general law to be set by Congress as regard service contract agreements which the President will enter into might be too general or
since we do not know the content yet of such a law, it might be that certain agreements will be detrimental to the interest of the Filipinos. This is
in direct contrast to my proposal which provides that there be effective constraints in the implementation of service contracts.
So instead of a general law to be passed by Congress to serve as a guideline to the President when entering into service contract agreements, I
propose that every service contract entered into by the President would need the concurrence of Congress, so as to assure the Filipinos of
their interests with regard to the issue in Section 3 on all lands of the public domain. My alternative amendment, which we will discuss later,
reads: THAT THE PRESIDENT SHALL ENTER INTO SUCH AGREEMENTS ONLY WITH THE CONCURRENCE OF TWO-THIRDS VOTE OF
ALL THE MEMBERS OF CONGRESS SITTING SEPARATELY.
xxxxxxxxx
MR. BENGZON. The reason we made that shift is that we realized the original proposal could breed corruption. By the way, this is not just confined
to service contracts but also to financial assistance. If we are going to make every single contract subject to the concurrence of Congress
which, according to the Commissioners amendment is the concurrence of two-thirds of Congress voting separately then (1) there is a very great
chance that each contract will be different from another; and (2) there is a great temptation that it would breed corruption because of the great
lobbying that is going to happen. And we do not want to subject our legislature to that.
Now, to answer the Commissioners apprehension, by general law, we do not mean statements of motherhood. Congress can build all the restrictions that it
wishes into that general law so that every contract entered into by the President under that specific area will have to be uniform. The President has no choice
but to follow all the guidelines that will be provided by law.
MR. GASCON. But my basic problem is that we do not know as of yet the contents of such a general law as to how much constraints there will be in
it. And to my mind, although the Committees contention that the regular concurrence from Congress would subject Congress to extensive
lobbying, I think that is a risk we will have to take since Congress is a body of representatives of the people whose membership will be changing
regularly as there will be changing circumstances every time certain agreements are made. It would be best then to keep in tab and attuned to
the interest of the Filipino people, whenever the President enters into any agreement with regard to such an important matter as technical or
financial assistance for large-scale exploration, development and utilization of natural resources or service contracts, the peoples
elected representatives should be on top of it.
xxxxxxxxx
MR. OPLE. Madam President, we do not need to suspend the session. If Commissioner Gascon needs a few minutes, I can fill up the remaining
time while he completes his proposed amendment. I just wanted to ask Commissioner Jamir whether he would entertain a minor amendment to
his amendment, and it reads as follows: THE PRESIDENT SHALL SUBSEQUENTLY NOTIFY CONGRESS OF EVERY SERVICE
CONTRACT ENTERED INTO IN ACCORDANCE WITH THE GENERAL LAW. I think the reason is, if I may state it briefly, as Commissioner
Bengzon said, Congress can always change the general law later on to conform to new perceptions of standards that should be built
into service contracts. But the only way Congress can do this is if there were a notification requirement from the Office of the President that
such service contracts had been entered into, subject then to the scrutiny of the Members of Congress. This pertains to a situation where
the service contracts are already entered into, and all that this amendment seeks is the reporting requirement from the Office of the President.
Will Commissioner Jamir entertain that?
MR. JAMIR. I will gladly do so, if it is still within my power.
MR. VILLEGAS. Yes, the Committee accepts the amendment.

xxxxxxxxx
SR. TAN. Madam President, may I ask a question?
THE PRESIDENT. Commissioner Tan is recognized.
SR. TAN. Am I correct in thinking that the only difference between these future service contracts and the past service contracts under Mr. Marcos
is the general law to be enacted by the legislature and the notification of Congress by the President? That is the only difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards.
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President.[45]

More Than Mere Financial

and Technical Assistance
Entailed by the Agreements
The clear words of Commissioner Jose N. Nolledo quoted below explicitly and eloquently demonstrate that the drafters knew that the agreements with
foreign corporations were going to entail not mere technical or financial assistance but, rather, foreign investment in and management of an enterprise
involved in large-scale exploration, development and utilization of minerals, petroleum, and other mineral oils.
THE PRESIDENT. Commissioner Nolledo is recognized.
MR. NOLLEDO. Madam President, I have the permission of the Acting Floor Leader to speak for only two minutes in favor of the amendment of
Commissioner Gascon.
THE PRESIDENT. Commissioner Nolledo may proceed.
MR. NOLLEDO. With due respect to the members of the Committee and Commissioner Jamir, I am in favor of the objection of Commissioner
Gascon.
Madam President, I was one of those who refused to sign the 1973 Constitution, and one of the reasons is that there were many provisions in the Transitory
Provisions therein that favored aliens. I was shocked when I read a provision authorizing service contracts while we, in this Constitutional Commission,
provided for Filipino control of the economy. We are, therefore, providing for exceptional instances where aliens may circumvent Filipino control of our
economy. And one way of circumventing the rule in favor of Filipino control of the economy is to recognize service contracts.
As far as I am concerned, if I should have my own way, I am for the complete deletion of this provision. However, we are presenting a compromise in the
sense that we are requiring a two-thirds vote of all the Members of Congress as a safeguard. I think we should not mistrust the future Members of Congress
by saying that the purpose of this provision is to avoid corruption. We cannot claim that they are less patriotic than we are. I think the Members of this
Commission should know that entering into service contracts is an exception to the rule on protection of natural resources for the interest of the nation, and
therefore, being an exception it should be subject, whenever possible, to stringent rules. It seems to me that we are liberalizing the rules in favor of aliens.
I say these things with a heavy heart, Madam President. I do not claim to be a nationalist, but I love my country. Although we need investments, we must
adopt safeguards that are truly reflective of the sentiments of the people and not mere cosmetic safeguards as they now appear in the Jamir amendment.
(Applause)
Thank you, Madam President.[46]

Another excerpt, featuring then Commissioner (now Chief Justice) Hilario G. Davide Jr., indicates the limitations of the scope of such service contracts
-- they are valid only in regard to minerals, petroleum and other mineral oils, not to all natural resources.
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. Thank you, Madam President. This is an amendment to the Jamir amendment and also to the Ople amendment. I propose to delete
NATURAL RESOURCES and substitute it with the following: MINERALS, PETROLEUM AND OTHER MINERAL OILS. On the Ople
amendment, I propose to add: THE NOTIFICATION TO CONGRESS SHALL BE WITHIN THIRTY DAYS FROM THE EXECUTION OF THE
SERVICE CONTRACT.
THE PRESIDENT. What does the Committee say with respect to the first amendment in lieu of NATURAL RESOURCES?
MR. VILLEGAS. Could Commissioner Davide explain that?
MR. DAVIDE. Madam President, with the use of NATURAL RESOURCES here, it would necessarily include all lands of the public domain, our
marine resources, forests, parks and so on. So we would like to limit the scope of these service contracts to those areas really where these
may be needed, the exploitation, development and exploration of minerals, petroleum and other mineral oils. And so, we believe that we should
really, if we want to grant service contracts at all, limit the same to only those particular areas where Filipino capital may not be
sufficient, and not to all natural resources.
MR. SUAREZ. Just a point of clarification again, Madam President. When the Commissioner made those enumerations and specifications, I
suppose he deliberately did not include agricultural land?
MR. DAVIDE. That is precisely the reason we have to enumerate what these resources are into which service contracts may enter. So, beyond the
reach of any service contract will be lands of the public domain, timberlands, forests, marine resources, fauna and flora, wildlife and national
parks.[47]
After the Jamir amendment was voted upon and approved by a vote of 21 to 10 with 2 abstentions, Commissioner Davide made the following statement,
which is very relevant to our quest:
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I am very glad that Commissioner Padilla emphasized minerals, petroleum and mineral oils. The Commission has just approved the
possible foreign entry into the development, exploration and utilization of these minerals, petroleum and other mineral oils by virtue of the Jamir
amendment. I voted in favor of the Jamir amendment because it will eventually give way to vesting in exclusively Filipino citizens and
corporations wholly owned by Filipino citizens the right to utilize the other natural resources. This means that as a matter of policy, natural
resources should be utilized and exploited only by Filipino citizens or corporations wholly owned by such citizens. But by virtue of the Jamir
amendment, since we feel that Filipino capital may not be enough for the development and utilization of minerals, petroleum and other mineral
oils, the President can enter into service contracts with foreign corporations precisely for the development and utilization of such resources.
And so, there is nothing to fear that we will stagnate in the development of minerals, petroleum and mineral oils because we now allow
service contracts. x x x. [48]
The foregoing are mere fragments of the framers lengthy discussions of the provision dealing with agreements x x x involving either technical or financial
assistance, which ultimately became paragraph 4 of Section 2 of Article XII of the Constitution. Beyond any doubt, the members of the ConCom were actually
debating about the martial-law-era service contracts for which they were crafting appropriate safeguards.
In the voting that led to the approval of Article XII by the ConCom, the explanations given by Commissioners Gascon, Garcia and Tadeo indicated that
they had voted to reject this provision on account of their objections to the constitutionalization of the service contract concept.
Mr. Gascon said, I felt that if we would constitutionalize any provision on service contracts, this should always be with the concurrence of Congress and
not guided only by a general law to be promulgated by Congress. [49] Mr. Garcia explained, Service contracts are given constitutional legitimization in Sec. 3,
even when they have been proven to be inimical to the interests of the nation, providing, as they do, the legal loophole for the exploitation of our natural
resources for the benefit of foreign interests. [50] Likewise, Mr. Tadeo cited inter alia the fact that service contracts continued to subsist, enabling foreign
interests to benefit from our natural resources. [51] It was hardly likely that these gentlemen would have objected so strenuously, had the provision
called for mere technical or financial assistance and nothing more.

The deliberations of the ConCom and some commissioners explanation of their votes leave no room for doubt that the service contract concept precisely
underpinned the commissioners understanding of the agreements involving either technical or financial assistance.

Summation of the
Concom Deliberations
At this point, we sum up the matters established, based on a careful reading of the ConCom deliberations, as follows:
In their deliberations on what was to become paragraph 4, the framers used the term service contracts in referring to agreements x x x
involving either technical or financial assistance.
They spoke of service contracts as the concept was understood in the 1973 Constitution.
It was obvious from their discussions that they were not about to ban or eradicate service contracts.
Instead, they were plainly crafting provisions to put in place safeguards that would eliminate or minimize the abuses prevalent during the
marital law regime. In brief, they were going to permit service contracts with foreign corporations as contractors, but with safety measures to
prevent abuses, as an exception to the general norm established in the first paragraph of Section 2 of Article XII. This provision reserves or
limits to Filipino citizens -- and corporations at least 60 percent of which is owned by such citizens -- the exploration, development and
utilization of natural resources.
This provision was prompted by the perceived insufficiency of Filipino capital and the felt need for foreign investments in the EDU of
minerals and petroleum resources.
The framers for the most part debated about the sort of safeguards that would be considered adequate and reasonable. But some of them,
having more radical leanings, wanted to ban service contracts altogether; for them, the provision would permit aliens to exploit and benefit
from the nations natural resources, which they felt should be reserved only for Filipinos.
In the explanation of their votes, the individual commissioners were heard by the entire body. They sounded off their individual opinions,
openly enunciated their philosophies, and supported or attacked the provisions with fervor. Everyones viewpoint was heard.
In the final voting, the Article on the National Economy and Patrimony -- including paragraph 4 allowing service contracts with foreign
corporations as an exception to the general norm in paragraph 1 of Section 2 of the same article -- was resoundingly approved by a vote of
32 to 7, with 2 abstentions.

Agreements Involving Technical

or Financial Assistance Are
Service Contracts With Safeguards
From the foregoing, we are impelled to conclude that the phrase agreements involving either technical or financial assistance, referred to in paragraph 4,
are in fact service contracts.But unlike those of the 1973 variety, the new ones are between foreign corporations acting as contractors on the one hand; and on
the other, the government as principal or owner of the works. In the new service contracts, the foreign contractors provide capital, technology and technical
know-how, and managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and the government, through its agencies
(DENR, MGB), actively exercises control and supervision over the entire operation.
Such service contracts may be entered into only with respect to minerals, petroleum and other mineral oils. The grant thereof is subject to several
safeguards, among which are these requirements:

(1) The service contract shall be crafted in accordance with a general law that will set standard or uniform terms, conditions and requirements, presumably to
attain a certain uniformity in provisions and avoid the possible insertion of terms disadvantageous to the country.
(2) The President shall be the signatory for the government because, supposedly before an agreement is presented to the President for signature, it will have
been vetted several times over at different levels to ensure that it conforms to law and can withstand public scrutiny.
(3) Within thirty days of the executed agreement, the President shall report it to Congress to give that branch of government an opportunity to look over the
agreement and interpose timely objections, if any.

Use of the Record of the

ConCom to Ascertain Intent
At this juncture, we shall address, rather than gloss over, the use of the framers intent approach, and the criticism hurled by petitioners who quote a ruling
of this Court:
While it is permissible in this jurisdiction to consult the debates and proceedings of the constitutional convention in order to arrive at the reason and purpose of
the resulting Constitution, resort thereto may be had only when other guides fail as said proceedings are powerless to vary the terms of the Constitution when
the meaning is clear. Debates in the constitutional convention are of value as showing the views of the individual members, and as indicating the reason for
their votes, but they give us no light as to the views of the large majority who did not talk, much less the mass of our fellow citizens whose votes at the polls
gave that instrument the force of fundamental law. We think it safer to construe the constitution from what appears upon its face. The proper interpretation
therefore depends more on how it was understood by the people adopting it than in the framers understanding thereof. [52]
The notion that the deliberations reflect only the views of those members who spoke out and not the views of the majority who remained silent should be
clarified. We must never forget that those who spoke out were heard by those who remained silent and did not react. If the latter were silent because they
happened not to be present at the time, they are presumed to have read the minutes and kept abreast of the deliberations. By remaining silent, they are
deemed to have signified their assent to and/or conformity with at least some of the views propounded or their lack of objections thereto. It was incumbent
upon them, as representatives of the entire Filipino people, to follow the deliberations closely and to speak their minds on the matter if they did not see eye to
eye with the proponents of the draft provisions.
In any event, each and every one of the commissioners had the opportunity to speak out and to vote on the matter. Moreover, the individual explanations
of votes are on record, and they show where each delegate stood on the issues . In sum, we cannot completely denigrate the value or usefulness of the
record of the ConCom, simply because certain members chose not to speak out.
It is contended that the deliberations therein did not necessarily reflect the thinking of the voting population that participated in the referendum and ratified
the Constitution. Verily, whether we like it or not, it is a bit too much to assume that every one of those who voted to ratify the proposed Charter did so only
after carefully reading and mulling over it, provision by provision.
Likewise, it appears rather extravagant to assume that every one of those who did in fact bother to read the draft Charter actually understood the import
of its provisions, much less analyzed it vis--vis the previous Constitutions. We believe that in reality, a good percentage of those who voted in favor of it did so
more out of faith and trust. For them, it was the product of the hard work and careful deliberation of a group of intelligent, dedicated and trustworthy men and
women of integrity and conviction, whose love of country and fidelity to duty could not be questioned.
In short, a large proportion of the voters voted yes because the drafters, or a majority of them, endorsed the proposed Constitution. What this fact
translates to is the inescapable conclusion that many of the voters in the referendum did not form their own isolated judgment about the draft Charter, much
less about particular provisions therein. They only relied or fell back and acted upon the favorable endorsement or recommendation of the framers as a group.
In other words, by voting yes, they may be deemed to have signified their voluntary adoption of the understanding and interpretation of the delegates with
respect to the proposed Charter and its particular provisions. If its good enough for them, its good enough for me; or, in many instances, If its good enough for
President Cory Aquino, its good enough for me.

And even for those who voted based on their own individual assessment of the proposed Charter, there is no evidence available to indicate that their
assessment or understanding of its provisions was in fact different from that of the drafters. This unwritten assumption seems to be petitioners as well. For all
we know, this segment of voters must have read and understood the provisions of the Constitution in the same way the framers had, an assumption that would
account for the favorable votes.
Fundamentally speaking, in the process of rewriting the Charter, the members of the ConCom as a group were supposed to represent the entire Filipino
people. Thus, we cannot but regard their views as being very much indicative of the thinking of the people with respect to the matters deliberated upon and to
the Charter as a whole.
It is therefore reasonable and unavoidable to make the following conclusion, based on the above arguments. As written by the framers and
ratified and adopted by the people, the Constitution allows the continued use of service contracts with foreign corporations -- as contractors who
would invest in and operate and manage extractive enterprises, subject to the full control and supervision of the State -- sans the abuses of the
past regime. The purpose is clear: to develop and utilize our mineral, petroleum and other resources on a large scale for the immediate and
tangible benefit of the Filipino people.
In view of the foregoing discussion, we should reverse the Decision of January 27, 2004, and in fact now hold a view different from that of the Decision,
which had these findings: (a) paragraph 4 of Section 2 of Article XII limits foreign involvement in the local mining industry to agreements strictly for either
financial or technical assistance only; (b) the same paragraph precludes agreements that grant to foreign corporations the management of local mining
operations, as such agreements are purportedly in the nature of service contracts as these were understood under the 1973 Constitution; (c) these service
contracts were supposedly de-constitutionalized and proscribed by the omission of the term service contracts from the 1987 Constitution; (d) since the WMCP
FTAA contains provisions permitting the foreign contractor to manage the concern, the said FTAA is invalid for being a prohibited service contract; and (e)
provisions of RA 7942 and DAO 96-40, which likewise grant managerial authority to the foreign contractor, are also invalid and unconstitutional.

Ultimate Test: States Control

Determinative of Constitutionality
But we are not yet at the end of our quest. Far from it. It seems that we are confronted with a possible collision of constitutional provisions. On the one
hand, paragraph 1 of Section 2 of Article XII explicitly mandates the State to exercise full control and supervision over the exploration, development and
utilization of natural resources. On the other hand, paragraph 4 permits safeguarded service contracts with foreign contractors. Normally, pursuant thereto, the
contractors exercise management prerogatives over the mining operations and the enterprise as a whole. There is thus a legitimate ground to be concerned
that either the States full control and supervision may rule out any exercise of management authority by the foreign contractor; or, the other way around,
allowing the foreign contractor full management prerogatives may ultimately negate the States full control and supervision.

Ut Magis Valeat
Quam Pereat
Under the third principle of constitutional construction laid down in Francisco -- ut magis valeat quam pereat -- every part of the Constitution is to be given
effect, and the Constitution is to be read and understood as a harmonious whole. Thus, full control and supervision by the State must be understood as one
that does not preclude the legitimate exercise of management prerogatives by the foreign contractor. Before any further discussion, we must stress the
primacy and supremacy of the principle of sovereignty and State control and supervision over all aspects of exploration, development and utilization of the
countrys natural resources, as mandated in the first paragraph of Section 2 of Article XII.
But in the next breadth we have to point out that full control and supervision cannot be taken literally to mean that the State controls and
supervises everything involved, down to the minutest details, and makes all decisions required in the mining operations. This strained concept of control and
supervision over the mining enterprise would render impossible the legitimate exercise by the contractors of a reasonable degree of management prerogative
and authority necessary and indispensable to their proper functioning.

For one thing, such an interpretation would discourage foreign entry into large-scale exploration, development and utilization activities; and result in the
unmitigated stagnation of this sector, to the detriment of our nations development. This scenario renders paragraph 4 inoperative and useless. And as
respondents have correctly pointed out, the government does not have to micro-manage the mining operations and dip its hands into the day-to-day affairs of
the enterprise in order for it to be considered as having full control and supervision.
The concept of control[53] adopted in Section 2 of Article XII must be taken to mean less than dictatorial, all-encompassing control; but nevertheless
sufficient to give the State the power 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 measures that would enable the government to control the
conduct of affairs in various enterprises and restrain activities deemed not desirable or beneficial.
The end in view is 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 affected local communities. Such a concept of control would be compatible with permitting the foreign contractor sufficient and
reasonable management authority over the enterprise it invested in, in order to ensure that it is operating efficiently and profitably, to protect its investments
and to enable it to succeed.
The question to be answered, then, is whether RA 7942 and its Implementing Rules enable the government to exercise that degree of control
sufficient to direct and regulate the conduct of affairs of individual enterprises and restrain undesirable activities.
On the resolution of these questions will depend the validity and constitutionality of certain provisions of the Philippine Mining Act of 1995 (RA 7942) and
its Implementing Rules and Regulations (DAO 96-40), as well as the WMCP FTAA.
Indeed, petitioners charge[54] that RA 7942, as well as its Implementing Rules and Regulations, makes it possible for FTAA contracts to cede full control
and management of mining enterprises over to fully foreign-owned corporations, with the result that the State is allegedly reduced to a passive regulator
dependent on submitted plans and reports, with weak review and audit powers. The State does not supposedly act as the owner of the natural resources for
and on behalf of the Filipino people; it practically has little effective say in the decisions made by the enterprise. Petitioners then conclude that the law, the
implementing regulations, and the WMCP FTAA cede beneficial ownership of the mineral resources to the foreign contractor.
A careful scrutiny of the provisions of RA 7942 and its Implementing Rules belies petitioners claims. Paraphrasing the Constitution, Section 4 of the
statute clearly affirms the States control thus:
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 communities to their ancestral lands as provided for by the Constitution.
The aforequoted provision is substantively reiterated in Section 2 of DAO 96-40 as follows:
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 the Government and private sector in order to enhance national growth in a way that effectively safeguards the environment
and protects the rights of affected communities.

Sufficient Control Over Mining

Operations Vested in the State
by RA 7942 and DAO 96-40
RA 7942 provides for the States control and supervision over mining operations. The following provisions thereof establish the mechanism of inspection
and visitorial rights over mining operations and institute reportorial requirements in this manner:

1. Sec. 8 which provides for the DENRs power of over-all supervision and periodic review for the conservation, management, development and
proper use of the States mineral resources;
2. Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the DENR to exercise direct charge in the administration and
disposition of mineral resources, and empowers the MGB to monitor the compliance by the contractor of the terms and conditions of the
mineral agreements, confiscate surety and performance bonds, and deputize whenever necessary any member or unit of the Phil. National
Police, barangay, duly registered non-governmental organization (NGO) or any qualified person to police mining activities;
3. Sec. 66 which vests in the Regional Director exclusive jurisdiction over safety inspections of all installations, whether surface or underground,
utilized in mining operations.
4. Sec. 35, which incorporates into all FTAAs the following terms, conditions and warranties:
(g) Mining operations shall be conducted in accordance with the provisions of the Act and its IRR.
(h) Work programs and minimum expenditures commitments.
xxxxxxxxx
(k) Requiring proponent to effectively use appropriate anti-pollution technology and facilities to protect the environment and restore or
rehabilitate mined-out areas.
(l) The contractors shall furnish the Government records of geologic, accounting and other relevant data for its mining operation, and
that books of accounts and records shall be open for inspection by the government. x x x.
(m) Requiring the proponent to dispose of the minerals at the highest price and more advantageous terms and conditions.
(n) x x x x x x x x x
(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 welfare of the Filipino people.
The foregoing provisions of Section 35 of RA 7942 are also reflected and implemented in Section 56 (g), (h), (l), (m) and (n) of the Implementing Rules,
DAO 96-40.
Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the governments control over mining enterprises:
The contractor is to relinquish to the government those portions of the contract area not needed for mining operations and not covered by any
declaration of mining feasibility (Section 35-e, RA 7942; Section 60, DAO 96-40).
The contractor must comply with the provisions pertaining to mine safety, health and environmental protection (Chapter XI, RA 7942; Chapters
XV and XVI, DAO 96-40).
For violation of any of its terms and conditions, government may cancel an FTAA. (Chapter XVII, RA 7942; Chapter XXIV, DAO 96-40).
An FTAA contractor is obliged to open its books of accounts and records for inspection by the government (Section 56-m, DAO 96-40).
An FTAA contractor has to dispose of the minerals and by-products at the highest market price and register with the MGB a copy of the sales
agreement (Section 56-n, DAO 96-40).

MGB is mandated to monitor the contractors compliance with the terms and conditions of the FTAA; and to deputize, when necessary, any
member or unit of the Philippine National Police, the barangay or a DENR-accredited nongovernmental organization to police mining activities
(Section 7-d and -f, DAO 96-40).
An FTAA cannot be transferred or assigned without prior approval by the President (Section 40, RA 7942; Section 66, DAO 96-40).
A mining project under an FTAA cannot proceed to the construction/development/utilization stage, unless its Declaration of Mining Project
Feasibility has been approved by government (Section 24, RA 7942).
The Declaration of Mining Project Feasibility filed by the contractor cannot be approved without submission of the following documents:
1. Approved mining project feasibility study (Section 53-d, DAO 96-40)
2. Approved three-year work program (Section 53-a-4, DAO 96-40)
3. Environmental compliance certificate (Section 70, RA 7942)
4. Approved environmental protection and enhancement program (Section 69, RA 7942)
5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA 7942; Section 27, RA 7160)
6. Free and prior informed consent by the indigenous peoples concerned, including payment of royalties through a
Memorandum of Agreement (Section 16, RA 7942; Section 59, RA 8371)
The FTAA contractor is obliged to assist in the development of its mining community, promotion of the general
welfare of its inhabitants, and development of science and mining technology (Section 57, RA 7942).
The FTAA contractor is obliged to submit reports (on quarterly, semi-annual or annual basis as the case may be;
per Section 270, DAO 96-40), pertaining to the following:
1. Exploration
2. Drilling
3. Mineral resources and reserves
4. Energy consumption
5. Production
6. Sales and marketing
7. Employment
8. Payment of taxes, royalties, fees and other Government Shares
9. Mine safety, health and environment
10. Land use
11. Social development
12. Explosives consumption
An FTAA pertaining to areas within government reservations cannot be granted without a written clearance from
the government agencies concerned (Section 19, RA 7942; Section 54, DAO 96-40).
An FTAA contractor is required to post a financial guarantee bond in favor of the government in an amount
equivalent to its expenditures obligations for any particular year. This requirement is apart from the representations and warranties of the
contractor that it has access to all the financing, managerial and technical expertise and technology necessary to carry out the objectives of the
FTAA (Section 35-b, -e, and -f, RA 7942).
Other reports to be submitted by the contractor, as required under DAO 96-40, are as follows: an environmental
report on the rehabilitation of the mined-out area and/or mine waste/tailing covered area, and anti-pollution measures undertaken (Section 35-a2); annual reports of the mining operations and records of geologic accounting (Section 56-m); annual progress reports and final report of
exploration activities (Section 56-2).
Other programs required to be submitted by the contractor, pursuant to DAO 96-40, are the following: a safety
and health program (Section 144); an environmental work program (Section 168); an annual environmental protection and enhancement
program (Section 171).

The foregoing gamut of requirements, regulations, restrictions and limitations imposed upon the FTAA contractor by the statute and regulations easily
overturns petitioners contention. The setup under RA 7942 and DAO 96-40 hardly relegates the State to the role of a passive regulator dependent on
submitted plans and reports. On the contrary, the government agencies concerned are empowered to approve or disapprove -- hence, 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 mining enterprise.
Once these plans and reports are approved, the contractor is bound to comply with its commitments therein. Figures for mineral production and sales are
regularly monitored and subjected to government review, in order to ensure that the products and by-products are disposed of at the best prices possible;
even copies of sales agreements have to be submitted to and registered with MGB. And the contractor is mandated to open its books of accounts and records
for scrutiny, so as to enable the State to determine if the government share has been fully paid.
The State may likewise compel the contractors compliance with mandatory requirements on mine safety, health and environmental protection, and the
use of anti-pollution technology and facilities. Moreover, the contractor is also obligated to assist in the development of the mining community and to pay
royalties to the indigenous peoples concerned.
Cancellation of the FTAA may be the penalty for violation of any of its terms and conditions and/or noncompliance with statutes or regulations. This
general, all-around, multipurpose sanction is no trifling matter, especially to a contractor who may have yet to recover the tens or hundreds of millions of
dollars sunk into a mining project.
Overall, considering the provisions of the statute and the regulations just discussed, we believe that the State definitely possesses the means by which it
can have the ultimate word in the operation of the enterprise, set directions and objectives, and detect deviations and noncompliance by the contractor;
likewise, it has the capability to enforce compliance and to impose sanctions, should the occasion therefor arise.
In other words, the FTAA contractor is not free to do whatever it pleases and get away with it; on the contrary, it will have to follow the
government line if it wants to stay in the enterprise. Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a sufficient degree
of control and supervision over the conduct of mining operations.

Section 3(aq) of RA 7942

Not Unconstitutional
An objection has been expressed that Section 3(aq) [55] of RA 7942 -- which allows a foreign contractor to apply for and hold an exploration permit -- is
unconstitutional. The reasoning is that Section 2 of Article XII of the Constitution does not allow foreign-owned corporations to undertake mining operations
directly. They may act only as contractors of the State under an FTAA; and the State, as the party directly undertaking exploitation of its natural resources,
must hold through the government all exploration permits and similar authorizations. Hence, Section 3(aq), in permitting foreign-owned corporations to hold
exploration permits, is unconstitutional.
The objection, however, is not well-founded. While the Constitution mandates the State to exercise full control and supervision over the exploitation of
mineral resources, nowhere does it require the government to hold all exploration permits and similar authorizations. In fact, there is no prohibition at all
against foreign or local corporations or contractors holding exploration permits. The reason is not hard to see.
Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person the right to conduct exploration for all minerals in specified
areas. Such a permit does not amount to an authorization to extract and carry off the mineral resources that may be discovered. This phase involves nothing
but expenditures for exploring the contract area and locating the mineral bodies. As no extraction is involved, there are no revenues or incomes to speak of. In
short, the exploration permit is an authorization for the grantee to spend its own funds on exploration programs that are pre-approved by the government,
without any right to recover anything should no minerals in commercial quantities be discovered. The State risks nothing and loses nothing by granting these
permits to local or foreign firms; in fact, it stands to gain in the form of data generated by the exploration activities.
Pursuant to Section 24 of RA 7942, an exploration permit grantee who determines the commercial viability of a mining area may, within the term of the
permit, file with the MGB 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 of RA 7942 vests in the grantee the exclusive right to an MPSA or any other mineral agreement, or to an
FTAA.

Thus, the permit grantee may apply for an MPSA, a joint venture agreement, a co-production agreement, or an FTAA over the permit area, and the
application shall be approved if the permit grantee meets the necessary qualifications and the terms and conditions of any such agreement. Therefore, the
contractor will be in a position to extract minerals and earn revenues only when the MPSA or another mineral agreement, or an FTAA, is granted. At that point,
the contractors rights and obligations will be covered by an FTAA or a mineral agreement.
But prior to the issuance of such FTAA or mineral agreement, the exploration permit grantee (or prospective contractor) cannot yet be deemed to have
entered into any contract or agreement with the State, and the grantee would definitely need to have some document or instrument as evidence of its right to
conduct exploration works within the specified area. This need is met by the exploration permit issued pursuant to Sections 3(aq), 20 and 23 of RA 7942.
In brief, the exploration permit serves a practical and legitimate purpose in that it protects the interests and preserves the rights of the
exploration permit grantee (the would-be contractor) -- foreign or local -- during the period of time that it is spending heavily on exploration works,
without yet being able to earn revenues to recoup any of its investments and expenditures. Minus this permit and the protection it affords, the
exploration works and expenditures may end up benefiting only claim-jumpers. Such a possibility tends to discourage investors and contractors. Thus, Section
3(aq) of RA 7942 may not be deemed unconstitutional.

The Terms of the WMCP FTAA

A Deference to State Control
A perusal of the WMCP FTAA also reveals a slew of stipulations providing for State control and supervision:
1. The contractor is obligated to account for the value of production and sale of minerals (Clause 1.4).
2. The contractors work program, activities and budgets must be approved by/on behalf of the State (Clause 2.1).
3. The DENR secretary has the power to extend the exploration period (Clause 3.2-a).
4. Approval by the State is necessary for incorporating lands into the FTAA contract area (Clause 4.3-c).
5. The Bureau of Forest Development is vested with discretion in regard to approving the inclusion of forest reserves as part of the FTAA contract
area (Clause 4.5).
6. The contractor is obliged to relinquish periodically parts of the contract area not needed for exploration and development (Clause 4.6).
7. A Declaration of Mining Feasibility must be submitted for approval by the State (Clause 4.6-b).
8. The contractor is obligated to report to the State its exploration activities (Clause 4.9).
9. The contractor is required to obtain State approval of its work programs for the succeeding two-year periods, containing the proposed work
activities and expenditures budget related to exploration (Clause 5.1).
10. The contractor is required to obtain State approval for its proposed expenditures for exploration activities (Clause 5.2).
11. The contractor is required to submit an annual report on geological, geophysical, geochemical and other information relating to its explorations
within the FTAA area (Clause 5.3-a).
12. The contractor is to submit within six months after expiration of exploration period a final report on all its findings in the contract area (Clause 5.3b).
13. The contractor, after conducting feasibility studies, shall 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 a proposed work program for
the development phase, for approval by the DENR secretary (Clause 5.4).
14. The contractor is obliged to complete the development of the mine, including construction of the production facilities, within the period stated in
the approved work program (Clause 6.1).

15. The contractor is obligated to submit for approval of the DENR secretary a work program covering each period of three fiscal years (Clause 6.2).
16. The contractor is to submit reports to the DENR 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).
17. Any expansions, modifications, improvements and replacements of mining facilities shall be subject to the approval of the secretary (Clause 6.4).
18. The State has control with respect to the amount of funds that the contractor may borrow within the Philippines (Clause 7.2).
19. The State has supervisory power with respect to technical, financial and marketing issues (Clause 10.1-a).
20. The contractor is required to ensure 60 percent Filipino equity in the contractor, within ten years of recovering specified expenditures, unless not
so required by subsequent legislation (Clause 10.1).
21. The State has the right to terminate the FTAA for the contractors unremedied substantial breach thereof (Clause 13.2);
22. The States approval is needed for any assignment of the FTAA by the contractor to an entity other than an affiliate (Clause 14.1).
We should elaborate a little on the work programs and budgets, and what they mean with respect to the States ability to exercise full control and effective
supervision over the enterprise. For instance, throughout the initial five-year exploration and feasibility phase of the project, the contractor is mandated by
Clause 5.1 of the WMCP FTAA to submit a series of work programs (copy furnished the director of MGB) to the DENR secretary for approval. The programs
will detail the contractors proposed exploration activities and budget covering each subsequent period of two fiscal years.
In other words, the concerned government officials will be informed beforehand of the proposed exploration activities and expenditures of the contractor
for each succeeding two-year period, with the right to approve/disapprove them or require changes or adjustments therein if deemed necessary.
Likewise, under Clause 5.2(a), the amount that the contractor was supposed to spend for exploration activities during the first contract year of the
exploration period was fixed at not less than P24 million; and then for the succeeding years, the amount shall be as agreed between the DENR secretary and
the contractor prior to the commencement of each subsequent fiscal year. If no such agreement is arrived upon, the previous years expenditure commitment
shall apply.
This provision alone grants the government through the DENR secretary a very big say in the exploration phase of the project. This fact is not something
to be taken lightly, considering that the government has absolutely no contribution to the exploration expenditures or work activities and yet is given veto
power over such a critical aspect of the project. We cannot but construe as very significant such a degree of control over the project and, resultantly, over the
mining enterprise itself.
Following its exploration activities or feasibility studies, if the contractor believes that any part of the contract area is likely to contain an economic mineral
resource, it shall submit to the DENR secretary a declaration of mining feasibility (per Clause 5.4 of the FTAA), together with a technical description of the area
delineated for development and production, a description of the proposed mining operations including the technology to be used, a work program for
development, an environmental impact statement, and a description of the contributions to the economic and general welfare of the country to be generated
by the mining operations (pursuant to Clause 5.5).
The work program for development is subject to the approval of the DENR secretary. Upon its approval, the contractor must comply with it and complete
the development of the mine, including the construction of production facilities and installation of machinery and equipment, within the period provided in the
approved work program for development (per Clause 6.1).
Thus, notably, the development phase of the project is likewise subject to the control and supervision of the government. It cannot be emphasized enough
that the proper and timely construction and deployment of the production facilities and the development of the mine are of pivotal significance to the success
of the mining venture. Any missteps here will potentially be very costly to remedy. Hence, the submission of the work program for development to the DENR
secretary for approval is particularly noteworthy, considering that so many millions of dollars worth of investments -- courtesy of the contractor -- are made to
depend on the States consideration and action.
Throughout the operating period, the contractor is required to submit to the DENR secretary for approval, copy furnished the director of MGB, work
programs covering each period of three fiscal years (per Clause 6.2). During the same period (per Clause 6.3), the contractor is mandated to submit various
quarterly and annual reports to the DENR secretary, copy furnished the director of MGB, on the tonnages of production in terms of ores and concentrates, with

corresponding grades, values and destinations; reports of sales; total ore reserves, total tonnage of ores, work accomplished and work in progress
(installations and facilities related to mining operations), investments made or committed, and so on and so forth.
Under Section VIII, during the period of mining operations, the contractor is also required to submit to the DENR secretary (copy furnished the director of
MGB) the work program and corresponding budget for the contract area, describing the mining operations that are proposed to be carried out during the
period covered. The secretary is, of course, entitled to grant or deny approval of any work program or budget and/or propose revisions thereto. Once the
program/budget has been approved, the contractor shall comply therewith.
In sum, the above provisions of the WMCP FTAA taken together, far from constituting a surrender of control and a grant of beneficial ownership of
mineral resources to the contractor in question, bestow upon the State more than adequate control and supervision over the activities of the
contractor and the enterprise.

No Surrender of Control
Under the WMCP FTAA
Petitioners, however, take aim at Clause 8.2, 8.3, and 8.5 of the WMCP FTAA which, they say, amount to a relinquishment of control by the State, since it
cannot truly impose its own discretion in respect of the submitted work programs.
8.2. The Secretary shall be deemed to have approved any Work Programme or Budget or variation thereof submitted by the Contractor unless within
sixty (60) days after submission by the Contractor the Secretary gives notice declining such approval or proposing a revision of certain
features and specifying its reasons therefor (the Rejection Notice).
8.3. If the Secretary gives a Rejection Notice, the Parties shall promptly meet and endeavor to agree on amendments to the Work Programme or
Budget. If the Secretary and the Contractor fail to agree on the proposed revision within 30 days from delivery of the Rejection Notice then
the Work Programme or Budget or variation thereof proposed by the Contractor shall be deemed approved, so as not to unnecessarily delay
the performance of the Agreement.
8.4. x x x x x x x x x
8.5. So far as is practicable, the Contractor shall comply with any approved Work Programme and Budget. It is recognized by the Secretary and the
Contractor that the details of any Work Programmes or Budgets may require changes in the light of changing circumstances. The Contractor
may make such changes without approval of the Secretary provided they do not change the general objective of any Work Programme, nor
entail a downward variance of more than twenty per centum (20percent) of the relevant Budget. All other variations to an approved Work
Programme or Budget shall be submitted for approval of the Secretary.
From the provisions quoted above, petitioners generalize by asserting that the government does not participate in making critical decisions regarding the
operations of the mining firm. Furthermore, while the State can require the submission of work programs and budgets, the decision of the contractor will still
prevail, if the parties have a difference of opinion with regard to matters affecting operations and management.
We hold, however, that the foregoing provisions do not manifest a relinquishment of control. For instance, Clause 8.2 merely provides a mechanism for
preventing the business or mining operations from grinding to a complete halt as a result of possibly over-long and unjustified delays in the governments
handling, processing and approval of submitted work programs and budgets. Anyway, the provision does give the DENR secretary more than sufficient time
(60 days) to react to submitted work programs and budgets. It cannot be supposed that proper grounds for objecting thereto, if any exist, cannot be discovered
within a period of two months.
On the other hand, Clause 8.3 seeks to provide a temporary, stop-gap solution in the event a disagreement over the submitted work program or budget
arises between the State and the contractor and results in a stalemate or impasse, in order that there will be no unreasonably long delays in the performance
of the works.
These temporary or stop-gap solutions are not necessarily evil or wrong. Neither does it follow that the government will inexorably be aggrieved if and
when these temporary remedies come into play. First, avoidance of long delays in these situations will undoubtedly redound to the benefit of the State as well
as the contractor. Second, who is to say that the work program or budget proposed by the contractor and deemed approved under Clause 8.3 would not be

the better or more reasonable or more effective alternative? The contractor, being the insider, as it were, may be said to be in a better position than the State -an outsider looking in -- to determine what work program or budget would be appropriate, more effective, or more suitable under the circumstances.
All things considered, we take exception to the characterization of the DENR secretary as a subservient nonentity whom the contractor can overrule at
will, on account of Clause 8.3. And neither is it true that under the same clause, the DENR secretary has no authority whatsoever to disapprove the work
program. As Respondent WMCP reasoned in its Reply-Memorandum, 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. And ultimately, the State may terminate the agreement, pursuant to Clause 13.2 of the
same FTAA, citing substantial breach thereof. Hence, it clearly retains full and effective control of the exploitation of the mineral resources.
On the other hand, Clause 8.5 is merely an acknowledgment of the parties need for flexibility, given that no one can accurately forecast under all
circumstances, or predict how situations may change. Hence, while approved work programs and budgets are to be followed and complied with as far as
practicable, there may be instances in which changes will have to be effected, and effected rapidly, since events may take shape and unfold with suddenness
and urgency. Thus, Clause 8.5 allows the contractor to move ahead and make changes without the express or implicit approval of the DENR secretary. Such
changes are, however, subject to certain conditions that will serve to limit or restrict the variance and prevent the contractor from straying very far from what
has been approved.
Clause 8.5 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. Clause 8.5 does not constitute proof that the State has relinquished control. And ultimately, should there be
disagreement with the actions taken by the contractor in this instance as well as under Clause 8.3 discussed above, the DENR secretary may resort to
cancellation/termination of the FTAA as the ultimate sanction.

Discretion to Select Contract

Area Not an Abdication of Control
Next, petitioners complain that the contractor has full discretion to select -- and the government has no say whatsoever as to -- the parts of the contract
area to be relinquished pursuant to Clause 4.6 of the WMCP FTAA. [56] This clause, however, does not constitute abdication of control. Rather, it is a mere
acknowledgment of the fact that the contractor will have determined, after appropriate exploration works, which portions of the contract area do not contain
minerals in commercial quantities sufficient to justify developing the same and ought therefore to be relinquished. The State cannot just substitute its judgment
for that of the contractor and dictate upon the latter which areas to give up.
Moreover, we can be certain that the contractors self-interest will propel proper and efficient relinquishment. According to private respondent, [57] a mining
company tries to relinquish as much non-mineral areas as soon as possible, because the annual occupation fees paid to the government are based on the total
hectarage of the contract area, net of the areas relinquished. Thus, the larger the remaining area, the heftier the amount of occupation fees to be paid by the
contractor. Accordingly, relinquishment is not an issue, given that the contractor will not want to pay the annual occupation fees on the non-mineral parts of its contract
area. Neither will it want to relinquish promising sites, which other contractors may subsequently pick up.

Government Not
a Subcontractor
Petitioners further maintain that the contractor can compel the government to exercise its power of eminent domain to acquire surface areas within the
contract area for the contractors use. Clause 10.2 (e) of the WMCP FTAA provides that the government agrees that the contractor shall (e) have the right to
require the Government at the Contractors own cost, to purchase or acquire surface areas for and on behalf of the Contractor at such price and terms as may
be acceptable to the contractor. At the termination of this Agreement such areas shall be sold by public auction or tender and the Contractor shall be entitled
to reimbursement of the costs of acquisition and maintenance, adjusted for inflation, from the proceeds of sale.
According to petitioners, government becomes a subcontractor to the contractor and may, on account of this provision, be compelled to make use of its
power of eminent domain, not for public purposes but on behalf of a private party, i.e., the contractor. Moreover, the power of the courts to determine the

amount corresponding to the constitutional requirement of just compensation has allegedly also been contracted away by the government, on account of the
latters commitment that the acquisition shall be at such terms as may be acceptable to the contractor.
However, private respondent has proffered a logical explanation for the provision. [58] Section 10.2(e) contemplates a situation applicable to foreign-owned
corporations. WMCP, at the time of the execution of the FTAA, was a foreign-owned corporation and therefore not qualified to own land. As contractor, it has at
some future date to construct the infrastructure -- the mine processing plant, the camp site, the tailings dam, and other infrastructure -- needed for the largescale mining operations. It will then have to identify and pinpoint, within the FTAA contract area, the particular surface areas with favorable topography
deemed ideal for such infrastructure and will need to acquire the surface rights. The State owns the mineral deposits in the earth, and is also qualified to own
land.
Section 10.2(e) sets forth the mechanism whereby the foreign-owned contractor, disqualified to own land, identifies to the government the specific surface
areas within the FTAA contract area to be acquired for the mine infrastructure. The government then acquires ownership of the surface land areas on behalf of
the contractor, in order to enable the latter to proceed to fully implement the FTAA.
The contractor, of course, shoulders the purchase price of the land. Hence, the provision allows it, after termination of the FTAA, to be reimbursed from
proceeds of the sale of the surface areas, which the government will dispose of through public bidding. It should be noted that this provision will not be
applicable to Sagittarius as the present FTAA contractor, since it is a Filipino corporation qualified to own and hold land. As such, it may therefore freely
negotiate with the surface rights owners and acquire the surface property in its own right.
Clearly, petitioners have needlessly jumped to unwarranted conclusions, without being aware of the rationale for the said provision. That provision does
not call for the exercise of the power of eminent domain -- and determination of just compensation is not an issue -- as much as it calls for a qualified party to
acquire the surface rights on behalf of a foreign-owned contractor.
Rather than having the foreign contractor act through a dummy corporation, having the State do the purchasing is a better alternative. This will at least
cause the government to be aware of such transaction/s and foster transparency in the contractors dealings with the local property owners. The government,
then, will not act as a subcontractor of the contractor; rather, it will facilitate the transaction and enable the parties to avoid a technical violation of the AntiDummy Law.

Absence of Provision
Requiring Sale at Posted
Prices Not Problematic
The supposed absence of any provision in the WMCP FTAA directly and explicitly requiring the contractor to sell the mineral products at posted or market
prices is not a problem. Apart from Clause 1.4 of the FTAA obligating the contractor to account for the total value of mineral production and the sale of
minerals, we can also look to Section 35 of RA 7942, which incorporates into all FTAAs certain terms, conditions and warranties, including the following:
(l) The contractors shall furnish the Government records of geologic, accounting and other relevant data for its mining operation, and that books of
accounts and records shall be open for inspection by the government. x x x
(m) Requiring the proponent to dispose of the minerals at the highest price and more advantageous terms and conditions.
For that matter, Section 56(n) of DAO 99-56 specifically obligates an FTAA contractor to dispose of the minerals and by-products at the highest market
price and to register with the MGB a copy of the sales agreement. After all, the provisions of prevailing statutes as well as rules and regulations are deemed
written into contracts.

Contractors Right to Mortgage

Not Objectionable Per Se

Petitioners also question the absolute right of the contractor under Clause 10.2 (l) to mortgage and encumber not only its rights and interests in the FTAA
and the infrastructure and improvements introduced, but also the mineral products extracted. Private respondents do not touch on this matter, but we believe
that this provision may have to do with the conditions imposed by the creditor-banks of the then foreign contractor WMCP to secure the lendings made or to be
made to the latter. Ordinarily, banks lend not only on the security of mortgages on fixed assets, but also on encumbrances of goods produced that can easily
be sold and converted into cash that can be applied to the repayment of loans. Banks even lend on the security of accounts receivable that are collectible
within 90 days.[59]
It is not uncommon to find that a debtor corporation has executed deeds of assignment by way of security over the production for the next twelve months
and/or the proceeds of the sale thereof -- or the corresponding accounts receivable, if sold on terms -- in favor of its creditor-banks. Such deeds may include
authorizing the creditors to sell the products themselves and to collect the sales proceeds and/or the accounts receivable.
Seen in this context, Clause 10.2(l) is not something out of the ordinary or objectionable. In any case, as will be explained below, even if it is allowed
to mortgage or encumber the mineral end-products themselves, the contractor is not freed of its obligation to pay the government its basic and additional
shares in the net mining revenue, which is the essential thing to consider.
In brief, the alarum raised over the contractors right to mortgage the minerals is simply unwarranted. Just the same, the contractor must account for the
value of mineral production and the sales proceeds therefrom. Likewise, under the WMCP FTAA, the government remains entitled to its sixty percent share in
the net mining revenues of the contractor. The latters right to mortgage the minerals does not negate the States right to receive its share of net mining
revenues.

Shareholders Free
to Sell Their Stocks
Petitioners likewise criticize Clause 10.2(k), which gives the contractor authority to change its equity structure at any time. This provision may seem
somewhat unusual, but considering that WMCP then was 100 percent foreign-owned, any change would mean that such percentage would either stay
unaltered or be decreased in favor of Filipino ownership. Moreover, the foreign-held shares may change hands freely. Such eventuality is as it should be.
We believe it is not necessary for government to attempt to limit or restrict the freedom of the shareholders in the contractor to freely transfer, dispose of
or encumber their shareholdings, consonant with the unfettered exercise of their business judgment and discretion. Rather, what is critical is that, regardless
of the identity, nationality and percentage ownership of the various shareholders of the contractor -- and regardless of whether these shareholders decide to
take the company public, float bonds and other fixed-income instruments, or allow the creditor-banks to take an equity position in the company -- the foreignowned contractor is always in a position to render the services required under the FTAA, under the direction and control of the government.

Contractors Right to Ask

For Amendment Not Absolute
With respect to Clauses 10.4(e) and (i), petitioners complain that these provisions bind government to allow amendments to the FTAA if required by
banks and other financial institutions as part of the conditions for new lendings. However, we do not find anything wrong with Clause 10.4(e), which only states
that if the Contractor seeks to obtain financing contemplated herein from banks or other financial institutions, (the Government shall) cooperate with the
Contractor in such efforts provided that such financing arrangements will in no event reduce the Contractors obligations or the Governments rights
hereunder. The colatilla obviously safeguards the States interests; if breached, it will give the government cause to object to the proposed amendments.
On the other hand, Clause 10.4(i) provides that the Government shall favourably consider any request from [the] Contractor for amendments of this
Agreement which are necessary in order for the Contractor to successfully obtain the financing. Petitioners see in this provision a complete renunciation of
control. We disagree.
The proviso does not say that the government shall grant any request for amendment. Clause 10.4(i) only obliges the State to favorably consider any
such request, which is not at all unreasonable, as it is not equivalent to saying that the government must automatically consent to it. This provision should be

read together with the rest of the FTAA provisions instituting government control and supervision over the mining enterprise. The clause should not be given
an interpretation that enables the contractor to wiggle out of the restrictions imposed upon it by merely suggesting that certain amendments are requested by
the lenders.
Rather, it is up to the contractor to prove to the government that the requested changes to the FTAA are indispensable, as they enable the contractor to
obtain the needed financing; that without such contract changes, the funders would absolutely refuse to extend the loan; that there are no other sources of
financing available to the contractor (a very unlikely scenario); and that without the needed financing, the execution of the work programs will not proceed. But
the bottom line is, in the exercise of its power of control, the government has the final say on whether to approve or disapprove such requested amendments
to the FTAA. In short, approval thereof is not mandatory on the part of the government.
In fine, the foregoing evaluation and analysis of the aforementioned FTAA provisions sufficiently overturns petitioners litany of objections to
and criticisms of the States alleged lack of control.

Financial Benefits Not

Surrendered to the Contractor
One of the main reasons certain provisions of RA 7942 were struck down was the finding mentioned in the Decision that beneficial ownership of the
mineral resources had been conveyed to the contractor. This finding was based on the underlying assumption, common to the said provisions, that the foreign
contractor manages the mineral resources in the same way that foreign contractors in service contracts used to. By allowing foreign contractors to manage or
operate all the aspects of the mining operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the nations
mineral resources to these contractors, leaving the State with nothing but bare title thereto. [60] As the WMCP FTAA contained similar provisions deemed by
the ponente to be abhorrent to the Constitution, the Decision struck down the Contract as well.
Beneficial ownership has been defined as ownership recognized by law and capable of being enforced in the courts at the suit of the beneficial owner.
Blacks Law Dictionaryindicates that the term is used in two senses: first, to indicate the interest of a beneficiary in trust property (also called equitable
ownership); and second, to refer to the power of a corporate shareholder to buy or sell the shares, though the shareholder is not registered in the corporations
books as the owner.[62] Usually, beneficial ownership is distinguished from naked ownership, which is the enjoyment of all the benefits and privileges of
ownership, as against possession of the bare title to property.
[61]

An assiduous examination of the WMCP FTAA uncovers no indication that it confers upon WMCP ownership, beneficial or otherwise, of the mining
property it is to develop, the minerals to be produced, or the proceeds of their sale, which can be legally asserted and enforced as against the State.
As public respondents correctly point out, any interest the contractor may have in the proceeds of the mining operation is merely the equivalent of the
consideration the government has undertaken to pay for its services. All lawful contracts require such mutual prestations, and the WMCP FTAA is no different.
The contractor commits to perform certain services for the government in respect of the mining operation, and in turn it is to be compensated out of the net
mining revenues generated from the sale of mineral products. What would be objectionable is a contractual provision that unduly benefits the contractor far in
excess of the service rendered or value delivered, if any, in exchange therefor.
A careful perusal of the statute itself and its implementing rules reveals that neither RA 7942 nor DAO 99-56 can be said to convey beneficial ownership
of any mineral resource or product to any foreign FTAA contractor.

Equitable Sharing
of Financial Benefits
On the contrary, DAO 99-56, entitled Guidelines Establishing the Fiscal Regime of Financial or Technical Assistance Agreements aims to ensure an
equitable sharing of the benefits derived from mineral resources. These benefits are to be equitably shared among the government (national and local), the
FTAA contractor, and the affected communities. The purpose is to ensure sustainable mineral resources development; and a fair, equitable, competitive and
stable investment regime for the large-scale exploration, development and commercial utilization of minerals. The general framework or concept followed in

crafting the fiscal regime of the FTAA is based on the principle that the government expects real contributions to the economic growth and general welfare of
the country, while the contractor expects a reasonable return on its investments in the project. [63]
Specifically, under the fiscal regime, the governments expectation is, inter alia, the receipt of its share from the taxes and fees normally paid by a mining
enterprise. On the other hand, the FTAA contractor is granted by the government certain fiscal and non-fiscal incentives [64] to help support the formers cash
flow during the most critical phase (cost recovery) and to make the Philippines competitive with other mineral-producing countries. After the contractor has
recovered its initial investment, it will pay all the normal taxes and fees comprising the basic share of the government, plus an additional share for the
government based on the options and formulae set forth in DAO 99-56.
The said DAO spells out the financial benefits the government will receive from an FTAA, referred to as the Government Share, composed of a basic
government share and an additional government share.
The basic government share is comprised of all direct taxes, fees and royalties, as well as other payments made by the contractor during the term of
the FTAA. These are amounts paid directly to (i) the national government (through the Bureau of Internal Revenue, Bureau of Customs, Mines & Geosciences
Bureau and other national government agencies imposing taxes or fees), (ii) the local government units where the mining activity is conducted, and (iii)
persons and communities directly affected by the mining project. The major taxes and other payments constituting the basic government share are
enumerated below:[65]
Payments to the National Government:
Excise tax on minerals - 2 percent of the gross output of mining operations
Contractor income tax - maximum of 32 percent of taxable income for corporations
Customs duties and fees on imported capital equipment -the rate is set by the Tariff and Customs Code (3-7 percent for chemicals; 3-10
percent for explosives; 3-15 percent for mechanical and electrical equipment; and 3-10 percent for vehicles, aircraft and vessels
VAT on imported equipment, goods and services 10 percent of value
Royalties due the government on minerals extracted from mineral reservations, if applicable 5 percent of the actual market value of the
minerals produced
Documentary stamp tax - the rate depends on the type of transaction
Capital gains tax on traded stocks - 5 to 10 percent of the value of the shares
Withholding tax on interest payments on foreign loans -15 percent of the amount of interest
Withholding tax on dividend payments to foreign stockholders 15 percent of the dividend
Wharfage and port fees
Licensing fees (for example, radio permit, firearms permit, professional fees)
Other national taxes and fees.
Payments to Local Governments:
Local business tax - a maximum of 2 percent of gross sales or receipts (the rate varies among local government units)
Real property tax - 2 percent of the fair market value of the property, based on an assessment level set by the local government
Special education levy - 1 percent of the basis used for the real property tax
Occupation fees - PhP50 per hectare per year; PhP100 per hectare per year if located in a mineral reservation
Community tax - maximum of PhP10,500 per year

All other local government taxes, fees and imposts as of the effective date of the FTAA - the rate and the type depend on the local
government
Other Payments:
Royalty to indigenous cultural communities, if any 1 percent of gross output from mining operations
Special allowance - payment to claim owners and surface rights holders
Apart from the basic share, an additional government share is also collected from the FTAA contractor in accordance with the second paragraph of
Section 81 of RA 7942, which provides that the government share shall be comprised of, among other things, certain taxes, duties and fees. The subject
proviso reads:
The Government share in a financial or technical assistance agreement shall consist of, among other things, the contractors corporate income tax, excise
tax, special allowance, withholding tax due from the contractors foreign stockholders arising from dividend 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. (Bold types supplied.)
The government, through the DENR and the MGB, has interpreted the insertion of the phrase among other things as signifying that the government is
entitled to an additional government share to be paid by the contractor apart from the basic share, in order to attain a fifty-fifty sharing of net benefits from
mining.
The additional government share is computed by using one of three options or schemes presented in DAO 99-56: (1) a fifty-fifty sharing in the
cumulative present value of cash flows; (2) the share based on excess profits; and (3) the sharing based on the cumulative net mining revenue. The particular
formula to be applied will be selected by the contractor, with a written notice to the government prior to the commencement of the development and
construction phase of the mining project.[66]
Proceeds from the government shares arising from an FTAA contract are distributed to and received by the different levels of government in the following
proportions:
National Government 50 percent
Provincial Government 10 percent
Municipal Government 20 percent
Affected Barangays 20 percent
The portion of revenues remaining after the deduction of the basic and additional government shares is what goes to the contractor.

Governments Share in an
FTAA Not Consisting Solely
of Taxes, Duties and Fees
In connection with the foregoing discussion on the basic and additional government shares, it is pertinent at this juncture to mention the criticism
leveled at the second paragraph of Section 81 of RA 7942, quoted earlier. The said proviso has been denounced, because, allegedly, the States share in
FTAAs with foreign contractors has been limited to taxes, fees and duties only; in effect, the State has been deprived of a share in the after-tax income of the
enterprise. In the face of this allegation, one has to consider that the law does not define the term among other things; and the Office of the Solicitor General,
in its Motion for Reconsideration, appears to have erroneously claimed that the phrase refers to indirect taxes.
The law provides no definition of the term among other things, for the reason that Congress deliberately avoided setting unnecessary limitations as to
what may constitute compensation to the State for the exploitation and use of mineral resources. But the inclusion of that phrase clearly and unmistakably
reveals the legislative intent to have the State collect more than just the usual taxes, duties and fees. Certainly, there is nothing in that phrase -- or in the
second paragraph of Section 81 -- that would suggest that such phrase should be interpreted as referring only to taxes, duties, fees and the like.

Precisely for that reason, to fulfill the legislative intent behind the inclusion of the phrase among other things in the second paragraph of Section 81,[67] the
DENR structured and formulated in DAO 99-56 the said additional government share. Such a share was to consist not of taxes, but of a share in the
earnings or cash flows of the mining enterprise. The additional government share was to be paid by the contractor on top of the basic share, so as to
achieve a fifty-fifty sharing -- between the government and the contractor -- of net benefits from mining. In the Ramos-DeVera paper, the explanation of
the three options or formulas[68] -- presented in DAO 99-56 for the computation of the additional government share -- serves to debunk the claim that the
governments take from an FTAA consists solely of taxes, fees and duties.
Unfortunately, the Office of the Solicitor General -- although in possession of the relevant data -- failed to fully replicate or echo the pertinent elucidation in
the Ramos-DeVera paper regarding the three schemes or options for computing the additional government share presented in DAO 99-56. Had due care been
taken by the OSG, the Court would have been duly apprised of the real nature and particulars of the additional share.
But, perhaps, on account of the esoteric discussion in the Ramos-DeVera paper, and the even more abstruse mathematical jargon employed in DAO 9956, the OSG omitted any mention of the three options. Instead, the OSG skipped to a side discussion of the effect of indirect taxes, which had nothing at all to
do with the additional government share, to begin with.Unfortunately, this move created the wrong impression, pointed out in Justice Antonio T. Carpios
Opinion, that the OSG had taken the position that the additional government share consisted of indirect taxes.
In any event, what is quite evident is the fact that the additional government share, as formulated, has nothing to do with taxes -- direct or indirect -- or
with duties, fees or charges. To repeat, it is over and above the basic government share composed of taxes and duties. Simply put, the additional share may
be (a) an amount that will result in a 50-50 sharing of the cumulative present value of the cash flows[69] of the enterprise; (b) an amount equivalent to 25
percent of the additional or excess profits of the enterprise, reckoned against a benchmark return on investments; or (c) an amount that will result in a fifty-fifty
sharing of the cumulative net mining revenue from the end of the recovery period up to the taxable year in question. The contractor is required to select one of
the three options or formulae for computing the additional share, an option it will apply to all of its mining operations.
As used above, net mining revenue is defined as the gross output from mining operations for a calendar year, less deductible expenses (inclusive of
taxes, duties and fees). Such revenue would roughly be equivalent to taxable income or income before income tax. Definitely, as compared with, say,
calculating the additional government share on the basis of net income (after income tax), the net mining revenue is a better and much more reasonable
basis for such computation, as it gives a truer picture of the profitability of the company.
To demonstrate that the three options or formulations will operate as intended, Messrs. Ramos and de Vera also performed some quantifications of the
government share via a financial modeling of each of the three options discussed above. They found that the government would get the highest share from the
option that is based on the net mining revenue, as compared with the other two options, considering only the basic and the additional shares; and that, even
though production rate decreases, the government share will actually increase when the net mining revenue and the additional profit-based options are used.
Furthermore, it should be noted that the three options or formulae do not yet take into account the indirect taxes [70] and other financial contributions[71] of
mining projects. These indirect taxes and other contributions are real and actual benefits enjoyed by the Filipino people and/or government. Now, if some of
the quantifiable items are taken into account in the computations, the financial modeling would show that the total government share increases to 60
percent or higher -- in one instance, as much as 77 percent and even 89 percent -- of the net present value of total benefits from the project. As noted in the
Ramos-DeVera paper, these results are not at all shabby, considering that the contractor puts in all the capital requirements and assumes all the risks, without
the government having to contribute or risk anything.
Despite the foregoing explanation, Justice Carpio still insisted during the Courts deliberations that the phrase among other things refers only to taxes,
duties and fees. We are bewildered by his position. On the one hand, he condemns the Mining Law for allegedly limiting the governments benefits only to
taxes, duties and fees; and on the other, he refuses to allow the State to benefit from the correct and proper interpretation of the DENR/MGB. To remove all
doubts then, we hold that the States share is not limited to taxes, duties and fees only and that the DENR/MGB interpretation of the phrase among other
things is correct. Definitely, this DENR/MGB interpretation is not only legally sound, but also greatly advantageous to the government.
One last point on the subject. The legislature acted judiciously in not defining the terms among other things and, instead, leaving it to the agencies
concerned to devise and develop the various modes of arriving at a reasonable and fair amount for the additional government share. As can be seen from
DAO 99-56, the agencies concerned did an admirable job of conceiving and developing not just one formula, but three different formulae for arriving at the
additional government share. Each of these options is quite fair and reasonable; and, as Messrs. Ramos and De Vera stated, other alternatives or schemes
for a possible improvement of the fiscal regime for FTAAs are also being studied by the government.

Besides, not locking into a fixed definition of the term among other things will ultimately be more beneficial to the government, as it will have that innate
flexibility to adjust to and cope with rapidly changing circumstances, particularly those in the international markets. Such flexibility is especially significant for
the government in terms of helping our mining enterprises remain competitive in world markets despite challenging and shifting economic scenarios.
In conclusion, we stress that we do not share the view that in FTAAs with foreign contractors under RA 7942, the governments share is limited
to taxes, fees and duties. Consequently, we find the attacks on the second paragraph of Section 81 of RA 7942 totally unwarranted.

Collections Not Made Uncertain

by the Third Paragraph of Section 81
The third or last paragraph of Section 81[72] provides that the government share in FTAAs shall be collected when the contractor shall have recovered its
pre-operating expenses and exploration and development expenditures. The objection has been advanced that, on account of the proviso, the collection of the
States share is not even certain, as there is no time limit in RA 7942 for this grace period or recovery period.
We believe that Congress did not set any time limit for the grace period, preferring to leave it to the concerned agencies, which are, on account of their
technical expertise and training, in a better position to determine the appropriate durations for such recovery periods. After all, these recovery periods are
determined, to a great extent, by technical and technological factors peculiar to the mining industry. Besides, with developments and advances in technology
and in the geosciences, we cannot discount the possibility of shorter recovery periods. At any rate, the concerned agencies have not been remiss in this area.
The 1995 and 1996 Implementing Rules and Regulations of RA 7942 specify that the period of recovery, reckoned 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.

Approval of Pre-Operating
Expenses Required by RA 7942
Still, RA 7942 is criticized for allegedly not requiring government approval of pre-operating, exploration and development expenses of the foreign
contractors, who are in effect given unfettered discretion to determine the amounts of such expenses. Supposedly, nothing prevents the contractors from
recording such expenses in amounts equal to the mining revenues anticipated for the first 10 or 15 years of commercial production, with the result that the
share of the State will be zero for the first 10 or 15 years. Moreover, under the circumstances, the government would be unable to say when it would start to
receive its share under the FTAA.
We believe that the argument is based on incorrect information as well as speculation. Obviously, certain crucial provisions in the Mining Law were
overlooked. Section 23, dealing with the rights and obligations of the exploration permit grantee, states: The permittee shall undertake exploration work on the
area as specified by its permit based on an approved work program. The next proviso reads: 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. x x x. (underscoring supplied)
Clearly, even at the stage of application for an exploration permit, the applicant is required to submit -- for approval by the government -- a proposed work
program for exploration, containing a yearly budget of proposed expenditures. The State has the opportunity to pass upon (and approve or reject) such
proposed expenditures, with the foreknowledge that -- if approved -- these will subsequently be recorded as pre-operating expenses that the contractor will
have to recoup over the grace period. That is not all.
Under Section 24, an exploration permit holder who determines the commercial viability of a project covering a mining area may, within the term of the
permit, file with the Mines and Geosciences Bureau a declaration of mining project feasibility. This declaration is to be accompanied by a work program for
development for the Bureaus approval, the necessary prelude for entering into an FTAA, a mineral production sharing agreement (MPSA), or some other
mineral agreement. At this stage, too, the government obviously has the opportunity to approve or reject the proposed work program and budgeted
expenditures for development works on the project. Such expenditures will ultimately become the pre-operating and development costs that will have to be
recovered by the contractor.

Naturally, with the submission of approved work programs and budgets for the exploration and the development/construction phases, the government will
be able to scrutinize and approve or reject such expenditures. It will be well-informed as to the amounts of pre-operating and other expenses that the
contractor may legitimately recover and the approximate period of time needed to effect such a recovery. There is therefore no way the contractor can just
randomly post any amount of pre-operating expenses and expect to recover the same.
The aforecited provisions on approved work programs and budgets have counterparts in Section 35, which deals with the terms and conditions
exclusively applicable to FTAAs. The said provision requires certain terms and conditions to be incorporated into FTAAs; among them, a firm commitment x x
x of an amount corresponding to the expenditure obligation that will be invested in the contract area and representations and warranties x x x to timely deploy
these [financing, managerial and technical expertise and technological] resources under its supervision pursuant to the periodic work programs and related
budgets x x x, as well as work programs and minimum expenditures commitments. (underscoring supplied)
Unarguably, given the provisions of Section 35, the State has every opportunity to pass upon the proposed expenditures under an FTAA and approve or
reject them. It has access to all the information it may need in order to determine in advance the amounts of pre-operating and developmental expenses that
will have to be recovered by the contractor and the amount of time needed for such recovery.
In summary, we cannot agree that the third or last paragraph of Section 81 of RA 7942 is in any manner unconstitutional.

No Deprivation of
Beneficial Rights
It is also claimed that aside from the second and the third paragraphs of Section 81 (discussed above), Sections 80, 84 and 112 of RA 7942 also operate
to deprive the State of beneficial rights of ownership over mineral resources; and give them away for free to private business enterprises (including foreign
owned corporations). Likewise, the said provisions have been construed as constituting, together with Section 81, an ingenious attempt to resurrect the old
and discredited system of license, concession or lease.
Specifically, Section 80 is condemned for limiting the States share in a mineral production-sharing agreement (MPSA) to just the excise tax on the mineral
product. Under Section 151(A) of the Tax Code, such tax is only 2 percent of the market value of the gross output of the minerals. The colatilla in Section 84,
the portion considered offensive to the Constitution, reiterates the same limitation made in Section 80. [73]
It should be pointed out that Section 80 and the colatilla in Section 84 pertain only to MPSAs and have no application to FTAAs. These particular statutory
provisions do not come within the issues that were defined and delineated by this Court during the Oral Argument -- particularly the third issue, which
pertained exclusively to FTAAs. Neither did the parties argue upon them in their pleadings. Hence, this Court cannot make any pronouncement in this
case regarding the constitutionality of Sections 80 and 84 without violating the fundamental rules of due process. Indeed, the two provisos will have to await
another case specifically placing them in issue.
On the other hand, Section 112[74] is disparaged for allegedly reverting FTAAs and all mineral agreements to the old and discredited license, concession
or lease system. This Section states in relevant part that the provisions of Chapter XIV [which includes Sections 80 to 82] on government share in mineral
production-sharing agreement x x x shall immediately govern and apply to a mining lessee or contractor. (underscoring supplied) This provision is construed
as signifying that the 2 percent excise tax which, pursuant to Section 80, comprises the government share in MPSAs shall now also constitute the government
share in FTAAs -- as well as in co-production agreements and joint venture agreements -- to the exclusion of revenues of any other nature or from any other
source.
Apart from the fact that Section 112 likewise does not come within the issues delineated by this Court during the Oral Argument, and was never touched
upon by the parties in their pleadings, it must also be noted that the criticism hurled against this Section is rooted in unwarranted conclusions made without
considering other relevant provisions in the statute. Whether Section 112 may properly apply to co-production or joint venture agreements, the fact of the
matter is that it cannot be made to apply to FTAAs.
First, Section 112 does not specifically mention or refer to FTAAs; the only reason it is being applied to them at all is the fact that it happens to use the
word contractor. Hence, it is a bit of a stretch to insist that it covers FTAAs as well. Second, mineral agreements, of which there are three types -- MPSAs, coproduction agreements, and joint venture agreements -- are covered by Chapter V of RA 7942. On the other hand, FTAAs are covered by and in fact are the
subject of Chapter VI, an entirely different chapter altogether. The law obviously intends to treat them as a breed apart from mineral agreements, since Section

35 (found in Chapter VI) creates a long list of specific terms, conditions, commitments, representations and warranties -- which have not been made applicable
to mineral agreements -- to be incorporated into FTAAs.
Third, under Section 39, the FTAA contractor is given the option to downgrade -- to convert the FTAA into a mineral agreement at any time during the
term if the economic viability of the contract area is inadequate to sustain large-scale mining operations. Thus, there is no reason to think that the law through
Section 112 intends to exact from FTAA contractors merely the same government share (a 2 percent excise tax) that it apparently demands from contractors
under the three forms of mineral agreements. In brief, Section 112 does not apply to FTAAs.
Notwithstanding the foregoing explanation, Justices Carpio and Morales maintain that the Court must rule now on the constitutionality of Sections 80, 84
and 112, allegedly because the WMCP FTAA contains a provision which grants the contractor unbridled and automatic authority to convert the FTAA into an
MPSA; and should such conversion happen, the State would be prejudiced since its share would be limited to the 2 percent excise tax. Justice Carpio adds
that there are five MPSAs already signed just awaiting the judgment of this Court on respondents and intervenors Motions for Reconsideration. We hold
however that, at this point, this argument is based on pure speculation. The Court cannot rule on mere surmises and hypothetical assumptions, without firm
factual anchor. We repeat: basic due process requires that we hear the parties who have a real legal interest in the MPSAs (i.e. the parties who executed
them) before these MPSAs can be reviewed, or worse, struck down by the Court. Anything less than that requirement would be arbitrary and capricious.
In any event, the conversion of the present FTAA into an MPSA is problematic. First, the contractor must comply with the law, particularly Section 39 of
RA 7942; inter alia, it must convincingly show that the economic viability of the contract is found to be inadequate to justify large-scale mining
operations; second, it must contend with the Presidents exercise of the power of State control over the EDU of natural resources; and third, it will have to risk
a possible declaration of the unconstitutionality (in a proper case) of Sections 80, 84 and 112.
The first requirement is not as simple as it looks. Section 39 contemplates a situation in which an FTAA has already been executed and entered into,
and is presumably being implemented, when the contractor discovers that the mineral ore reserves in the contract area are not sufficient to justify large-scale
mining, and thus the contractor requests the conversion of the FTAA into an MPSA. The contractor in effect needs to explain why, despite its exploration
activities, including the conduct of various geologic and other scientific tests and procedures in the contract area, it was unable to determine correctly the
mineral ore reserves and the economic viability of the area. The contractor must explain why, after conducting such exploration activities, it decided to file
a declaration of mining feasibility, and to apply for an FTAA, thereby leading the State to believe that the area could sustain large-scale mining. The contractor
must justify fully why its earlier findings, based on scientific procedures, tests and data, turned out to be wrong, or were way off. It must likewise prove that
its new findings, also based on scientific tests and procedures, are correct. Right away, this puts the contractors technical capabilities and expertise into
serious doubt. We wonder if anyone would relish being in this situation. The State could even question and challenge the contractors qualification and
competence to continue the activity under an MPSA.
All in all, while there may be cogent grounds to assail the aforecited Sections, this Court -- on considerations of due process -- cannot rule
upon them here. Anyway, if later on these Sections are declared unconstitutional, such declaration will not affect the other portions since they are
clearly separable from the rest.

Our Mineral Resources Not

Given Away for Free by RA 7942
Nevertheless, if only to disabuse our minds, we should address the contention that our mineral resources are effectively given away for free by the law
(RA 7942) in general and by Sections 80, 81, 84 and 112 in particular.
Foreign contractors do not just waltz into town one day and leave the next, taking away mineral resources without paying anything. In order to get at the
minerals, they have to invest huge sums of money (tens or hundreds of millions of dollars) in exploration works first. If the exploration proves unsuccessful, all
the cash spent thereon will not be returned to the foreign investors; rather, those funds will have been infused into the local economy, to remain there
permanently. The benefits therefrom cannot be simply ignored. And assuming that the foreign contractors are successful in finding ore bodies that are viable
for commercial exploitation, they do not just pluck out the minerals and cart them off. They have first to build camp sites and roadways; dig mine shafts and
connecting tunnels; prepare tailing ponds, storage areas and vehicle depots; install their machinery and equipment, generator sets, pumps, water tanks and
sewer systems, and so on.

In short, they need to expend a great deal more of their funds for facilities, equipment and supplies, fuel, salaries of local labor and technical staff, and
other operating expenses. In the meantime, they also have to pay taxes, [75] duties, fees, and royalties. All told, the exploration, pre-feasibility, feasibility,
development and construction phases together add up to as many as eleven years. [76] The contractors have to continually shell out funds for the duration of
over a decade, before they can commence commercial production from which they would eventually derive revenues. All that money translates into a lot of
pump-priming for the local economy.
Granted that the contractors are allowed subsequently to recover their pre-operating expenses, still, that eventuality will happen only after they shall
have first put out the cash and fueled the economy. Moreover, in the process of recouping their investments and costs, the foreign contractors do not actually
pull out the money from the economy. Rather, they recover or recoup their investments out of actual commercial production by not paying a portion of the
basic government share corresponding to national taxes, along with the additional government share, for a period of not more than five years [77] counted from
the commencement of commercial production.
It must be noted that there can be no recovery without commencing actual commercial production. In the meantime that the contractors are recouping
costs, they need to continue operating; in order to do so, they have to disburse money to meet their various needs. In short, money is continually infused into
the economy.
The foregoing discussion should serve to rid us of the mistaken belief that, since the foreign contractors are allowed to recover their investments and
costs, the end result is that they practically get the minerals for free, which leaves the Filipino people none the better for it.

All Businesses Entitled

to Cost Recovery
Let it be put on record that not only foreign contractors, but all businessmen and all business entities in general, have to recoup their investments and
costs. That is one of the first things a student learns in business school. Regardless of its nationality, and whether or not a business entity has a five-year cost
recovery period, it will -- must -- have to recoup its investments, one way or another. This is just common business sense. Recovery of investments is
absolutely indispensable for business survival; and business survival ensures soundness of the economy, which is critical and contributory to the general
welfare of the people. Even government corporations must recoup their investments in order to survive and continue in operation. And, as the preceding
discussion has shown, there is no business that gets ahead or earns profits without any cost to it.
It must also be stressed that, though the State owns vast mineral wealth, such wealth is not readily accessible or transformable into usable and
negotiable currency without the intervention of the credible mining companies. Those untapped mineral resources, hidden beneath tons of earth and rock, may
as well not be there for all the good they do us right now. They have first to be extracted and converted into marketable form, and the country needs the
foreign contractors funds, technology and know-how for that.
After about eleven years of pre-operation and another five years for cost recovery, the foreign contractors will have just broken even. Is it likely that they
would at that point stop their operations and leave? Certainly not. They have yet to make profits. Thus, for the remainder of the contract term, they must strive
to maintain profitability. During this period, they pay the whole of the basic government share and the additional government share which, taken together with
indirect taxes and other contributions, amount to approximately 60 percent or more of the entire financial benefits generated by the mining venture.
In sum, we can hardly talk about foreign contractors taking our mineral resources for free. It takes a lot of hard cash to even begin to do what they
do. And what they do in this country ultimately benefits the local economy, grows businesses, generates employment, and creates infrastructure , as discussed
above. Hence, we definitely disagree with the sweeping claim that no FTAA under Section 81 will ever make any real contribution to the growth of the
economy or to the general welfare of the country. This is not a plea for foreign contractors. Rather, this is a question of focusing the judicial spotlight squarely
on all the pertinent facts as they bear upon the issue at hand, in order to avoid leaping precipitately to ill-conceived conclusions not solidly grounded upon fact.

Repatriation of
After-Tax Income

Another objection points to the alleged failure of the Mining Law to ensure real contributions to the economic growth and general welfare of the country,
as mandated by Section 2 of Article XII of the Constitution. Pursuant to Section 81 of the law, the entire after-tax income arising from the exploitation of mineral
resources owned by the State supposedly belongs to the foreign contractors, which will naturally repatriate the said after-tax income to their home countries,
thereby resulting in no real contribution to the economic growth of this country. Clearly, this contention is premised on erroneous assumptions.
First, as already discussed in detail hereinabove, the concerned agencies have correctly interpreted the second paragraph of Section 81 of RA 7942 to
mean that the government is entitled to an additional share, to be computed based on any one of the following factors: net mining revenues, the present value
of the cash flows, or excess profits reckoned against a benchmark rate of return on investments. So it is not correct to say that all of the after-tax income will
accrue to the foreign FTAA contractor, as the government effectively receives a significant portion thereof.
Second, the foreign contractors can hardly repatriate the entire after-tax income to their home countries. Even a bit of knowledge of corporate finance will
show that it will be impossible to maintain a business as a going concern if the entire net profit earned in any particular year will be taken out and repatriated.
The net income figure reflected in the bottom line is a mere accounting figure not necessarily corresponding to cash in the bank, or other quick assets. In order
to produce and set aside cash in an amount equivalent to the bottom line figure, one may need to sell off assets or immediately collect receivables or liquidate
short-term investments; but doing so may very likely disrupt normal business operations.
In terms of cash flows, the funds corresponding to the net income as of a particular point in time are actually in use in the normal course of business
operations. Pulling out such net income disrupts the cash flows and cash position of the enterprise and, depending on the amount being taken out, could
seriously cripple or endanger the normal operations and financial health of the business enterprise. In short, no sane business person, concerned with
maintaining the mining enterprise as a going concern and keeping a foothold in its market, can afford to repatriate the entire after-tax income to the
home country.

The States Receipt of Sixty

Percent of an FTAA Contractors
After-Tax Income Not Mandatory
We now come to the next objection which runs this way: 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. This share is the equivalent of the constitutional requirement that at least 60 percent of the capital, and
hence 60 percent of the income, of mining companies should remain in Filipino hands.
First, we fail to see how we can properly conclude that the Constitution mandates the State to extract at least 60 percent of the after-tax income from a
mining company run by a foreign contractor. The argument is that the Charter requires the States partner in a co-production agreement, joint venture
agreement or MPSA to be a Filipino corporation (at least 60 percent owned by Filipino citizens).
We question the logic of this reasoning, premised on a supposedly parallel or analogous situation. We are, after all, dealing with an essentially different
equation, one that involves different elements. The Charter did not intend to fix an iron-clad rule on the 60 percent share, applicable to all situations at
all times and in all circumstances. If ever such was the intention of the framers, they would have spelt it out in black and white. Verba legis will serve to
dispel unwarranted and untenable conclusions.
Second, if we would bother to do the math, we might better appreciate the impact (and reasonableness) of what we are demanding of the foreign
contractor. Let us use a simplifiedillustration. Let us base it on gross revenues of, say, P500. After deducting operating expenses, but prior to income tax,
suppose a mining firm makes a taxable income of P100. A corporate income tax of 32 percent results in P32 of taxable income going to the government,
leaving the mining firm with P68. Government then takes 60 percent thereof, equivalent to P40.80, leaving only P27.20 for the mining firm.
At this point the government has pocketed P32.00 plus P40.80, or a total of P72.80 for every P100 of taxable income, leaving the mining firm with
only P27.20. But that is not all. The government has also taken 2 percent excise tax off the top, equivalent to another P10. Under the minimum 60 percent
proposal, the government nets around P82.80 (not counting other taxes, duties, fees and charges) from a taxable income of P100 (assuming gross revenues
of P500, for purposes of illustration). On the other hand, the foreign contractor, which provided all the capital, equipment and labor, and took all the
entrepreneurial risks -- receives P27.20. One cannot but wonder whether such a distribution is even remotely equitable and reasonable, considering
the nature of the mining business. The amount of P82.80 out of P100.00 is really a lot it does not matter that we call part of it excise tax or income tax, and

another portion thereof income from exploitation of mineral resources. Some might think it wonderful to be able to take the lions share of the benefits. But we
have to ask ourselves if we are really serious in attracting the investments that are the indispensable and key element in generating the monetary benefits of
which we wish to take the lions share. Fairness is a credo not only in law, but also in business.
Third, the 60 percent rule in the petroleum industry cannot be insisted upon at all times in the mining business. The reason happens to be the fact that in
petroleum operations, the bulk of expenditures is in exploration, but once the contractor has found and tapped into the deposit, subsequent investments and
expenditures are relatively minimal. The crude (or gas) keeps gushing out, and the work entailed is just a matter of piping, transporting and storing. Not so in
mineral mining. The ore body does not pop out on its own. Even after it has been located, the contractor must continually invest in machineries and expend
funds to dig and build tunnels in order to access and extract the minerals from underneath hundreds of tons of earth and rock.
As already stated, the numerous intrinsic differences involved in their respective operations and requirements, cost structures and investment needs
render it highly inappropriate to use petroleum operations FTAAs as benchmarks for mining FTAAs. Verily, we cannot just ignore the realities of the distinctly
different situations and stubbornly insist on the minimum 60 percent.

The Mining and the Oil Industries

Different From Each Other
To stress, there is no independent showing that the taking of at least a 60 percent share in the after-tax income of a mining company operated by a
foreign contractor is fair and reasonable under most if not all circumstances. The fact that some petroleum companies like Shell acceded to such percentage
of sharing does not ipso facto mean that it is per se reasonable and applicable to non-petroleum situations (that is, mining companies) as well. We can take
judicial notice of the fact that there are, after all, numerous intrinsic differences involved in their respective operations and equipment or technological
requirements, costs structures and capital investment needs, and product pricing and markets.
There is no showing, for instance, that mining companies can readily cope with a 60 percent government share in the same way petroleum companies
apparently can. What we have is a suggestion to enforce the 60 percent quota on the basis of a disjointed analogy. The only factor common to the two
disparate situations is the extraction of natural resources.
Indeed, we should take note of the fact that Congress made a distinction between mining firms and petroleum companies. In Republic Act No. 7729 -- An
Act Reducing the Excise Tax Rates on Metallic and Non-Metallic Minerals and Quarry Resources, Amending for the Purpose Section 151(a) of the National
Internal Revenue Code, as amended -- the lawmakers fixed the excise tax rate on metallic and non-metallic minerals at two percent of the actual market value
of the annual gross output at the time of removal. However, in the case of petroleum, the lawmakers set the excise tax rate for the first taxable sale at fifteen
percent of the fair international market price thereof.
There must have been a very sound reason that impelled Congress to impose two very dissimilar excise tax rate. We cannot assume, without proof, that
our honorable legislators acted arbitrarily, capriciously and whimsically in this instance. We cannot just ignore the reality of two distinctly different situations
and stubbornly insist on going minimum 60 percent.
To repeat, the mere fact that gas and oil exploration contracts grant the State 60 percent of the net revenues does not necessarily imply that mining
contracts should likewise yield a minimum of 60 percent for the State. Jumping to that erroneous conclusion is like comparing apples with oranges. The
exploration, development and utilization of gas and oil are simply different from those of mineral resources.
To stress again, the main risk in gas and oil is in the exploration. But once oil in commercial quantities is struck and the wells are put in place, the risk is
relatively over and black gold simply flows out continuously with comparatively less need for fresh investments and technology.
On the other hand, even if minerals are found in viable quantities, there is still need for continuous fresh capital and expertise to dig the mineral ores from
the mines. Just because deposits of mineral ores are found in one area is no guarantee that an equal amount can be found in the adjacent areas. There are
simply continuing risks and need for more capital, expertise and industry all the time.
Note, however, that the indirect benefits -- apart from the cash revenues -- are much more in the mineral industry. As mines are explored and extracted,
vast employment is created, roads and other infrastructure are built, and other multiplier effects arise. On the other hand, once oil wells start producing, there

is less need for employment. Roads and other public works need not be constructed continuously. In fine, there is no basis for saying that government
revenues from the oil industry and from the mineral industries are to be identical all the time.
Fourth, to our mind, the proffered minimum 60 percent suggestion tends to limit the flexibility and tie the hands of government, ultimately hampering the
countrys competitiveness in the international market, to the detriment of the Filipino people. This you-have-to-give-us-60-percent-of-after-tax-income-or-wedont-do- business-with-you approach is quite perilous. True, this situation may not seem too unpalatable to the foreign contractor during good years, when
international market prices are up and the mining firm manages to keep its costs in check. However, under unfavorable economic and business conditions,
with costs spiraling skywards and minerals prices plummeting, a mining firm may consider itself lucky to make just minimal profits.
The inflexible, carved-in-granite demand for a 60 percent government share may spell the end of the mining venture, scare away potential investors, and
thereby further worsen the already dismal economic scenario. Moreover, such an unbending or unyielding policy prevents the government from responding
appropriately to changing economic conditions and shifting market forces. This inflexibility further renders our country less attractive as an investment option
compared with other countries.
And fifth, for this Court to decree imperiously that the governments share should be not less than 60 percent of the after-tax income of FTAA contractors
at all times is nothing short of dictating upon the government. The result, ironically, is that the State ends up losing control. To avoid compromising the States
full control and supervision over the exploitation of mineral resources, this Court must back off from insisting upon 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 more) in the contractors net mining revenues or after-tax income, or
whatever other basis the government may decide to use in reckoning its share. It is not necessary for it to do so in every case, regardless of circumstances.
In fact, the government must be trusted, must be accorded the liberty and the utmost flexibility to deal, negotiate and transact with contractors and third
parties as it sees fit; and upon terms that it ascertains to be most favorable or most acceptable under the circumstances, even if it means agreeing to less than
60 percent. Nothing must prevent the State from agreeing to a share less than that, should it be deemed fit; otherwise the State will be deprived of full control
over mineral exploitation that the Charter has vested in it.
To stress again, there is simply no constitutional or legal provision fixing the minimum share of the government in an FTAA at 60 percent of the net profit.
For this Court to decree such minimum is to wade into judicial legislation, and thereby inordinately impinge on the control power of the State. Let it be clear:
the Court is not against the grant of more benefits to the State; in fact, the more the better. If during the FTAA negotiations, the President can secure 60
percent,[78] or even 90 percent, then all the better for our people. But, if under the peculiar circumstances of a specific contract, the President could secure only
50 percent or 55 percent, so be it. Needless to say, the President will have to report (and be responsible for) the specific FTAA to Congress, and eventually to
the people.
Finally, if it should later be found that the share agreed to is grossly disadvantageous to the government, the officials responsible for entering into such a
contract on its behalf will have to answer to the courts for their malfeasance. And the contract provision voided. But this Court would abuse its own authority
should it force the governments hand to adopt the 60 percent demand of some of our esteemed colleagues.

Capital and Expertise Provided,

Yet All Risks Assumed by Contractor
Here, we will repeat what has not been emphasized and appreciated enough: the fact that the contractor in an FTAA provides all the needed capital,
technical and managerial expertise, and technology required to undertake the project.
In regard to the WMCP FTAA, the then foreign-owned WMCP as contractor committed, at the very outset, to make capital investments of up to US$50
million in that single mining project. WMCP claims to have already poured in well over P800 million into the country as of February 1998, with more in the
pipeline. These resources, valued in the tens or hundreds of millions of dollars, are invested in a mining project that provides no assurance whatsoever that
any part of the investment will be ultimately recouped.
At the same time, the contractor must comply with legally imposed environmental standards and the social obligations, for which it also commits to make
significant expenditures of funds. Throughout, the contractor assumes all the risks [79] of the business, as mentioned earlier. These risks are indeed very high,
considering that the rate of success in exploration is extremely low. The probability of finding any mineral or petroleum in commercially viable quantities is
estimated to be about 1:1,000 only. On that slim chance rides the contractors hope of recouping investments and generating profits. And when the contractor

has recouped its initial investments in the project, the government share increases to sixty percent of net benefits -- without the State ever being in peril of
incurring costs, expenses and losses.
And even in the worst possible scenario -- an absence of commercial quantities of minerals to justify development -- the contractor would already have
spent several million pesos for exploration works, before arriving at the point in which it can make that determination and decide to cut its losses. In fact,
during the first year alone of the exploration period, the contractor was already committed to spend not less than P24 million. The FTAA therefore clearly
ensures benefits for the local economy, courtesy of the contractor.
All in all, this setup cannot be regarded as disadvantageous to the State or the Filipino people; it certainly cannot be said to convey beneficial
ownership of our mineral resources to foreign contractors.

Deductions Allowed by the

WMCP FTAA Reasonable
Petitioners question whether the States weak control might render the sharing arrangements ineffective. They cite the so-called
suspicious deductions allowed by the WMCP FTAA in arriving at the net mining revenue, which is the basis for computing the government share. The WMCP
FTAA, for instance, allows expenditures for development within and outside the Contract Area relating to the Mining Operations, [80] consulting fees incurred
both inside and outside the Philippines for work related directly to the Mining Operations, [81] and the establishment and administration of field offices including
administrative overheads incurred within and outside the Philippines which are properly allocatable to the Mining Operations and reasonably related to the
performance of the Contractors obligations and exercise of its rights under this Agreement. [82]
It is quite well known, however, that mining companies do perform some marketing activities abroad in respect of selling their mineral products and byproducts. Hence, it would not be improper to allow the deduction of reasonable consulting fees incurred abroad, as well as administrative expenses and
overheads related to marketing offices also located abroad -- provided that these deductions are directly related or properly allocatable to the mining
operations and reasonably related to the performance of the contractors obligations and exercise of its rights. In any event, more facts are needed. Until we
see how these provisions actually operate, mere suspicions will not suffice to propel this Court into taking action.

Section 7.9 of the WMCP FTAA

Invalid and Disadvantageous
Having defended the WMCP FTAA, we shall now turn to two defective provisos. Let us start with Section 7.9 of the WMCP FTAA. While Section 7.7 gives
the government a 60 percent share in the net mining revenues of WMCP from the commencement of commercial production, Section 7.9 deprives the
government of part or all of the said 60 percent. Under the latter provision, should WMCPs foreign shareholders -- who originally owned 100 percent of the
equity -- sell 60 percent or more of its outstanding capital stock to a Filipino citizen or corporation, the State loses its right to receive its 60 percent share in net
mining revenues under Section 7.7.
Section 7.9 provides:
The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7 shall be reduced by 1percent of Net Mining Revenues for every
1percent ownership interest in the Contractor (i.e., WMCP) held by a Qualified Entity.[83]
Evidently, what Section 7.7 grants to the State is taken away in the next breath by Section 7.9 without any offsetting compensation to the State. Thus, in
reality, the State has no vested right to receive any income from the FTAA for the exploitation of its mineral resources. Worse, it would seem that what is given
to the State in Section 7.7 is by mere tolerance of WMCPs foreign stockholders, who can at any time cut off the governments entire 60 percent share. They
can do so by simply selling 60 percent of WMCPs outstanding capital stock to a Philippine citizen or corporation. Moreover, the proceeds of such sale will of
course accrue to the foreign stockholders of WMCP, not to the State.

The sale of 60 percent of WMCPs outstanding equity to a corporation that is 60 percent Filipino-owned and 40 percent foreign-owned will still trigger the
operation of Section 7.9. Effectively, the State will lose its right to receive all 60 percent of the net mining revenues of WMCP; and foreign stockholders will
own beneficially up to 64 percent of WMCP, consisting of the remaining 40 percent foreign equity therein, plus the 24 percent pro-rata share in the buyercorporation.[84]
In fact, the January 23, 2001 sale by WMCPs foreign stockholder of the entire outstanding equity in WMCP to Sagittarius Mines, Inc. -- a domestic
corporation at least 60 percent Filipino owned -- may be deemed to have automatically triggered the operation of Section 7.9, without need of further action by
any party, and removed the States right to receive the 60 percent share in net mining revenues.
At bottom, Section 7.9 has the effect of depriving the State of its 60 percent share in the net mining revenues of WMCP without any offset or
compensation whatsoever. It is possible that the inclusion of the offending provision was initially prompted by the desire to provide some form of incentive for
the principal foreign stockholder in WMCP to eventually reduce its equity position and ultimately divest in favor of Filipino citizens and corporations. However,
as finally structured, Section 7.9 has the deleterious effect of depriving government of the entire 60 percent share in WMCPs net mining revenues, without any
form of compensation whatsoever. Such an outcome is completely unacceptable.
The whole point of developing the nations natural resources is to benefit the Filipino people, future generations included. And the State as sovereign and
custodian of the nations natural wealth is mandated to protect, conserve, preserve and develop that part of the national patrimony for their benefit. Hence, the
Charter lays great emphasis on real contributions to the economic growth and general welfare of the country [85] as essential guiding principles to be kept in
mind when negotiating the terms and conditions of FTAAs.
Earlier, we held (1) that the State must be accorded the liberty and the utmost flexibility to deal, negotiate and transact with contractors and third parties
as it sees fit, and upon terms that it ascertains to be most favorable or most acceptable under the circumstances, even if that should mean agreeing to less
than 60 percent; (2) that it is not necessary for the State to extract a 60 percent share in every case and regardless of circumstances; and (3) that should the
State be prevented from agreeing to a share less than 60 percent as it deems fit, it will be deprived of the full control over mineral exploitation that the Charter
has vested in it.
That full control is obviously not an end in itself; it exists and subsists precisely because of the need to serve and protect the national interest. In this
instance, national interest finds particular application in the protection of the national patrimony and the development and exploitation of the countrys mineral
resources for the benefit of the Filipino people and the enhancement of economic growth and the general welfare of the country. Undoubtedly, such full
control can be misused and abused, as we now witness.
Section 7.9 of the WMCP FTAA effectively gives away the States share of net mining revenues (provided for in Section 7.7) without anything in exchange.
Moreover, this outcome constitutes unjust enrichment on the part of the local and foreign stockholders of WMCP. By their mere divestment of up to 60 percent
equity in WMCP in favor of Filipino citizens and/or corporations, the local and foreign stockholders get a windfall. Their share in the net mining revenues of
WMCP is automatically increased, without their having to pay the government anything for it. In short, the provision in question is without a doubt grossly
disadvantageous to the government, detrimental to the interests of the Filipino people, and violative of public policy.
Moreover, it has been reiterated in numerous decisions [86] that the parties to a contract may establish any agreements, terms and conditions that they
deem convenient; but these should not be contrary to law, morals, good customs, public order or public policy. [87] Being precisely violative of anti-graft
provisions and contrary to public policy, Section 7.9 must therefore be stricken off as invalid.
Whether the government officials concerned acceded to that provision by sheer mistake or with full awareness of the ill consequences, is of no moment. It
is hornbook doctrine that the principle of estoppel does not operate against the government for the act of its agents, [88] and that it is never estopped by any
mistake or error on their part. [89] It is therefore possible and proper to rectify the situation at this time. Moreover, we may also say that the FTAA in question
does not involve mere contractual rights; being impressed 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 [90] from Section 7.7 and the rest of the FTAA, the deletion of Section 7.9 can be done without
affecting or requiring the invalidation of the WMCP FTAA itself. Such a deletion will preserve for the government its due share of the benefits. This way, the
mandates of the Constitution are complied with and the interests of the government fully protected, while the business operations of the contractor are not
needlessly disrupted.

Section 7.8(e) of the WMCP FTAA

Also Invalid and Disadvantageous
Section 7.8(e) of the WMCP FTAA is likewise invalid. It provides thus:
7.8 The Government Share shall be deemed to include all of the following sums:
(a) all Government taxes, fees, levies, costs, imposts, duties and royalties including excise tax, corporate income tax, customs duty,
sales tax, value added tax, occupation and regulatory fees, Government controlled price stabilization schemes, any other
form of Government backed schemes, any tax on dividend payments by the Contractor or its Affiliates in respect of
revenues from the Mining Operations and any tax on interest on domestic and foreign loans or other financial arrangements
or accommodations, including loans extended to the Contractor by its stockholders;
(b) any payments to local and regional government, including taxes, fees, levies, costs, imposts, duties, royalties, occupation and
regulatory fees and infrastructure contributions;
(c) any payments to landowners, surface rights holders, occupiers, indigenous people or Claimowners;
(d) costs and expenses of fulfilling the Contractors obligations to contribute to national development in accordance with Clause 10.1(i)
(1) and 10.1(i) (2);
(e) an amount equivalent to whatever benefits that may be extended in the future by the Government to the Contractor or to financial
or technical assistance agreement contractors in general;
(f) all of the foregoing items which have not previously been offset against the Government Share in an earlier Fiscal Year, adjusted
for inflation. (underscoring supplied)
Section 7.8(e) is out of place in the FTAA. It makes no sense why, for instance, money spent by the government for the benefit of the contractor in
building roads leading to the mine site should still be deductible from the States share in net mining revenues. Allowing this deduction results in benefiting the
contractor twice over. It constitutes unjust enrichment on the part of the contractor at the expense of the government, since the latter is effectively being made
to pay twice for the same item.[91] For being grossly disadvantageous and prejudicial to the government and contrary to public policy, Section 7.8(e) is
undoubtedly invalid and must be declared to be without effect. Fortunately, this provision can also easily be stricken off without affecting the rest of the FTAA.

Nothing Left Over

After Deductions?
In connection with Section 7.8, an objection has been raised: Specified in Section 7.8 are numerous items of deduction from the States 60 percent share.
After taking these into account, will the State ever receive anything for its ownership of the mineral resources?
We are confident that under normal circumstances, the answer will be yes. If we examine the various items of deduction listed in Section 7.8 of the
WMCP FTAA, we will find that they correspond closely to the components or elements of the basic government share established in DAO 99-56, as
discussed in the earlier part of this Opinion.
Likewise, the balance of the governments 60 percent share -- after netting out the items of deduction listed in Section 7.8 --corresponds closely to
the additional government shareprovided for in DAO 99-56 which, we once again stress, has nothing at all to do with indirect taxes. The Ramos-DeVera
paper[92] concisely presents the fiscal contribution of an FTAA under DAO 99-56 in this equation:
Receipts from an FTAA = basic govt share + addl govt share
Transposed into a similar equation, the fiscal payments system from the WMCP FTAA assumes the following formulation:
Governments 60 percent share in net mining revenues of WMCP = items listed in Sec. 7.8 of the FTAA + balance of Govt share, payable 4 months from the
end of the fiscal year

It should become apparent that the fiscal arrangement under the WMCP FTAA is very similar to that under DAO 99-56, with the balance of government
share payable 4 months from end of fiscal year being the equivalent of the additional government share computed in accordance with the net-miningrevenue-based option under DAO 99-56, as discussed above. As we have emphasized earlier, we find each of the three options for computing the additional
government share -- as presented in DAO 99-56 -- to be sound and reasonable.
We therefore conclude that there is nothing inherently wrong in the fiscal regime of the WMCP FTAA, and certainly nothing to warrant the
invalidation of the FTAA in its entirety.

Section 3.3 of the WMCP

FTAA Constitutional
Section 3.3 of the WMCP FTAA is assailed for violating supposed constitutional restrictions on the term of FTAAs. The provision in question reads:
3.3 This Agreement shall be renewed by the Government for a further period of twenty-five (25) years under the same terms and conditions provided
that the Contractor lodges a request for renewal with the Government not less than sixty (60) days prior to the expiry of the initial term of this
Agreement and provided that the Contractor is not in breach of any of the requirements of this Agreement.
Allegedly, the above provision runs afoul of Section 2 of Article XII of the 1987 Constitution, which states:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development and utilization of natural resources shall be under the full control and supervision of the State. The State may directly
undertake such activities, or it may enter into co-production, joint venture or production-sharing agreements with Filipino citizens or corporations or
associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation,
water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nations marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays and lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. [93]
We hold that the term limitation of twenty-five years does not apply to FTAAs. The reason is that the above provision is found within paragraph 1 of
Section 2 of Article XII, which refers to mineral agreements -- co-production agreements, joint venture agreements and mineral production-sharing agreements
-- which the government may enter into with Filipino citizens and corporations, at least 60 percent owned by Filipino citizens. The word such clearly refers to
these three mineral agreements -- CPAs, JVAs and MPSAs -- not to FTAAs.
Specifically, FTAAs are covered by paragraphs 4 and 5 of Section 2 of Article XII of the Constitution. It will be noted that there are no term
limitations provided for in the said paragraphs dealing with FTAAs. This shows that FTAAs are sui generis, in a class of their own. This omission was obviously

a deliberate move on the part of the framers. They probably realized that FTAAs would be different in many ways from MPSAs, JVAs and CPAs. The reason
the framers did not fix term limitations applicable to FTAAs is that they preferred to leave the matter to the discretion of the legislature and/or the agencies
involved in implementing the laws pertaining to FTAAs, in order to give the latter enough flexibility and elbow room to meet changing circumstances.
Note also that, as previously stated, the exploratory phrases of an FTAA lasts up to eleven years. Thereafter, a few more years would be gobbled up in
start-up operations. It may take fifteen years before an FTAA contractor can start earning profits. And thus, the period of 25 years may really be short for an
FTAA. Consider too that in this kind of agreement, the contractor assumes all entrepreneurial risks. If no commercial quantities of minerals are found, the
contractor bears all financial losses. To compensate for this long gestation period and extra business risks, it would not be totally unreasonable to allow it to
continue EDU activities for another twenty five years.
In any event, the complaint is that, in essence, Section 3.3 gives the contractor the power to compel the government to renew the WMCP FTAA for
another 25 years and deprives the State of any say on whether to renew the contract.
While we agree that Section 3.3 could have been worded so as to prevent it from favoring the contractor, this provision does not violate any constitutional
limits, since the said term limitation does not apply at all to FTAAs. Neither can the provision be deemed in any manner to be illegal, as no law is being violated
thereby. It is certainly not illegal for the government to waive its option to refuse the renewal of a commercial contract.
Verily, the government did not have to agree to Section 3.3. It could have said No to the stipulation, but it did not. It appears that, in the process of
negotiations, the other contracting party was able to convince the government to agree to the renewal terms. Under the circumstances, it does not seem
proper for this Court to intervene and step in to undo what might have perhaps been a possible miscalculation on the part of the State. If government believes
that it is or will be aggrieved by the effects of Section 3.3, the remedy is the renegotiation of the provision in order to provide the State the option to not renew
the FTAA.

Financial Benefits for Foreigners

Not Forbidden by the Constitution
Before leaving this subject matter, we find it necessary for us to rid ourselves of the false belief that the Constitution somehow forbids foreign-owned
corporations from deriving financial benefits from the development of our natural or mineral resources.
The Constitution has never prohibited foreign corporations from acquiring and enjoying beneficial interest in the development of Philippine natural
resources. The State itself need not directly undertake exploration, development, and utilization activities. Alternatively, the Constitution authorizes the
government to enter into joint venture agreements (JVAs), co-production agreements (CPAs) and mineral production sharing agreements (MPSAs) with
contractors who are Filipino citizens or corporations that are at least 60 percent Filipino-owned. They may do the actual dirty work -- the mining operations.
In the case of a 60 percent Filipino-owned corporation, the 40 percent individual and/or corporate non-Filipino stakeholders obviously participate in the
beneficial interest derived from the development and utilization of our natural resources. They may receive by way of dividends, up to 40 percent of the
contractors earnings from the mining project. Likewise, they may have a say in the decisions of the board of directors, since they are entitled to representation
therein to the extent of their equity participation, which the Constitution permits to be up to 40 percent of the contractors equity. Hence, the non-Filipino
stakeholders may in that manner also participate in the management of the contractors natural resource development work. All of this is permitted by our
Constitution, for any natural resource, and without limitation even in regard to the magnitude of the mining project or operations (see paragraph 1 of Section 2
of Article XII).
It is clear, then, that there is nothing inherently wrong with or constitutionally objectionable about the idea of foreign individuals and entities having or
enjoying beneficial interest in -- and participating in the management of operations relative to -- the exploration, development and utilization of our natural
resources.

FTAA More Advantageous

Than Other Schemes
Like CPA, JVA and MPSA

A final point on the subject of beneficial interest. We believe the FTAA is a more advantageous proposition for the government as compared with other
agreements permitted by the Constitution. In a CPA that the government enters into with one or more contractors, the government shall provide inputs to the
mining operations other than the mineral resource itself. [94]
In a JVA, a JV company is organized by the government and the contractor, with both parties having equity shares (investments); and the contractor is
granted the exclusive right to conduct mining operations and to extract minerals found in the area. [95] On the other hand, in an MPSA, the government grants
the contractor the exclusive right to conduct mining operations within the contract area and shares in the gross output; and the contractor provides the
necessary financing, technology, management and manpower.
The point being made here is that, in two of the three types of agreements under consideration, the government has to ante up some risk capital for the
enterprise. In other words, government funds (public moneys) are withdrawn from other possible uses, put to work in the venture and placed at risk in case the
venture fails. This notwithstanding, management and control of the operations of the enterprise are -- in all three arrangements -- in the hands of the
contractor, with the government being mainly a silent partner. The three types of agreement mentioned above apply to any natural resource, without limitation
and regardless of the size or magnitude of the project or operations.
In contrast to the foregoing arrangements, and pursuant to paragraph 4 of Section 2 of Article XII, the FTAA is limited to large-scale projects and only for
minerals, petroleum and other mineral oils. Here, the Constitution removes the 40 percent cap on foreign ownership and allows the foreign corporation to own
up to 100 percent of the equity. Filipino capital may not be sufficient on account of the size of the project, so the foreign entity may have to ante up all the risk
capital.
Correlatively, the foreign stakeholder bears up to 100 percent of the risk of loss if the project fails. In respect of the particular FTAA granted to it, WMCP
(then 100 percent foreign owned) was responsible, as contractor, for providing the entire equity, including all the inputs for the project. It was to bear 100
percent of the risk of loss if the project failed, but its maximum potential beneficial interest consisted only of 40 percent of the net beneficial interest, because
the other 60 percent is the share of the government, which will never be exposed to any risk of loss whatsoever.
In consonance with the degree of risk assumed, the FTAA vested in WMCP the day-to-day management of the mining operations. Still such management
is subject to the overall control and supervision of the State in terms of regular reporting, approvals of work programs and budgets, and so on.
So, one needs to consider in relative terms, the costs of inputs for, degree of risk attendant to, and benefits derived or to be derived from a CPA, a JVA or
an MPSA vis--vis those pertaining to an FTAA. It may not be realistically asserted that the foreign grantee of an FTAA is being unduly favored or benefited as
compared with a foreign stakeholder in a corporation holding a CPA, a JVA or an MPSA. Seen the other way around, the government is definitely better off
with an FTAA than a CPA, a JVA or an MPSA.

Developmental Policy
on the Mining Industry
During the Oral Argument and in their Final Memorandum, petitioners repeatedly urged the Court to consider whether mining as an industry and
economic activity deserved to be accorded priority, preference and government support as against, say, agriculture and other activities in which Filipinos and
the Philippines may have an economic advantage. For instance, a recent US study [96] reportedly examined the economic performance of all local US counties
that were dependent on mining and 20 percent of whose labor earnings between 1970 and 2000 came from mining enterprises.
The study -- covering 100 US counties in 25 states dependent on mining -- showed that per capita income grew about 30 percent less in miningdependent communities in the 1980s and 25 percent less for the entire period 1980 to 2000; the level of per capita income was also lower. Therefore, given
the slower rate of growth, the gap between these and other local counties increased.
Petitioners invite attention to the OXFAM America Reports warning to developing nations that mining brings with it serious economic problems, including
increased regional inequality, unemployment and poverty. They also cite the final report [97] of the Extractive Industries Review project commissioned by the
World Bank (the WB-EIR Report), which warns of environmental degradation, social disruption, conflict, and uneven sharing of benefits with local communities
that bear the negative social and environmental impact. The Report suggests that countries need to decide on the best way to exploit their natural resources,
in order to maximize the value added from the development of their resources and ensure that they are on the path to sustainable development once the
resources run out.

Whatever priority or preference may be given to mining vis--vis other economic or non-economic activities is a question of policy that the President and
Congress will have to address; it is not for this Court to decide. This Court declares what the Constitution and the laws say, interprets only when necessary,
and refrains from delving into matters of policy.
Suffice it to say that the State control accorded by the Constitution over mining activities assures a proper balancing of interests. More pointedly, such
control will enable the President to demand the best mining practices and the use of the best available technologies to protect the environment and to
rehabilitate mined-out areas. Indeed, under the Mining Law, the government can ensure the protection of the environment during and after mining. It can
likewise provide for the mechanisms to protect the rights of indigenous communities, and thereby mold a more socially-responsive, culturally-sensitive and
sustainable mining industry.
Early on during the launching of the Presidential Mineral Industry Environmental Awards on February 6, 1997, then President Fidel V. Ramos captured
the essence of balanced and sustainable mining in these words:
Long term, high profit mining translates into higher revenues for government, more decent jobs for the population, more raw materials to feed the engines of
downstream and allied industries, and improved chances of human resource and countryside development by creating self-reliant communities away from
urban centers.
xxxxxxxxx
Against a fragile and finite environment, it is sustainability that holds the key. In sustainable mining, we take a middle ground where both production and
protection goals are balanced, and where parties-in-interest come to terms.
Neither has the present leadership been remiss in addressing the concerns of sustainable mining operations. Recently, on January 16, 2004 and April 20,
2004, President Gloria Macapagal Arroyo issued Executive Orders Nos. 270 and 270-A, respectively, to promote responsible mineral resources exploration,
development and utilization, in order to enhance economic growth, in a manner that adheres to the principles of sustainable development and with due regard
for justice and equity, sensitivity to the culture of the Filipino people and respect for Philippine sovereignty.[98]

REFUTATION OF DISSENTS
The Court will now take up a number of other specific points raised in the dissents of Justices Carpio and Morales.
1. Justice Morales introduced us to Hugh Morgan, former president and chief executive officer of Western Mining Corporation (WMC) and former
president of the Australian Mining Industry Council, who spearheaded the vociferous opposition to the filing by aboriginal peoples of native title claims against
mining companies in Australia in the aftermath of the landmark Mabo decision by the Australian High Court. According to sources quoted by our esteemed
colleague, Morgan was also a racist and a bigot. In the course of protesting Mabo, Morgan allegedly uttered derogatory remarks belittling the aboriginal
culture and race.
An unwritten caveat of this introduction is that this Court should be careful not to permit the entry of the likes of Hugh Morgan and his hordes of alleged
racist-bigots at WMC. With all due respect, such scare tactics should have no place in the discussion of this case. We are deliberating on the constitutionality
of RA 7942, DAO 96-40 and the FTAA originally granted to WMCP, which had been transferred to Sagittarius Mining, a Filipino corporation. We are not
discussing the apparition of white Anglo-Saxon racists/bigots massing at our gates.
2. On the proper interpretation of the phrase agreements involving either technical or financial assistance, Justice Morales points out that at times we
conveniently omitted the use of the disjunctive eitheror, which according to her denotes restriction; hence the phrase must be deemed to connote restriction
and limitation.
But, as Justice Carpio himself pointed out during the Oral Argument, the disjunctive phrase either technical or financial assistance would, strictly
speaking, literally mean that a foreign contractor may provide only one or the other, but not both. And if both technical and financial assistance were required
for a project, the State would have to deal with at least two different foreign contractors -- one for financial and the other for technical assistance. And following

on that, a foreign contractor, though very much qualified to provide both kinds of assistance, would nevertheless be prohibited from providing one kind as soon
as it shall have agreed to provide the other.
But if the Court should follow this restrictive and literal construction, can we really find two (or more) contractors who are willing to participate in one single
project -- one to provide the financial assistance only and the other the technical assistance exclusively; it would be excellent if these two or more contractors
happen to be willing and are able to cooperate and work closely together on the same project (even if they are otherwise competitors). And it would be superb
if no conflicts would arise between or among them in the entire course of the contract. But what are the chances things will turn out this way in the real world?
To think that the framers deliberately imposed this kind of restriction is to say that they were either exceedingly optimistic, or incredibly nave. This begs the
question -- What laudable objective or purpose could possibly be served by such strict and restrictive literal interpretation?
3. Citing Oposa v. Factoran Jr., Justice Morales claims that a service contract is not a contract or property right which merits protection by the due
process clause of the Constitution, but merely a license or privilege which may be validly revoked, rescinded or withdrawn by executive action whenever
dictated by public interest or public welfare.
Oposa cites Tan v. Director of Forestry and Ysmael v. Deputy Executive Secretary as authority. The latter cases dealt specifically with timber licenses
only. Oposa allegedly reiterated that 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. Thus this Court held that the granting of license does not create irrevocable rights, neither is it property or property rights.
Should Oposa be deemed applicable to the case at bar, on the argument that natural resources are also involved in this situation? We do not think so. A
grantee of a timber license, permit or license agreement gets to cut the timber already growing on the surface; it need not dig up tons of earth to get at the
logs. In a logging concession, the investment of the licensee is not as substantial as the investment of a large-scale mining contractor. If a timber license were
revoked, the licensee packs up its gear and moves to a new area applied for, and starts over; what it leaves behind are mainly the trails leading to the logging
site.
In contrast, the mining contractor will have sunk a great deal of money (tens of millions of dollars) into the ground, so to speak, for exploration activities,
for development of the mine site and infrastructure, and for the actual excavation and extraction of minerals, including the extensive tunneling work to reach
the ore body. The cancellation of the mining contract will utterly deprive the contractor of its investments (i.e., prevent recovery of investments), most of which
cannot be pulled out.
To say that an FTAA is just like a mere timber license or permit and does not involve contract or property rights which merit protection by the due process
clause of the Constitution, and may therefore be revoked or cancelled in the blink of an eye, is to adopt a well-nigh confiscatory stance; at the very least, it is
downright dismissive of the property rights of businesspersons and corporate entities that have investments in the mining industry, whose investments,
operations and expenditures do contribute to the general welfare of the people, the coffers of government, and the strength of the economy. Such a
pronouncement will surely discourage investments (local and foreign) which are critically needed to fuel the engine of economic growth and move this country
out of the rut of poverty. In sum, Oposa is not applicable.
4. Justice Morales adverts to the supposedly clear intention of the framers of the Constitution to reserve our natural resources exclusively for the Filipino
people. She then quoted from the records of the ConCom deliberations a passage in which then Commissioner Davide explained his vote, arguing in the
process that aliens ought not be allowed to participate in the enjoyment of our natural resources. One passage does not suffice to capture the tenor or
substance of the entire extensive deliberations of the commissioners, or to reveal the clear intention of the framers as a group. A re-reading of the entire
deliberations (quoted here earlier) is necessary if we are to understand the true intent of the framers.
5. Since 1935, the Filipino people, through their Constitution, have decided that the retardation or delay in the exploration, development or utilization of
the nations natural resources is merely secondary to the protection and preservation of their ownership of the natural resources, so says Justice Morales,
citing Aruego. If it is true that the framers of the 1987 Constitution did not care much about alleviating the retardation or delay in the development and
utilization of our natural resources, why did they bother to write paragraph 4 at all? Were they merely paying lip service to large-scale exploration,
development and utilization? They could have just completely ignored the subject matter and left it to be dealt with through a future constitutional amendment.
But we have to harmonize every part of the Constitution and to interpret each provision in a manner that would give life and meaning to it and to the rest of the
provisions. It is obvious that a literal interpretation of paragraph 4 will render it utterly inutile and inoperative.
6. According to Justice Morales, the deliberations of the Constitutional Commission do not support our contention that the framers, by specifying such
agreements involving financial or technical assistance, necessarily gave implied assent to everything that these agreements implicitly entailed, or that could

reasonably be deemed necessary to make them tenable and effective, including management authority in the day-to-day operations. As proof thereof, she
quotes one single passage from the ConCom deliberations, consisting of an exchange among Commissioners Tingson, Garcia and Monsod.
However, the quoted exchange does not serve to contradict our argument; it even bolsters it. Comm. Christian Monsod was quoted as saying: xxx I think
we have to make a distinction that it is not really realistic to say that we will borrow on our own terms. Maybe we can say that we inherited unjust loans, and
we would like to repay these on terms that are not prejudicial to our own growth. But the general statement that we should only borrow on our own terms is a
bit unrealistic. Comm. Monsod is one who knew whereof he spoke.
7. Justice Morales also declares that the optimal time for the conversion of an FTAA into an MPSA is after completion of the exploration phase and just
before undertaking the development and construction phase, on account of the fact that the requirement for a minimum investment of $50 million is applicable
only during the development, construction and utilization phase, but not during the exploration phase, when the foreign contractor need merely comply with
minimum ground expenditures. Thus by converting, the foreign contractor maximizes its profits by avoiding its obligation to make the minimum investment of
$50 million.
This argument forgets that the foreign contractor is in the game precisely to make money. In order to come anywhere near profitability, the contractor
must first extract and sell the mineral ore. In order to do that, it must also develop and construct the mining facilities, set up its machineries and equipment and
dig the tunnels to get to the deposit. The contractor is thus compelled to expend funds in order to make profits. If it decides to cut back on investments and
expenditures, it will necessarily sacrifice the pace of development and utilization; it will necessarily sacrifice the amount of profits it can make from the mining
operations. In fact, at certain less-than-optimal levels of operation, the stream of revenues generated may not even be enough to cover variable expenses, let
alone overhead expenses; this is a dismal situation anyone would want to avoid. In order to make money, one has to spend money. This truism applies to the
mining industry as well.
8. Mortgaging the minerals to secure a foreign FTAA contractors obligations is anomalous, according to Justice Morales since the contractor was from the
beginning obliged to provide all financing needed for the mining operations. However, the mortgaging of minerals by the contractor does not necessarily signify
that the contractor is unable to provide all financing required for the project, or that it does not have the financial capability to undertake large-scale operations.
Mortgaging of mineral products, just like the assignment (by way of security) of manufactured goods and goods in inventory, and the assignment of
receivables, is an ordinary requirement of banks, even in the case of clients with more than sufficient financial resources. And nowadays, even the richest and
best managed corporations make use of bank credit facilities -- it does not necessarily signify that they do not have the financial resources or are unable to
provide the financing on their own; it is just a manner of maximizing the use of their funds.
9. Does the contractor in reality acquire the surface rights for free, by virtue of the fact that it is entitled to reimbursement for the costs of acquisition and
maintenance, adjusted for inflation? We think not. The reimbursement is possible only at the end of the term of the contract, when the surface rights will no
longer be needed, and the land previously acquired will have to be disposed of, in which case the contractor gets reimbursement from the sales proceeds. The
contractor has to pay out the acquisition price for the land. That money will belong to the seller of the land. Only if and when the land is finally sold off will the
contractor get any reimbursement. In other words, the contractor will have been cash-out for the entire duration of the term of the contract -- 25 or 50 years,
depending. If we calculate the cost of money at say 12 percent per annum, that is the cost or opportunity loss to the contractor, in addition to the amount of the
acquisition price. 12 percent per annum for 50 years is 600 percent; this, without any compounding yet. The cost of money is therefore at least 600 percent of
the original acquisition cost; it is in addition to the acquisition cost. For free? Not by a long shot.
10. The contractor will acquire and hold up to 5,000 hectares? We doubt it. The acquisition by the State of land for the contractor is just to enable the
contractor to establish its mine site, build its facilities, establish a tailings pond, set up its machinery and equipment, and dig mine shafts and tunnels, etc. It is
impossible that the surface requirement will aggregate 5,000 hectares. Much of the operations will consist of the tunneling and digging underground, which will
not require possessing or using any land surface. 5,000 hectares is way too much for the needs of a mining operator. It simply will not spend its cash to
acquire property that it will not need; the cash may be better employed for the actual mining operations, to yield a profit.
11. Justice Carpio claims that the phrase among other things (found in the second paragraph of Section 81 of the Mining Act) is being incorrectly treated
as a delegation of legislative power to the DENR secretary to issue DAO 99-56 and prescribe the formulae therein on the States share from mining operations.
He adds that the phrase among other things was not intended as a delegation of legislative power to the DENR secretary, much less could it be deemed a
valid delegation of legislative power, since there is nothing in the second paragraph of Section 81 which can be said to grant any delegated legislative power
to the DENR secretary. And even if there were, such delegation would be void, for lack of any standards by which the delegated power shall be exercised.
While there is nothing in the second paragraph of Section 81 which can directly be construed as a delegation of legislative power to the DENR secretary,
it does not mean that DAO 99-56 is invalid per se, or that the secretary acted without any authority or jurisdiction in issuing DAO 99-56. As we stated earlier in

our Prologue, Who or what organ of government actually exercises this power of control on behalf of the State? The Constitution is crystal clear:
the President. Indeed, the Chief Executive is the official constitutionally mandated to enter into agreements with foreign owned corporations. On the other
hand, Congress may review the action of the President once it is notified of every contract entered into in accordance with this [constitutional] provision within
thirty days from its execution. It is the President who is constitutionally mandated to enter into FTAAs with foreign corporations, and in doing so, it is within
the Presidents prerogative to specify certain terms and conditions of the FTAAs, for example, the fiscal regime of FTAAs -- i.e., the sharing of the net
mining revenues between the contractor and the State.
Being the Presidents alter ego with respect to the control and supervision of the mining industry, the DENR secretary, acting for the President, is
necessarily clothed with the requisite authority and power to draw up guidelines delineating certain terms and conditions, and specifying therein the terms of
sharing of benefits from mining, to be applicable to FTAAs in general. It is important to remember that DAO 99-56 has been in existence for almost six years,
and has not been amended or revoked by the President.
The issuance of DAO 99-56 did not involve the exercise of delegated legislative power. The legislature did not delegate the power to determine the
nature, extent and composition of the items that would come under the phrase among other things. The legislatures power pertains to the imposition of taxes,
duties and fees. This power was not delegated to the DENR secretary. But the power to negotiate and enter into FTAAs was withheld from Congress, and
reserved for the President. In determining the sharing of mining benefits, i.e., in specifying what the phrase among other things include, the President (through
the secretary acting in his/her behalf) was not determining the amount or rate of taxes, duties and fees, but rather the amount of INCOME to be derived from
minerals to be extracted and sold, income which belongs to the State as owner of the mineral resources. We may say that, in the second paragraph of Section
81, the legislature in a sense intruded partially into the Presidents sphere of authority when the former provided that
The Government share in financial or technical assistance agreement shall consist of, among other things, the contractors corporate income tax, excise tax,
special allowance, withholding tax due from the contractors foreign stockholders arising from dividend 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. (Italics supplied)
But it did not usurp the Presidents authority since the provision merely included the enumerated items as part of the government share, without
foreclosing or in any way preventing (as in fact Congress could not validly prevent) the President from determining what constitutes the States compensation
derived from FTAAs. In this case, the President in effect directed the inclusion or addition of other things, viz., INCOME for the owner of the resources, in the
governments share, while adopting the items enumerated by Congress as part of the government share also.
12. Justice Carpios insistence on applying the ejusdem generis rule of statutory construction to the phrase among other things is therefore useless, and
must fall by the wayside. There is no point trying to construe that phrase in relation to the enumeration of taxes, duties and fees found in paragraph 2 of
Section 81, precisely because the constitutional power to prescribe the sharing of mining income between the State and mining companies, to quote
Justice Carpio pursuant to an FTAA is constitutionally lodged with the President, not with Congress. It thus makes no sense to persist in giving the
phrase among other things a restricted meaning referring only to taxes, duties and fees.
13. Strangely, Justice Carpio claims that the DENR secretary can change the formulae in DAO 99-56 any time even without the approval of the President,
and the secretary is the sole authority to determine the amount of consideration that the State shall receive in an FTAA, because Section 5 of the DAO states
that xxx any amendment of an FTAA other than the provision on fiscal regime shall require the negotiation with the Negotiation Panel and the recommendation
of the Secretary for approval of the President xxx. Allegedly, because of that provision, if an amendment in the FTAA involves non-fiscal matters, the
amendment requires approval of the President, but if the amendment involves a change in the fiscal regime, the DENR secretary has the final authority, and
approval of the President may be dispensed with; hence the secretary is more powerful than the President.
We believe there is some distortion resulting from the quoted provision being taken out of context. Section 5 of DAO 99-56 reads as follows:
Section 5. Status of Existing FTAAs. All FTAAs approved prior to the effectivity of this Administrative Order shall remain valid and be recognized by the
Government: Provided, That should a Contractor desire to amend its FTAA, it shall do so by filing a Letter of Intent (LOI) to the Secretary thru the Director.
Provided, further, That if the Contractor desires to amend the fiscal regime of its FTAA, it may do so by seeking for the amendment of its FTAAs whole fiscal
regime by adopting the fiscal regime provided hereof: Provided, finally, That any amendment of an FTAA other than the provision on fiscal regime shall require
the negotiation with the Negotiating Panel and the recommendation of the Secretary for approval of the President of the Republic of the
Philippines. (underscoring supplied)

It looks like another case of misapprehension. The proviso being objected to by Justice Carpio is actually preceded by a phrase that requires a contractor
desiring to amend the fiscal regime of its FTAA, to amend the same by adopting the fiscal regime prescribed in DAO 99-56 -- i.e., solely in that manner, and in
no other. Obviously, since DAO 99-56 was issued by the secretary under the authority and with the presumed approval of the President, the
amendment of an FTAA by merely adopting the fiscal regime prescribed in said DAO 99-56 (and nothing more) need not have the express clearance
of the President anymore. It is as if the same had been pre-approved. We cannot fathom the complaint that that makes the secretary more powerful than the
President, or that the former is trying to hide things from the President or Congress.
14. Based on the first sentence of Section 5 of DAO 99-56, which states [A]ll FTAAs approved prior to the effectivity of this Administrative Order shall
remain valid and be recognized by the Government, Justice Carpio concludes that said Administrative Order allegedly exempts FTAAs approved prior to its
effectivity -- like the WMCP FTAA -- from having to pay the State any share from their mining income, apart from taxes, duties and fees.
We disagree. What we see in black and white is the statement that the FTAAs approved before the DAO came into effect are to continue to be valid and
will be recognized by the State.Nothing is said about their fiscal regimes. Certainly, there is no basis to claim that the contractors under said FTAAs were being
exempted from paying the government a share in their mining incomes.
For the record, the WMCP FTAA is NOT and has never been exempt from paying the government share. The WMCP FTAA has its own fiscal regime -Section 7.7 -- which gives the government a 60 percent share in the net mining revenues of WMCP from the commencement of commercial
production.
For that very reason, we have never said that DAO 99-56 is the basis for claiming that the WMCP FTAA has a consideration. Hence, we find quite out of
place Justice Carpios statement that ironically, DAO 99-56, the very authority cited to support the claim that the WMCP FTAA has a consideration, does not
apply to the WMCP FTAA. By its own express terms, DAO 99-56 does not apply to FTAAs executed before the issuance of DAO 99-56, like the WMCP FTAA.
The majoritys position has allegedly no leg to stand on since even DAO 99-56, assuming it is valid, cannot save the WMCP FTAA from want of
consideration. Even assuming arguendo that DAO 99-56 does not apply to the WMCP FTAA, nevertheless, the WMCP FTAA has its own fiscal regime, found
in Section 7.7 thereof. Hence, there is no such thing as want of consideration here.
Still more startling is this claim: The majority supposedly agrees that the provisions of the WMCP FTAA, which grant a sham consideration to the State,
are void. Since the majority agrees that the WMCP FTAA has a sham consideration, the WMCP FTAA thus lacks the third element of a valid contract. The
Decision should declare the WMCP FTAA void for want of consideration unless it treats the contract as an MPSA under Section 80. Indeed the only recourse
of WMCP to save the validity of its contract is to convert it into an MPSA.
To clarify, we said that Sections 7.9 and 7.8(e) of the WMCP FTAA are provisions grossly disadvantageous to government and detrimental to the interests
of the Filipino people, as well as violative of public policy, and must therefore be stricken off as invalid. Since the offending provisions are very much separable
from Section 7.7 and the rest of the FTAA, the deletion of Sections 7.9 and 7.8(e) can be done without affecting or requiring the invalidation of the WMCP
FTAA itself, and such deletion will preserve for government its due share of the 60 percent benefits. Therefore, the WMCP FTAA is NOT bereft of a valid
consideration (assuming for the nonce that indeed this is the consideration of the FTAA).

SUMMATION
To conclude, a summary of the key points discussed above is now in order.

The Meaning of Agreements Involving

Either Technical or Financial Assistance
Applying familiar principles of constitutional construction to the phrase agreements 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 Constitution 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
Constitution.
Furthermore, a literal and restrictive interpretation of this paragraph leads to logical inconsistencies. A constitutional provision specifically allowing foreignowned corporations 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 unavoidable, and a careful scrutiny thereof conclusively shows that the ConCom
members discussed 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 financial 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 eradicate service contracts. Instead, they were intent on crafting provisions to put in place safeguards that would eliminate or minimize the abuses prevalent
during the martial law regime. In brief, they were going to permit service contracts with foreign corporations as contractors, but with safety measures to
prevent abuses, as an exception to the general norm 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 exploration, 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 service contracts with foreign corporations as an exception to the general norm in paragraph 1 of Section 2 of the same Article -- was resoundingly
and overwhelmingly approved.
The drafters, many of whom were economists, academicians, lawyers, businesspersons 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 ultimately 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 necessary to make them
tenable and effective -- including management authority with respect 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 financial 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 mining/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, petroleum 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 executed agreement to Congress within thirty days.

Ultimate Test:
Full State Control

To repeat, the primacy of the principle of the States 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 measures that would enable government to regulate the conduct of affairs in various enterprises, 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 mineral resources is allegedly ceded to the foreign contractor.
As discussed hereinabove, the States full control and supervision over mining operations 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.
Through the foregoing provisions, the government agencies concerned are empowered 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 contractors 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 disposed of at the
best prices; copies of sales agreements have to be submitted to and registered 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 technology and facilities. The contractor is also obligated to assist the development of the mining community, and pay royalties to the
indigenous peoples concerned. And violation of any of the FTAAs 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 enterprises, 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 heavily 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 contractors 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 incorporation of lands into the contract area (Clause 4.3-c); requires Bureau of Forest Development 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 declaration 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 succeeding 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 information relating to its explorations within the FTAA area (Clause 5.3-a); requires the contractor 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 conducting
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 production 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); obligates the contractor to ensure 60 percent
Filipino equity in the contractor within ten years of recovering specified expenditures unless not so required by subsequent legislation (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 from grinding to a complete halt as a result of possible delays of more than 60 days in the governments processing and approval of
submitted work programs and budgets. Clause 8.3 seeks to provide a temporary, stop-gap solution in case a disagreement between the State and the
contractor (over the proposed work program or budget submitted 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 programs 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 secretary 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 judgment 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 contractors 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 former. 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 is not thereby
relieved of its obligation to pay the government its basic and additional shares in the net mining revenue. The contractors ability to mortgage the minerals does
not negate the States 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 required by banks and other financial institutions as part of the conditions of
new lendings. There is nothing objectionable here, since Clause 10.4(e) also provides that such financing arrangements should in no event reduce the
contractors obligations or the governments 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 States share in FTAAs with foreign contractors to just
taxes, fees and duties, and depriving the State of a share in the after-tax income of the enterprise. However, the inclusion of the phrase among other things in
the second paragraph of Section 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 miningbetween 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 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 percent, 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 recovered its pre-operating expenses, exploration and development expenditures. Allegedly, the collection of the States 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, reckoned 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 States 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 preoperating 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 corresponding budget, for approval by the Bureau, before government may grant an FTAA or MPSA or other mineral agreements; again,
government has the opportunity to approve 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.
Section 80 of RA 7942 allegedly limits the States 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 issues 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 contractors 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 unconstitutional, 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 constitutional 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 entitled 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 operational requirements, cost structures and investment needs of off-shore petroleum exploration and drilling
companies do not have the remotest resemblance to those of on-shore mining companies.
To take the position that governments 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 States 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 States 60 percent share of WMCPs revenues. Under Section 7.9, should WMCPs 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 WMCPs foreign stockholders, who can at any time cut off the governments entire share by simply selling 60 percent of WMCPs equity
to a Philippine citizen or corporation.
In fact, the sale by WMCPs 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 States right to
receive its 60 percent share. Section 7.9 of the WMCP FTAA has effectively given away the States 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 people, 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 impressed 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 States 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 government. 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.

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 supervision 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 operations, the complicated technology needed, and the intricacies of international trade, coupled with the
States need to maintain flexibility in its dealings, in order to preserve and enhance our countrys 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 multibillion 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 States control. The remedy may be worse than the problem it was
meant to address. In any event, provisions in such future agreements which may be suspected to be grossly disadvantageous or detrimental to government
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 using 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 government of their official functions .[99] 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 conferred on it by the Organic Act .[100] 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.
The Constitution of the Philippines is the supreme law of the land. It is the repository of all the aspirations and hopes of all the people. We fully
sympathize with the plight of Petitioner La Bugal Blaan 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 otherwise 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 concerned -- 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 countrys mineral resources as the petitioners.
Whether we consider the near term or take the longer view, we cannot overemphasize 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 estimates 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 indigenous communities, and prevent irreversible ecological damage.
This Court cannot but be mindful that any decision rendered in this case will ultimately 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 commodities 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 countless 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 the 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 interests 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.
WHEREFORE, the Court RESOLVES to GRANT the respondents and the intervenors Motions for Reconsideration; to REVERSE and SET ASIDE this
Courts January 27, 2004 Decision; to DISMISS the Petition; and to issue this new judgment declaring 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 referred to in paragraph 4 of Section 2 of Article XII of the Constitution; and (3) the Financial 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.
SO ORDERED.
Davide Jr., C.J., Sandoval-Gutierrez, Austria-Martinez, and Garcia, JJ., concur.
Puno, J., in the result and votes to invalidate sections 3.3; 7.8 and 7.9 of the WMC FTAA.
Quisumbing, J., in the result.
Ynares-Santiago, J., joins dissenting opinion of J. Antonio Carpio & J. Conchita C. Morales.
Carpio, and Carpio-Morales, JJ., see dissenting opinion.
Corona, J., certifies he voted affirmatively with the majority and he was allowed to do so although he is on leave.
Callejo, Sr., J., concurs to the dissenting opinion of J. Carpio.
Azcuna, J., took no part-same reason.
Tinga, and Chico-Nazario, JJ., concur with a separate opinion.
6. Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 94759

January 21, 1991

TECHNOLOGY DEVELOPERS, INC., petitioner,

vs.
COURT OF APPEALS, HON. NARCISO T. ATIENZA as Presiding Judge, Bulacan, RTC, and HON. VICENTE CRUZ, Acting Mayor and the
MUNICIPALITY OF STA. MARIA, BULACAN, respondents.
Diosdado P. Peralta for petitioner.

GANCAYCO, J.:
The authority of the local executive to protect the community from pollution is the center of this controversy.
The antecedent facts are related in the appealed decision of the Court of Appeals as follows:
Petitioner, a domestic private corporation engaged in the manufacture and export of charcoal briquette, received a letter dated February 16, 1989 from
private respondent acting mayor Pablo N. Cruz, ordering the full cessation of the operation of the petitioner's plant located at Guyong, Sta. Maria,
Bulacan, until further order. The letter likewise requested Plant Manager Mr. Armando Manese to bring with him to the office of the mayor on February
20, 1989 the following: a) Building permit; b) Mayor's permit; c) Region III-Pollution of Environment and Natural Resources Anti-Pollution Permit; and
of other document.
At the requested conference on February 20, 1989, petitioner, through its representative, undertook to comply with respondent's request for the
production of the required documents. In compliance with said undertaking, petitioner commenced to secure "Region III-Department of Environmental
and Natural Resources Anti-Pollution Permit," although among the permits previously secured prior to the operation of petitioner's plant was a
"Temporary Permit to Operate Air Pollution Installation" issued by the then National Pollution Control Commission (now Environmental Management
Bureau) and is now at a stage where the Environmental Management Bureau is trying to determine the correct kind of anti-pollution devise to be
installed as part of petitioner's request for the renewal of its permit.
Petitioner's attention having been called to its lack of mayor's permit, it sent its representatives to the office of the mayor to secure the same but were
not entertained.
On April 6, 1989, without previous and reasonable notice upon petitioner, respondent acting mayor ordered the Municipality's station commander to
padlock the premises of petitioner's plant, thus effectively causing the stoppage of its operation.
Left with no recourse, petitioner instituted an action for certiorari, prohibition, mandamus with preliminary injunction against private respondent with the
court a quo which is presided by the respondent judge. In its prayer for the issuance of a writ of preliminary mandatory injunction, it alleged therein
that the closure order was issued in grave abuse of discretion.
During the hearing of the application for the issuance of a writ of preliminary injunction on April 14, 1989, herein parties adduced their respective
evidences. The respondent judge, April 19, 1989, found that petitioner is entitled to the issuance of the writ of preliminary mandatory injunction, hence,
it ordered as follows:
In view of the foregoing, upon petitioner's posting of a bond in the amount of P50,000.00 to answer for such damages that respondents may
sustain should petitioner eventually be found not entitled to the injunctive relief hereby issued, let a PRELIMINARY MANDATORY
INJUNCTION issue ordering the respondent Hon. Pablo N. Cruz, and other person acting in his behalf and stead to immediately revoke his
closure order dated April 6, 1989, and allow petitioner to resume its normal business operations until after the instant case shall have been
adjudicated on the merits without prejudice to the inherent power of the court to alter, modify or even revoke this order at any given time.

SO ORDERED.
The writ of preliminary mandatory injunction was issued on April 28, 1989, upon petitioner's posting a bond in the amount of P50,000.00.
Private respondent filed his motion for reconsideration dated May 3, 1989. Said motion for reconsideration was heard on May 30, 1989. Petitioner's
counsel failed to appear and the hearing proceeded with the Provincial Prosecutor presenting his evidence. The following documents were submitted:
a) Exhibit "A", Investigation report on the Technology Developers Inc., prepared by one Marivic Guina, and her conclusion and recommendation read:
Due to the manufacturing process and nature of raw materials used, the fumes coming from the factory may contain particulate matters which
are hazardous to the health of the people. As such, the company should cease operating until such a time that the proper air pollution device
is installed and operational.
b) Exhibits "B", "B-1", "B-2", three (3) sheets of coupon bond containing signatures of residents of Barangay Guyong, Sta. Maria, Bulacan;
c) Exhibit "B-3", a letter addressed to Hon. Roberto Pagdanganan Governor of the Province of Bulacan, dated November 22, 1988, complaining about
the smoke coming out of the chimney of the company while in operation.
Reassessing all the evidence adduced, the lower court, on June 14, 1989, issued an order (a) setting aside the order dated April 28, 1989, which
granted a Writ of Preliminary Mandatory Injunction, and (b) dissolving the writ consequently issued.
A motion for reconsideration dated July 6, 1989 was filed by petitioner. Said motion drew an opposition dated July 19, 1989 from private respondent.
Resolving the petitioner's motion for reconsideration, the respondent judge issued an order dated August 9, 1989, denying said motion for
reconsideration.1
Hence a petition for certiorari and prohibition with preliminary injunction was filed by petitioner in the Court of Appeals seeking to annul and set aside (a) the
order issued by the trial court on June 14, 1989, setting aside the order dated April 28, 1989, and (b) the order of August 9, 1989, denying petitioner's motion
for reconsideration of the order of June 14, 1989. In due course the petition was denied for lack of merit by the appellate court in a decision dated January 26,
1990. 2 A motion for reconsideration thereof filed by petitioner was denied on August 10, 1990.
Thus, the herein petition for review on certiorari filed with this Court. Six errors are alleged to have been committed by the appellate court which may be
synthesized into the singular issue of whether or not the appellate court committed a grave abuse of discretion in rendering its question decision and
resolution.
The petition is devoid of merit.
The well-known rule is that the matter of issuance of a writ of preliminary injunction is addressed to the sound judicial discretion of the trial court and its action
shall not be disturbed on appeal unless it is demonstrated that it acted without jurisdiction or in excess of jurisdiction or otherwise, in grave abuse of its
discretion. By the same token the court that issued such a preliminary relief may recall or dissolve the writ as the circumstances may warrant.
To the mind of the Court the following circumstances militate against the maintenance of the writ of preliminary injunction sought by petitioner:
1. No mayor's permit had been secured. While it is true that the matter of determining whether there is a pollution of the environment that requires
control if not prohibition of the operation of a business is essentially addressed to the then National Pollution Control Commission of the Ministry of
Human Settlements, now the Environmental Management Bureau of the Department of Environment and Natural Resources, it must be recognized
that the mayor of a town has as much responsibility to protect its inhabitants from pollution, and by virture of his police power, he may deny the

application for a permit to operate a business or otherwise close the same unless appropriate measures are taken to control and/or avoid injury to the
health of the residents of the community from the emissions in the operation of the business.
2. The Acting Mayor, in a letter of February 16, 1989, called the attention of petitioner to the pollution emitted by the fumes of its plant whose offensive
odor "not only pollute the air in the locality but also affect the health of the residents in the area," so that petitioner was ordered to stop its operation
until further orders and it was required to bring the following:
(1) Building permit;
(2) Mayor's permit; and
(3) Region III-Department of Environment and Natural Resources Anti-Pollution permit.

3. This action of the Acting Mayor was in response to the complaint of the residents of Barangay Guyong, Sta. Maria, Bulacan, directed to the
Provincial Governor through channels.4 The alleged NBI finding that some of the signatures in the four-page petition were written by one
person, 5 appears to be true in some instances, (particularly as among members of the same family), but on the whole the many signatures appear to
be written by different persons. The certification of the barrio captain of said barrio that he has not received any complaint on the matter 6 must be
because the complaint was sent directly to the Governor through the Acting Mayor.
4. The closure order of the Acting Mayor was issued only after an investigation was made by Marivic Guina who in her report of December 8, 1988
observed that the fumes emitted by the plant of petitioner goes directly to the surrounding houses and that no proper air pollution device has been
installed.7
5. Petitioner failed to produce a building permit from the municipality of Sta. Maria, but instead presented a building permit issued by an official of
Makati on March 6,1987.8
6. While petitioner was able to present a temporary permit to operate by the then National Pollution Control Commission on December 15, 1987, the
permit was good only up to May 25, 1988.9 Petitioner had not exerted any effort to extend or validate its permit much less to install any device to
control the pollution and prevent any hazard to the health of the residents of the community.
All these factors justify the dissolution of the writ of preliminary injunction by the trial court and the appellate court correctly upheld the action of the lower court.
Petitioner takes note of the plea of petitioner focusing on its huge investment in this dollar-earning industry.1wphi1 It must be stressed however, that
concomitant with the need to promote investment and contribute to the growth of the economy is the equally essential imperative of protecting the health, nay
the very lives of the people, from the deleterious effect of the pollution of the environment.
WHEREFORE, the petition is DENIED, with costs against petitioner.
SO ORDERED.
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.
7. Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 158290

October 23, 2006

HILARION M. HENARES, JR., VICTOR C. AGUSTIN, ALFREDO L. HENARES, DANIEL L. HENARES, ENRIQUE BELO HENARES, and CRISTINA BELO
HENARES, petitioners,
vs.
LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD and DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, respondents.

RESOLUTION

QUISUMBING, J.:
Petitioners challenge this Court to issue a writ of mandamus commanding respondents Land Transportation Franchising and Regulatory Board (LTFRB) and
the Department of Transportation and Communications (DOTC) to require public utility vehicles (PUVs) to use compressed natural gas (CNG) as alternative
fuel.
Citing statistics from the Metro Manila Transportation and Traffic Situation Study of 1996, 1 the Environmental Management Bureau (EMB) of the National
Capital Region,2 a study of the Asian Development Bank,3 the Manila Observatory4 and the Department of Environment and Natural Resources5 (DENR) on
the high growth and low turnover in vehicle ownership in the Philippines, including diesel-powered vehicles, two-stroke engine powered motorcycles and their
concomitant emission of air pollutants, petitioners attempt to present a compelling case for judicial action against the bane of air pollution and related
environmental hazards.
Petitioners allege that the particulate matters (PM) complex mixtures of dust, dirt, smoke, and liquid droplets, varying in sizes and compositions emitted into
the air from various engine combustions have caused detrimental effects on health, productivity, infrastructure and the overall quality of life. Petitioners
particularly cite the effects of certain fuel emissions from engine combustion when these react to other pollutants. For instance, petitioners aver, with
hydrocarbons, oxide of nitrogen (NO x) creates smog; with sulfur dioxide, it creates acid rain; and with ammonia, moisture and other compounds, it reacts to
form nitric acid and harmful nitrates. Fuel emissions also cause retardation and leaf bleaching in plants. According to petitioner, another emission, carbon
monoxide (CO), when not completely burned but emitted into the atmosphere and then inhaled can disrupt the necessary oxygen in blood. With prolonged
exposure, CO affects the nervous system and can be lethal to people with weak hearts. 6
Petitioners add that although much of the new power generated in the country will use natural gas while a number of oil and coal-fired fuel stations are being
phased-out, still with the projected doubling of power generation over the next 10 years, and with the continuing high demand for motor vehicles, the energy
and transport sectors are likely to remain the major sources of harmful emissions. Petitioners refer us to the study of the Philippine Environment Monitor
20027, stating that in four of the country's major cities, Metro Manila, Davao, Cebu and Baguio, the exposure to PM 10, a finer PM which can penetrate deep into
the lungs causing serious health problems, is estimated at over US$430 million. 8 The study also reports that the emissions of PMs have caused the following:
Over 2,000 people die prematurely. This loss is valued at about US$140 million.
Over 9,000 people suffer from chronic bronchitis, which is valued at about US$120 million.

 Nearly 51 million cases of respiratory symptom days in Metro Manila (averaging twice a year in Davao and Cebu, and five to six times in Metro
Manila and Baguio), costs about US$170 million. This is a 70 percent increase, over a decade, when compared with the findings of a similar study
done in 1992 for Metro Manila, which reported 33 million cases. 9
Petitioners likewise cite the University of the Philippines' studies in 1990-91 and 1994 showing that vehicular emissions in Metro Manila have resulted to the
prevalence of chronic obstructive pulmonary diseases (COPD); that pulmonary tuberculosis is highest among jeepney drivers; and there is a 4.8 to 27.5
percent prevalence of respiratory symptoms among school children and 15.8 to 40.6 percent among child vendors. The studies also revealed that the children
in Metro Manila showed more compromised pulmonary function than their rural counterparts. Petitioners infer that these are mostly due to the emissions of
PUVs.
To counter the aforementioned detrimental effects of emissions from PUVs, petitioners propose the use of CNG. According to petitioners, CNG is a natural gas
comprised mostly of methane which although containing small amounts of propane and butane, 10 is colorless and odorless and considered the cleanest fossil
fuel because it produces much less pollutants than coal and petroleum; produces up to 90 percent less CO compared to gasoline and diesel fuel; reduces
NOx emissions by 50 percent and cuts hydrocarbon emissions by half; emits 60 percent less PMs; and releases virtually no sulfur dioxide. Although, according
to petitioners, the only drawback of CNG is that it produces more methane, one of the gases blamed for global warming. 11
Asserting their right to clean air, petitioners contend that the bases for their petition for a writ of mandamus to order the LTFRB to require PUVs to use CNG as
an alternative fuel, lie in Section 16,12 Article II of the 1987 Constitution, our ruling in Oposa v. Factoran, Jr.,13 and Section 414 of Republic Act No. 8749
otherwise known as the "Philippine Clean Air Act of 1999."
Meantime, following a subsequent motion, the Court granted petitioners' motion to implead the Department of Transportation and Communications (DOTC) as
additional respondent.
In his Comment for respondents LTFRB and DOTC, the Solicitor General, cites Section 3, Rule 65 of the Revised Rules of Court and explains that the writ of
mandamus is not the correct remedy since the writ may be issued only to command a tribunal, corporation, board or person to do an act that is required to be
done, when he or it unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or station, or
unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, there being no other plain, speedy and adequate
remedy in the ordinary course of law.15 Further citing existing jurisprudence, the Solicitor General explains that in contrast to a discretionary act, a ministerial
act, which a mandamus is, is one in which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to a mandate of legal
authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of an act done.
The Solicitor General also notes that nothing in Rep. Act No. 8749 that petitioners invoke, prohibits the use of gasoline and diesel by owners of motor vehicles.
Sadly too, according to the Solicitor General, Rep. Act No. 8749 does not even mention the existence of CNG as alternative fuel and avers that unless this law
is amended to provide CNG as alternative fuel for PUVs, the respondents cannot propose that PUVs use CNG as alternative fuel.
The Solicitor General also adds that it is the DENR that is tasked to implement Rep. Act No. 8749 and not the LTFRB nor the DOTC. Moreover, he says, it is
the Department of Energy (DOE), under Section 2616 of Rep. Act No. 8749, that is required to set the specifications for all types of fuel and fuel-related
products to improve fuel compositions for improved efficiency and reduced emissions. He adds that under Section 21 17 of the cited Republic Act, the DOTC is
limited to implementing the emission standards for motor vehicles, and the herein respondents cannot alter, change or modify the emission standards. The
Solicitor General opines that the Court should declare the instant petition for mandamus without merit.
Petitioners, in their Reply, insist that the respondents possess the administrative and regulatory powers to implement measures in accordance with the policies
and principles mandated by Rep. Act No. 8749, specifically Section 218 and Section 21.19 Petitioners state that under these laws and with all the available
information provided by the DOE on the benefits of CNG, respondents cannot ignore the existence of CNG, and their failure to recognize CNG and compel its
use by PUVs as alternative fuel while air pollution brought about by the emissions of gasoline and diesel endanger the environment and the people, is
tantamount to neglect in the performance of a duty which the law enjoins.

Lastly, petitioners aver that other than the writ applied for, they have no other plain, speedy and adequate remedy in the ordinary course of law. Petitioners
insist that the writ in fact should be issued pursuant to the very same Section 3, Rule 65 of the Revised Rules of Court that the Solicitor General invokes.
In their Memorandum, petitioners phrase the issues before us as follows:
I. WHETHER OR NOT THE PETITIONERS HAVE THE PERSONALITY TO BRING THE PRESENT ACTION
II. WHETHER OR NOT THE PRESENT ACTION IS SUPPORTED BY LAW
III. WHETHER OR NOT THE RESPONDENT IS THE AGENCY RESPONSIBLE TO IMPLEMENT THE SUGGESTED ALTERNATIVE OF REQUIRING
PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL GAS (CNG)
IV. WHETHER OR NOT THE RESPONDENT CAN BE COMPELLED TO REQUIRE PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL
GAS THROUGH A WRIT OF MANDAMUS20
Briefly put, the issues are two-fold. First, Do petitioners have legal personality to bring this petition before us? Second, Should mandamus issue against
respondents to compel PUVs to use CNG as alternative fuel?
According to petitioners, Section 16,21 Article II of the 1987 Constitution is the policy statement that bestows on the people the right to breathe clean air in a
healthy environment. This policy is enunciated in Oposa.22 The implementation of this policy is articulated in Rep. Act No. 8749. These, according to
petitioners, are the bases for their standing to file the instant petition. They aver that when there is an omission by the government to safeguard a right, in this
case their right to clean air, then, the citizens can resort to and exhaust all remedies to challenge this omission by the government. This, they say, is embodied
in Section 423 of Rep. Act No. 8749.
Petitioners insist that since it is the LTFRB and the DOTC that are the government agencies clothed with power to regulate and control motor vehicles,
particularly PUVs, and with the same agencies' awareness and knowledge that the PUVs emit dangerous levels of air pollutants, then, the responsibility to see
that these are curbed falls under respondents' functions and a writ of mandamus should issue against them.
The Solicitor General, for his part, reiterates his position that the respondent government agencies, the DOTC and the LTFRB, are not in a position to compel
the PUVs to use CNG as alternative fuel. The Solicitor General explains that the function of the DOTC is limited to implementing the emission standards set
forth in Rep. Act No. 8749 and the said law only goes as far as setting the maximum limit for the emission of vehicles, but it does not recognize CNG as
alternative engine fuel. The Solicitor General avers that the petition should be addressed to Congress for it to come up with a policy that would compel the use
of CNG as alternative fuel.
Patently, this Court is being asked to resolve issues that are not only procedural. Petitioners challenge this Court to decide if what petitioners propose could be
done through a less circuitous, speedy and unchartered course in an issue that Chief Justice Hilario G. Davide, Jr. in his ponencia in
the Oposa case,24 describes as "inter-generational responsibility" and "inter-generational justice."
Now, as to petitioners' standing. There is no dispute that petitioners have standing to bring their case before this Court. Even respondents do not question their
standing. This petition focuses on one fundamental legal right of petitioners, their right to clean air. Moreover, as held previously, a party's standing before this
Court is a procedural technicality which may, in the exercise of the Court's discretion, be set aside in view of the importance of the issue raised. We brush
aside this issue of technicality under the principle of the transcendental importance to the public, especially so if these cases demand that they be settled
promptly.
Undeniably, the right to clean air not only is an issue of paramount importance to petitioners for it concerns the air they breathe, but it is also impressed with
public interest. The consequences of the counter-productive and retrogressive effects of a neglected environment due to emissions of motor vehicles
immeasurably affect the well-being of petitioners. On these considerations, the legal standing of the petitioners deserves recognition.

Our next concern is whether the writ of mandamus is the proper remedy, and if the writ could issue against respondents.
Under Section 3, Rule 65 of the Rules of Court, mandamus lies under any of the following cases: (1) against any tribunal which unlawfully neglects the
performance of an act which the law specifically enjoins as a duty; (2) in case any corporation, board or person unlawfully neglects the performance of an act
which the law enjoins as a duty resulting from an office, trust, or station; and (3) in case any tribunal, corporation, board or person unlawfully excludes another
from the use and enjoyment of a right or office to which such other is legally entitled; and there is no other plain, speedy, and adequate remedy in the ordinary
course of law.
In University of San Agustin, Inc. v. Court of Appeals,25 we said,
It is settled that mandamus is employed to compel the performance, when refused, of a ministerial duty, this being its main objective. It does
not lie to require anyone to fulfill contractual obligations or to compel a course of conduct, nor to control or review the exercise of discretion.
On the part of the petitioner, it is essential to the issuance of a writ of mandamus that he should have a clear legal rightto the thing demanded
and it must be the imperative duty of the respondent to perform the act required. It never issues in doubtful cases. While it may not be
necessary that the duty be absolutely expressed, it must however, be clear. The writ will not issue to compel an official to do anything which is
not his duty to do or which is his duty not to do, or give to the applicant anything to which he is not entitled by law. The writ neither confers
powers nor imposes duties. It is simply a command to exercise a power already possessed and to perform a duty already imposed. (Emphasis
supplied.)
In this petition the legal right which is sought to be recognized and enforced hinges on a constitutional and a statutory policy already articulated in operational
terms, e.g. in Rep. Act No. 8749, the Philippine Clean Air Act of 1999. Paragraph (a), Section 21 of the Act specifically provides that when PUVs are
concerned, the responsibility of implementing the policy falls on respondent DOTC. It provides as follows:
SEC 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission standards for motor vehicles set pursuant to and as provided in
this Act. To further improve the emission standards, the Department [DENR] shall review, revise and publish the standards every two (2) years, or as
the need arises. It shall consider the maximum limits for all major pollutants to ensure substantial improvement in air quality for the health, safety and
welfare of the general public.
Paragraph (b) states:
b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs, shall develop an action plan for the control and management of air
pollution from motor vehicles consistent with the Integrated Air Quality Framework . . . . (Emphasis supplied.)
There is no dispute that under the Clean Air Act it is the DENR that is tasked to set the emission standards for fuel use and the task of developing an action
plan. As far as motor vehicles are concerned, it devolves upon the DOTC and the line agency whose mandate is to oversee that motor vehicles prepare an
action plan and implement the emission standards for motor vehicles, namely the LTFRB.
In Oposa26 we said, the right to a balanced and healthful ecology carries with it the correlative duty to refrain from impairing the environment. We also said, it is
clearly the duty of the responsible government agencies to advance the said right.
Petitioners invoke the provisions of the Constitution and the Clean Air Act in their prayer for issuance of a writ of mandamus commanding the respondents to
require PUVs to use CNG as an alternative fuel. Although both are general mandates that do not specifically enjoin the use of any kind of fuel, particularly the
use of CNG, there is an executive order implementing a program on the use of CNG by public vehicles. Executive Order No. 290, entitled Implementing the
Natural Gas Vehicle Program for Public Transport (NGVPPT), took effect on February 24, 2004. The program recognized, among others, natural gas as a
clean burning alternative fuel for vehicle which has the potential to produce substantially lower pollutants; and the Malampaya Gas-to-Power Project as
representing the beginning of the natural gas industry of the Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites as one of its objectives, the use of
CNG as a clean alternative fuel for transport. Furthermore, one of the components of the program is the development of CNG refueling stations and all related
facilities in strategic locations in the country to serve the needs of CNG-powered PUVs. Section 3 of E.O. No. 290, consistent with E.O. No. 66, series of 2002,

designated the DOE as the lead agency (a) in developing the natural gas industry of the country with the DENR, through the EMB and (b) in formulating
emission standards for CNG. Most significantly, par. 4.5, Section 4 tasks the DOTC, working with the DOE, to develop an implementation plan for "a gradual
shift to CNG fuel utilization in PUVs and promote NGVs [natural gas vehicles] 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" A thorough reading of the executive order
assures us that implementation for a cleaner environment is being addressed. To a certain extent, the instant petition had been mooted by the issuance of
E.O. No. 290.
Regrettably, however, the plain, speedy and adequate remedy herein sought by petitioners, i.e., a writ of mandamus commanding the respondents to require
PUVs to use CNG, is unavailing. Mandamus is available only to compel the doing of an act specifically enjoined by law as a duty. Here, there is no law that
mandates the respondents LTFRB and the DOTC to order owners of motor vehicles to use CNG. At most the LTFRB has been tasked by E.O. No. 290 in par.
4.5 (ii), Section 4 "to grant preferential and exclusive Certificates of Public Convenience (CPC) or franchises to operators of NGVs based on the results of the
DOTC surveys."
Further, mandamus will not generally lie from one branch of government to a coordinate branch, for the obvious reason that neither is inferior to the
other.27 The need for future changes in both legislation and its implementation cannot be preempted by orders from this Court, especially when what is prayed
for is procedurally infirm. Besides, comity with and courtesy to a coequal branch dictate that we give sufficient time and leeway for the coequal branches to
address by themselves the environmental problems raised in this petition.
In the same manner that we have associated the fundamental right to a balanced and healthful ecology with the twin concepts of "inter-generational
responsibility" and "inter-generational justice" in Oposa,28 where we upheld the right of future Filipinos to prevent the destruction of the rainforests, so do we
recognize, in this petition, the right of petitioners and the future generation to clean air. In Oposa we said that if the right to a balanced and healthful ecology is
now explicitly found in the Constitution even if the right is "assumed to exist from the inception of humankind, it is because of the well-founded fear of its
framers [of the Constitution] 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 continuing 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. . ." 29
It is the firm belief of this Court that in this case, it is timely to reaffirm the premium we have placed on the protection of the environment in the landmark case
of Oposa. Yet, as serious as the statistics are on air pollution, with the present fuels deemed toxic as they are to the environment, as fatal as these pollutants
are to the health of the citizens, and urgently requiring resort to drastic measures to reduce air pollutants emitted by motor vehicles, we must admit in
particular that petitioners are unable to pinpoint the law that imposes an indubitable legal duty on respondents that will justify a grant of the writ of mandamus
compelling the use of CNG for public utility vehicles. It appears to us that more properly, the legislature should provide first the specific statutory remedy to the
complex environmental problems bared by herein petitioners before any judicial recourse by mandamus is taken.
WHEREFORE, the petition for the issuance of a writ of mandamus is DISMISSED for lack of merit.
SO ORDERED.
Carpio, Morales, Tinga, and Velasco, Jr., JJ., concur.
8. THIRD DIVISION
[G.R. No. 147465. January 30, 2002]
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs. JANCOM ENVIRONMENTAL CORPORATION and JANCOM INTERNATIONAL
DEVELOPMENT PROJECTS PTY. LIMITED OF AUSTRALIA, respondents.
DECISION

MELO, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure filed by petitioner Metropolitan Manila Development
Authority (MMDA), seeking to reverse and set aside the November 13, 2000 decision of the Court of Appeals declaring valid and perfected the waste
management contract entered into by the Republic of the Philippines, represented by the Secretary of National Resources and the Executive Committee to
oversee the build-operate-transfer implementation of solid waste management projects, and JANCOM Environmental Corporation.
The pertinent facts are as follows:
In 1994, then President Fidel V. Ramos issued Presidential Memorandum Order No. 202 creating the Executive Committee (EXECOM) to oversee the
BOT implementation of solid waste management projects, headed by the Chairman of the MMDA and the Cabinet Officer for Regional Development-National
Capital Region (CORD-NCR). The EXECOM was to oversee and develop waste-to-energy projects for the waste disposal sites in San Mateo, Rizal and
Carmona, Cavite under the build-operate-transfer (BOT) scheme. The terms of reference for the waste-to-energy projects provided that its proponents should
have the capability to establish municipal solid waste thermal plants using incineration technology. This type of technology was selected because of its alleged
advantages of greatly reduced waste volume, prolongation of the service life of the disposal site, and generation of electricity.
While eleven (11) proponents submitted their pre-qualification documents, most failed to comply with the requirements under Section 5.4 of the
Implementing Rules and Regulations (IRR) of Republic Act No. 6957, otherwise known as the Build-Operate-Transfer Law. On July 21, 1995, the Prequalification, Bids and Awards Committee (PBAC) recommended the pre-qualification of three proponents, namely: i) JANCOM International Pty. Ltd.; ii) First
Philippine International W-E Managers; and iii) PACTECH Development Corporation. On July 26, 1995,the EXECOM approved the recommendation of the
PBAC. On July 27, 1995, MMDA forwarded to the Investment Coordinating Committee (ICC) Secretariat the pre-feasibility study on the privatization of the
Carmona and San Mateo landfill sites. The project was later presented to the ICC-Technical Board (ICC-TB) and then endorsed to the ICC-Cabinet Committee
(ICC-CC).
On May 2, 1996, the PBAC conducted a pre-bid conference where it required the three pre-qualified bidders to submit, within ninety (90) days, their bid
proposals. On August 2, 1996, JANCOM and First Philippines requested for an extension of time to submit their bids. PACTECH, on the other hand, withdrew
from the bidding.
Subsequently, JANCOM entered into a partnership with Asea Brown Boveri (ABB) to form JANCOM Environmental Corporation while First Philippines
formed a partnership with OGDEN. Due to the change in the composition of the proponents, particularly in their technology partners and contractors, the
PBAC conducted a post pre-qualification evaluation.
During the second bid conference, the bid proposals of First Philippines for the Carmona site and JANCOM for the San Mateo site were found to be
complete and responsive.Consequently, on February 12, 1997, JANCOM and First Philippines were declared the winning bidders, respectively, for the San
Mateo and the Carmona projects.
In a letter dated February 27, 1997, then MMDA Chairman Prospero I. Oreta informed JANCOMs Chief Executive Officer Jay Alparslan that the EXECOM
had approved the PBAC recommendation to award to JANCOM the San Mateo Waste-to-Energy Project on the basis of the final Evaluation Report declaring
JANCOM International Ltd., Pty., together with Asea Brown Boveri (ABB), as the sole complying (winning) bidder for the San Mateo Waste Disposal site,
subject to negotiation and mutual approval of the terms and conditions of the contract of award. The letter also notified Alparslan that the EXECOM had
created a negotiating team composed of Secretary General Antonio Hidalgo of the Housing and Urban Development Coordinating Council, Director Ronald G.
Fontamillas, General Manager Roberto Nacianceno of MMDA, and Atty. Eduardo Torres of the host local government unit to work out and finalize the contract
award. Chairman Oreta requested JANCOM to submit to the EXECOM the composition of its own negotiating team.

Thereafter, after a series of meetings and consultations between the negotiating teams of EXECOM and JANCOM, a draft BOT contract was prepared
and presented to the Presidential Task Force on Solid Waste Management.
On December 19, 1997, the BOT Contract for the waste-to-energy project was signed between JANCOM and the Philippine Government, represented by
the Presidential Task Force on Solid Waste Management through DENR Secretary Victor Ramos, CORD-NCR Chairman Dionisio dela Serna, and MMDA
Chairman Prospero Oreta.
On March 5, 1998, the BOT contract was submitted to President Ramos for approval but this was too close to the end of his term which expired without
him signing the contract.President Ramos, however, endorsed the contract to incoming President Joseph E. Estrada.
With the change of administration, the composition of the EXECOM also changed. Memorandum Order No. 19 appointed the Chairman of the
Presidential Committee on Flagship Programs and Project to be the EXECOM chairman. Too, Republic Act No. 8749, otherwise known as the Clean Air Act of
1999, was passed by Congress. And due to the clamor of residents of Rizal province, President Estrada had, in the interim, also ordered the closure of
the San Mateo landfill. Due to these circumstances, the Greater Manila Solid Waste Management Committee adopted a resolution not to pursue the BOT
contract with JANCOM. Subsequently, in a letter dated November 4, 1999, Roberto Aventajado, Chairman of the Presidential Committee on Flagship
Programs and Project informed Mr. Jay Alparslan, Chairman of JANCOM, that due to changes in policy and economic environment (Clean Air Act and nonavailability of the San Mateo landfill), the implementation of the BOT contract executed and signed between JANCOM and the Philippine Government would
no longer be pursued. The letter stated that other alternative implementation arrangements for solid waste management for Metro Manila would be considered
instead.
JANCOM appealed to President Joseph Estrada the position taken by the EXECOM not to pursue the BOT Contract executed and signed between
JANCOM and the Philippine Government, refuting the cited reasons for non-implementation. Despite the pendency of the appeal, MMDA, on February 22,
2000, caused the publication in a newspaper of an invitation to pre-qualify and to submit proposals for solid waste management projects for Metro
Manila. JANCOM thus filed with the Regional Trial Court of Pasig a petition for certiorari to declare i) the resolution of the Greater Metropolitan Manila Solid
Waste Management Committee disregarding the BOT Contract and ii) the acts of MMDA calling for bids and authorizing a new contract for Metro Manila waste
management, as illegal, unconstitutional, and void; and for prohibition to enjoin the Greater Metropolitan Manila Solid Waste Management Committee and
MMDA from implementing the assailed resolution and disregarding the Award to, and the BOT contract with, JANCOM, and from making another award in its
place. On May 29, 2000, the trial court rendered a decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of petitioners JANCOM ENVIRONMENTAL CORPORATION, and
JANCOM INTERNATIONAL DEVELOPMENT PROJECTS PTY., LIMITED OF AUSTRALIA, and against respondent GREATER METROPOLITAN MANILA
SOLID WASTE MANAGEMENT COMM., and HON. ROBERTO N. AVENTAJADO, in his Capacity as Chairman of the said Committee, METRO MANILA
DEVELOPMENT AUTHORITY and HON. JEJOMAR C. BINAY, in his capacity as Chairman of said Authority, declaring the Resolution of respondent Greater
Metropolitan Manila Solid Waste Management Committee disregarding petitioners BOT Award Contract and calling for bids for and authorizing a new contract
for the Metro Manila waste management ILLEGAL and VOID.
Moreover, respondents and their agents are hereby PROHIBITED and ENJOINED from implementing the aforesaid Resolution and disregarding petitioners
BOT Award Contract and from making another award in its place.
Let it be emphasized that this Court is not preventing or stopping the government from implementing infrastructure projects as it is aware of the proscription
under PD 1818. On the contrary, the Court is paving the way for the necessary and modern solution to the perennial garbage problem that has been the major
headache of the government and in the process would serve to attract more investors in the country.
(Rollo,p. 159.)

Instead of appealing the decision, MMDA filed a special civil action for certiorari with prayer for a temporary restraining order with the Court of Appeals
which was later docketed therein as CA-G.R. SP No. 59021. The appellate court not only required JANCOM to comment on the petition, it also granted
MMDAs prayer for a temporary restraining order. During the pendency of the petition for certiorari, JANCOM moved for the execution of the RTC decision,
which was opposed by MMDA. However, the RTC granted the motion for execution on the ground that its decision had become final since MMDA had not
appealed the same to the Court of Appeals. MMDA moved to declare respondents and the RTC judge in contempt of court, alleging that the RTCs grant of
execution was abuse of and interference with judicial rules and processes.
On November 13, 2001, the Court of Appeals dismissed the petition in CA-G.R. SP No. 59021 and a companion case, CA-G.R. SP No. 60303.
MMDAs motion for reconsideration of said decision having been denied, MMDA filed the instant petition, alleging that the Court of Appeals gravely erred
in finding that:
1) There is a valid and binding contract between the Republic of the Philippines and JANCOM given that: a) the contract does not bear the signature
of the President of the Philippines; b) the conditions precedent specified in the contract were not complied with; and c) there was no valid notice
of award.
2) The MMDA had not seasonably appealed the Decision of the lower court via a petition for certiorari.
Before taking up the substantive issue in question, we shall first dispose of the question as to whether it is fatal to petitioners cause, that rather than
appealing the trial courts decision to the Court of Appeals, it instead filed a petition for certiorari. While petitioner claims that the trial courts decision never
became final by virtue of its having appealed by certiorari to the Court of Appeals, the trial court ruled that petitioners failure to file an appeal has made its
decision final and executory. At bottom, the question involves a determination of the propriety of petitioners choice of the remedy of certiorari in questioning
the decision of the trial court.
Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
Section 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy
in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may
require.
The petition shall be accompanied by a certified true copy of the judgment, order, or resolution subject thereof, copies of all pleadings and documents relevant
and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule 46.
Plain it is from a reading of the above provision that certiorari will lie only where a court has acted without or in excess of jurisdiction or with grave abuse
of discretion. If the court has jurisdiction over the subject matter and of the person, its rulings upon all questions involved are within its jurisdiction, however
irregular or erroneous these may be, they cannot be corrected by certiorari. Correction may be obtained only by an appeal from the final decision.
Verily, Section 1, Rule 41 of the 1997 Rules of Civil Procedure provides:
SEC. 1. Subject of appeal. An appeal may be taken from a judgment or final order that completely disposes of the case or of a particular matter therein when
declared by these Rules to be appealable.
xxx xxx xxx

In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65.
There can be no dispute that the trial courts May 29, 2000 decision was a final order or judgment which MMDA should have appealed, had it been so
minded. In its decision, the trial court disposed of the main controversy by declaring the Resolution of respondent Greater Metropolitan Manila Solid Waste
Management Committee disregarding petitioners BOT Award Contract and calling for bids for and authorizing a new contract for the Metro Manila waste
management ILLEGAL and VOID. This ruling completely disposed of the controversy between MMDA and JANCOM. In BA Finance Corporation vs. CA (229
SCRA 5667 [1994]), we held that a final order or judgment is one which disposes of the whole subject matter or terminates a particular proceeding or action,
leaving nothing to be done but to enforce by execution what has been determined. An order or judgment is deemed final when it finally disposes of the
pending action so that nothing more can be done with it in the trial court. In other words, a final order is that which gives an end to the litigation. A final order or
judgment finally disposes of, adjudicates, or determines the rights, or some right or rights of the parties, either on the entire controversy or on some definite
and separate branch thereof, and concludes them until it is reversed or set aside. Where no issue is left for future consideration, except the fact of compliance
or non-compliance with the terms of the judgment or doer, such judgment or order is final and appealable (Investments, Inc. vs. Court of Appeals, 147 SCRA
334 [1987]).
However, instead of appealing the decision, MMDA resorted to the extraordinary remedy of certiorari, as a mode of obtaining reversal of the
judgment. This cannot be done. The judgment was not in any sense null and void ab initio, incapable of producing any legal effects whatever, which could be
resisted at any time and in any court it was attempted. It was a judgment which could or may have suffered from some substantial error in procedure or in
findings of fact or of law, and on that account, it could have been reversed or modified on appeal.But since it was not appealed, it became final and has thus
gone beyond the reach of any court to modify in any substantive aspect. The remedy to obtain reversal or modification of the judgment on the merits is
appeal. This is true even if the error, or one of the errors, ascribed to the court rendering the judgment is its lack of jurisdiction over the subject matter, or the
exercise of power in excess thereof, or grave abuse of discretion in the findings of fact or of law set out in the decision. The existence and availability of the
right of appeal proscribes a resort to certiorari, because one of the requirements for availment of the latter remedy is precisely that there should be no
appeal (Mercado vs. CA, 162 SCRA 75 [1988]). As incisively observed by the Court of Appeals:
The special civil action for certiorari is available only when there is no appeal nor any plain, speedy and adequate remedy in the ordinary course of law (Sec.
1, rule 65, id.)
Admittedly, appeal could have been taken from the assailed RTC decision. However, petitioners maintain that appeal is not a speedy remedy because the
RTC decision prohibiting them from conducting a bidding for a new waste disposal project has adverse and serious effects on the citys garbage situation.
Nevertheless, the RTC decision is not immediately executory. Only judgments in actions for injunction, receivership, accounting and support and such other
judgments as are now or may hereafter be declared to be immediately executory shall be enforced after their rendition and shall not be stayed by an appeal
therefrom, unless otherwise ordered by the trial court (Sec. 4, rule 39, id.).
Since the RTC decision is not immediately executory, appeal would have stayed its execution. Consequently, the adverse effects of said decision will not visit
upon petitioners during the appeal. In other words, appeal is a plain, speedy and adequate remedy in the ordinary course of the law.
But as no appeal was taken within the reglementary period, the RTC decision had become final and executory. Well-settled is the rule that the special civil
action for certiorari may not be invoked as a substitute for the remedy of appeal (BF Corporation vs. Court of Appeals, 288 SCRA 267). Therefore, the
extraordinary remedy of certiorari does not lie.
Moreover, petitioners instituted the instant action without filing a motion for reconsideration of the RTC decision. Doctrinal is the rule that certiorari will not lie
unless a motion for reconsideration is first filed before the respondent tribunal to allow it an opportunity to correct its errors (Zapanta vs. NLRC, 292 SCRA
580).

(Rollo, p. 47-48.)
Admittedly, there are instances where the extraordinary remedy of certiorari may be resorted to despite the availability of an appeal. In Ruiz, Jr. vs. Court
of Appeals (220 SCRA 490 [1993]), we held:
Considered extraordinary, [certiorari] is made available only when there is no appeal, nor any plain, speedy or adequate remedy in the ordinary course of the
law (Rule 65, Rules of Court, Section 1). The long line of decisions denying the petition for certiorari, either before appeal was availed or specially in instances
where the appeal period has lapsed, far outnumbers the instances when certiorari was given due course. The few significant exceptions were: when public
welfare and the advancement of public policy dictate; or when the broader interests of justice so require, or when the writs issued are null . . . or when the
questioned order amounts to an oppressive exercise of judicial authority.
In the instant case, however, MMDA has not sufficiently established the existence of any fact or reason to justify its resort to the extraordinary remedy
of certiorari. Neither does the record show that the instant case, indeed, falls under any of the exceptions aforementioned.
The Court thus holds that the Court of Appeals did not err in declaring that the trial courts decision has become final due to the failure of MMDA to perfect
an appeal within the reglementary period.
With the foregoing disquisition, it would appear unnecessarily to discuss and resolve the substantive issue posed before the Court. However, the
procedural flaw notwithstanding, the Court deems it judicious to take cognizance of the substantive question, if only to put petitioners mind to rest.
In its second assignment of errors, petitioner MMDA contends that there is no valid and binding contract between the Republic of the Philippines and
respondents because: a) the BOT contract does not bear the signature of the President of the Philippines; b) the conditions precedent specified in the contract
were not complied with; and that c) there was no valid notice of award.
These contentions hold no water.
Under Article 1305 of the Civil Code, [a] contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give
something or to render some service. A contract undergoes three distinct stages preparation or negotiation, its perfection, and finally, its
consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of
agreement of the parties. The perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. The last stage
is the consummation of the contract wherein the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment
thereof (Bugatti vs. CA, 343 SCRA 335 [2000]). Article 1315 of the Civil Code, provides that a contract is perfected by mere consent. Consent, on the other
hand, is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract (See Article 1319, Civil
Code). In the case at bar, the signing and execution of the contract by the parties clearly show that, as between the parties, there was a concurrence of offer
and acceptance with respect to the material details of the contract, thereby giving rise to the perfection of the contract. The execution and signing of the
contract is not disputed by the parties. As the Court of Appeals aptly held:
[C]ontrary to petitioners insistence that there was no perfected contract, the meeting of the offer and acceptance upon the thing and the cause, which are to
constitute the contract (Arts. 1315 and 1319, New Civil Code), is borne out by the records.
Admittedly, when petitioners accepted private respondents bid proposal (offer), there was, in effect, a meeting of the minds upon the object (waste
management project) and the cause (BOT scheme). Hence, the perfection of the contract. In City of Cebu vs. Heirs of Candido Rubi (306 SCRA 108), the
Supreme Court held that the effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon notice of the award to the
bidder.

(Rollo, p. 48-49.)
In fact, in asserting that there is no valid and binding contract between the parties, MMDA can only allege that there was no valid notice of award; that the
contract does not bear the signature of the President of the Philippines; and that the conditions precedent specified in the contract were not complied with.
In asserting that the notice of award to JANCOM is not a proper notice of award, MMDA points to the Implementing Rules and Regulations of Republic
Act No. 6957, otherwise known as the BOT Law, which require that i) prior to the notice of award, an Investment Coordinating Committee clearance must first
be obtained; and ii) the notice of award indicate the time within which the awardee shall submit the prescribed performance security, proof of commitment of
equity contributions and indications of financing resources.
Admittedly, the notice of award has not complied with these requirements. However, the defect was cured by the subsequent execution of the contract
entered into and signed by authorized representatives of the parties; hence, it may not be gainsaid that there is a perfected contract existing between the
parties giving to them certain rights and obligations (conditions precedents) in accordance with the terms and conditions thereof. We borrow the words of the
Court of Appeals:
Petitioners belabor the point that there was no valid notice of award as to constitute acceptance of private respondents offer. They maintain that former MMDA
Chairman Oretas letter to JANCOM EC dated February 27, 1997 cannot be considered as a valid notice of award as it does not comply with the rules
implementing Rep. Act No. 6957, as amended. The argument is untenable.
The fact that Chairman Oretas letter informed JANCOM EC that it was the sole complying (winning) bidder for the San Mateo project leads to no other
conclusion than that the project was being awarded to it. But assuming that said notice of award did not comply with the legal requirements, private
respondents cannot be faulted therefore as it was the government representatives duty to issue the proper notice.
In any event, petitioners, as successors of those who previously acted for the government (Chairman Oreta, et al), are estopped from assailing the validity of
the notice of award issued by the latter. As private respondents correctly observed, in negotiating on the terms and conditions of the BOT contract and
eventually signing said contract, the government had led private respondents to believe that the notice of award given to them satisfied all the requirement of
the law.
While the government cannot be estopped by the erroneous acts of its agents, nevertheless, petitioners may not now assail the validity of the subject notice of
award to the prejudice of private respondents.Until the institution of the original action before the RTC, invalidity of the notice of award was never invoked as a
ground for termination of the BOT contract. In fact, the reasons cited for terminating the San Mateo project, per Chairman Aventajados letter to JANCOM EC
dated November 4, 1999, were its purported non-implementability and non-viability on account of supervening events, e.g., passage of the Clean Air Act, etc.
(Rollo, p. 49-50.)
MMDA also points to the absence of the Presidents signature as proof that the same has not yet been perfected. Not only that, the authority of the
signatories to bind the Republic has even been put to question. Firstly, it is pointed out that Memorandum Order No. 202 creating the Executive Committee to
oversee the BOT implementation of solid waste management projects only charged the officials thereof with the duty of recommending to the President the
specific project to be implemented under the BOT scheme for both San Mateo and Carmona sites. Hence, it is concluded that the signatories, CORD-NCR
Chairman Dionisio dela Serna and MMDA Chairman Prospero Oreta, had no authority to enter into any waste management project for and in behalf of the
Government. Secondly, Section 59 of Executive Order No. 292 is relied upon as authority for the proposition that presidential approval is necessary for the
validity of the contract.
The first argument conveniently overlooks the fact that then Secretary of Environment and Natural Resources Victor Ramos was likewise a signatory to
the contract. While dela Serna and Oreta may not have had any authority to sign, the Secretary of Environment and Natural Resources has such an

authority. In fact, the authority of the signatories to the contract was not denied by the Solicitor General. Moreover, as observed by the Court of Appeals, [i]t
was not alleged, much less shown, that those who signed in behalf of the Republic had acted beyond the scope of their authority.
In truth, the argument raised by MMDA does not focus on the lack of authority of the signatories, but on the amount involved as placing the contract
beyond the authority of the signatories to approve. Section 59 of Executive Order No. 292 reads:
Section 59. Contracts for Approval by the President. Contracts for infrastructure projects, including contracts for the supply of materials and equipment to be
used in said projects, which involve amounts above the ceilings provided in the preceding section shall be approved by the President: Provided, That the
President may, when conditions so warrant, and upon recommendation of the National Economic and Development Authority, revise the aforesaid ceilings of
approving authority.
However, the Court of Appeals trenchantly observed in this connection:
As regards the Presidents approval of infrastructure projects required under Section 59 of Executive Order No. 292, said section does not apply to the BOT
contract in question. Sec. 59 should be correlated with Sec. 58 of Exec. Order No. 292. Said sections read:
SECTION 58. Ceiling for Infrastructure Contracts. The following shall be the ceilings for all civil works, construction and other contracts for infrastructure
projects, including supply contracts for said projects, awarded through public bidding or through negotiation, which may be approved by the Secretaries of
Public Works and Highways, Transportation and Communications, Local Government with respect to Rural Road improvement Project and governing boards
of government-owned or controlled corporations:
xxx xxx xxx
Save as provided for above, the approval ceilings assigned to the departments/agencies involved in national infrastructure and construction projects shall
remain at the levels provided in existing laws, rules and regulations.
Contrary to petitioners claim that all infrastructure contracts require the Presidents approval (Petition, p. 16), Sec. 59 provides that such approval is required
only in infrastructure contracts involving amounts exceeding the ceilings set in Sec. 58. Significantly, the infrastructure contracts treated in Sec. 58 pertain only
to those which may be approved by the Secretaries of Public Works and Highways, Transportation and Communications, Local Government (with respect to
Rural Road Improvement Project) and the governing boards of certain government-owned or controlled corporations. Consequently, the BOT contract in
question, which was approved by the DENR Secretary and the EXCOM Chairman and Co-Chairman, is not covered by Exec. Order No. 292.
(Rollo, p. 51-52.)
The provision pertinent to the authority of the Secretary of Environment and Natural Resources would actually be Section 1 of Executive Order No. 380,
Series of 1989 which provides that The Secretaries of all Departments and Governing Boards of government-owned or controlled corporations [except the
Secretaries of Public Works and Highways, Transportation and Communication, and Local Government with respect to Rural Road Improvement projects] can
enter into publicly bidded contracts regardless of amount (See also Section 515,Government Accounting and Auditing Manual Volume I). Consequently,
MMDA may not claim that the BOT contract is not valid and binding due to the lack of presidential approval.
Significantly, the contract itself provides that the signature of the President is necessary only for its effectivity (not perfection), pursuant to Article 19 of the
contract, which reads:

This contract shall become effective upon approval by the President of the Republic of the Philippines pursuant to existing laws subject to the condition,
precedent in Article 18. This contract shall remain in full force and effect for twenty-five (25) years subject to renewal for another twenty-five (25) years from
the date of Effectivity. Such renewal will be subject to mutual agreement of the parties and approval of the President of the Republic of the Philippines.
(Rollo, p. 94.)
Stated differently, while the twenty-five year effectivity period of the contract has not yet started to run because of the absence of the Presidents
signature, the contract has, nonetheless, already been perfected.
As to the contention that there is no perfected contract due to JANCOMs failure to comply with several conditions precedent, the same is, likewise,
unmeritorious. Article 18 of the BOT contract reads:
ARTICLE 18
CONDITIONS PRECEDENT
xxx
18.2.1. The BOT COMPANY hereby undertakes to provide the following within 2 months from execution of this Contract as an effective document:
a) sufficient proof of the actual equity contributions from the proposed shareholders of the BOT COMPANY in a total amount not less than
PHP500,000,000 in accordance with the BOT Law and the implementing rules and regulations;
b) sufficient proof of financial commitment from a lending institution sufficient to cover total project cost in accordance with the BOT Law and the
implementing rules and regulations;
c) to support its obligation under this Contract, the BOT COMPANY shall submit a security bond to the CLIENT in accordance with the form and
amount required under the BOT Law.
xxx
18.2.3 Completion of Documentary Requirements as per Schedule 4 by the BOT Company
As clearly stated in Article 18, JANCOM undertook to comply with the stated conditions within 2 months from execution of the Contract as an effective
document. Since the President of the Philippines has not yet affixed his signature on the contract, the same has not yet become an effective document. Thus,
the two-month period within which JANCOM should comply with the conditions has not yet started to run. It cannot thus be said that JANCOM has already
failed to comply with the conditions precedent mandated by the contract. By arguing that failure [of JANCOM] to comply with the conditions results in the
failure of a contract or prevents the judicial relation from coming into existence, MMDA reads into the contract something which is not contemplated by the
parties. If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control
(Art. 1370, Civil Code).
We, therefore, hold that the Court of Appeals did not err when it declared the existence of a valid and perfected contract between the Republic of
the Philippines and JANCOM. There being a perfected contract, MMDA cannot revoke or renounce the same without the consent of the other. From the
moment of perfection, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according
to their nature, may be in keeping with good faith, usage, and law (Article 1315, Civil Code). The contract has the force of law between the parties and they

are expected to abide in good faith by their respective contractual commitments, not weasel out of them. Just as nobody can be forced to enter into a contract,
in the same manner, once a contract is entered into, no party can renounce it unilaterally or without the consent of the other. It is a general principle of law that
no one may be permitted to change his mind or disavow and go back upon his own acts, or to proceed contrary thereto, to the prejudice of the other
party. Nonetheless, it has to be repeated that although the contract is a perfected one, it is still ineffective or unimplementable until and unless it is approved
by the President.
Moreover, if after a perfected and binding contract has been executed between the parties, it occurs to one of them to allege some defect therein as
reason for annulling it, the alleged defect must be conclusively proven, since the validity and the fulfillment of contracts cannot be left to the will of one of the
contracting parties. In the case at bar, the reasons cited by MMDA for not pushing through with the subject contract were: 1) the passage of the Clean Air Act,
which allegedly bans incineration; 2) the closure of the San Mateo landfill site; and 3) the costly tipping fee. These reasons are bereft of merit
Once again, we make reference to the insightful declarations of the Court of Appeals:
Sec. 20 of the Clean Air Act pertinently reads:
SECTION 20. Ban on Incineration. Incineration, hereby defined as the burning of municipal, bio-chemical and hazardous wastes, which process emits
poisonous and toxic fumes, is hereby prohibited: x x x.
Section 20 does not absolutely prohibit incineration as a mode of waste disposal; rather only those burning processes which emit poisonous and toxic fumes
are banned.
As regards the projected closure of the San Mateo landfill vis--vis the implementability of the contract, Art. 2.3 thereof expressly states that [i]n the event the
project Site is not delivered x x x, the Presidential task Force on Solid Waste Management (PTFSWM) and the Client, shall provide within a reasonable period
of time, a suitable alternative acceptable to the BOT COMPANY.
With respect to the alleged financial non-viability of the project because the MMDA and the local government units cannot afford the tipping fees under the
contract, this circumstance cannot, by itself, abrogate the entire agreement.
Doctrinal is the rule that neither the law nor the courts will extricate a party from an unwise or undesirable contract, or stipulation for that matter, he or she
entered into with full awareness of its consequences (Opulencia vs. CA, 293 SCRA 385). Indeed, the terms and conditions of the subject contract were arrived
at after due negotiations between the parties thereto.
(Rollo, p. 54.)
WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit and the decision of the Court of Appeals in CA-G.R. SP No.
59021 dated November 13, 2001AFFIRMED. No costs.
SO ORDERED.
Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.
Carpio, J., no part. I was former counsel to a foreign partner of Jancom Environmental Corporation.
9. THIRD DIVISION

LEONORA
P.
CALANZA, EVA
M.
AMOREN, GENE P. ROO, SANNY C.
CALANZA, GREGORIO C. YNCIERTO
IIand ANGEL M. PUYO,

G.R. No. 146622

Petitioners,

YNARES-SANTIAGO, J.,

Present:

Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,

- versus -

NACHURA, and
PERALTA, JJ.

PAPER INDUSTRIES CORPORATION OF

THE PHILIPPINES (PICOP), GOOD EARTH
MINERAL CORP.(GEMCOR), EVARISTO
NARVAEZ, JR., RICARDO G. SANTIAGO,
ROBERTO
A.
DORMENDO and
REYDANDE D. AZUCENA,
Respondents.

Promulgated:

April 24, 2009

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

This Petition for Review under Rule 45 of the Rules of Court seeks to reverse and set aside the 19 June 2000 Decision[1] of the Court of Appeals in
CA-G.R. CV No. 45234 which annulled the Decision of the Regional Trial Court (RTC) of Banganga, Davao Oriental, Branch 7, granting the Complaint for
Injunction filed by petitioners.

On 23 August 1991, petitioners Leonora P. Calanza, Eva M. Amoren, Gene P. Roo, Sanny C. Calanza, Gregorio C. Yncierto II, and Angel M. Puyo
filed with the Mines and Geo-Sciences Development Service, Department of Environment and Natural Resources (DENR), Region XI, of Davao City,
applications for small-scale mining permits for the purpose of extracting gold. In their applications, petitioners stated that the area where they will conduct
mining operations was in the Municipality of Boston, Davao Oriental.[2]

On 22 December 1992, the governor of Davao Oriental, Rosalind Y. Lopez, approved the applications and issued six small-scale mining permits in
favor of the petitioners.[3] Since the mining areas applied for by petitioners were within the respondent Paper Industries Corporation of the Philippines (PICOP)
logging concession area under Timber License Agreements (TLAs) that covered large tracts of forest lands of the Provinces of Surigao del Sur, Agusan del
Sur, Davao Oriental and Davao del Norte, petitioners negotiated with PICOP for their entry into the mining site at Barangay Catihan, Municipality of Boston,
Davao Oriental. PICOP, through its officer Roberto A. Dormendo, refused petitioners entry into the mining area on the grounds that it has the exclusive right of
occupation, possession and control over the area being a logging concessionaire thereof; that petitioners mining permits are defective since they were issued
by the governor of Davao Oriental when in fact the mining area is situated in Barangay Pagtilaan, Municipality of Lingig, Surigao del Sur; and that mining
permits cannot be issued over areas covered by forest rights such as TLAs or forest reservations unless their status as such is withdrawn by competent
authority.

On 7 May 1993, petitioners filed a Complaint for Injunction with Prayer for the Issuance of a Restraining Order, Damages and Attorneys Fees against
PICOP and its officers before the RTC of Banganga, Davao Oriental, praying that PICOP or its agent be enjoined from preventing and prohibiting them from
entering into the mining site.

PICOP countered that the RTC of Davao Oriental has no jurisdiction over the complaint of petitioners since the disputed area is situated in the
Province of Surigao del Sur. PICOP also claimed that the issuance of petitioners permits were void ab initio since the same violated Section 5 of Republic Act
No. 7076, otherwise known as the Peoples Small-Scale Mining Act of 1991, which allegedly prohibits the issuance of mining permits over areas covered by
forest rights such as TLAs or forest reservations unless their status as such is withdrawn by the competent authority.

In the Pre-Trial Order dated 4 October 1993, the following are identified as the issues:

1. Whether the mining areas claimed by petitioners are found within the territories of Davao Oriental or Surigao del Sur.

2. Whether the small-scale mining permits of petitioners are valid.

3. Whether PICOP has the right and authority to deny petitioners access to, possession of and the authority to conduct mining activities within
the disputed areas.[4]

In a decision dated 26 November 1993, the RTC ruled in favor of the petitioners. The RTC opined that Barangay Pagtilaan (as claimed by PICOP) or
Catihan (as claimed by petitioners) is within the territory of the Province of Davao Oriental. Citing Section 465, paragraph (b), Sub-paragraph (3)iv of Republic
Act No. 7160 or the Local Government Code of 1991 which states to the effect that the governor has the power to issue licenses and permits, the RTC ruled
that the governor is vested with the power to issue the small-scale mining permits to the petitioners. The decretal portion of the RTC decision provides:

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered:

1. Declaring that all the [petitioners] have the rights under the laws to extract and remove gold ore from their permit area as
particularly described by its technical descriptions found in their respective permits subject to the terms and conditions stipulated therein;

2. Finding that [respondents] have no rights to deny [petitioners] entry into the mining permit areas and hereby enjoining
[respondents], their agents, representatives, their attorneys, the SCAA or any persons acting in their behalf to allow petitioners/permittees,
their agents, representatives and vehicles to enter, travel into the mining site areas of plaintiffs without any restrictions, preventions and/or
harassment of the purpose of conducting mining activities thereat;

3. Further restraining and enjoining the respondents, their attorneys, agents and/or representatives, the SCAA or its officers and
such other persons acting for and in their behalf from preventing, prohibiting or harassing the [petitioners], their agents or authorized
representatives, their vehicles, tools and other mining paraphernalias from entering, traveling into the mining site using and passing through
the most accessible concession roads of [respondents], such as but not limited to Road 5M and spurs within PICOPs TLA 43 areas.

There being no evidentiary proof of actual and compensatory damages, and in the absence of fraud or evident bad faith on the part of
defendants, especially PICOP, which apparently is exercising its right to litigate, this Court makes no finding as to actual, compensatory and
moral damages nor attorneys fees.[5]

Respondent PICOP appealed the RTC decision.

In a Decision dated 19 June 2000, the Court of Appeals reversed the RTC Decision and dismissed the complaint of respondents.

In setting aside the RTC Decision, the Court of Appeals stated that the RTC erred in passing upon the issue of the boundary dispute between the
provinces of Davao Oriental and Surigao del Sur since the resolution of the boundary dispute primarily resides with the sangguniang panlalawigans of the two
provinces and the RTC has only appellate jurisdiction over the case, pursuant to the Local Government Code of 1991. The Court of Appeals also said that the
governor has no power to issue small-scale mining permits since such authority under Section 9 of Republic Act No. 7076 is vested with the Provincial Mining
Regulatory Board.

The disposition of the Court of Appeals reads:

WHEREFORE, premises considered, the appealed decision in Civil Case No. 489 is hereby REVERSED and SET ASIDE and a new
one is hereby rendered dismissing the complaint filed by [petitioners]. [6]

Petitioners filed a motion for reconsideration, which was denied by the Court of Appeals in its Order dated 10 November 2000.

Hence, the instant petition.

The petition is not meritorious.

There is boundary dispute when a portion or the whole of the territorial area of a Local Government Unit (LGU) is claimed by two or more LGUs. [7] In
settling boundary disputes, Section 118 of the 1991 Local Government Code provides:

Sec. 118. Jurisdictional Responsibility for Settlement of Boundary Dispute. Boundary disputes between and among local government
units shall, as much as possible, be settled amicably. To this end:

(a) Boundary disputes involving two (2) or more barangays in the same city or municipality shall be referred for settlement to
the sangguniang panlungsod or sangguniang bayanconcerned.

(b) Boundary disputes involving two (2) or more municipalities within the same province shall be referred for settlement to
the sangguniang panlalawigan concerned.

(c) Boundary disputes involving municipalities or component cities of different provinces shall be jointly referred for
settlement to the sanggunians of the provinces concerned.

(d) Boundary disputes involving a component city or municipality on the one hand and a highly urbanized city on the other, or two (2)
or more highly urbanized cities, shall be jointly referred for settlement to the respective sanggunians of the parties.

(e) In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the date the dispute was referred
thereto, it shall issue a certification to that effect.Thereafter, the dispute shall be formally tried by the sanggunian concerned which shall decide
the issue within sixty (60) days from the date of the certification referred to above.

Under paragraph (c) of Section 118, the settlement of a boundary dispute involving municipalities or component cities of different provinces shall be jointly
referred for settlement to the respective sanggunians or the provincial boards of the different provinces involved. Section 119 of the Local Government Code
gives a dissatisfied party an avenue to question the decision of the sanggunian to the RTC having jurisdiction over the area, viz:

Section 119. Appeal. - Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of
the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the area in dispute x x x.

Article 17, Rule III of the Rules and Regulations Implementing The Local Government Code of 1991 outlines the procedures governing boundary
disputes, which succinctly includes the filing of the proper petition, and in case of failure to amicably settle, a formal trial will be conducted and a decision will
be rendered thereafter. An aggrieved party can appeal the decision of the sanggunian to the appropriate RTC. Said rules and regulations state:

Article 17. Procedures for Settling Boundary Disputes. The following procedures shall govern the settlement of boundary disputes:

(a)

Filing of petition - The sanggunian concerned may initiate action by filing a petition, in the form of a resolution, with
the sanggunian having jurisdiction over the dispute.

(b)

Contents of petition - The petition shall state the grounds, reasons or justifications therefore.

(c)

Documents attached to petition - The petition shall be accompanied by:

1.
Duly authenticated copy of the law or statute creating the LGU or any other document showing proof of creation
of the LGU;

2.

Provincial, city, municipal, or barangay map, as the case may be, duly certified by the LMB.

3.

Technical description of the boundaries of the LGUs concerned;

4.
Written certification of the provincial, city, or municipal assessor, as the case may be, as to territorial jurisdiction
over the disputed area according to records in custody;

5.

Written declarations or sworn statements of the people residing in the disputed area; and

6.

Such other documents or information as may be required by the sanggunian hearing the dispute.

(d)

Answer of adverse party - Upon receipt by the sanggunian concerned of the petition together with the required documents, the
LGU or LGUs complained against shall be furnished copies thereof and shall be given fifteen (15) working days within which to file
their answers.

(e)

Hearing - Within five (5) working days after receipt of the answer of the adverse party, the sanggunian shall hear the case and
allow the parties concerned to present their respective evidences.

(f)

Joint hearing - When two or more sanggunians jointly hear a case, they may sit en banc or designate their respective
representatives. Where representatives are designated, there shall be an equal number of representatives from each sanggunian.
They shall elect from among themselves a presiding officer and a secretary. In case of disagreement, selection shall be by drawing
lot.

(g)

Failure to settle - In the event the sanggunian fails to amicably settle the dispute within sixty (60) days from the date such dispute
was referred thereto, it shall issue a certification to the effect and copies thereof shall be furnished the parties concerned.

(h)

Decision - Within sixty (60) days from the date the certification was issued, the dispute shall be formally tried and decided by
the sanggunian concerned. Copies of the decision shall, within fifteen (15) days from the promulgation thereof, be furnished the
parties concerned, DILG, local assessor, COMELEC, NSO, and other NGAs concerned.

(i)

Appeal - Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of
the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the dispute by filing therewith the appropriate
pleading, stating among others, the nature of the dispute, the decision of the sanggunian concerned and the reasons for appealing
therefrom. The Regional Trial Court shall decide the case within one (1) year from the filing thereof. Decisions on boundary disputes
promulgated jointly by two (2) or more sangguniang panlalawigans shall be heard by the Regional Trial Court of the province which
first took cognizance of the dispute.

The records of the case reveal that the instant case was initiated by petitioners against respondents predicated on the latters refusal to allow the
former entry into the disputed mining areas. This is not a case where the sangguniang panlalawigans of Davao Oriental and Surigao del Sur jointly rendered a
decision resolving the boundary dispute of the two provinces and the same decision was elevated to the RTC. Clearly, the RTC cannot exercise appellate
jurisdiction over the case since there was no petition that was filed and decided by the sangguniang panlalawigans of Davao Oriental and Surigao del
Sur. Neither can the RTC assume original jurisdiction over the boundary dispute since the Local Government Code allocates such power to the sangguniang
panlalawigans of Davao Oriental and Surigao del Sur. Since the RTC has no original jurisdiction on the boundary dispute between Davao Oriental and Surigao
del Sur, its decision is a total nullity. We have repeatedly ruled that a judgment rendered by a court without jurisdiction is null and void and may be attacked
anytime.[8] It creates no rights and produces no effect. In fact it remains a basic fact in law that the choice of the proper forum is crucial as the decision of a
court or tribunal without jurisdiction is a total nullity. A void judgment for want of jurisdiction is no judgment at all. It cannot be the source of any right nor the
creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect. [9]

Moreover, petitioners small-scale mining permits are legally questionable. Under Presidential Decree No. 1899, applications of small-scale miners are
processed with the Director of the Mines and Geo-Sciences Bureau. Pursuant to Republic Act No. 7076, which took effect [10] on 18 July 1991, approval of the
applications for mining permits and for mining contracts are vested in the Provincial/City Mining Regulatory Board. Composed of the DENR representative, a
representative from the small-scale mining sector, a representative from the big-scale mining industry and a representative from an environmental group, this
body is tasked to approve small-scale mining permits and contracts.

In the case under consideration, petitioners filed their small-scale mining permits on 23 August 1991, making them bound by the procedures provided
for under the applicable and prevailing statute, Republic Act No. 7076. Instead of processing and obtaining their permits from the Provincial Mining Regulatory
Board, petitioners were able to get the same from the governor of Davao del Norte. Considering that the governor is without legal authority to issue said
mining permits, the same permits are null and void.

Based on the discussions above, the Court of Appeals is correct in finding that petitioners have no right to enter into and to conduct mining operations
within the disputed lands under the infirmed small-scale mining permits.

In fine, this Court defers to the findings of the Court of Appeals, there being no cogent reason to veer away from such findings.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 19 June 2000 and its Resolution dated 10 November
2000 reversing the 26 November 1993 Decision of the Regional Trial Court of Banganga, Davao Oriental, Branch 7, are hereby AFFIRMED. No costs.

SO ORDERED.

10. FIRST DIVISION

[G.R. No. 135190. April 3, 2002]
SOUTHEAST MINDANAO GOLD MINING CORPORATION, petitioner, vs. BALITE PORTAL MINING COOPERATIVE and others similarly situated; and
THE HONORABLE ANTONIO CERILLES, in his capacity as Secretary of the Department of Environment and Natural Resources (DENR),
PROVINCIAL MINING REGULATORY BOARD OF DAVAO (PMRB-Davao), respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review of the March 19, 1998 decision of the Court of Appeals in CA-G.R. SP No. 44693, dismissing the special civil action
for certiorari, prohibition and mandamus, and the resolution dated August 19, 1998 denying petitioners motion for reconsideration.
The instant case involves a rich tract of mineral land situated in the Agusan-Davao-Surigao Forest Reserve known as the Diwalwal Gold Rush Area.
Located at Mt. Diwata in the municipalities of Monkayo and Cateel in Davao Del Norte, the land has been embroiled in controversy since the mid-80s due to
the scramble over gold deposits found within its bowels.

From 1985 to 1991, thousands of people flocked to Diwalwal to stake their respective claims. Peace and order deteriorated rapidly, with hundreds of
people perishing in mine accidents, man-made or otherwise, brought about by unregulated mining activities. The multifarious problems spawned by the gold
rush assumed gargantuan proportions, such that finding a win-win solution became a veritable needle in a haystack.
On March 10, 1988, Marcopper Mining Corporation (Marcopper) was granted Exploration Permit No. 133 (EP No. 133) over 4,491 hectares of land, which
included the hotly-contested Diwalwal area.[1]Marcoppers acquisition of mining rights over Diwalwal under its EP No. 133 was subsequently challenged before
this Court in Apex Mining Co., Inc., et al. v. Hon. Cancio C. Garcia, et al., [2] where Marcoppers claim was sustained over that of another mining firm, Apex
Mining Corporation (Apex). The Court found that Apex did not comply with the procedural requisites for acquiring mining rights within forest reserves.
Not long thereafter, Congress enacted on June 27, 1991 Republic Act No. 7076, or the Peoples Small-Scale Mining Act. The law established a Peoples
Small-Scale Mining Program to be implemented by the Secretary of the DENR [3] and created the Provincial Mining Regulatory Board (PMRB) under the DENR
Secretarys direct supervision and control.[4] The statute also authorized the PMRB to declare and set aside small-scale mining areas subject to review by the
DENR Secretary[5] and award mining contracts to small-scale miners under certain conditions. [6]
On December 21, 1991, DENR Secretary Fulgencio S. Factoran issued Department Administrative Order (DAO) No. 66, declaring 729 hectares of the
Diwalwal area as non-forest land open to small-scale mining. [7] The issuance was made pursuant to the powers vested in the DENR Secretary by
Proclamation No. 369, which established the Agusan-Davao-Surigao Forest Reserve.
Subsequently, a petition for the cancellation of EP No. 133 and the admission of a Mineral Production Sharing Arrangement (MPSA) proposal over
Diwalwal was filed before the DENR Regional Executive Director, docketed as RED Mines Case No. 8-8-94 entitled, Rosendo Villaflor, et al. v. Marcopper
Mining Corporation.
On February 16, 1994, while the RED Mines case was pending, Marcopper assigned its EP No. 133 to petitioner Southeast Mindanao Gold Mining
Corporation (SEM),[8] which in turn applied for an integrated MPSA over the land covered by the permit.
In due time, the Mines and Geosciences Bureau Regional Office No. XI in Davao City (MGB-XI) accepted and registered the integrated MPSA application
of petitioner. After publication of the application, the following filed their oppositions:
a) MAC Case No. 004(XI) - JB Management Mining Corporation;
b) MAC Case No. 005(XI) - Davao United Miners Cooperative;
c) MAC Case No. 006(XI) - Balite Integrated Small Scale Miners Cooperative;
d) MAC Case No. 007(XI) - Monkayo Integrated Small Scale Miners Association, Inc.;
e) MAC Case No. 008(XI) - Paper Industries Corporation of the Philippines;
f) MAC Case No. 009(XI) - Rosendo Villaflor, et al.;
g) MAC Case No. 010(XI) - Antonio Dacudao;
h) MAC Case No. 011(XI) - Atty. Jose T. Amacio;
i) MAC Case No. 012(XI) - Puting-Bato Gold Miners Cooperative;

j) MAC Case No. 016(XI) - Balite Communal Portal Mining Cooperative; and
k) MAC Case No. 97-01(XI) - Romeo Altamera, et al.
In the meantime, on March 3, 1995, Republic Act No. 7942, the Philippine Mining Act, was enacted. Pursuant to this statute, the above-enumerated MAC
cases were referred to a Regional Panel of Arbitrators (RPA) tasked to resolve disputes involving conflicting mining rights. The RPA subsequently took
cognizance of the RED Mines case, which was consolidated with the MAC cases.
On April 1, 1997, Provincial Mining Regulatory Board of Davao passed Resolution No. 26, Series of 1997, authorizing the issuance of ore transport
permits (OTPs) to small-scale miners operating in the Diwalwal mines.
Thus, on May 30, 1997, petitioner filed a complaint for damages before the Regional Trial Court of Makati City, Branch 61, against the DENR Secretary
and PMRB-Davao. SEM alleged that the illegal issuance of the OTPs allowed the extraction and hauling of P60,000.00 worth of gold ore per truckload from
SEMs mining claim.
Meanwhile, on June 13, 1997, the RPA resolved the Consolidated Mines cases and decreed in an Omnibus Resolution as follows:
VIEWED IN THE LIGHT OF THE FOREGOING, the validity of Exploration Permit No. 133 is hereby reiterated and all the adverse claims against MPSAA No.
128 are DISMISSED.[9]
On June 24, 1997, the DENR Secretary issued Memorandum Order No. 97-03 [10] which provided, among others, that:
1. The DENR shall study thoroughly and exhaustively the option of direct state utilization of the mineral resources in the Diwalwal Gold-Rush Area. Such study
shall include, but shall not be limited to, studying and weighing the feasibility of entering into management agreements or operating agreements, or both, with
the appropriate government instrumentalities or private entities, or both, in carrying out the declared policy of rationalizing the mining operations in the
Diwalwal Gold Rush Area; such agreements shall include provisions for profit-sharing between the state and the said parties, including profit-sharing
arrangements with small-scale miners, as well as the payment of royalties to indigenous cultural communities, among others. The Undersecretary for Field
Operations, as well as the Undersecretary for Legal and Legislative Affairs and Attached Agencies, and the Director of the Mines and Geo-sciences Bureau
are hereby ordered to undertake such studies. x x x[11]
On July 16, 1997, petitioner filed a special civil action for certiorari, prohibition and mandamus before the Court of Appeals against PMRB-Davao, the
DENR Secretary and Balite Communal Portal Mining Cooperative (BCPMC), which represented all the OTP grantees. It prayed for the nullification of the
above-quoted Memorandum Order No. 97-03 on the ground that the direct state utilization espoused therein would effectively impair its vested rights under EP
No. 133; that the DENR Secretary unduly usurped and interfered with the jurisdiction of the RPA which had dismissed all adverse claims against SEM in the
Consolidated Mines cases; and that the memorandum order arbitrarily imposed the unwarranted condition that certain studies be conducted before mining and
environmental laws are enforced by the DENR.
Meanwhile, on January 6, 1998, the MAB rendered a decision in the Consolidated Mines cases, setting aside the judgment of the RPA. [12] This MAB
decision was then elevated to this Court by way of a consolidated petition, docketed as G.R. Nos. 132475 and 132528.
On March 19, 1998, the Court of Appeals, through a division of five members voting 3-2, [13] dismissed the petition in CA-G.R. SP No. 44693. It ruled that
the DENR Secretary did not abuse his discretion in issuing Memorandum Order No. 97-03 since the same was merely a directive to conduct studies on the
various options available to the government for solving the Diwalwal conflict. The assailed memorandum did not conclusively adopt direct state utilization as
official government policy on the matter, but was simply a manifestation of the DENRs intent to consider it as one of its options, after determining its feasibility
through studies. MO 97-03 was only the initial step in the ladder of administrative process and did not, as yet, fix any obligation, legal relationship or right. It

was thus premature for petitioner to claim that its constitutionally-protected rights under EP No. 133 have been encroached upon, much less, violated by its
issuance.
Additionally, the appellate court pointed out that petitioners rights under EP No. 133 are not inviolable, sacrosanct or immutable. Being in the nature of a
privilege granted by the State, the permit can be revoked, amended or modified by the Chief Executive when the national interest so requires. The Court of
Appeals, however, declined to rule on the validity of the OTPs, reasoning that said issue was within the exclusive jurisdiction of the RPA.
Petitioner filed a motion for reconsideration of the above decision, which was denied for lack of merit on August 19, 1998. [14]
Hence this petition, raising the following errors:
I. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR, AND HAS DECIDED A QUESTION OF SUBSTANCE NOT
THERETOFORE DETERMINED BY THIS HONORABLE SUPREME COURT, OR HAS DECIDED IT IN A WAY PROBABLY NOT IN ACCORD
WITH LAW OR WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT IN UPHOLDING THE QUESTIONED ACTS OF
RESPONDENT DENR SECRETARY WHICH ARE IN VIOLATION OF MINING LAWS AND IN DEROGATION OF PETITIONERS VESTED
RIGHTS OVER THE AREA COVERED BY ITS EP NO. 133;
II. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN HOLDING THAT AN ACTION ON THE VALIDITY OF ORE
TRANSPORT PERMIT (OTP) IS VESTED IN THE REGIONAL PANEL OF ARBITRATORS.[15]
In a resolution dated September 11, 2000, the appealed Consolidated Mines cases, docketed as G.R. Nos. 132475 and 132528, were referred to the
Court of Appeals for proper disposition pursuant to Rule 43 of the 1997 Rules of Civil Procedure. [16] These cases, which were docketed as CA-G.R. SP Nos.
61215 and 61216, are still pending before the Court of Appeals.
In the first assigned error, petitioner insists that the Court of Appeals erred when it concluded that the assailed memorandum order did not adopt the
direct state utilization scheme in resolving the Diwalwal dispute. On the contrary, petitioner submits, said memorandum order dictated the said recourse and,
in effect, granted management or operating agreements as well as provided for profit sharing arrangements to illegal small-scale miners.
According to petitioner, MO 97-03 was issued to preempt the resolution of the Consolidated Mines cases. The direct state utilization scheme espoused in
the challenged memorandum is nothing but a legal shortcut, designed to divest petitioner of its vested right to the gold rush area under its EP No. 133.
We are not persuaded.
We agree with the Court of Appeals ruling that the challenged MO 97-03 did not conclusively adopt direct state utilization as a policy in resolving the
Diwalwal dispute. The terms of the memorandum clearly indicate that what was directed thereunder was merely a study of this option and nothing
else. Contrary to petitioners contention, it did not grant any management/operating or profit-sharing agreement to small-scale miners or to any party, for that
matter, but simply instructed the DENR officials concerned to undertake studies to determine its feasibility. As the Court of Appeals extensively discussed in its
decision:
x x x under the Memorandum Order, the State still had to study prudently and exhaustively the various options available to it in rationalizing the explosive and
ever perilous situation in the area, the debilitating adverse effects of mining in the community and at the same time, preserve and enhance the safety of the
mining operations and ensure revenues due to the government from the development of the mineral resources and the exploitation thereof. The government
was still in earnest search of better options that would be fair and just to all parties concerned, including, notably, the Petitioner. The direct state utilization of
the mineral resources in the area was only one of the options of the State. Indeed, it is too plain to see, x x x that before the State will settle on an option, x x x
an extensive and intensive study of all the facets of a direct state exploitation was directed by the Public Respondent DENR Secretary. And even if direct state

exploitation was opted by the government, the DENR still had to promulgate rules and regulations to implement the same x x x, in coordination with the other
concerned agencies of the government.[17]
Consequently, the petition was premature. The said memorandum order did not impose any obligation on the claimants or fix any legal relation
whatsoever between and among the parties to the dispute.At this stage, petitioner can show no more than a mere apprehension that the State, through the
DENR, would directly take over the mines after studies point to its viability. But until the DENR actually does so and petitioners fears turn into reality, no valid
objection can be entertained against MO 97-03 on grounds which are purely speculative and anticipatory. [18]
With respect to the alleged vested rights claimed by petitioner, it is well to note that the same is invariably based on EP No. 133, whose validity is still
being disputed in the Consolidated Mines cases. A reading of the appealed MAB decision reveals that the continued efficacy of EP No. 133 is one of the
issues raised in said cases, with respondents therein asserting that Marcopper cannot legally assign the permit which purportedly had expired. In other words,
whether or not petitioner actually has a vested right over Diwalwal under EP No. 133 is still an indefinite and unsettled matter. And until a positive
pronouncement is made by the appellate court in the Consolidated Mines cases, EP No. 133 cannot be deemed as a source of any conclusive rights that can
be impaired by the issuance of MO 97-03.
Similarly, there is no merit in petitioners assertion that MO 97-03 sanctions violation of mining laws by allowing illegal miners to enter into mining
agreements with the State. Again, whether or not respondent BCMC and the other mining entities it represents are conducting illegal mining activities is a
factual matter that has yet to be finally determined in the Consolidated Mines cases. We cannot rightfully conclude at this point that respondent BCMC and the
other mining firms are illegitimate mining operators. Otherwise, we would be preempting the resolution of the cases which are still pending before the Court of
Appeals.[19]
Petitioners reliance on the Apex Mining case to justify its rights under E.P. No. 133 is misplaced. For one, the said case was litigated solely between
Marcopper and Apex Mining Corporation and cannot thus be deemed binding and conclusive on respondent BCMC and the other mining entities presently
involved. While petitioner may be regarded as Marcoppers successor to EP No. 133 and therefore bound by the judgment rendered in the Apex Mining case,
the same cannot be said of respondent BCMC and the other oppositor mining firms, who were not impleaded as parties therein.
Neither can the Apex Mining case foreclose any question pertaining to the continuing validity of EP No. 133 on grounds which arose after the judgment in
said case was promulgated. While it is true that the Apex Mining case settled the issue of who between Apex and Marcopper validly acquired mining rights
over the disputed area by availing of the proper procedural requisites mandated by law, it certainly did not deal with the question raised by the oppositors in
the Consolidated Mines cases, i.e. whether EP No. 133 had already expired and remained valid subsequent to its transfer by Marcopper to petitioner.Besides,
as clarified in our decision in the Apex Mining case:
x x x is conclusive only between the parties with respect to the particular issue herein raised and under the set of circumstances herein prevailing. In no case
should the decision be considered as a precedent to resolve or settle claims of persons/entities not parties hereto. Neither is it intended to unsettle rights of
persons/entities which have been acquired or which may have accrued upon reliance on laws passed by appropriate agencies. [20]
Clearly then, the Apex Mining case did not invest petitioner with any definite right to the Diwalwal mines which it could now set up against respondent
BCMC and the other mining groups.
Incidentally, it must likewise be pointed out that under no circumstances may petitioners rights under EP No. 133 be regarded as total and absolute. As
correctly held by the Court of Appeals in its challenged decision, EP No. 133 merely evidences a privilege granted by the State, which may be amended,
modified or rescinded when the national interest so requires. This is necessarily so since the exploration, development and utilization of the countrys natural
mineral resources are matters impressed with great public interest. Like timber permits, mining exploration permits do not vest in the grantee any permanent
or irrevocable right within the purview of the non-impairment of contract and due process clauses of the Constitution, [21] since the State, under its allencompassing police power, may alter, modify or amend the same, in accordance with the demands of the general welfare. [22]

Additionally, there can be no valid opposition raised against a mere study of an alternative which the State, through the DENR, is authorized to undertake
in the first place. Worth noting is Article XII, Section 2, of the 1987 Constitution, which specifically provides:
SEC. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly
undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant. (Underscoring ours)
Likewise, Section 4, Chapter II of the Philippine Mining Act of 1995 states:
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. (Underscoring ours)
Thus, the State may pursue the constitutional policy of full control and supervision of the exploration, development and utilization of the countrys natural
mineral resources, by either directly undertaking the same or by entering into agreements with qualified entities. The DENR Secretary acted within his
authority when he ordered a study of the first option, which may be undertaken consistently in accordance with the constitutional policy enunciated
above. Obviously, the State may not be precluded from considering a direct takeover of the mines, if it is the only plausible remedy in sight to the gnawing
complexities generated by the gold rush. As implied earlier, the State need be guided only by the demands of public interest in settling for this option, as well
as its material and logistic feasibility.
In this regard, petitioners imputation of bad faith on the part of the DENR Secretary when the latter issued MO 97-03 is not well-taken. The avowed
rationale of the memorandum order is clearly and plainly stated in its whereas clauses. [23] In the absence of any concrete evidence that the DENR Secretary
violated the law or abused his discretion, as in this case, he is presumed to have regularly issued the memorandum with a lawful intent and pursuant to his
official functions.
Given these considerations, petitioners first assigned error is baseless and premised on tentative assumptions. Petitioner cannot claim any absolute right
to the Diwalwal mines pending resolution of the Consolidated Mines cases, much less ask us to assume, at this point, that respondent BCMC and the other
mining firms are illegal miners. These factual issues are to be properly threshed out in CA G.R. SP Nos. 61215 and 61216, which have yet to be decided by
the Court of Appeals. Any objection raised against MO 97-03 is likewise premature at this point, inasmuch as it merely ordered a study of an option which the
State is authorized by law to undertake.
We see no need to rule on the matter of the OTPs, considering that the grounds invoked by petitioner for invalidating the same are inextricably linked to
the issues raised in the Consolidated Mines cases.
WHEREFORE, in view of the foregoing, the instant petition is DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 44693 is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), and Kapunan, J., concur.
Puno, J., on official leave.

12. Republic of the Philippines

SUPREME COURT
Baguio City
THIRD DIVISION
G.R. No. 195580

April 21, 2014

NARRA NICKEL MINING AND DEVELOPMENT CORP., TESORO MINING AND DEVELOPMENT, INC., and MCARTHUR MINING, INC., Petitioners,
vs.
REDMONT CONSOLIDATED MINES CORP., Respondent.
DECISION
VELASCO, JR., J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 filed by Narra Nickel and Mining Development Corp. (Narra), Tesoro Mining and
Development, Inc. (Tesoro), and McArthur Mining Inc. (McArthur), which seeks to reverse the October 1, 2010 Decision 1 and the February 15, 2011 Resolution
of the Court of Appeals (CA).
The Facts
Sometime in December 2006, respondent Redmont Consolidated Mines Corp. (Redmont), a domestic corporation organized and existing under Philippine
laws, took interest in mining and exploring certain areas of the province of Palawan. After inquiring with the Department of Environment and Natural
Resources (DENR), it learned that the areas where it wanted to undertake exploration and mining activities where already covered by Mineral Production
Sharing Agreement (MPSA) applications of petitioners Narra, Tesoro and McArthur.
Petitioner McArthur, through its predecessor-in-interest Sara Marie Mining, Inc. (SMMI), filed an application for an MPSA and Exploration Permit (EP) with the
Mines and Geo-Sciences Bureau (MGB), Region IV-B, Office of the Department of Environment and Natural Resources (DENR).
Subsequently, SMMI was issued MPSA-AMA-IVB-153 covering an area of over 1,782 hectares in Barangay Sumbiling, Municipality of Bataraza, Province of
Palawan and EPA-IVB-44 which includes an area of 3,720 hectares in Barangay Malatagao, Bataraza, Palawan. The MPSA and EP were then transferred to
Madridejos Mining Corporation (MMC) and, on November 6, 2006, assigned to petitioner McArthur. 2
Petitioner Narra acquired its MPSA from Alpha Resources and Development Corporation and Patricia Louise Mining & Development Corporation (PLMDC)
which previously filed an application for an MPSA with the MGB, Region IV-B, DENR on January 6, 1992. Through the said application, the DENR issued
MPSA-IV-1-12 covering an area of 3.277 hectares in barangays Calategas and San Isidro, Municipality of Narra, Palawan. Subsequently, PLMDC conveyed,
transferred and/or assigned its rights and interests over the MPSA application in favor of Narra.
Another MPSA application of SMMI was filed with the DENR Region IV-B, labeled as MPSA-AMA-IVB-154 (formerly EPA-IVB-47) over 3,402 hectares in
Barangays Malinao and Princesa Urduja, Municipality of Narra, Province of Palawan. SMMI subsequently conveyed, transferred and assigned its rights and
interest over the said MPSA application to Tesoro.
On January 2, 2007, Redmont filed before the Panel of Arbitrators (POA) of the DENR three (3) separate petitions for the denial of petitioners applications for
MPSA designated as AMA-IVB-153, AMA-IVB-154 and MPSA IV-1-12.

In the petitions, Redmont alleged that at least 60% of the capital stock of McArthur, Tesoro and Narra are owned and controlled by MBMI Resources, Inc.
(MBMI), a 100% Canadian corporation. Redmont reasoned that since MBMI is a considerable stockholder of petitioners, it was the driving force behind
petitioners filing of the MPSAs over the areas covered by applications since it knows that it can only participate in mining activities through corporations which
are deemed Filipino citizens. Redmont argued that given that petitioners capital stocks were mostly owned by MBMI, they were likewise disqualified from
engaging in mining activities through MPSAs, which are reserved only for Filipino citizens.
In their Answers, petitioners averred that they were qualified persons under Section 3(aq) of Republic Act No. (RA) 7942 or the Philippine Mining Act of 1995
which provided:
Sec. 3 Definition of Terms. As used in and for purposes of this Act, the following terms, whether in singular or plural, shall mean:
xxxx
(aq) "Qualified person" means any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or cooperative organized or
authorized for the purpose of engaging in mining, with technical and financial capability to undertake mineral resources development and duly registered in
accordance with law at least sixty per cent (60%) of the capital of which is owned by citizens of the Philippines: Provided, That a legally organized foreignowned corporation shall be deemed a qualified person for purposes of granting an exploration permit, financial or technical assistance agreement or mineral
processing permit.
Additionally, they stated that their nationality as applicants is immaterial because they also applied for Financial or Technical Assistance Agreements (FTAA)
denominated as AFTA-IVB-09 for McArthur, AFTA-IVB-08 for Tesoro and AFTA-IVB-07 for Narra, which are granted to foreign-owned corporations.
Nevertheless, they claimed that the issue on nationality should not be raised since McArthur, Tesoro and Narra are in fact Philippine Nationals as 60% of their
capital is owned by citizens of the Philippines. They asserted that though MBMI owns 40% of the shares of PLMC (which owns 5,997 shares of Narra), 3 40%
of the shares of MMC (which owns 5,997 shares of McArthur) 4and 40% of the shares of SLMC (which, in turn, owns 5,997 shares of Tesoro), 5 the shares of
MBMI will not make it the owner of at least 60% of the capital stock of each of petitioners. They added that the best tool used in determining the nationality of a
corporation is the "control test," embodied in Sec. 3 of RA 7042 or the Foreign Investments Act of 1991. They also claimed that the POA of DENR did not have
jurisdiction over the issues in Redmonts petition since they are not enumerated in Sec. 77 of RA 7942. Finally, they stressed that Redmont has no personality
to sue them because it has no pending claim or application over the areas applied for by petitioners.
On December 14, 2007, the POA issued a Resolution disqualifying petitioners from gaining MPSAs. It held:
[I]t is clearly established that respondents are not qualified applicants to engage in mining activities. On the other hand, [Redmont] having filed its own
applications for an EPA over the areas earlier covered by the MPSA application of respondents may be considered if and when they are qualified under the
law. The violation of the requirements for the issuance and/or grant of permits over mining areas is clearly established thus, there is reason to believe that the
cancellation and/or revocation of permits already issued under the premises is in order and open the areas covered to other qualified applicants.
xxxx
WHEREFORE, the Panel of Arbitrators finds the Respondents, McArthur Mining Inc., Tesoro Mining and Development, Inc., and Narra Nickel Mining and
Development Corp. as, DISQUALIFIED for being considered as Foreign Corporations. Their Mineral Production Sharing Agreement (MPSA) are hereby x x x
DECLARED NULL AND VOID.6
The POA considered petitioners as foreign corporations being "effectively controlled" by MBMI, a 100% Canadian company and declared their MPSAs null and
void. In the same Resolution, it gave due course to Redmonts EPAs. Thereafter, on February 7, 2008, the POA issued an Order 7 denying the Motion for
Reconsideration filed by petitioners.
Aggrieved by the Resolution and Order of the POA, McArthur and Tesoro filed a joint Notice of Appeal 8 and Memorandum of Appeal9 with the Mines
Adjudication Board (MAB) while Narra separately filed its Notice of Appeal 10 and Memorandum of Appeal.11

In their respective memorandum, petitioners emphasized that they are qualified persons under the law. Also, through a letter, they informed the MAB that they
had their individual MPSA applications converted to FTAAs. McArthurs FTAA was denominated as AFTA-IVB-09 12 on May 2007, while Tesoros MPSA
application was converted to AFTA-IVB-0813 on May 28, 2007, and Narras FTAA was converted to AFTA-IVB-07 14 on March 30, 2006.
Pending the resolution of the appeal filed by petitioners with the MAB, Redmont filed a Complaint 15 with the Securities and Exchange Commission (SEC),
seeking the revocation of the certificates for registration of petitioners on the ground that they are foreign-owned or controlled corporations engaged in mining
in violation of Philippine laws. Thereafter, Redmont filed on September 1, 2008 a Manifestation and Motion to Suspend Proceeding before the MAB praying for
the suspension of the proceedings on the appeals filed by McArthur, Tesoro and Narra.
Subsequently, on September 8, 2008, Redmont filed before the Regional Trial Court of Quezon City, Branch 92 (RTC) a Complaint 16 for injunction with
application for issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction, docketed as Civil Case No. 08-63379. Redmont prayed for
the deferral of the MAB proceedings pending the resolution of the Complaint before the SEC.
But before the RTC can resolve Redmonts Complaint and applications for injunctive reliefs, the MAB issued an Order on September 10, 2008, finding the
appeal meritorious. It held:
WHEREFORE, in view of the foregoing, the Mines Adjudication Board hereby REVERSES and SETS ASIDE the Resolution dated 14 December 2007 of the
Panel of Arbitrators of Region IV-B (MIMAROPA) in POA-DENR Case Nos. 2001-01, 2007-02 and 2007-03, and its Order dated 07 February 2008 denying the
Motions for Reconsideration of the Appellants. The Petition filed by Redmont Consolidated Mines Corporation on 02 January 2007 is hereby ordered
DISMISSED.17
Belatedly, on September 16, 2008, the RTC issued an Order18 granting Redmonts application for a TRO and setting the case for hearing the prayer for the
issuance of a writ of preliminary injunction on September 19, 2008.
Meanwhile, on September 22, 2008, Redmont filed a Motion for Reconsideration 19 of the September 10, 2008 Order of the MAB. Subsequently, it filed a
Supplemental Motion for Reconsideration20 on September 29, 2008.
Before the MAB could resolve Redmonts Motion for Reconsideration and Supplemental Motion for Reconsideration, Redmont filed before the RTC a
Supplemental Complaint21 in Civil Case No. 08-63379.
On October 6, 2008, the RTC issued an Order22 granting the issuance of a writ of preliminary injunction enjoining the MAB from finally disposing of the appeals
of petitioners and from resolving Redmonts Motion for Reconsideration and Supplement Motion for Reconsideration of the MABs September 10, 2008
Resolution.
On July 1, 2009, however, the MAB issued a second Order denying Redmonts Motion for Reconsideration and Supplemental Motion for Reconsideration and
resolving the appeals filed by petitioners.
Hence, the petition for review filed by Redmont before the CA, assailing the Orders issued by the MAB. On October 1, 2010, the CA rendered a Decision, the
dispositive of which reads:
WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed Orders, dated September 10, 2008 and July 1, 2009 of the Mining Adjudication Board are
reversed and set aside. The findings of the Panel of Arbitrators of the Department of Environment and Natural Resources that respondents McArthur, Tesoro
and Narra are foreign corporations is upheld and, therefore, the rejection of their applications for Mineral Product Sharing Agreement should be recommended
to the Secretary of the DENR.
With respect to the applications of respondents McArthur, Tesoro and Narra for Financial or Technical Assistance Agreement (FTAA) or conversion of their
MPSA applications to FTAA, the matter for its rejection or approval is left for determination by the Secretary of the DENR and the President of the Republic of
the Philippines.

SO ORDERED.23
In a Resolution dated February 15, 2011, the CA denied the Motion for Reconsideration filed by petitioners.
After a careful review of the records, the CA found that there was doubt as to the nationality of petitioners when it realized that petitioners had a common
major investor, MBMI, a corporation composed of 100% Canadians. Pursuant to the first sentence of paragraph 7 of Department of Justice (DOJ) Opinion No.
020, Series of 2005, adopting the 1967 SEC Rules which implemented the requirement of the Constitution and other laws pertaining to the exploitation of
natural resources, the CA used the "grandfather rule" to determine the nationality of petitioners. It provided:
Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine
nationality, but if the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number of shares corresponding to such
percentage shall be counted as of Philippine nationality. Thus, if 100,000 shares are registered in the name of a corporation or partnership at least 60% of the
capital stock or capital, respectively, of which belong to Filipino citizens, all of the shares shall be recorded as owned by Filipinos. But if less than 60%, or say,
50% of the capital stock or capital of the corporation or partnership, respectively, belongs to Filipino citizens, only 50,000 shares shall be recorded as
belonging to aliens.24 (emphasis supplied)
In determining the nationality of petitioners, the CA looked into their corporate structures and their corresponding common shareholders. Using the grandfather
rule, the CA discovered that MBMI in effect owned majority of the common stocks of the petitioners as well as at least 60% equity interest of other majority
shareholders of petitioners through joint venture agreements. The CA found that through a "web of corporate layering, it is clear that one common controlling
investor in all mining corporations involved x x x is MBMI." 25 Thus, it concluded that petitioners McArthur, Tesoro and Narra are also in partnership with, or
privies-in-interest of, MBMI.
Furthermore, the CA viewed the conversion of the MPSA applications of petitioners into FTAA applications suspicious in nature and, as a consequence, it
recommended the rejection of petitioners MPSA applications by the Secretary of the DENR.
With regard to the settlement of disputes over rights to mining areas, the CA pointed out that the POA has jurisdiction over them and that it also has the power
to determine the of nationality of petitioners as a prerequisite of the Constitution prior the conferring of rights to "co-production, joint venture or productionsharing agreements" of the state to mining rights. However, it also stated that the POAs jurisdiction is limited only to the resolution of the dispute and not on
the approval or rejection of the MPSAs. It stipulated that only the Secretary of the DENR is vested with the power to approve or reject applications for MPSA.
Finally, the CA upheld the findings of the POA in its December 14, 2007 Resolution which considered petitioners McArthur, Tesoro and Narra as foreign
corporations. Nevertheless, the CA determined that the POAs declaration that the MPSAs of McArthur, Tesoro and Narra are void is highly improper.
While the petition was pending with the CA, Redmont filed with the Office of the President (OP) a petition dated May 7, 2010 seeking the cancellation of
petitioners FTAAs. The OP rendered a Decision26 on April 6, 2011, wherein it canceled and revoked petitioners FTAAs for violating and circumventing the
"Constitution x x x[,] the Small Scale Mining Law and Environmental Compliance Certificate as well as Sections 3 and 8 of the Foreign Investment Act and
E.O. 584."27 The OP, in affirming the cancellation of the issued FTAAs, agreed with Redmont stating that petitioners committed violations against the
abovementioned laws and failed to submit evidence to negate them. The Decision further quoted the December 14, 2007 Order of the POA focusing on the
alleged misrepresentation and claims made by petitioners of being domestic or Filipino corporations and the admitted continued mining operation of PMDC
using their locally secured Small Scale Mining Permit inside the area earlier applied for an MPSA application which was eventually transferred to Narra. It also
agreed with the POAs estimation that the filing of the FTAA applications by petitioners is a clear admission that they are "not capable of conducting a large
scale mining operation and that they need the financial and technical assistance of a foreign entity in their operation, that is why they sought the participation
of MBMI Resources, Inc."28 The Decision further quoted:
The filing of the FTAA application on June 15, 2007, during the pendency of the case only demonstrate the violations and lack of qualification of the
respondent corporations to engage in mining. The filing of the FTAA application conversion which is allowed foreign corporation of the earlier MPSA is an
admission that indeed the respondent is not Filipino but rather of foreign nationality who is disqualified under the laws. Corporate documents of MBMI
Resources, Inc. furnished its stockholders in their head office in Canada suggest that they are conducting operation only through their local counterparts. 29

The Motion for Reconsideration of the Decision was further denied by the OP in a Resolution 30 dated July 6, 2011. Petitioners then filed a Petition for Review
on Certiorari of the OPs Decision and Resolution with the CA, docketed as CA-G.R. SP No. 120409. In the CA Decision dated February 29, 2012, the CA
affirmed the Decision and Resolution of the OP. Thereafter, petitioners appealed the same CA decision to this Court which is now pending with a different
division.
Thus, the instant petition for review against the October 1, 2010 Decision of the CA. Petitioners put forth the following errors of the CA:
I.
The Court of Appeals erred when it did not dismiss the case for mootness despite the fact that the subject matter of the controversy, the MPSA
Applications, have already been converted into FTAA applications and that the same have already been granted.
II.
The Court of Appeals erred when it did not dismiss the case for lack of jurisdiction considering that the Panel of Arbitrators has no jurisdiction to
determine the nationality of Narra, Tesoro and McArthur.
III.
The Court of Appeals erred when it did not dismiss the case on account of Redmonts willful forum shopping.
IV.
The Court of Appeals ruling that Narra, Tesoro and McArthur are foreign corporations based on the "Grandfather Rule" is contrary to law, particularly
the express mandate of the Foreign Investments Act of 1991, as amended, and the FIA Rules.
V.
The Court of Appeals erred when it applied the exceptions to the res inter alios acta rule.
VI.
The Court of Appeals erred when it concluded that the conversion of the MPSA Applications into FTAA Applications were of "suspicious nature" as the
same is based on mere conjectures and surmises without any shred of evidence to show the same. 31
We find the petition to be without merit.
This case not moot and academic
The claim of petitioners that the CA erred in not rendering the instant case as moot is without merit.
Basically, a case is said to be moot and/or academic when it "ceases to present a justiciable controversy by virtue of supervening events, so that a declaration
thereon would be of no practical use or value." 32 Thus, the courts "generally decline jurisdiction over the case or dismiss it on the ground of mootness." 33

The "mootness" principle, however, does accept certain exceptions and the mere raising of an issue of "mootness" will not deter the courts from trying a case
when there is a valid reason to do so. In David v. Macapagal-Arroyo (David), the Court provided four instances where courts can decide an otherwise moot
case, thus:
1.) There is a grave violation of the Constitution;
2.) The exceptional character of the situation and paramount public interest is involved;
3.) When constitutional issue raised requires formulation of controlling principles to guide the bench, the bar, and the public; and
4.) The case is capable of repetition yet evading review.34
All of the exceptions stated above are present in the instant case. We of this Court note that a grave violation of the Constitution, specifically Section 2 of
Article XII, is being committed by a foreign corporation right under our countrys nose through a myriad of corporate layering under different, allegedly, Filipino
corporations. The intricate corporate layering utilized by the Canadian company, MBMI, is of exceptional character and involves paramount public interest
since it undeniably affects the exploitation of our Countrys natural resources. The corresponding actions of petitioners during the lifetime and existence of the
instant case raise questions as what principle is to be applied to cases with similar issues. No definite ruling on such principle has been pronounced by the
Court; hence, the disposition of the issues or errors in the instant case will serve as a guide "to the bench, the bar and the public." 35 Finally, the instant case is
capable of repetition yet evading review, since the Canadian company, MBMI, can keep on utilizing dummy Filipino corporations through various schemes of
corporate layering and conversion of applications to skirt the constitutional prohibition against foreign mining in Philippine soil.
Conversion of MPSA applications to FTAA applications
We shall discuss the first error in conjunction with the sixth error presented by petitioners since both involve the conversion of MPSA applications to FTAA
applications. Petitioners propound that the CA erred in ruling against them since the questioned MPSA applications were already converted into FTAA
applications; thus, the issue on the prohibition relating to MPSA applications of foreign mining corporations is academic. Also, petitioners would want us to
correct the CAs finding which deemed the aforementioned conversions of applications as suspicious in nature, since it is based on mere conjectures and
surmises and not supported with evidence.
We disagree.
The CAs analysis of the actions of petitioners after the case was filed against them by respondent is on point. The changing of applications by petitioners from
one type to another just because a case was filed against them, in truth, would raise not a few sceptics eyebrows. What is the reason for such conversion?
Did the said conversion not stem from the case challenging their citizenship and to have the case dismissed against them for being "moot"? It is quite obvious
that it is petitioners strategy to have the case dismissed against them for being "moot."
Consider the history of this case and how petitioners responded to every action done by the court or appropriate government agency: on January 2, 2007,
Redmont filed three separate petitions for denial of the MPSA applications of petitioners before the POA. On June 15, 2007, petitioners filed a conversion of
their MPSA applications to FTAAs. The POA, in its December 14, 2007 Resolution, observed this suspect change of applications while the case was pending
before it and held:
The filing of the Financial or Technical Assistance Agreement application is a clear admission that the respondents are not capable of conducting a large scale
mining operation and that they need the financial and technical assistance of a foreign entity in their operation that is why they sought the participation of
MBMI Resources, Inc. The participation of MBMI in the corporation only proves the fact that it is the Canadian company that will provide the finances and the
resources to operate the mining areas for the greater benefit and interest of the same and not the Filipino stockholders who only have a less substantial
financial stake in the corporation.
xxxx

x x x The filing of the FTAA application on June 15, 2007, during the pendency of the case only demonstrate the violations and lack of qualification of the
respondent corporations to engage in mining. The filing of the FTAA application conversion which is allowed foreign corporation of the earlier MPSA is an
admission that indeed the respondent is not Filipino but rather of foreign nationality who is disqualified under the laws. Corporate documents of MBMI
Resources, Inc. furnished its stockholders in their head office in Canada suggest that they are conducting operation only through their local counterparts. 36
On October 1, 2010, the CA rendered a Decision which partially granted the petition, reversing and setting aside the September 10, 2008 and July 1, 2009
Orders of the MAB. In the said Decision, the CA upheld the findings of the POA of the DENR that the herein petitioners are in fact foreign corporations thus a
recommendation of the rejection of their MPSA applications were recommended to the Secretary of the DENR. With respect to the FTAA applications or
conversion of the MPSA applications to FTAAs, the CA deferred the matter for the determination of the Secretary of the DENR and the President of the
Republic of the Philippines.37
In their Motion for Reconsideration dated October 26, 2010, petitioners prayed for the dismissal of the petition asserting that on April 5, 2010, then President
Gloria Macapagal-Arroyo signed and issued in their favor FTAA No. 05-2010-IVB, which rendered the petition moot and academic. However, the CA, in a
Resolution dated February 15, 2011 denied their motion for being a mere "rehash of their claims and defenses." 38 Standing firm on its Decision, the CA
affirmed the ruling that petitioners are, in fact, foreign corporations. On April 5, 2011, petitioners elevated the case to us via a Petition for Review on Certiorari
under Rule 45, questioning the Decision of the CA. Interestingly, the OP rendered a Decision dated April 6, 2011, a day after this petition for review was filed,
cancelling and revoking the FTAAs, quoting the Order of the POA and stating that petitioners are foreign corporations since they needed the financial strength
of MBMI, Inc. in order to conduct large scale mining operations. The OP Decision also based the cancellation on the misrepresentation of facts and the
violation of the "Small Scale Mining Law and Environmental Compliance Certificate as well as Sections 3 and 8 of the Foreign Investment Act and E.O.
584."39 On July 6, 2011, the OP issued a Resolution, denying the Motion for Reconsideration filed by the petitioners.
Respondent Redmont, in its Comment dated October 10, 2011, made known to the Court the fact of the OPs Decision and Resolution. In their Reply,
petitioners chose to ignore the OP Decision and continued to reuse their old arguments claiming that they were granted FTAAs and, thus, the case was moot.
Petitioners filed a Manifestation and Submission dated October 19, 2012, 40 wherein they asserted that the present petition is moot since, in a remarkable turn
of events, MBMI was able to sell/assign all its shares/interest in the "holding companies" to DMCI Mining Corporation (DMCI), a Filipino corporation and, in
effect, making their respective corporations fully-Filipino owned.
Again, it is quite evident that petitioners have been trying to have this case dismissed for being "moot." Their final act, wherein MBMI was able to allegedly
sell/assign all its shares and interest in the petitioner "holding companies" to DMCI, only proves that they were in fact not Filipino corporations from the start.
The recent divesting of interest by MBMI will not change the stand of this Court with respect to the nationality of petitioners prior the suspicious change in their
corporate structures. The new documents filed by petitioners are factual evidence that this Court has no power to verify.
The only thing clear and proved in this Court is the fact that the OP declared that petitioner corporations have violated several mining laws and made
misrepresentations and falsehood in their applications for FTAA which lead to the revocation of the said FTAAs, demonstrating that petitioners are not beyond
going against or around the law using shifty actions and strategies. Thus, in this instance, we can say that their claim of mootness is moot in itself because
their defense of conversion of MPSAs to FTAAs has been discredited by the OP Decision.
Grandfather test
The main issue in this case is centered on the issue of petitioners nationality, whether Filipino or foreign. In their previous petitions, they had been adamant in
insisting that they were Filipino corporations, until they submitted their Manifestation and Submission dated October 19, 2012 where they stated the alleged
change of corporate ownership to reflect their Filipino ownership. Thus, there is a need to determine the nationality of petitioner corporations.
Basically, there are two acknowledged tests in determining the nationality of a corporation: the control test and the grandfather rule. Paragraph 7 of DOJ
Opinion No. 020, Series of 2005, adopting the 1967 SEC Rules which implemented the requirement of the Constitution and other laws pertaining to the
controlling interests in enterprises engaged in the exploitation of natural resources owned by Filipino citizens, provides:

Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine
nationality, but if the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number of shares corresponding to such
percentage shall be counted as of Philippine nationality. Thus, if 100,000 shares are registered in the name of a corporation or partnership at least 60% of the
capital stock or capital, respectively, of which belong to Filipino citizens, all of the shares shall be recorded as owned by Filipinos. But if less than 60%, or say,
50% of the capital stock or capital of the corporation or partnership, respectively, belongs to Filipino citizens, only 50,000 shares shall be counted as owned by
Filipinos and the other 50,000 shall be recorded as belonging to aliens.
The first part of paragraph 7, DOJ Opinion No. 020, stating "shares belonging to corporations or partnerships at least 60% of the capital of which is owned by
Filipino citizens shall be considered as of Philippine nationality," pertains to the control test or the liberal rule. On the other hand, the second part of the DOJ
Opinion which provides, "if the percentage of the Filipino ownership in the corporation or partnership is less than 60%, only the number of shares
corresponding to such percentage shall be counted as Philippine nationality," pertains to the stricter, more stringent grandfather rule.
Prior to this recent change of events, petitioners were constant in advocating the application of the "control test" under RA 7042, as amended by RA 8179,
otherwise known as the Foreign Investments Act (FIA), rather than using the stricter grandfather rule. The pertinent provision under Sec. 3 of the FIA provides:
SECTION 3. Definitions. - As used in this Act:
a.) The term Philippine national shall mean a citizen of the Philippines; or a domestic partnership or association wholly owned by the citizens of the
Philippines; a corporation organized under the laws of the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote
is wholly owned by Filipinos or a trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a Philippine national
and at least sixty percent (60%) of the fund will accrue to the benefit of Philippine nationals: Provided, That were a corporation and its non-Filipino
stockholders own stocks in a Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent (60%) of the capital stock outstanding
and entitled to vote of each of both corporations must be owned and held by citizens of the Philippines and at least sixty percent (60%) of the members of the
Board of Directors, in order that the corporation shall be considered a Philippine national. (emphasis supplied)
The grandfather rule, petitioners reasoned, has no leg to stand on in the instant case since the definition of a "Philippine National" under Sec. 3 of the FIA
does not provide for it. They further claim that the grandfather rule "has been abandoned and is no longer the applicable rule." 41 They also opined that the last
portion of Sec. 3 of the FIA admits the application of a "corporate layering" scheme of corporations. Petitioners claim that the clear and unambiguous wordings
of the statute preclude the court from construing it and prevent the courts use of discretion in applying the law. They said that the plain, literal meaning of the
statute meant the application of the control test is obligatory.
We disagree. "Corporate layering" is admittedly allowed by the FIA; but if it is used to circumvent the Constitution and pertinent laws, then it becomes illegal.
Further, the pronouncement of petitioners that the grandfather rule has already been abandoned must be discredited for lack of basis.
Art. XII, Sec. 2 of the Constitution provides:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly
undertake such activities, or it may enter into co-production, joint venture or production-sharing agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law.
xxxx
The President may enter into agreements with Foreign-owned corporations involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real

contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources. (emphasis supplied)
The emphasized portion of Sec. 2 which focuses on the State entering into different types of agreements for the exploration, development, and utilization of
natural resources with entities who are deemed Filipino due to 60 percent ownership of capital is pertinent to this case, since the issues are centered on the
utilization of our countrys natural resources or specifically, mining. Thus, there is a need to ascertain the nationality of petitioners since, as the Constitution so
provides, such agreements are only allowed corporations or associations "at least 60 percent of such capital is owned by such citizens." The deliberations in
the Records of the 1986 Constitutional Commission shed light on how a citizenship of a corporation will be determined:
Mr. BENNAGEN: Did I hear right that the Chairmans interpretation of an independent national economy is freedom from undue foreign control? What is the
meaning of undue foreign control?
MR. VILLEGAS: Undue foreign control is foreign control which sacrifices national sovereignty and the welfare of the Filipino in the economic sphere.
MR. BENNAGEN: Why does it have to be qualified still with the word "undue"? Why not simply freedom from foreign control? I think that is the meaning of
independence, because as phrased, it still allows for foreign control.
MR. VILLEGAS: It will now depend on the interpretation because if, for example, we retain the 60/40 possibility in the cultivation of natural resources, 40
percent involves some control; not total control, but some control.
MR. BENNAGEN: In any case, I think in due time we will propose some amendments.
MR. VILLEGAS: Yes. But we will be open to improvement of the phraseology.
Mr. BENNAGEN: Yes.
Thank you, Mr. Vice-President.
xxxx
MR. NOLLEDO: In Sections 3, 9 and 15, the Committee stated local or Filipino equity and foreign equity; namely, 60-40 in Section 3, 60-40 in Section 9, and
2/3-1/3 in Section 15.
MR. VILLEGAS: That is right.
MR. NOLLEDO: In teaching law, we are always faced with the question: Where do we base the equity requirement, is it on the authorized capital stock, on the
subscribed capital stock, or on the paid-up capital stock of a corporation? Will the Committee please enlighten me on this?
MR. VILLEGAS: We have just had a long discussion with the members of the team from the UP Law Center who provided us with a draft. The phrase that is
contained here which we adopted from the UP draft is 60 percent of the voting stock.
MR. NOLLEDO: That must be based on the subscribed capital stock, because unless declared delinquent, unpaid capital stock shall be entitled to vote.
MR. VILLEGAS: That is right.
MR. NOLLEDO: Thank you.

With respect to an investment by one corporation in another corporation, say, a corporation with 60-40 percent equity invests in another corporation which is
permitted by the Corporation Code, does the Committee adopt the grandfather rule?
MR. VILLEGAS: Yes, that is the understanding of the Committee.
MR. NOLLEDO: Therefore, we need additional Filipino capital?
MR. VILLEGAS: Yes.42 (emphasis supplied)
It is apparent that it is the intention of the framers of the Constitution to apply the grandfather rule in cases where corporate layering is present.
Elementary in statutory construction is when there is conflict between the Constitution and a statute, the Constitution will prevail. In this instance, specifically
pertaining to the provisions under Art. XII of the Constitution on National Economy and Patrimony, Sec. 3 of the FIA will have no place of application. As
decreed by the honorable framers of our Constitution, the grandfather rule prevails and must be applied.
Likewise, paragraph 7, DOJ Opinion No. 020, Series of 2005 provides:
The above-quoted SEC Rules provide for the manner of calculating the Filipino interest in a corporation for purposes, among others, of determining
compliance with nationality requirements (the Investee Corporation). Such manner of computation is necessary since the shares in the Investee Corporation
may be owned both by individual stockholders (Investing Individuals) and by corporations and partnerships (Investing Corporation). The said rules thus
provide for the determination of nationality depending on the ownership of the Investee Corporation and, in certain instances, the Investing Corporation.
Under the above-quoted SEC Rules, there are two cases in determining the nationality of the Investee Corporation. The first case is the liberal rule, later
coined by the SEC as the Control Test in its 30 May 1990 Opinion, and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states,
(s)hares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine
nationality. Under the liberal Control Test, there is no need to further trace the ownership of the 60% (or more) Filipino stockholdings of the Investing
Corporation since a corporation which is at least 60% Filipino-owned is considered as Filipino.
The second case is the Strict Rule or the Grandfather Rule Proper and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states, "but if
the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number of shares corresponding to such percentage shall be
counted as of Philippine nationality." Under the Strict Rule or Grandfather Rule Proper, the combined totals in the Investing Corporation and the Investee
Corporation must be traced (i.e., "grandfathered") to determine the total percentage of Filipino ownership.
Moreover, the ultimate Filipino ownership of the shares must first be traced to the level of the Investing Corporation and added to the shares directly owned in
the Investee Corporation x x x.
xxxx
In other words, based on the said SEC Rule and DOJ Opinion, the Grandfather Rule or the second part of the SEC Rule applies only when the 60-40 Filipinoforeign equity ownership is in doubt (i.e., in cases where the joint venture corporation with Filipino and foreign stockholders with less than 60% Filipino
stockholdings [or 59%] invests in other joint venture corporation which is either 60-40% Filipino-alien or the 59% less Filipino). Stated differently, where the 6040 Filipino- foreign equity ownership is not in doubt, the Grandfather Rule will not apply. (emphasis supplied)
After a scrutiny of the evidence extant on record, the Court finds that this case calls for the application of the grandfather rule since, as ruled by the POA and
affirmed by the OP, doubt prevails and persists in the corporate ownership of petitioners. Also, as found by the CA, doubt is present in the 60-40 Filipino equity
ownership of petitioners Narra, McArthur and Tesoro, since their common investor, the 100% Canadian corporationMBMI, funded them. However,
petitioners also claim that there is "doubt" only when the stockholdings of Filipinos are less than 60%. 43

The assertion of petitioners that "doubt" only exists when the stockholdings are less than 60% fails to convince this Court. DOJ Opinion No. 20, which
petitioners quoted in their petition, only made an example of an instance where "doubt" as to the ownership of the corporation exists. It would be ludicrous to
limit the application of the said word only to the instances where the stockholdings of non-Filipino stockholders are more than 40% of the total stockholdings in
a corporation. The corporations interested in circumventing our laws would clearly strive to have "60% Filipino Ownership" at face value. It would be senseless
for these applying corporations to state in their respective articles of incorporation that they have less than 60% Filipino stockholders since the applications will
be denied instantly. Thus, various corporate schemes and layerings are utilized to circumvent the application of the Constitution.
Obviously, the instant case presents a situation which exhibits a scheme employed by stockholders to circumvent the law, creating a cloud of doubt in the
Courts mind. To determine, therefore, the actual participation, direct or indirect, of MBMI, the grandfather rule must be used.
McArthur Mining, Inc.
To establish the actual ownership, interest or participation of MBMI in each of petitioners corporate structure, they have to be "grandfathered."
As previously discussed, McArthur acquired its MPSA application from MMC, which acquired its application from SMMI. McArthur has a capital stock of ten
million pesos (PhP 10,000,000) divided into 10,000 common shares at one thousand pesos (PhP 1,000) per share, subscribed to by the following: 44
Name

Nationality

Number of
Shares

Amount
Subscribed

Amount Paid

Madridejos Mining
Corporation

Filipino

5,997

PhP 5,997,000.00

PhP 825,000.00

MBMI Resources,
Inc.

Canadian

3,998

PhP 3,998,000.0

PhP 1,878,174.60

Lauro L. Salazar

Filipino

PhP 1,000.00

PhP 1,000.00

Fernando B.
Esguerra

Filipino

PhP 1,000.00

PhP 1,000.00

Manuel A. Agcaoili

Filipino

PhP 1,000.00

PhP 1,000.00

Michael T. Mason

American

PhP 1,000.00

PhP 1,000.00

Kenneth Cawkell

Canadian

PhP 1,000.00

PhP 1,000.00

Total

10,000

PhP 10,000,000.00

PhP 2,708,174.60
(emphasis supplied)

Interestingly, looking at the corporate structure of MMC, we take note that it has a similar structure and composition as McArthur. In fact, it would seem that
MBMI is also a major investor and "controls"45 MBMI and also, similar nominal shareholders were present, i.e. Fernando B. Esguerra (Esguerra), Lauro L.
Salazar (Salazar), Michael T. Mason (Mason) and Kenneth Cawkell (Cawkell):
Madridejos Mining Corporation
Name

Nationality

Number of
Shares

Amount
Subscribed

Amount Paid

Olympic Mines &

Filipino

6,663

PhP 6,663,000.00
PhP 0

Development
Corp.
MBMI
Resources,

Canadian

3,331

PhP 3,331,000.00

PhP 2,803,900.00

Amanti Limson

Filipino

PhP 1,000.00

PhP 1,000.00

Fernando B.

Filipino

PhP 1,000.00

PhP 1,000.00

Lauro Salazar

Filipino

PhP 1,000.00

PhP 1,000.00

Emmanuel G.

Filipino

PhP 1,000.00

PhP 1,000.00

Michael T. Mason

American

PhP 1,000.00

PhP 1,000.00

Kenneth Cawkell

Canadian

PhP 1,000.00

PhP 1,000.00

Total

10,000

PhP 10,000,000.00

PhP 2,809,900.00

Inc.

Esguerra

Hernando

(emphasis supplied)

Noticeably, Olympic Mines & Development Corporation (Olympic) did not pay any amount with respect to the number of shares they subscribed to in the
corporation, which is quite absurd since Olympic is the major stockholder in MMC. MBMIs 2006 Annual Report sheds light on why Olympic failed to pay any
amount with respect to the number of shares it subscribed to. It states that Olympic entered into joint venture agreements with several Philippine companies,
wherein it holds directly and indirectly a 60% effective equity interest in the Olympic Properties. 46 Quoting the said Annual report:
On September 9, 2004, the Company and Olympic Mines & Development Corporation ("Olympic") entered into a series of agreements including a Property
Purchase and Development Agreement (the Transaction Documents) with respect to three nickel laterite properties in Palawan, Philippines (the "Olympic
Properties"). The Transaction Documents effectively establish a joint venture between the Company and Olympic for purposes of developing the Olympic
Properties. The Company holds directly and indirectly an initial 60% interest in the joint venture. Under certain circumstances and upon achieving certain
milestones, the Company may earn up to a 100% interest, subject to a 2.5% net revenue royalty.47 (emphasis supplied)
Thus, as demonstrated in this first corporation, McArthur, when it is "grandfathered," company layering was utilized by MBMI to gain control over McArthur. It is
apparent that MBMI has more than 60% or more equity interest in McArthur, making the latter a foreign corporation.

Tesoro Mining and Development, Inc.

Tesoro, which acquired its MPSA application from SMMI, has a capital stock of ten million pesos (PhP 10,000,000) divided into ten thousand (10,000) common
shares at PhP 1,000 per share, as demonstrated below:
[[reference = http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/april2014/195580.pdf]]

Name

Number of

Amount

Shares

Subscribed

Filipino

5,997

PhP 5,997,000.00

PhP 825,000.00

Canadian

3,998

PhP 3,998,000.00

PhP 1,878,174.60

Lauro L. Salazar

Filipino

PhP 1,000.00

PhP 1,000.00

Fernando B.

Filipino

PhP 1,000.00

PhP 1,000.00

Filipino

PhP 1,000.00

PhP 1,000.00

Michael T. Mason

American

PhP 1,000.00

PhP 1,000.00

Kenneth Cawkell

Canadian

PhP 1,000.00

PhP 1,000.00

Total

10,000

PhP 10,000,000.00

PhP 2,708,174.60

Sara Marie

Nationality

Amount Paid

Mining, Inc.
MBMI
Resources, Inc.

Esguerra
Manuel A.
Agcaoili

(emphasis supplied)

Except for the name "Sara Marie Mining, Inc.," the table above shows exactly the same figures as the corporate structure of petitioner McArthur, down to the
last centavo. All the other shareholders are the same: MBMI, Salazar, Esguerra, Agcaoili, Mason and Cawkell. The figures under "Nationality," "Number of
Shares," "Amount Subscribed," and "Amount Paid" are exactly the same. Delving deeper, we scrutinize SMMIs corporate structure:
Sara Marie Mining, Inc.
[[reference = http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/april2014/195580.pdf]]

Name

Number of

Amount

Shares

Subscribed

Filipino

6,663

PhP 6,663,000.00

PhP 0

Canadian

3,331

PhP 3,331,000.00

PhP 2,794,000.00

Amanti Limson

Filipino

PhP 1,000.00

PhP 1,000.00

Fernando B.

Filipino

PhP 1,000.00

PhP 1,000.00

Lauro Salazar

Filipino

PhP 1,000.00

PhP 1,000.00

Emmanuel G.

Filipino

PhP 1,000.00

PhP 1,000.00

Michael T. Mason

American

PhP 1,000.00

PhP 1,000.00

Kenneth Cawkell

Canadian

PhP 1,000.00

PhP 1,000.00

Total

10,000

PhP 10,000,000.00

PhP 2,809,900.00

Olympic Mines &

Nationality

Amount Paid

Development
Corp.
MBMI Resources,
Inc.

Esguerra

Hernando

(emphasis supplied)

After subsequently studying SMMIs corporate structure, it is not farfetched for us to spot the glaring similarity between SMMI and MMCs corporate structure.
Again, the presence of identical stockholders, namely: Olympic, MBMI, Amanti Limson (Limson), Esguerra, Salazar, Hernando, Mason and Cawkell. The
figures under the headings "Nationality," "Number of Shares," "Amount Subscribed," and "Amount Paid" are exactly the same except for the amount paid by
MBMI which now reflects the amount of two million seven hundred ninety four thousand pesos (PhP 2,794,000). Oddly, the total value of the amount paid is
two million eight hundred nine thousand nine hundred pesos (PhP 2,809,900).
Accordingly, after "grandfathering" petitioner Tesoro and factoring in Olympics participation in SMMIs corporate structure, it is clear that MBMI is in control of
Tesoro and owns 60% or more equity interest in Tesoro. This makes petitioner Tesoro a non-Filipino corporation and, thus, disqualifies it to participate in the
exploitation, utilization and development of our natural resources.
Narra Nickel Mining and Development Corporation
Moving on to the last petitioner, Narra, which is the transferee and assignee of PLMDCs MPSA application, whose corporate structures arrangement is similar
to that of the first two petitioners discussed. The capital stock of Narra is ten million pesos (PhP 10,000,000), which is divided into ten thousand common
shares (10,000) at one thousand pesos (PhP 1,000) per share, shown as follows:
[[reference = http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/april2014/195580.pdf]]

Name

Patricia Louise

Nationality

Number of

Amount

Amount Paid

Shares

Subscribed

Filipino

5,997

PhP 5,997,000.00

PhP 1,677,000.00

Canadian

3,998

PhP 3,996,000.00

PhP 1,116,000.00

Filipino

PhP 1,000.00

PhP 1,000.00

Mining &
Development
Corp.
MBMI
Resources, Inc.
Higinio C.

Mendoza, Jr.
Henry E.

Filipino

PhP 1,000.00

PhP 1,000.00

Filipino

PhP 1,000.00

PhP 1,000.00

Filipino

PhP 1,000.00

PhP 1,000.00

Filipino

PhP 1,000.00

PhP 1,000.00

American

PhP 1,000.00

PhP 1,000.00

Canadian

PhP 1,000.00

PhP 1,000.00

Total

10,000

PhP 10,000,000.00

PhP 2,800,000.00
(emphasis supplied)

Fernandez
Manuel A.
Agcaoili
Ma. Elena A.
Bocalan
Bayani H. Agabin
Robert L.
McCurdy
Kenneth Cawkell

Again, MBMI, along with other nominal stockholders, i.e., Mason, Agcaoili and Esguerra, is present in this corporate structure.
Patricia Louise Mining & Development Corporation
Using the grandfather method, we further look and examine PLMDCs corporate structure:
Name

Nationality
Number of
Shares

Palawan Alpha South Resources

Development Corporation
MBMI Resources,

Amount
Subscribed

Amount Paid

Filipino

6,596

PhP
6,596,000.00

PhP 0

Canadian

3,396

PhP
3,396,000.00

PhP
2,796,000.00

Inc.
Higinio C. Mendoza, Jr.

Filipino

PhP 1,000.00

PhP 1,000.00

Fernando B. Esguerra

Filipino

PhP 1,000.00

PhP 1,000.00

Henry E. Fernandez

Filipino

PhP 1,000.00

PhP 1,000.00

Lauro L. Salazar

Filipino

PhP 1,000.00

PhP 1,000.00

Manuel A. Agcaoili

Filipino

PhP 1,000.00

PhP 1,000.00

Bayani H. Agabin

Filipino

PhP 1,000.00

PhP 1,000.00

Michael T. Mason

American

PhP 1,000.00

PhP 1,000.00

Kenneth Cawkell

Canadian

PhP 1,000.00

PhP 1,000.00

Total

10,000

PhP
10,000,000.00

PhP
2,708,174.60
(emphasis
supplied)

Yet again, the usual players in petitioners corporate structures are present. Similarly, the amount of money paid by the 2nd tier majority stock holder, in this
case, Palawan Alpha South Resources and Development Corp. (PASRDC), is zero.
Studying MBMIs Summary of Significant Accounting Policies dated October 31, 2005 explains the reason behind the intricate corporate layering that MBMI
immersed itself in:
JOINT VENTURES The Companys ownership interests in various mining ventures engaged in the acquisition, exploration and development of mineral
properties in the Philippines is described as follows:
(a) Olympic Group
The Philippine companies holding the Olympic Property, and the ownership and interests therein, are as follows:
Olympic- Philippines (the "Olympic Group")
Sara Marie Mining Properties Ltd. ("Sara Marie") 33.3%
Tesoro Mining & Development, Inc. (Tesoro) 60.0%
Pursuant to the Olympic joint venture agreement the Company holds directly and indirectly an effective equity interest in the Olympic Property of 60.0%.
Pursuant to a shareholders agreement, the Company exercises joint control over the companies in the Olympic Group.
(b) Alpha Group
The Philippine companies holding the Alpha Property, and the ownership interests therein, are as follows:

Alpha- Philippines (the "Alpha Group")

Patricia Louise Mining Development Inc. ("Patricia") 34.0%
Narra Nickel Mining & Development Corporation (Narra) 60.4%
Under a joint venture agreement the Company holds directly and indirectly an effective equity interest in the Alpha Property of 60.4%. Pursuant to a
shareholders agreement, the Company exercises joint control over the companies in the Alpha Group. 48 (emphasis supplied)
Concluding from the above-stated facts, it is quite safe to say that petitioners McArthur, Tesoro and Narra are not Filipino since MBMI, a 100% Canadian
corporation, owns 60% or more of their equity interests. Such conclusion is derived from grandfathering petitioners corporate owners, namely: MMI, SMMI
and PLMDC. Going further and adding to the picture, MBMIs Summary of Significant Accounting Policies statement regarding the "joint venture"
agreements that it entered into with the "Olympic" and "Alpha" groupsinvolves SMMI, Tesoro, PLMDC and Narra. Noticeably, the ownership of the "layered"
corporations boils down to MBMI, Olympic or corporations under the "Alpha" group wherein MBMI has joint venture agreements with, practically exercising
majority control over the corporations mentioned. In effect, whether looking at the capital structure or the underlying relationships between and among the
corporations, petitioners are NOT Filipino nationals and must be considered foreign since 60% or more of their capital stocks or equity interests are owned by
MBMI.
Application of the res inter alios acta rule
Petitioners question the CAs use of the exception of the res inter alios acta or the "admission by co-partner or agent" rule and "admission by privies" under the
Rules of Court in the instant case, by pointing out that statements made by MBMI should not be admitted in this case since it is not a party to the case and that
it is not a "partner" of petitioners.
Secs. 29 and 31, Rule 130 of the Revised Rules of Court provide:
Sec. 29. Admission by co-partner or agent.- The act or declaration of a partner or agent of the party within the scope of his authority and during the existence
of the partnership or agency, may be given in evidence against such party after the partnership or agency is shown by evidence other than such act or
declaration itself. The same rule applies to the act or declaration of a joint owner, joint debtor, or other person jointly interested with the party.
Sec. 31. Admission by privies.- Where one derives title to property from another, the act, declaration, or omission of the latter, while holding the title, in relation
to the property, is evidence against the former.
Petitioners claim that before the above-mentioned Rule can be applied to a case, "the partnership relation must be shown, and that proof of the fact must be
made by evidence other than the admission itself." 49 Thus, petitioners assert that the CA erred in finding that a partnership relationship exists between them
and MBMI because, in fact, no such partnership exists.
Partnerships vs. joint venture agreements
Petitioners claim that the CA erred in applying Sec. 29, Rule 130 of the Rules by stating that "by entering into a joint venture, MBMI have a joint interest" with
Narra, Tesoro and McArthur. They challenged the conclusion of the CA which pertains to the close characteristics of
"partnerships" and "joint venture agreements." Further, they asserted that before this particular partnership can be formed, it should have been formally
reduced into writing since the capital involved is more than three thousand pesos (PhP 3,000). Being that there is no evidence of written agreement to form a
partnership between petitioners and MBMI, no partnership was created.
We disagree.

A partnership is defined as two or more persons who bind themselves to contribute money, property, or industry to a common fund with the intention of dividing
the profits among themselves.50 On the other hand, joint ventures have been deemed to be "akin" to partnerships since it is difficult to distinguish between joint
ventures and partnerships. Thus:
[T]he relations of the parties to a joint venture and the nature of their association are so similar and closely akin to a partnership that it is ordinarily held that
their rights, duties, and liabilities are to be tested by rules which are closely analogous to and substantially the same, if not exactly the same, as those which
govern partnership. In fact, it has been said that the trend in the law has been to blur the distinctions between a partnership and a joint venture, very little law
being found applicable to one that does not apply to the other.51
Though some claim that partnerships and joint ventures are totally different animals, there are very few rules that differentiate one from the other; thus, joint
ventures are deemed "akin" or similar to a partnership. In fact, in joint venture agreements, rules and legal incidents governing partnerships are applied. 52
Accordingly, culled from the incidents and records of this case, it can be assumed that the relationships entered between and among petitioners and MBMI are
no simple "joint venture agreements." As a rule, corporations are prohibited from entering into partnership agreements; consequently, corporations enter into
joint venture agreements with other corporations or partnerships for certain transactions in order to form "pseudo partnerships."
Obviously, as the intricate web of "ventures" entered into by and among petitioners and MBMI was executed to circumvent the legal prohibition against
corporations entering into partnerships, then the relationship created should be deemed as "partnerships," and the laws on partnership should be applied.
Thus, a joint venture agreement between and among corporations may be seen as similar to partnerships since the elements of partnership are present.
Considering that the relationships found between petitioners and MBMI are considered to be partnerships, then the CA is justified in applying Sec. 29, Rule
130 of the Rules by stating that "by entering into a joint venture, MBMI have a joint interest" with Narra, Tesoro and McArthur.
Panel of Arbitrators jurisdiction
We affirm the ruling of the CA in declaring that the POA has jurisdiction over the instant case. The POA has jurisdiction to settle disputes over rights to mining
areas which definitely involve the petitions filed by Redmont against petitioners Narra, McArthur and Tesoro. Redmont, by filing its petition against petitioners,
is asserting the right of Filipinos over mining areas in the Philippines against alleged foreign-owned mining corporations. Such claim constitutes a "dispute"
found in Sec. 77 of RA 7942:
Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall have exclusive and original jurisdiction to hear and
decide the following:
(a) Disputes involving rights to mining areas
(b) Disputes involving mineral agreements or permits
We held in Celestial Nickel Mining Exploration Corporation v. Macroasia Corp.: 53
The phrase "disputes involving rights to mining areas" refers to any adverse claim, protest, or opposition to an application for mineral agreement. The POA
therefore has the jurisdiction to resolve any adverse claim, protest, or opposition to a pending application for a mineral agreement filed with the concerned
Regional Office of the MGB. This is clear from Secs. 38 and 41 of the DENR AO 96-40, which provide:
Sec. 38.
xxxx

Within thirty (30) calendar days from the last date of publication/posting/radio announcements, the authorized officer(s) of the concerned office(s) shall issue a
certification(s) that the publication/posting/radio announcement have been complied with. Any adverse claim, protest, opposition shall be filed directly, within
thirty (30) calendar days from the last date of publication/posting/radio announcement, with the concerned Regional Office or through any concerned PENRO
or CENRO for filing in the concerned Regional Office for purposes of its resolution by the Panel of Arbitrators pursuant to the provisions of this Act and these
implementing rules and regulations. Upon final resolution of any adverse claim, protest or opposition, the Panel of Arbitrators shall likewise issue a certification
to that effect within five (5) working days from the date of finality of resolution thereof. Where there is no adverse claim, protest or opposition, the Panel of
Arbitrators shall likewise issue a Certification to that effect within five working days therefrom.
xxxx
No Mineral Agreement shall be approved unless the requirements under this Section are fully complied with and any adverse claim/protest/opposition is finally
resolved by the Panel of Arbitrators.
Sec. 41.
xxxx
Within fifteen (15) working days form the receipt of the Certification issued by the Panel of Arbitrators as provided in Section 38 hereof, the concerned
Regional Director shall initially evaluate the Mineral Agreement applications in areas outside Mineral reservations. He/She shall thereafter endorse his/her
findings to the Bureau for further evaluation by the Director within fifteen (15) working days from receipt of forwarded documents. Thereafter, the Director shall
endorse the same to the secretary for consideration/approval within fifteen working days from receipt of such endorsement.
In case of Mineral Agreement applications in areas with Mineral Reservations, within fifteen (15) working days from receipt of the Certification issued by the
Panel of Arbitrators as provided for in Section 38 hereof, the same shall be evaluated and endorsed by the Director to the Secretary for consideration/approval
within fifteen days from receipt of such endorsement. (emphasis supplied)
It has been made clear from the aforecited provisions that the "disputes involving rights to mining areas" under Sec. 77(a) specifically refer only to those
disputes relative to the applications for a mineral agreement or conferment of mining rights.
The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is further elucidated by Secs. 219 and 43 of DENR AO 95936, which read:
Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions.- Notwithstanding the provisions of Sections 28, 43 and 57 above, any adverse claim, protest or
opposition specified in said sections may also be filed directly with the Panel of Arbitrators within the concerned periods for filing such claim, protest or
opposition as specified in said Sections.
Sec. 43. Publication/Posting of Mineral Agreement.xxxx
The Regional Director or concerned Regional Director shall also cause the posting of the application on the bulletin boards of the Bureau, concerned Regional
office(s) and in the concerned province(s) and municipality(ies), copy furnished the barangays where the proposed contract area is located once a week for
two (2) consecutive weeks in a language generally understood in the locality. After forty-five (45) days from the last date of publication/posting has been made
and no adverse claim, protest or opposition was filed within the said forty-five (45) days, the concerned offices shall issue a certification that
publication/posting has been made and that no adverse claim, protest or opposition of whatever nature has been filed. On the other hand, if there be any
adverse claim, protest or opposition, the same shall be filed within forty-five (45) days from the last date of publication/posting, with the Regional Offices
concerned, or through the Departments Community Environment and Natural Resources Officers (CENRO) or Provincial Environment and Natural Resources

Officers (PENRO), to be filed at the Regional Office for resolution of the Panel of Arbitrators. However previously published valid and subsisting mining claims
are exempted from posted/posting required under this Section.
No mineral agreement shall be approved unless the requirements under this section are fully complied with and any opposition/adverse claim is dealt with in
writing by the Director and resolved by the Panel of Arbitrators. (Emphasis supplied.)
It has been made clear from the aforecited provisions that the "disputes involving rights to mining areas" under Sec. 77(a) specifically refer only to those
disputes relative to the applications for a mineral agreement or conferment of mining rights.
The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is further elucidated by Secs. 219 and 43 of DENRO AO
95-936, which reads:
Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions.- Notwithstanding the provisions of Sections 28, 43 and 57 above, any adverse claim, protest or
opposition specified in said sections may also be filed directly with the Panel of Arbitrators within the concerned periods for filing such claim, protest or
opposition as specified in said Sections.
Sec. 43. Publication/Posting of Mineral Agreement Application.xxxx
The Regional Director or concerned Regional Director shall also cause the posting of the application on the bulletin boards of the Bureau, concerned Regional
office(s) and in the concerned province(s) and municipality(ies), copy furnished the barangays where the proposed contract area is located once a week for
two (2) consecutive weeks in a language generally understood in the locality. After forty-five (45) days from the last date of publication/posting has been made
and no adverse claim, protest or opposition was filed within the said forty-five (45) days, the concerned offices shall issue a certification that
publication/posting has been made and that no adverse claim, protest or opposition of whatever nature has been filed. On the other hand, if there be any
adverse claim, protest or opposition, the same shall be filed within forty-five (45) days from the last date of publication/posting, with the Regional offices
concerned, or through the Departments Community Environment and Natural Resources Officers (CENRO) or Provincial Environment and Natural Resources
Officers (PENRO), to be filed at the Regional Office for resolution of the Panel of Arbitrators. However, previously published valid and subsisting mining claims
are exempted from posted/posting required under this Section.
No mineral agreement shall be approved unless the requirements under this section are fully complied with and any opposition/adverse claim is dealt with in
writing by the Director and resolved by the Panel of Arbitrators. (Emphasis supplied.)
These provisions lead us to conclude that the power of the POA to resolve any adverse claim, opposition, or protest relative to mining rights under Sec. 77(a)
of RA 7942 is confined only to adverse claims, conflicts and oppositions relating to applications for the grant of mineral rights.
POAs jurisdiction is confined only to resolutions of such adverse claims, conflicts and oppositions and it has no authority to approve or reject said applications.
Such power is vested in the DENR Secretary upon recommendation of the MGB Director. Clearly, POAs jurisdiction over "disputes involving rights to mining
areas" has nothing to do with the cancellation of existing mineral agreements. (emphasis ours)
Accordingly, as we enunciated in Celestial, the POA unquestionably has jurisdiction to resolve disputes over MPSA applications subject of Redmonts
petitions. However, said jurisdiction does not include either the approval or rejection of the MPSA applications, which is vested only upon the Secretary of the
DENR. Thus, the finding of the POA, with respect to the rejection of petitioners MPSA applications being that they are foreign corporation, is valid.
Justice Marvic Mario Victor F. Leonen, in his Dissent, asserts that it is the regular courts, not the POA, that has jurisdiction over the MPSA applications of
petitioners.

This postulation is incorrect.

It is basic that the jurisdiction of the court is determined by the statute in force at the time of the commencement of the action. 54
Sec. 19, Batas Pambansa Blg. 129 or "The Judiciary Reorganization
Act of 1980" reads:
Sec. 19. Jurisdiction in Civil Cases.Regional Trial Courts shall exercise exclusive original jurisdiction:
1. In all civil actions in which the subject of the litigation is incapable of pecuniary estimation.
On the other hand, the jurisdiction of POA is unequivocal from Sec. 77 of RA 7942:
Section 77. Panel of Arbitrators.
x x x Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall have exclusive and original jurisdiction to
hear and decide the following:
(c) Disputes involving rights to mining areas
(d) Disputes involving mineral agreements or permits
It is clear that POA has exclusive and original jurisdiction over any and all disputes involving rights to mining areas. One such dispute is an MPSA application
to which an adverse claim, protest or opposition is filed by another interested applicant.1wphi1 In the case at bar, the dispute arose or originated from MPSA
applications where petitioners are asserting their rights to mining areas subject of their respective MPSA applications. Since respondent filed 3 separate
petitions for the denial of said applications, then a controversy has developed between the parties and it is POAs jurisdiction to resolve said disputes.
Moreover, the jurisdiction of the RTC involves civil actions while what petitioners filed with the DENR Regional Office or any concerned DENRE or CENRO are
MPSA applications. Thus POA has jurisdiction.
Furthermore, the POA has jurisdiction over the MPSA applications under the doctrine of primary jurisdiction. Euro-med Laboratories v. Province of
Batangas55 elucidates:
The doctrine of primary jurisdiction holds that if a case is such that its determination requires the expertise, specialized training and knowledge of an
administrative body, relief must first be obtained in an administrative proceeding before resort to the courts is had even if the matter may well be within their
proper jurisdiction.
Whatever may be the decision of the POA will eventually reach the court system via a resort to the CA and to this Court as a last recourse.
Selling of MBMIs shares to DMCI
As stated before, petitioners Manifestation and Submission dated October 19, 2012 would want us to declare the instant petition moot and academic due to
the transfer and conveyance of all the shareholdings and interests of MBMI to DMCI, a corporation duly organized and existing under Philippine laws and is at
least 60% Philippine-owned.56 Petitioners reasoned that they now cannot be considered as foreign-owned; the transfer of their shares supposedly cured the
"defect" of their previous nationality. They claimed that their current FTAA contract with the State should stand since "even wholly-owned foreign corporations
can enter into an FTAA with the State."57Petitioners stress that there should no longer be any issue left as regards their qualification to enter into FTAA

contracts since they are qualified to engage in mining activities in the Philippines. Thus, whether the "grandfather rule" or the "control test" is used, the
nationalities of petitioners cannot be doubted since it would pass both tests.
The sale of the MBMI shareholdings to DMCI does not have any bearing in the instant case and said fact should be disregarded. The manifestation can no
longer be considered by us since it is being tackled in G.R. No. 202877 pending before this Court.1wphi1 Thus, the question of whether petitioners, allegedly
a Philippine-owned corporation due to the sale of MBMI's shareholdings to DMCI, are allowed to enter into FTAAs with the State is a non-issue in this case.
In ending, the "control test" is still the prevailing mode of determining whether or not a corporation is a Filipino corporation, within the ambit of Sec. 2, Art. II of
the 1987 Constitution, entitled to undertake the exploration, development and utilization of the natural resources of the Philippines. When in the mind of the
Court there is doubt, based on the attendant facts and circumstances of the case, in the 60-40 Filipino-equity ownership in the corporation, then it may apply
the "grandfather rule."
WHEREFORE, premises considered, the instant petition is DENIED. The assailed Court of Appeals Decision dated October 1, 2010 and Resolution dated
February 15, 2011 are hereby AFFIRMED.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice
13.
EN BANC
PROVINCE OF RIZAL, MUNICIPALITY OF
SAN
MATEO,
PINTONG
BOCAUE
MULTIPURPOSE
COOPERATIVE,
CONCERNED CITIZENS OF RIZAL, INC.,
ROLANDO E. VILLACORTE, BERNARDO
HIDALGO, ANANIAS EBUENGA, VILMA T.
MONTAJES,
FEDERICO
MUNAR,
JR.,
ROLANDO BEAS, SR., ET AL., and
KILOSBAYAN, INC.,

G.R. No. 129546

Present:

P e t i t i o n e r s,
DAVIDE, JR., C. J.,
PUNO,
- versus -

PANGANIBAN,
QUISUMBING,
YNARES-SANTIAGO,

EXECUTIVE SECRETARY, SECRETARY OF

ENVIRONMENT & NATURAL RESOURCES,
LAGUNA LAKE DEVELOPMENT AUTHORITY,

SANDOVAL-GUTIERREZ,
CARPIO,

SECRETARY OF PUBLIC WORKS &

HIGHWAYS, SECRETARY OF BUDGET &
MANAGEMENT,
METRO
MANILA
DEVELOPMENT AUTHORITY and THE
HONORABLE COURT OF APPEALS,

MARTINEZ,
CORONA,
CARPIO MORALES,
CALLEJO, SR.,

R e s p o n d e n t s.

AZCUNA,
TINGA,
CHICO-NAZARIO, and
GARCIA, JJ.

Promulgated:

December 13, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

The earth belongs in usufruct to the living.[1]

At the height of the garbage crisis plaguing Metro Manila and its environs, parts of the Marikina Watershed Reservation were set aside by the Office of
the President, through Proclamation No. 635 dated 28 August 1995, for use as a sanitary landfill and similar waste disposal applications. In fact, this site,
extending to more or less 18 hectares, had already been in operation since 19 February 1990 [2] for the solid wastes of Quezon City, Marikina, San Juan,
Mandaluyong, Pateros, Pasig, and Taguig. [3]

This is a petition filed by the Province of Rizal, the municipality of San Mateo, and various concerned citizens for review on certiorari of the Decision of the
Court of Appeals in CA-G.R. SP No. 41330, denying, for lack of cause of action, the petition for certiorari, prohibition and mandamus with application for a
temporary restraining order/writ of preliminary injunction assailing the legality and constitutionality of Proclamation No. 635.

The facts are documented in painstaking detail.

On 17 November 1988, the respondent Secretaries of the Department of Public Works and Highways (DPWH) and the Department of Environment
and Natural Resources (DENR) and the Governor of the Metropolitan Manila Commission (MMC) entered into a Memorandum of Agreement (MOA), [4] which
provides in part:
1.

The DENR agrees to immediately allow the utilization by the Metropolitan Manila Commission of its land
property located at Pintong Bocaue in San Mateo, Rizal as a sanitary landfill site, subject to whatever restrictions that the government
impact assessment might require.

2.

Upon signing of this Agreement, the DPWH shall commence the construction/development of said
dumpsite.

3.

The MMC shall: a) take charge of the relocation of the families within and around the site; b) oversee the
development of the areas as a sanitary landfill; c) coordinate/monitor the construction of infrastructure facilities by the DPWH in the
said site; and d) ensure that the necessary civil works are properly undertaken to safeguard against any negative environmental
impact in the area.

On 7, 8 and 10 February 1989, the Sangguniang Bayan of San Mateo wrote Gov. Elfren Cruz of the MMC, Sec. Fiorello Estuar of the DPWH, the
Presidential Task Force on Solid Waste Management, Executive Secretary Catalino Macaraig, and Sec. Fulgencio Factoran, Jr., pointing out that it had
recently passed a Resolution banning the creation of dumpsites for Metro Manila garbage within its jurisdiction, asking that their side be heard, and that the
addressees suspend and temporarily hold in abeyance all and any part of your operations with respect to the San Mateo Landfill Dumpsite. No action was
taken on these letters.

It turns out that the land subject of the MOA of 17 November 1988 and owned by the DENR was part of the Marikina Watershed Reservation Area.
Thus, on 31 May 1989, forest officers of the Forest Engineering and Infrastructure Unit of the Community Environment and Natural Resource Office, (CENRO)
DENR-IV, Rizal Province, submitted a Memorandum [5] on the On-going Dumping Site Operation of the MMC inside (the) Upper Portion of Marikina Watershed
Reservation, located at Barangay Pintong Bocaue, San Mateo, Rizal, and nearby localities. Said Memorandum reads in part:
Observations:

3.1

The subject area is arable and agricultural in nature;

3.2

Soil type and its topography are favorable for agricultural and forestry productions;

...

3.5 Said Dumping Site is observed to be confined within the said Watershed Reservation, bearing in the northeastern part of
Lungsod Silangan Townsite Reservation. Such illegal Dumping Site operation inside (the) Watershed Reservation is in
violation of P.D. 705, otherwise known as the Revised Forestry Code, as amended. . .

Recommendations:

5.1 The MMC Dumping Site Inside Marikina Watershed Reservation, particularly at Brgy. Pintong Bocaue, San Mateo, Rizal and at
Bo. Pinugay, Baras/Antipolo, Rizal which are the present garbage zones must totally be stopped and discouraged without
any political intervention and delay in order to save our healthy ecosystems found therein, to avoid much
destruction, useless efforts and lost (sic) of millions of public funds over the land in question; (Emphasis ours)

On 19 June 1989, the CENRO submitted another Investigation Report [6] to the Regional Executive Director which states in part that:
1. About two (2) hectares had been excavated by bulldozers and garbage dumping operations are going on.

2. The dumping site is without the concurrence of the Provincial Governor, Rizal Province and without any permit from DENR who has
functional jurisdiction over the Watershed Reservation; and

3. About 1,192 families residing and cultivating areas covered by four (4) Barangays surrounding the dumping site will adversely be affected
by the dumping operations of MMC including their sources of domestic water supply. x x x x

On 22 January 1990, the CENRO submitted still another Investigation Report [7] to the Regional Executive Director which states that:
Findings show that the areas used as Dumping Site of the MMC are found to be within the Marikina Watershed which are part of the
Integrated Social Forestry Project (ISF) as per recorded inventory of Forest Occupancy of this office.

It also appears that as per record, there was no permit issued to the MMC to utilize these portions of land for dumping purposes.

It is further observed that the use of the areas as dumping site greatly affects the ecological balance and environmental factors in this
community.

On 19 February 1990, the DENR Environmental Management Bureau, through Undersecretary for Environment and Research Celso R. Roque,
granted the Metro Manila Authority (MMA [formerly MMC]) an Environmental Compliance Certificate (ECC) for the operation of a two-and-a-half-hectare
garbage dumpsite.

The ECC was sought and granted to comply with the requirement of Presidential Decree No. 1586 Establishing an Environmental Impact Statement
System, Section 4 of which states in part that, No persons, partnership or corporation shall undertake or operate any such declared environmentally critical
project or area without first securing an Environmental Compliance Certificate. Proclamation No. 2146, passed on 14 December 1981, designates all areas
declared by law as national parks, watershed reserves, wildlife preserves, and sanctuaries as Environmentally Critical Areas.

On 09 March 1990, respondent Laguna Lake Development Authority (LLDA), through its Acting General Manager, sent a letter [8] to the MMA, which
reads in part:
Through this letter we would like to convey our reservation on the choice of the sites for solid waste disposal inside the watershed of
Laguna Lake. As you may already know, the Metropolitan Waterworks and Sewerage System (MWSS) has scheduled the abstraction of
water from the lake to serve the needs of about 1.2 million residents of Muntinlupa, Paranaque, Las Pinas and Bacoor, Cavite by
1992. Accordingly, the Laguna Lake Development Authority (LLDA) is accelerating its environmental management program to upgrade the
water quality of the lake in order to make it suitable as a source of domestic water supply the whole year round. The said program
regards dumpsites as incompatible within the watershed because of the heavy pollution, including the risk of diseases, generated
by such activities which would negate the governments efforts to upgrade the water quality of the lake. Consequently, please consider
our objection to the proposed location of the dumpsites within the watershed. (Emphasis supplied by petitioners)

On 31 July 1990, less than six months after the issuance of the ECC, Undersecretary Roque suspended the ECC in a letter [9] addressed to the
respondent Secretary of DPWH, stating in part that:
Upon site investigation conducted by Environmental Management Bureau staff on development activities at the San Mateo Landfill
Site, it was ascertained that ground slumping and erosion have resulted from improper development of the site . We believe that this
will adversely affect the environmental quality in the area if the proper remedial measures are not instituted in the design of the landfill site.

This is therefore contradictory to statements made in the Environmental Impact Statement (EIS) submitted that above occurrences will be
properly mitigated.

In view of this, we are forced to suspend the Environmental Compliance Certificate (ECC) issued until appropriate modified plans are
submitted and approved by this Office for implementation. (Emphasis ours)

On 21 June 1993, the Acting Mayor of San Mateo, Enrique Rodriguez, Jr., Barangay Captain Dominador Vergara, and petitioner Rolando E. Villacorte,
Chairman of the Pintong Bocaue Multipurpose Cooperative (PBMC) wrote [10] then President Fidel V. Ramos expressing their objections to the continued
operation of the MMA dumpsite for causing unabated pollution and degradation of the Marikina Watershed Reservation.

On 14 July 1993, another Investigation Report [11] submitted by the Regional Technical Director to the DENR Undersecretary for Environment and
Research contained the following findings and recommendations:
Remarks and Findings:

....

5. Interview with Mr. Dayrit, whose lot is now being endangered because soil erosion have (sic) caused severe siltation and
sedimentation of the Dayrit Creek which water is greatly polluted by the dumping of soil bulldozed to the creek;

6. Also interview with Mrs. Vilma Montajes, the multi-grade teacher of Pintong Bocaue Primary School which is located only about 100
meters from the landfill site. She disclosed that bad odor have (sic) greatly affected the pupils who are sometimes sick with respiratory
illnesses. These odors show that MMA have (sic) not instituted/sprayed any disinfectant chemicals to prevent air pollution in the area. Besides
large flies (Bangaw) are swarming all over the playground of the school. The teacher also informed the undersigned that plastic debris are
being blown whenever the wind blows in their direction.

7. As per investigation report there are now 15 hectares being used as landfill disposal sites by the MMA. The MMA is intending to
expand its operation within the 50 hectares.

8. Lots occupied within 50 hectares are fully planted with fruit bearing trees like Mangoes, Santol, Jackfruit, Kasoy, Guyabano,
Kalamansi and Citrus which are now bearing fruits and being harvested and marketed to nearby San Mateo Market and Masinag Market in
Antipolo.

....

Recommendations:

1. As previously recommended, the undersigned also strongly recommend(s) that the MMA be made to relocate the landfill site
because the area is within the Marikina Watershed Reservation and Lungsod Silangan. The leachate treatment plant ha(s) been eroded twice
already and contaminated the nearby creeks which is the source of potable water of the residents. The contaminated water also flows to
Wawa Dam and Boso-boso River which also flows to Laguna de Bay.

2. The proposed Integrated Social Forestry Project be pushed through or be approved. ISF project will not only uplift the socioeconomic conditions of the participants but will enhance the rehabilitation of the Watershed considering that fruit bearing trees are vigorously
growing in the area. Some timber producing species are also planted like Mahogany and Gmelina Arboiea. There are also portions where
dipterocarp residuals abound in the area.

3. The sanitary landfill should be relocated to some other area, in order to avoid any conflict with the local government of San Mateo
and the nearby affected residents who have been in the area for almost 10-20 years.

On 16 November 1993, DENR Secretary Angel C. Alcala sent MMA Chairman Ismael A. Mathay, Jr. a letter [12] stating that after a series of
investigations by field officials of the DENR, the agency realized that the MOA entered into on 17 November 1988 is a very costly error because the area
agreed to be a garbage dumpsite is inside the Marikina Watershed Reservation. He then strongly recommended that all facilities and infrastructure in the
garbage dumpsite in Pintong Bocaue be dismantled, and the garbage disposal operations be transferred to another area outside the Marikina Watershed
Reservation to protect the health and general welfare of the residents of San Mateo in particular and the residents of Metro Manila in general.

On 06 June 1995, petitioner Villacorte, Chairman of the PBMC, wrote [13] President Ramos, through the Executive Secretary, informing the President of
the issues involved, that the dumpsite is located near three public elementary schools, the closest of which is only fifty meters away, and that its
location violates the municipal zoning ordinance of San Mateo and, in truth, the Housing and Land Use Regulatory Board had denied the then MMA chairmans
application for a locational clearance on this ground.

On 21 August 1995, the Sangguniang Bayan of San Mateo issued a Resolution [14] expressing a strong objection to the planned expansion of the
landfill operation in Pintong Bocaue and requesting President Ramos to disapprove the draft Presidential Proclamation segregating 71.6 Hectares from
Marikina Watershed Reservation for the landfill site in Pintong Bocaue, San Mateo, Rizal.

Despite the various objections and recommendations raised by the government agencies aforementioned, the Office of the President, through
Executive Secretary Ruben Torres, signed and issued Proclamation No. 635 on 28 August 1995, Excluding from the Marikina Watershed Reservation Certain
Parcels of Land Embraced Therein for Use as Sanitary Landfill Sites and Similar Waste Disposal Under the Administration of the Metropolitan Manila
Development Authority. The pertinent portions thereof state:
WHEREAS, to cope with the requirements of the growing population in Metro Manila and the adjoining provinces and municipalities,
certain developed and open portions of the Marikina Watershed Reservation, upon the recommendation of the Secretary of the Department of
Environment and Natural Resources should now be excluded form the scope of the reservation;

WHEREAS, while the areas delineated as part of the Watershed Reservations are intended primarily for use in projects and/or
activities designed to contain and preserve the underground water supply, other peripheral areas had been included within the scope of the
reservation to provide for such space as may be needed for the construction of the necessary structures, other related facilities, as well as
other priority projects of government as may be eventually determined;

WHEREAS, there is now an urgent need to provide for, and develop, the necessary facilities for the disposal of the waste generated
by the population of Metro Manila and the adjoining provinces and municipalities, to ensure their sanitary and /or hygienic disposal;

WHEREAS, to cope with the requirements for the development of the waste disposal facilities that may be used, portions of the
peripheral areas of the Marikina Watershed Reservation, after due consideration and study, have now been identified as suitable sites that
may be used for the purpose;

WHEREAS, the Secretary of the Department of Environment and Natural Resources has recommended the exclusion of these areas
that have been so identified from the Marikina Watershed Reservation so that they may then be developed for the purpose;

NOW, THEREFORE, for and in consideration of the aforecited premises, I, Fidel V. Ramos, President of the Philippines, by virtue of
the powers vested in me by law, do hereby ordain:

Section 1. General That certain parcels of land, embraced by the Marikina Watershed Reservation, were found needed for use in the
solid waste disposal program of the government in Metropolitan Manila, are hereby excluded from that which is held in reserve and are now
made available for use as sanitary landfill and such other related waste disposal applications.

Section 2. Purpose The areas being excluded from the Marikina Watershed Reservation are hereby placed under the administration
of the Metropolitan Manila Development Authority, for development as Sanitary Landfill, and/or for use in the development of such other
related waste disposal facilities that may be used by the cities and municipalities of Metro Manila and the adjoining province of Rizal and its
municipalities.

Section 3. Technical Description Specifically, the areas being hereby excluded from the Marikina Watershed Reservation consist of
two (2) parcels, with an aggregate area of approximately ONE MILLION SIXTY THOUSAND FIVE HUNDRED TWENTY NINE (1,060,529)
square meters more or less, as follows: x x x x

Section 4. Reservations The development, construction, use and/or operation of any facility that may be established within the parcel
of land herein excluded from the Marikina Watershed Reservation shall be governed by existing laws, rules and regulations pertaining to
environmental control and management. When no longer needed for sanitary landfill purposes or the related waste disposal activities, the
parcels of land subject of this proclamation shall revert back as part of the Marikina Watershed Reservation, unless otherwise authorized.

On 06 September 1995, Director Wilfrido S. Pollisco of the Protected Areas and Wildlife Bureau wrote the DENR Secretary to express the bureaus
stand against the dumpsite at Pintong Bocaue, and that it is our view . . . that the mere presence of a garbage dumpsite inside a watershed reservation is
definitely not compatible with the very purpose and objectives for which the reservation was established.

On 24 November 1995, the petitioners Municipality of San Mateo and the residents of Pintong Bocaue, represented by former Senator Jovito Salonga,
sent a letter to President Ramos requesting him to reconsider Proclamation No. 635. Receiving no reply, they sent another letter on 02 January 1996
reiterating their previous request.

On 04 March 1996, then chairman of the Metro Manila Development Authority (MMDA [formerly MMA]) Prospero I. Oreta addressed a letter to Senator
Salonga, stating in part that:
.

2.

Considering the circumstances under which we are pursuing the project, we are certain you will agree that, unless we are prepared
with a better alternative, the project simply has to be pursued in the best interest of the greater majority of the population, particularly
their health and welfare.

2.1

The San Mateo Sanitary Landfill services, at least, 38% of the waste disposal site requirements of Metro Manila where an
estimated 9 million population reside.

2.2

Metro Manila is presently estimated to be generating, at least, 15,700 cubic meters of household or municipal waste, a 1.57
hectare of land area will be filled in a months time with a pile 31 meters high of garbage, or in a year, the accumulated volume will
require 18.2 hectares.

....

4. The sanitary landfill projects are now on their fifth year of implementation. The amount of effort and money already invested in the project by
the government cannot easily be disregarded, much more set aside in favor of the few settlers/squatters who chose to ignore the earlier
notice given to them that the area would be used precisely for the development of waste disposal sites, and are now attempting to
arouse opposition to the project.

4.2 There is no place within the jurisdiction of Metro Manila, with an area big enough to accommodate at least 3 to 5 years of waste
disposal requirements. x x x x

4.21 The present site at San Mateo was selected because, at the time consideration was being made, and up to the present, it is found to
have the attributes that positively respond to the criteria established:

4.21.1 The site was a government property and would not require any outlay for it to be acquired.

4.21.2 It is far from any sizeable community/settlements that could be affected by the development that would be introduced and yet,
was within economic hauling distance from the areas they are designed to serve.

4.21.21

At the time it was originally decided to locate the landfills at the present site, there were not more that fifteen (15)
settlers in the area and they had hardly established themselves. The community settlements were located far from
the site.

4.21.22

The area was hardly accessible, especially to any public transport. The area was being served by a public utility
jeep that usually made only two (2) trips daily. During the rainy season, it could only be reached by equipping the
vehicle with tire chains to traverse the slippery muddy trail roads.

4.21.3 There was, at least, seventy-three (73) hectares available at the site.

4.3 While the site was within the Marikina Watershed Reservation under the administration of the DENR, the site was located at the lower
periphery of the buffer zone; was evaluated to be least likely to affect the underground water supply; and could, in fact, be excluded from the
reservation.

4.31 It was determined to be far from the main water containment area for it to pose any immediate danger of contaminating the
underground water, in case of a failure in any of the mitigating measures that would be installed.

4.32 It was likewise too far from the nearest body of water, the Laguna Lake, and the distance, plus the increasing accumulation of water
from other tributaries toward the lake, would serve to dilute and mitigate any contamination it may emit, in case one happened.

4.33 To resolve the recurring issue regarding its being located within the Marikina Watershed Reservation, the site had been recommended
by the DENR, and approved by the President, to already be excluded from the Marikina Watershed reservation and placed under the
administration of MMDA, since the site was deemed to form part of the land resource reserve then commonly referred to as buffer
zone.

5. Contrary to the impression that you had been given, relocating the site at this point and time would not be easy, if not impracticable, because aside
from the investments that had been made in locating the present site, further investments have been incurred in:

5.1 The conduct of the technical studies for the development being implemented. Through a grant-in-aid from the World Bank, US$600,000
was initially spent for the conduct of the necessary studies on the area and the design of the landfill. This was augmented by, at least,
another P1.5 million from the government for the studies to be completed, or a total cost at the time (1990) of approximately P20 million.

5.2. Additionally, the government has spent approximately P33 million in improving on the roadway to make the site accessible from the main
road/highway.

5.3 To achieve the necessary economies in the development of the site, the utilities had been planned so that their use could be maximized.
These include the access roads, the drainage system, the leacheate collection system, the gas collection system, and the waste water
treatment system. Their construction are designed so that instead of having to construct independent units for each area, the use of existing
facilities can be maximized through a system of interconnection. On the average, the government is spending P14.8 million to develop a
hectare of sanitary landfill area.

6. Despite the preparations and the investments that are now being made on the project, it is estimated that the total available area, at an accelerated
rate of disposal, assuming that all open dump sites were to be closed, will only last for 39 months.

6.1 We are still hard pressed to achieve advanced development on the sites to assure against any possible crisis in garbage from again being
experienced in Metro Manila, aside from having to look for the additional sites that may be used after the capacities shall have been
exhausted.

6.2 Faced with the prospects of having the 15,700 cubic meters of garbage generated daily strewn all over Metro Manila, we are certain you will
agree that it would be futile to even as much as consider a suspension of the waste disposal operations at the sanitary landfills.

On 22 July 1996, the petitioners filed before the Court of Appeals a civil action for certiorari, prohibition and mandamus with application for a
temporary restraining order/writ of preliminary injunction. The hearing on the prayer for preliminary injunction was held on 14 August 1996.

On 13 June 1997, the court a quo rendered a Decision,[15] the dispositive part of which reads:
WHEREFORE, the petition for certiorari, prohibition and mandamus with application for a temporary restraining order/writ of
preliminary injunction for lack of cause of action, is hereby DENIED. [16]

Hence, this petition for review on certiorari of the above decision on the following grounds:

THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION IN DELIBERATELY IGNORING THE SIGNIFICANT FACT THAT
PRESIDENTIAL PROCLAMATION NO. 635 WAS BASED ON A BRAZEN FORGERY IT WAS SUPPOSEDLY ISSUED, AS STATED IN THE
PROCLAMATION ITSELF AND REPEATEDLY ASSERTED BY RESPONDENTS IN THEIR COMMENT, ON THE BASIS OF THE ALLEGED
RECOMMENDATION OF THE DENR SECRETARY DATED JUNE 26, 1995 BUT WHICH ASSERTION WAS DENOUNCED BY THE THEN
SECRETARY ANGEL C. ALCALA HIMSELF IN A SWORN STATEMENT DATED SEPTEMBER 18, 1996 AND AGAIN DURING THE SPECIAL
HEARING OF THE CASE IN THE COURT OF APPEALS ON NOVEMBER 13, 1996 AS A FORGERY SINCE HIS SIGNATURE ON THE
ALLEGED RECOMMENDATION HAD BEEN FALSIFIED, AS NOW ADMITTED BY RESPONDENTS THEMSELVES IN THEIR COMMENT
FILED WITH THE COURT OF APPEALS, THROUGH THE OFFICE OF THE SOLICITOR GENERAL.

II

THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION IN COMPLETELY IGNORING THE SIGNIFICANT FACT THAT THE
RESPONDENTS ARE OPERATING THE LANDFILL BASED ON A SPURIOUS ENVIRONMENTAL COMPLIANCE CERTIFICATE.

III

THE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENTS DID NOT VIOLATE R.A. 7586 WHEN THEY ISSUED AND
IMPLEMENTED PROCLAMATION NO. 635 CONSIDERING THAT THE WITHDRAWAL OR DISESTABLISHMENT OF A PROTECTED AREA
OR THE MODIFICATION OF THE MARIKINA WATERSHED CAN ONLY BE DONE BY AN ACT OF CONGRESS.

IV

THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION WHEN IT DELIBERATELY AND WILLFULLY BRUSHED ASIDE THE
UNANIMOUS FINDINGS AND ADVERSE RECOMMENDATIONS OF RESPONSIBLE GOVERNMENT AGENCIES AND NON-PARTISAN
OFFICIALS CONCERNED WITH ENVIRONMENTAL PROTECTION IN FAVOR OF THE SELF-SERVING, GRATUITOUS ASSERTIONS
FOUND IN THE UNSOLICITED, PARTISAN LETTER OF FORMER MALABON MAYOR, NOW CHAIRMAN PROSPERO ORETA OF THE
MMDA WHO IS AN INTERESTED PARTY IN THIS CASE.

THE COURT OF APPEALS ERRED WHEN IT READILY SWALLOWED RESPONDENTS ASSERTION THAT THE SAN MATEO DUMPSITE
IS LOCATED IN THE BUFFER ZONE OF THE RESERVATION AND IS THEREFORE OUTSIDE OF ITS BOUNDARIES, AND EVEN
DECLARED IN ITS DECISION THAT IT TOOK SERIOUS NOTE OF THIS PARTICULAR ARGUMENT.

VI

THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION WHEN IT ENCROACHED ON THE FUNCTION OF CONGRESS BY
EXPRESSING ITS UNJUSTIFIED FEAR OF MINI-SMOKEY MOUNTAINS PROLIFERATING IN METRO MANILA AND JUSTIFYING ITS
DECISION IN FAVOR OF AN INTEGRATED SYSTEM OF SOLID WASTE MANAGEMENT LIKE THE SAN MATEO LANDFILL.

On 05 January 1998, while the appeal was pending, the petitioners filed a Motion for Temporary Restraining Order, [17] pointing out that the effects of
the El Niophenomenon would be aggravated by the relentless destruction of the Marikina Watershed Reservation. They noted that respondent MMDA had, in
the meantime, continued to expand the area of the dumpsite inside the Marikina Watershed Reservation, cutting down thousands of mature fruit trees and
forest trees, and leveling hills and mountains to clear the dumping area. Garbage disposal operations were also being conducted on a 24-hour basis, with
hundreds of metric tons of wastes being dumped daily, including toxic and infectious hospital wastes, intensifying the air, ground and water pollution. [18]

The petitioners reiterated their prayer that respondent MMDA be temporarily enjoined from further dumping waste into the site and from encroaching
into the area beyond its existing perimeter fence so as not to render the case moot and academic.

On 28 January 1999, the petitioners filed a Motion for Early Resolution, [19] calling attention to the continued expansion of the dumpsite by the MMDA
that caused the people of Antipolo to stage a rally and barricade the Marcos Highway to stop the dump trucks from reaching the site for five successive days
from 16 January 1999. On the second day of the barricade, all the municipal mayors of the province of Rizal openly declared their full support for the rally, and
notified the MMDA that they would oppose any further attempt to dump garbage in their province. [20]

As a result, MMDA officials, headed by then Chairman Jejomar Binay, agreed to abandon the dumpsite after six months. Thus, the municipal mayors
of Rizal, particularly the mayors of Antipolo and San Mateo, agreed to the use of the dumpsite until that period, which would end on 20 July 1999. [21]

On 13 July 1999, the petitioners filed an Urgent Second Motion for Early Resolution [22] in anticipation of violence between the conflicting parties as the
date of the scheduled closure of the dumpsite neared.

On 19 July 1999, then President Joseph E. Estrada, taking cognizance of the gravity of the problems in the affected areas and the likelihood that
violence would erupt among the parties involved, issued a Memorandum ordering the closure of the dumpsite on 31 December 2000. [23] Accordingly, on 20
July 1999, the Presidential Committee on Flagship Programs and Projects and the MMDA entered into a MOA with the Provincial Government of Rizal, the
Municipality of San Mateo, and the City of Antipolo, wherein the latter agreed to further extend the use of the dumpsite until its permanent closure on 31
December 2000.[24]

On 11 January 2001, President Estrada directed Department of Interior and Local Government Secretary Alfredo Lim and MMDA Chairman Binay to
reopen the San Mateo dumpsite in view of the emergency situation of uncollected garbage in Metro Manila, resulting in a critical and imminent health and
sanitation epidemic.[25]

Claiming the above events constituted a clear and present danger of violence erupting in the affected areas, the petitioners filed an Urgent Petition for
Restraining Order[26] on 19 January 2001.

On 24 January 2001, this Court issued the Temporary Restraining Order prayed for, effective immediately and until further orders. [27]
Meanwhile, on 26 January 2001, Republic Act No. 9003, otherwise known as The Ecological Solid Waste Management Act of 2000, was signed into
law by President Estrada.

Thus, the petitioners raised only two issues in their Memorandum [28] of 08 February 2005: 1) whether or not respondent MMDA agreed to the
permanent closure of the San Mateo Landfill as of December 2000, and 2) whether or not the permanent closure of the San Mateo landfill is mandated by
Rep. Act No. 9003.

We hold that the San Mateo Landfill will remain permanently closed.

Although the petitioners may be deemed to have waived or abandoned the issues raised in their previous pleadings but not included in the
memorandum,[29] certain events we shall relate below have inclined us to address some of the more pertinent issues raised in the petition for the guidance of
the herein respondents, and pursuant to our symbolic function to educate the bench and bar.[30]

The law and the facts indicate that a mere MOA does not guarantee the dumpsites permanent closure.

The rally and barricade staged by the people of Antipolo on 28 January 1999, with the full support of all the mayors of Rizal Province caused the
MMDA to agree that it would abandon the dumpsite after six months. In return, the municipal mayors allowed the use of the dumpsite until 20 July 1999.

On 20 July 1999, with much fanfare and rhetoric, the Presidential Committee on Flagship Programs and Projects and the MMDA entered into a MOA
with the Provincial Government of Rizal, the Municipality of San Mateo, and the City of Antipolo, whereby the latter agreed to an extension for the use of the
dumpsite until 31 December 2000, at which time it would be permanently closed.

Despite this agreement, President Estrada directed Department of Interior and Local Government Secretary Alfredo Lim and MMDA Chairman Binay
to reopen the San Mateo dumpsite on 11 January 2001, in view of the emergency situation of uncollected garbage in Metro Manila, resulting in a critical and
imminent health and sanitation epidemic; our issuance of a TRO on 24 January 2001 prevented the dumpsites reopening.

Were it not for the TRO, then President Estradas instructions would have been lawfully carried out, for as we observed in Oposa v. Factoran, the
freedom of contract is not absolute. Thus:

.. In Abe vs. Foster Wheeler Corp., this Court stated: "The freedom of contract, under our system of government, is not meant to be
absolute. 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 constitutional 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 general welfare." The reason for this is emphatically set forth in Nebia vs. New
York, quoted in Philippine American Life Insurance Co. vs. Auditor General, to wit: "'Under our form of government the use of property and the
making of contracts are normally matters of private and not of public concern. The general rule is that both shall be free of governmental
interference. But neither property rights nor contract rights are absolute; for government cannot exist if the citizen may at will use his property
to the detriment of his fellows, or exercise his freedom of contract to work them harm. Equally fundamental with the private right is that of the
public to regulate it in the common interest.'" In short, the non-impairment clause must yield to the police power of the state. (Citations omitted,
emphasis supplied)

We thus feel there is also the added need to reassure the residents of the Province of Rizal that this is indeed a final resolution of this controversy, for
a brief review of the records of this case indicates two self-evident facts. First, the San Mateo site has adversely affected its environs, and second,
sources of water should always be protected.

As to the first point, the adverse effects of the site were reported as early as 19 June 1989, when the Investigation Report of the Community
Environment and Natural Resources Officer of DENR-IV-1 stated that the sources of domestic water supply of over one thousand families would be adversely
affected by the dumping operations. [31] The succeeding report included the observation that the use of the areas as dumping site greatly affected the ecological
balance and environmental factors of the community.[32]Respondent LLDA in fact informed the MMA that the heavy pollution and risk of disease generated by
dumpsites rendered the location of a dumpsite within the Marikina Watershed Reservation incompatible with its program of upgrading the water quality of the
Laguna Lake. [33]

The DENR suspended the sites ECC after investigations revealed ground slumping and erosion had resulted from improper development of the site.
[34]

Another Investigation Report[35] submitted by the Regional Technical Director to the DENR reported respiratory illnesses among pupils of a primary school

located approximately 100 meters from the site, as well as the constant presence of large flies and windblown debris all over the schools playground. It further
reiterated reports that the leachate treatment plant had been eroded twice already, contaminating the nearby creeks that were sources of potable water for the
residents. The contaminated water was also found to flow to the Wawa Dam and Boso-boso River, which in turn empties into Laguna de Bay.

This brings us to the second self-evident point. Water is life, and must be saved at all costs. In Collado v. Court of Appeals,[36] we had occasion to
reaffirm our previous discussion in Sta. Rosa Realty Development Corporation v. Court of Appeals,[37] on the primordial importance of watershed areas, thus:
The most important product of a watershed is water, which is one of the most important human necessities. The protection of watersheds ensures an
adequate supply of water for future generations and the control of flashfloods that not only damage property but also cause loss of lives. Protection of
watersheds is an intergenerational responsibility that needs to be answered now.[38]

Three short months before Proclamation No. 635 was passed to avert the garbage crisis, Congress had enacted the National Water Crisis Act [39] to
adopt urgent and effective measures to address the nationwide water crisis which adversely affects the health and well-being of the population, food
production, and industrialization process. One of the issues the law sought to address was the protection and conservation of watersheds.[40]

In other words, while respondents were blandly declaring that the reason for the creation of the Marikina Watershed Reservation, i.e., to protect Marikina River
as the source of water supply of the City of Manila, no longer exists, the rest of the country was gripped by a shortage of potable water so serious, it
necessitated its own legislation.

Respondents actions in the face of such grave environmental consequences defy all logic. The petitioners rightly noted that instead of providing
solutions, they have, with unmitigated callousness, worsened the problem. It is this readiness to wreak irrevocable damage on our natural heritage in
pursuit of what is expedient that has compelled us to rule at length on this issue. We ignore the unrelenting depletion of our natural heritage at our peril.

I.
THE REORGANIZATION ACT OF THE DENR DEFINES AND
LIMITS ITS POWERS OVER THE COUNTRYS NATURAL RESOURCES

The respondents next point out that the Marikina Watershed Reservation, and thus the San Mateo Site, is located in the public domain. They allege
that as such, neither the Province of Rizal nor the municipality of San Mateo has the power to control or regulate its use since properties of this nature
belong to the national, and not to the local governments.

It is ironic that the respondents should pursue this line of reasoning.

In Cruz v. Secretary of Environment and Natural Resources,[41] we had occasion to observe that (o)ne of the fixed and dominating objectives of the
1935 Constitutional Convention was the nationalization and conservation of the natural resources of the country. There was an overwhelming sentiment in
the convention in favor of the principle of state ownership of natural resources and the adoption of the Regalian doctrine. State ownership of natural
resources was seen as a necessary starting point to secure recognition of the states power to control their disposition, exploitation, development, or
utilization.[42]

The Regalian doctrine was embodied in the 1935 Constitution, in Section 1 of Article XIII on Conservation and Utilization of Natural Resources.
This was reiterated in the 1973 Constitution under Article XIV on the National Economy and the Patrimony of the Nation, and reaffirmed in the 1987
Constitution in Section 2 of Article XII on National Economy and Patrimony, to wit:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all
other natural resources shall not be alienated. The exploration, development and utilization of natural resources shall be under the full control
and supervision of the State. The State may directly undertake such activities or it may enter into co-production, joint venture, or productionsharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens.
Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms
and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant. [43]

Clearly, the state is, and always has been, zealous in preserving as much of our natural and national heritage as it can, enshrining as it did the
obligation to preserve and protect the same within the text of our fundamental law.

It was with this objective in mind that the respondent DENR was mandated by then President Corazon C. Aquino, under Section 4 of Executive
Order No. 192, [44]otherwise known as The Reorganization Act of the Department of Environment and Natural Resources, to be the primary government
agency responsible for the conservation, management, development and proper use of the countrys environment and natural resources, specifically
forest and grazing lands, mineral resources, including those in reservation and watershed areas, and lands of the public domain. It is also responsible
for the licensing and regulation of all natural resources as may be provided for by law in order to ensure equitable sharing of the benefits derived
therefrom for the welfare of the present and future generations of Filipinos.

We expounded on this matter in the landmark case of Oposa v. Factoran,[45] where we held that the right to a balanced and healthful ecology is a
fundamental legal right that carries with it the correlative duty to refrain from impairing the environment. This right implies, among other things, the judicious
management and conservation of the countrys resources, which duty is reposed in the DENR under the aforequoted Section 4 of Executive Order No. 192.
Moreover:
Section 3 (of E. O. No. 192) makes the following statement of policy:

SEC. 3. Declaration of Policy. - It is hereby declared the policy of the State to ensure the sustainable use,
development, management, renewal, and conservation of the country's forest, mineral, land, off-shore areas and other
natural resources, including the protection and enhancement of the quality of the environment, and equitable access of the
different segments of the population to the development and use of the country's natural resources, not only for the present
generation but for future generations as well. It is also the policy of the state to recognize and apply a true value system
including social and environmental cost implications relative to their utilization; development and conservation of our natural
resources. (Emphasis ours)

This policy declaration is substantially re-stated in Title XIV, Book IV of the Administrative Code of 1987, specifically in Section 1
thereof which reads:

SEC. 1. Declaration of Policy. - (1) The State shall ensure, for the benefit of the Filipino people, the full exploration
and development as well as the judicious disposition, utilization, management, renewal and conservation of the
country's forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural resources, consistent with the
necessity of maintaining a sound ecological balance and protecting and enhancing the quality of the
environmentand the objective of making the exploration, development and utilization of such natural resources equitably
accessible to the different segments of the present as well as future generations.

(2) The State shall likewise recognize and apply a true value system that takes into account social and environmental
cost implications relative to the utilization, development and conservation of our natural resources.

The above provision stresses the necessity of maintaining a sound ecological balance and protecting and enhancing the quality of the
environment.[46] (Emphasis ours.)

In sum, the Administrative Code of 1987 and Executive Order No. 192 entrust the DENR with the guardianship and safekeeping of the Marikina
Watershed Reservation and our other natural treasures. However, although the DENR, an agency of the government, owns the Marikina Reserve and has
jurisdiction over the same, this power is not absolute, but is defined by the declared policies of the state, and is subject to the law and higher
authority. Section 2, Title XIV, Book IV of the Administrative Code of 1987, while specifically referring to the mandate of the DENR, makes particular
reference to the agencys being subject to law and higher authority, thus:
SEC. 2. Mandate. - (1) The Department of Environment and Natural Resources shall be primarily responsible for the implementation of the
foregoing policy.

(2) It shall, subject to law and higher authority, be in charge of carrying out the State's constitutional mandate to control and
supervise the exploration, development, utilization, and conservation of the country's natural resources.

With great power comes great responsibility. It is the height of irony that the public respondents have vigorously arrogated to themselves the power to
control the San Mateo site, but have deftly ignored their corresponding responsibility as guardians and protectors of this tormented piece of land.

II.

THE LOCAL GOVERNMENT CODE GIVES TO LOCAL GOVERNMENT UNITS ALL THE NECESSARY POWERS TO PROMOTE THE GENERAL WELFARE
OF THEIR INHABITANTS

The circumstances under which Proclamation No. 635 was passed also violates Rep. Act No. 7160, or the Local Government Code.

Contrary to the averment of the respondents, Proclamation No. 635, which was passed on 28 August 1995, is subject to the provisions of the Local
Government Code, which was approved four years earlier, on 10 October 1991.

Section 2(c) of the said law declares that it is the policy of the state to require all national agencies and offices to conduct periodic consultations
with appropriate local government units, non-governmental and people's organizations, and other concerned sectors of the community before any project
or program is implemented in their respective jurisdictions. Likewise, Section 27 requires prior consultations before a program shall be implemented by
government authorities and the prior approval of the sanggunian is obtained.

During the oral arguments at the hearing for the temporary restraining order, Director Uranza of the MMDA Solid Waste Management Task Force
declared before the Court of Appeals that they had conducted the required consultations. However, he added that (t)his is the problem, sir, the officials we

may have been talking with at the time this was established may no longer be incumbent and this is our difficulty now. That is what we are trying to do now,
a continuing dialogue.[47]

The ambivalent reply of Director Uranza was brought to the fore when, at the height of the protest rally and barricade along Marcos Highway to
stop dump trucks from reaching the site, all the municipal mayors of the province of Rizal openly declared their full support for the rally and notified the
MMDA that they would oppose any further attempt to dump garbage in their province. [48]

The municipal mayors acted within the scope of their powers, and were in fact fulfilling their mandate, when they did this. Section 16 allows every local
government unit to exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion of the general welfare, which involve, among other things, promot(ing)
health and safety, enhance(ing) the right of the people to a balanced ecology, and preserv(ing) the comfort and convenience of their inhabitants.

In Lina , Jr. v. Pao,[49] we held that Section 2 (c), requiring consultations with the appropriate local government units, should apply to national
government projects affecting the environmental or ecological balance of the particular community implementing the project. Rejecting the petitioners
contention that Sections 2(c) and 27 of the Local Government Code applied mandatorily in the setting up of lotto outlets around the country, we held that:
From a careful reading of said provisions, we find that these apply only to national programs and/or projects which are to be
implemented in a particular local community. Lotto is neither a program nor a project of the national government, but of a charitable institution,
the PCSO. Though sanctioned by the national government, it is far fetched to say that lotto falls within the contemplation of Sections 2 (c) and
27 of the Local Government Code.

Section 27 of the Code should be read in conjunction with Section 26 thereof. Section 26 reads:

SECTION 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. It shall be the duty of every national
agency or government-owned or controlled corporation authorizing or involved in the planning and implementation of any project or
program that may cause pollution, climatic change, depletion of non-renewable resources, loss of crop land, range-land, or forest
cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and other
sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in
terms of environmental or ecological balance, and the measures that will be undertaken to prevent or minimize the adverse effects
thereof.

Thus, the projects and programs mentioned in Section 27 should be interpreted to mean projects and programs whose effects are
among those enumerated in Section 26 and 27, to wit, those that: (1) may cause pollution; (2) may bring about climatic change; (3)
may cause the depletion of non-renewable resources; (4) may result in loss of crop land, range-land, or forest cover; (5) may
eradicate certain animal or plant species from the face of the planet; and (6) other projects or programs that may call for the eviction
of a particular group of people residing in the locality where these will be implemented. Obviously, none of these effects will be
produced by the introduction of lotto in the province of Laguna. (emphasis supplied)

We reiterated this doctrine in the recent case of Bangus Fry Fisherfolk v. Lanzanas,[50] where we held that there was no statutory requirement for
the sangguniang bayanof Puerto Galera to approve the construction of a mooring facility, as Sections 26 and 27 are inapplicable to projects which are not
environmentally critical.

Moreover, Section 447, which enumerates the powers, duties and functions of the municipality, grants the sangguniang bayan the power to, among
other things, enact ordinances, approve resolutions and appropriate funds for the general welfare of the municipality and its inhabitants pursuant to Section 16
of th(e) Code. These include:
(1) Approving ordinances and passing resolutions to protect the environment and impose appropriate penalties for acts which endanger
the environment, such as dynamite fishing and other forms of destructive fishing, illegal logging and smuggling of logs, smuggling of
natural resources products and of endangered species of flora and fauna, slash and burn farming, and such other activities which
result in pollution, acceleration of eutrophication of rivers and lakes, or of ecological imbalance; [Section 447 (1)(vi)]
(2) Prescribing reasonable limits and restraints on the use of property within the jurisdiction of the municipality, adopting a
comprehensive land use plan for the municipality, reclassifying land within the jurisdiction of the city, subject to the pertinent provisions
of this Code, enacting integrated zoning ordinances in consonance with the approved comprehensive land use plan, subject to
existing laws, rules and regulations; establishing fire limits or zones, particularly in populous centers; and regulating the construction,
repair or modification of buildings within said fire limits or zones in accordance with the provisions of this Code; [Section 447 (2)(vi-ix)]

(3) Approving ordinances which shall ensure the efficient and effective delivery of the basic services and facilities as provided for under
Section 17 of this Code, and in addition to said services and facilities, providing for the establishment, maintenance, protection,
and conservation of communal forests and watersheds, tree parks, greenbelts, mangroves, and other similar forest
development projects .and, subject to existing laws, establishing and providing for the maintenance, repair and operation of an
efficient waterworks system to supply water for the inhabitants and purifying the source of the water supply; regulating the
construction, maintenance, repair and use of hydrants, pumps, cisterns and reservoirs; protecting the purity and quantity of the
water supply of the municipality and, for this purpose, extending the coverage of appropriate ordinances over all territory
within the drainage area of said water supply and within one hundred (100) meters of the reservoir, conduit, canal, aqueduct,
pumping station, or watershed used in connection with the water service; and regulating the consumption, use or wastage of
water.[Section 447 (5)(i) & (vii)]

Under the Local Government Code, therefore, two requisites must be met before a national project that affects the environmental and ecological
balance of local communities can be implemented: prior consultation with the affected local communities, and prior approval of the project by the
appropriate sanggunian. Absent either of these mandatory requirements, the projects implementation is illegal.
III.
WASTE DISPOSAL IS REGULATED BY THE ECOLOGICAL
SOLID WASTE MANAGEMENT ACT OF 2000

The respondents would have us overlook all the abovecited laws because the San Mateo site is a very expensive - and necessary - fait
accompli. The respondents cite the millions of pesos and hundreds of thousands of dollars the government has already expended in its development and
construction, and the lack of any viable alternative sites.

The Court of Appeals agreed, thus:

During the hearing on the injunction, questions were also asked. What will happen if the San Mateo Sanitary Landfill is closed? Where
will the daily collections of garbage be disposed of and dumped? Atty. Mendoza, one of the lawyers of the petitioners, answered that each
city/municipality must take care of its own. Reflecting on that answer, we are troubled: will not the proliferation of separate open dumpsites be
a more serious health hazard (which ha(s) to be addressed) to the residents of the community? What with the galloping population growth and
the constricting available land area in Metro Manila? There could be a mini-Smokey Mountain in each of the ten citiescomprising Metro
Manila, placing in danger the health and safety of more people. Damage to the environment could be aggravated by the increase in number of
open dumpsites. An integrated system of solid waste management, like the San Mateo Sanitary Landfill, appears advisable to a populous
metropolis like the Greater Metro Manila Area absent access to better technology.[51]

We acknowledge that these are valid concerns. Nevertheless, the lower court should have been mindful of the legal truism that it is the legislature,
by its very nature, which is the primary judge of the necessity, adequacy, wisdom, reasonableness and expediency of any law. [52]

Moreover, these concerns are addressed by Rep. Act No. 9003. Approved on 26 January 2001, The Ecological Solid Waste Management Act of
2000 was enacted pursuant to the declared policy of the state to adopt a systematic, comprehensive and ecological solid waste management system which
shall ensure the protection of public health and environment, and utilize environmentally sound methods that maximize the utilization of valuable resources
and encourage resource conservation and recovery.[53] It requires the adherence to a Local Government Solid Waste Management Plan with regard to the
collection and transfer, processing, source reduction, recycling, composting and final disposal of solid wastes, the handling and disposal of special wastes,
education and public information, and the funding of solid waste management projects.

The said law mandates the formulation of a National Solid Waste Management Framework, which should include, among other things, the method
and procedure for the phaseout and the eventual closure within eighteen months from effectivity of the Act in case of existing open dumps and/or sanitary
landfills located within an aquifer, groundwater reservoir or watershed area.[54] Any landfills subsequently developed must comply with the minimum
requirements laid down in Section 40, specifically that the site selected must be consistent with the overall land use plan of the local government

unit, and that the site must be located in an area where the landfills operation will not detrimentally affect environmentally sensitive resources
such as aquifers, groundwater reservoirs or watershed areas.[55]

This writes finis to any remaining aspirations respondents may have of reopening the San Mateo Site. Having declared Proclamation No. 635
illegal, we see no compelling need to tackle the remaining issues raised in the petition and the parties respective memoranda.

A final word. Laws pertaining to the protection of the environment were not drafted in a vacuum. Congress passed these laws fully aware of the perilous state
of both our economic and natural wealth. It was precisely to minimize the adverse impact humanitys actions on all aspects of the natural world, at the same
time maintaining and ensuring an environment under which man and nature can thrive in productive and enjoyable harmony with each other, that these legal
safeguards were put in place. They should thus not be so lightly cast aside in the face of what is easy and expedient.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 41330, dated 13 June 1997, is REVERSED and SET
ASIDE. The temporary restraining order issued by the Court on 24 January 2001 is hereby made permanent.

SO ORDERED.

14. THIRD DIVISION

[A.C. No. 5499. August 16, 2005]
WILSON PO CHAM, complainant, vs. ATTY. EDILBERTO D. PIZARRO, respondent.
DECISION
CARPIO MORALES, J.:

Before this Court is an administrative complaint for disbarment filed by Wilson Po Cham (complainant) against Atty. Edilberto D. Pizarro (respondent) for
commission of falsehood and misrepresentations in violation of a lawyers oath.
Complainant gives the following account of the facts that spawned the filing of the present administrative complaint.
Sometime in July 1995, Emelita Caete (Caete), Elenita Alipio (Alipio), and now deceased Mario Navarro (Navarro) who was then the Municipal Assessor
of Morong, Bataan, offered for sale to him a parcel of land with an area of approximately forty (40) hectares, identified as Lot 1683 of Cad. Case No. 262,
situated at Sitio Gatao, Nagbalayong, Morong, Bataan (the property).
He having expressed interest in the offer, Caete and Navarro arranged a meeting between him and respondent at the latters residence in
Balanga, Bataan[1] where respondent categorically represented to him that the property being offered for sale was alienable and disposable. [2] Respondent in
fact presented to him 1) Real Property Tax Order of Payment [3] dated July 10, 1995 covering the property signed by Edna P. Pizarro as Municipal Treasurer
and Navarro as Municipal Assessor; 2) a Deed of Absolute Sale [4] dated July 25, 1995 purportedly executed by the alleged previous actual occupant of the
property, one Jose R. Monzon (Monzon), transferring all his rights, interest and possession thereover in favor of Virgilio Banzon (Banzon), Rolando B. Zabala
(Zabala) and respondent for an agreed consideration of P500,000.00; and 3) Special Power of Attorney[5] dated July 25, 1995 executed by Banzon and Zabala
authorizing him (respondent) to:
1. x x x offer to sell [their] rights over a certain parcel of land, which is more particularly described as follows:
AREA: 40 has. more or less
situated at Pook Batangas, Nagbalayong, Morong, Bataan covered by Tax Declaration No. 6066 PIN #108-08-044-05-126
2. x x x negotiate and enter into a contract for the consumation (sic) of sale of the subject property; and to sign the same.
3. x x x receive proceeds thereof with obligation to distribute the corresponding share of each co-owner;
x x x[6] (Underscoring supplied)
On July 25, 1995, he as buyer and respondent as seller executed an Option to Buy,[7] the pertinent portions of which provide:
WHEREAS, the SELLER is the owner and Attorney-In-Fact of his co-owners of rights with planted trees (improvements) containing an area of FORTY
THREE (43) hectares, situated in Pook Batangas, Nagbalayong, Morong, Bataan; (Portion of Lot 1683, Cad. 262, Morong Cadastre), covered by Tax
Declaration 6066.
WHEREAS, the BUYER is interested to buy the same for a total price of THREE MILLION AND SEVEN HUNDRED THOUSAND PESOS (P3,700,000.00)
payable in two (2) gives (sic), as follows:
a) Earnest money of P10,000.00 upon signing of this contract and the balance of full payment within three (3) weeks from date hereof which offer the SELLER
accepts;
NOW THEREFORE, for and in consideration of the foregoing premises and the terms and conditions hereunder specified the parties have agreed on the
following:

1) That the Buyer shall give an option money and earnest (sic) of P10,000.00 upon signing of this contract, which shall form part of the contract price if and
when the buyer comply (sic) with his obligation to pay in full within three (3) weeks from date hereof, otherwise should the BUYER fails (sic) to comply with his
obligation to pay in full on the scheduled period the P10,000.00 earnest money shall be forfeited in favor of the SELLER and the Option to Buy is automatically
cancelled.
2) That the SELLER upon full payment of the price shall execute a final Deed of Sale and shall surrender all documents, plans and paper relative to the
properties subject of sale;
3) That the SELLER shall warrants (sic) their rights and claims over the above stated properties including the trees planted on it as against the rights of third
party except that of the government.[8] (Emphasis and underscoring supplied)
In accordance with the terms of the Option to Buy, he paid respondent the amount of P10,000.00 for which respondent issued the corresponding
Receipt[9] reading:
Received the sum of TEN THOUSAND PESOS (P10,000.00) from MR. WILSON CHAM, representing earnest/option money for Lot 1683 of Cad. Case No.
262 situated at Boundaries:
NORTH : Right of Catalino Agujo
SOUTH : National Road-Bagac-Morong
WEST : Right of Nicasio Canta
EAST : Sapang Batang Panao
including the trees and improvement situated thereon.
Full payment shall be paid within three (3) weeks from date hereof. [10] (Underscoring supplied)
On August 21, 1995, respondent executed a Deed of Absolute Sale [11] over the property in his favor, the pertinent portions of which read as follows:
For and in consideration of the sum of THREE MILLION THREE HUNDRED SEVENTY TWO THOUSAND FIVE HUNDRED THIRTY THREE (P3,372,533.00),
Philippine Currency, the receipt whereof is hereby acknowledged from the BUYER to the entire satisfaction of the SELLERS, the said SELLERS do by these
presents SELL, TRANSFER and CONVEY, in manner absolute and irrevocable, in favor of the said BUYER, his heirs and assigns, all
their rights, interest and participation over that certain real estate destined for, and in actual use as fruit land, situated at Pook Batangas, Nagbalayong,
Morong, Bataan and more particularly described as follows:
Location : Pook Batangas, Nagbalayong, Morong, Bataan
Area : That portion of Lot 1683, Cad. 262, Morong Cadastre, containing an area of 392,155 square meters more or less.
Boundaries : North : Right of Catalino Agujo
South : National Road, Bagac-Morong

West : Right of Nicasio Canta

East : Sapang Batang Panao
The SELLERS do hereby declare that the boundaries of the foregoing land are visible by means of monuments, creeks and trees; that the land including the
permanent improvements existing thereon consist of fruit-bearing trees assessed for the current year at TWO HUNDRED SIXTY TWO THOUSAND FOUR
HUNDRED P262,400.00 as per Tax Declaration No. 5010; and that the property is presently in the possession of the SELLERS.
The SELLERS hereby agree with the BUYER that they are the absolute owners of the rights over the said property; that they have the perfect right to
convey the same; that they acquired their rights over the said property by absolute deed of sale from Jose R. Monzon who acquired his rights over the
property from Marianito Holgado; that Marianito Holgado acquired his right from Pedro de Leon who, in turn, acquired his right from Julian Agujo who was the
original owner who cleared the land and who was in possession of the same immediately after the Second World War.
The SELLERS warrant their rights and claims over the aforedescribed real estate including the trees planted thereon and they undertake to defend the same
unto said Vendee, his heirs and assigns against the claims of any third person whomsoever.[12] (Emphasis and underscoring supplied)
Respondent thereafter furnished him with a copy of Tax Declaration No. 5010 [13] with Property Index No. 018-08-004-05-126 issued in his (respondents)
name and his alleged co-owners, and Real Property Tax Receipt No. 025201 [14] dated August 17, 1995 issued in his (respondents) name.
He thus gave respondent two checks dated August 21, 1995 representing the purchase price of the rights over the property, Asian Bank Corporation
Check No. GA063210[15] in the amount of P168,627.00 payable to respondent, and Asian Bank Managers Check No. 004639GA [16] in the amount
of P3,193,906.00 payable to respondent, Banzon and Zabala.
He subsequently took possession of the property and installed a barbed wire fence at its front portion. Soon after, however, a forest guard approached
him and informed him that the property could not be fenced as it was part of the Bataan National Park.[17]
Upon investigation, he discovered that the property is not an alienable or disposable land susceptible of private ownership. He thus secured a
Certification[18] from the Community Environment and Natural Resources Office (CENR) in Bagac, Bataan of the Department of Environment and Natural
Resources (DENR) dated July 2, 1998, signed by CENR Officer Laurino D. Macadangdang, reading:
This pertains to your request for a certification as to the status of land claimed by spouses Perfecto and Purificacion, Jose Monson, et. al, Virgilio Banzon and
Edilberto Pizarro, all located at Nagbalayong, Morong, Bataan.
Please be informed that per verification conducted by the personnel of this Office, said lands fall within the Bataan Natural Park per L.C. Map/N.P. Map No. 34
as certified on December 1, 1945. Under thePublic Land Law, lands within this category are not subject for disposition. [19] (Underscoring supplied)
He also obtained a Letter-directive [20] dated August 31, 1995 issued by Officer-in-Charge Ricardo R. Alarcon of the Provincial Environment and Natural
Resources Office (PENR) of Balanga, Bataan to the Municipal Assessor, the pertinent portions of which read:
Please be informed that it comes to our attention that there are some forest occupants that are securing land tax declarations from your office
in (sic) the pretext that the area they occupied (sic) were(sic) within alienable and disposable lands. Presently, this tax declaration is being used in
the illegal selling of right [of] possession within the Bataan Natural Park which is prohibited under our laws.
xxx

In this regard, I would like to request for your assistance by way of informing us and in controlling this land rush and massive selling and buying of rights of
possession within prohibited areas as stated above.[21] (Emphasis and underscoring supplied)
Upon his request, the PENR issued a Certification [22] dated March 14, 1996 stating that those named by respondent as prior owners of rights over the
property from whom respondent and his alleged co-owners acquired their alleged rights were not among those inventoried as occupants per the PENRs 1978
to 1994 Forest Occupancy Census (IFO) Survey.
Despite repeated demands, respondent refused to return the purchase price of the rights over the property.[23]
In his present complaint[24] dated September 10, 2001, complainant charges respondent to have violated his oath as a member of the Bar in committing
manifest falsehood and evident misrepresentation by employing fraudulent means to lure him into buying rights over the property which property he
represented to be disposable and alienable.[25]
In his Comment[26] dated January 12, 2002, respondent denied having employed deceit or having pretended to co-own rights over the property or having
represented that it was alienable and disposable. He claimed that complainant, being engaged in speculation in the purchase of property, knew exactly the
character and nature of the object of his purchase; [27]and that despite complainants awareness that he was merely buying rights to forest land, he just the
same voluntarily entered into the transaction because of the propertys proximity to the Subic Bay Economic Zone.
Respondent surmised that complainant bought the rights over the property in the hope that lands belonging to the public domain in Morong would be
eventually declared alienable and disposable to meet the rising demand for economic zones. [28]
By Resolution[29] of February 6, 2002, this Court referred the case to the Integrated Bar of the Philippines (IBP) for investigation, report and
recommendation or decision within ninety (90) days from notice.
On May 6, 2002, complainant filed before the IBP his Reply [30] to respondents Comment, maintaining that the sale of rights over the property was
attended with deceit as respondent deliberately did not disclose that the property was within the confines of the Bataan National Park. [31] And he denied being
engaged in speculation, he claiming that with his purchase of the property, he would venture into low-cost housing for the employees of the nearby Subic
Bay area.[32]
To complainants Reply, respondent filed his Rejoinder on June 21, 2002.[33]
Complainant later filed his Affidavit [34] and Position Paper[35] on June 21, 2002 and September 17, 2001, respectively, reiterating his assertions in his
previous pleadings.
The record shows that complainant filed a criminal complaint for estafa against respondent, Banzon, Zabala, Caete, Alipio and Navarro in 1999 [36] arising
from the questioned sale of rights. The complaint was twice dismissed by the City Prosecutor of Quezon City. On petition for review, however, the Department
of Justice, through then Secretary Hernando B. Perez, by Resolution [37] of March 6, 2002, reversed the dismissal of the complaint as it found probable cause to
indict respondent et al. in court. An information for estafa was thereupon filed against respondent et al. before the Regional Trial Court (RTC) of Quezon City,
docketed as Criminal Case No. Q-00-94232.
By Report and Recommendation of April 20, 2004, the IBP Commission on Bar Discipline (CBD), through Commissioner Lydia A. Navarro, finding
respondent to have violated his oath as a member of the Bar to do no falsehood and misrepresentations, recommended his suspension from the practice of
law for three (3) months, subject to the approval of the members of the Board of Governors. Pertinent portions of the Report and Recommendation read:

. . . [I]t is evident that as early as of (sic) 1992, the Implementing Rules and Regulations of NIPAS ACT [38] prohibited the illegal selling of rights or possession of
the areas occupied within the Bataan Natural Park, the subject property not excluded as per letter of OIC CENRO Laurino D. Mapadanig [illegible], Bagac,
Bataan per L.C. map/N.P. Map No. 34 to the Municipal Assessor therein and certified on December 1, 1945 that subject property which is within this category
was not subject for disposition; a fact supposed to be known by the respondent being a resident of Balanga, Bataan and was in the practice of his profession
also in said area.
Aside from the fact that the alleged original owner Monzon was not among those inventoried occupants as per Forest Occupancy (IFO) Survey since 1978 up
to the latest census in 1994 from whom respondent allegedly bought the subject property; the Absolute Deed of Sale executed between the complainant
Wilson Po Cham and the respondent relative to the same subject property was not notarizedwhich partook the nature of a private and not official document.
Although respondent furnished complainant the foregoing documents to prove their rights, interest and possession to the subject property, respondent and his
co-owners failed to show a permit from the government conferring upon them rights or concessions over the subject property, which formed part of the Bataan
Natural Park classified as public and not subject to disposition, therefore respondent and his co-owners have no rights and interests whatsoever over the
subject property and their representations to complainant were simply not true but a falsehood.
Respondent being extensively conversant and knowledgeable about the law took advantage of his versatility in the practice of law and committed
misrepresentations that he and his co-owners have irrevocable rights, interests and possession over the subject property which convinced complainant into
purchasing subject property unmindful that the same is not alienable or disposable being a portion of the public domain; whereby respondent violated his
solemn oath as member of the Philippine Bar for having committed such falsehood and misrepresentations to the complainant.[39] (Underscoring supplied).
By CBD Resolution No. XVI-2004-407 of October 7, 2004, the IBP Board of Governors adopted and approved the April 20, 2004 Committee Report and
Recommendation.
The case was forwarded to this Court for final action pursuant to Rule 139-B of the Rules of Court. [40]
The IBP findings are well-taken.
The Bar is enjoined to maintain a high standard of not only legal proficiency but of honesty and fair dealing. [41] Thus, a member should refrain from doing
any act which might lessen in any degree the confidence and trust reposed by the public in the fidelity, honesty and integrity of the legal profession. [42]
The misconduct of a lawyer, whether in his professional or private capacity, which shows him to be wanting in moral character, honesty, probity and good
demeanor to thus render him unworthy of the privileges which his license and the law confer upon him, may be sanctioned with disbarment or suspension. [43]
Thus, under Section 27, Rule 138 of the Revised Rules of Court, a member of the Bar may be disbarred or suspended from his office as attorney on the
following grounds: 1) deceit; 2) malpractice or other gross misconduct in office; 3) grossly immoral conduct; 4) conviction of a crime involving moral turpitude;
5) violation of the lawyers oath; 6) willful disobedience to any lawful order of a superior court; and 7) willfully appearing as an attorney for a party without
authority.
And he may be faulted under Canon 1 of the Code of Professional Responsibility which mandates a member of the Bar to obey the laws of the land and
promote respect for the law.Rule 1.01 of the Code specifically enjoins him not to engage in unlawful, dishonest, immoral or deceitful conduct. Conduct, as
used in this rule, is not limited to conduct exhibited in connection with the performance of professional duties. [44]
In the case at bar, as reflected above, complainant presented certifications from the DENR that the property is part of the public domain and not
disposable as it is within the Bataan National Park. Indeed, by virtue of Proclamation No. 24[45] issued on December 1, 1945, all properties of the public domain
therein designated as part of the Bataan National Park were withdrawn from sale, settlement or other disposition, subject to private rights.

On the other hand, respondent has utterly failed to substantiate his documented claim of having irrevocable rights and interests over the property which
he could have conveyed to complainant. E.g., he could have presented any document issued by the government conferring upon him and his alleged coowners, or even upon his alleged predecessors-in-interest, with any such right or interest, but he presented none. He merely presented a Deed of Absolute
Sale purportedly executed by a certain Jose R. Monzon in his, Banzons and Zabalas favor on July 25, 1995, a month shy of the execution on August 21, 1995
of the Deed of Absolute Sale in favor of complainant.
The tax declaration and receipt which respondent presented do not help his cause any as neither tax receipts nor realty tax declarations are sufficient
evidence of the right of possession over realty unless supported by other effective proof. [46] The presentation of a tax declaration must indeed have been a
pretext, as observed by the PENR in its earlier-quoted portion of its letter-directive to the Balanga Municipal Assessor that the area occupied . . . [is] within
alienable and disposable land.
Respondent must thus be faulted for fraudulently inducing complainant to purchase, for P3,372,533.00, non-existent irrevocable rights, interest and
participation over an inalienableproperty.
In Lizaso v. Amante[47] where therein respondent lawyer enticed the therein complainant to invest in the casino business with the proposition that her
investment would yield her substantial profit, but therein respondent not only failed to deliver the promised return on the investment but also the principal
thereof, this Court took occasion to expound on sanctioning lawyers for committing fraud, deceit or falsehood in their private dealings:
It is true, of course, that there was no attorney-client relationship between respondent Amante and complainant Cuyugan-Lizaso. The transaction that
complainant entered into with respondent did not require respondent to perform professional legal services for complainant nor did that transaction relate to
the rendition of professional services by respondent to any other person.
As early as 1923, however, the Court laid down in In Re Vicente Pelaez the principle that it can exercise its power to discipline lawyers for causes which do not
involve the relationship of an attorney and client. x x x
x x x [A]s a general rule, a court will not assume jurisdiction to discipline one of its officers for misconduct alleged to have been committed in his private
capacity. But this is a general rule with many exceptions. The courts sometimes stress the point that the attorney has shown, through misconduct outside of
his professional dealings, a want of such professional honesty as render him unworthy of public confidence, and an unfit and unsafe person to manage the
legal business of others. The reason why such a distinction can be drawn is because it is the court which admits an attorney to the bar, and the court requires
for such admission the possession of a good moral character.
xxx
The rationale of the rule that misconduct, indicative of moral unfitness, whether relating to professional or non-professional matters, justifies suspension or
disbarment, was expressed by Mr. Chief Justice Prentice in In Re Disbarment of Peck, with eloquence and restraint:
As important as it is that an attorney be competent to deal with the oftentimes intricate matters which may be intrusted to him, it is infinitely more so that he be
upright and trustworthy. Unfortunately, it is not easy to limit membership in the profession to those who satisfy the standard of test of fitness. But scant
progress in that direction can be hoped for if, in the determination of the qualification of professional fitness, non-professional dishonor and dishonesty in
whatsoever path of life is to be ignored. Professional honesty and honor are not to be expected as the accompaniment of dishonesty and dishonor in other
relations. x x x misconduct, indicative of moral unfitness for the profession, whether it be professional or non-professional, justifies dismission as well as
exclusion from the bar.
The rule in this jurisdiction was stated by Mr. Justice Malcolm in Piatt v. Abordo x xx:

The courts are not curators of the morals of the bar. At the same time the profession is not compelled to harbor all persons whatever their character, who are
fortunate enough to keep out of prison. As good character is an essential qualification for admission of an attorney to practice, when the attorneys character is
bad in such respects as to show that he is unsafe and unfit to be entrusted with the powers of an attorney, the courts retain the power to discipline him.
[48]
(Italics in the original)
This Lizaso ruling was reiterated in Co v. Bernardino[49] and Lao v. Medel.[50]
To be sure, complainant is not entirely blameless. Had he exhibited a modicum of prudence before entering into the transaction with respondent, he
would have spared himself from respondents sham.
It is jurisprudentially established though that in a disbarment proceeding, it is immaterial that the complainant is not blameless or is in pari delicto as this
is not a proceeding to grant relief to the complainant, but one to purge the law profession of unworthy members to protect the public and the courts. [51]
The record does not disclose the status of the estafa case against respondent. His conviction or acquittal is not, however, essential insofar as the present
administrative case against him is concerned.[52]
Administrative cases against lawyers belong to a class of their own. They are distinct from and they may proceed independently of x x x criminal cases.
The burden of proof for these types of cases differ. In a criminal case, proof beyond reasonable doubt is necessary; in an administrative case for disbarment or
suspension, clearly preponderant evidence is all that is required. Thus, a criminal prosecution will not constitute a prejudicial question even if the same facts
and circumstances are attendant in the administrative proceedings.
It should be emphasized that a finding of guilt in the criminal case will not necessarily result in a finding of liability in the administrative
case. Conversely, respondents acquittal does not necessarily exculpate him administratively.[53] (Emphasis supplied)
It is not thus sound judicial policy to await the final resolution of a criminal case before a complaint against a lawyer may be acted upon; otherwise, this
Court will be rendered helpless from vigorously applying the rules on admission to and continuing membership in the legal profession during the whole period
that the criminal case is pending final disposition when the objectives of the two proceedings are vastly disparate. [54]
While the facts and circumstances of the case do not warrant the imposition of so severe a penalty as disbarment, the inherent power of this Court to
discipline an errant member of the Bar must, nonetheless, be exercised as it cannot be denied that respondent violated his solemn oath as a lawyer not to
engage in unlawful, dishonest or deceitful conduct. [55]
The penalty of suspension for three (3) months recommended by the IBP is not, however, commensurate to the gravity of the wrong committed by
respondent. This Court finds that respondents suspension from the practice of law for One (1) Year is warranted.
WHEREFORE, respondent, Atty. Edilberto D. Pizarro, is SUSPENDED from the practice of law for One (1) Year and STERNLY WARNED that a repetition
of the same or similar offense will merit a more severe penalty.
Let copies of this Decision be entered in the personal record of respondent as a member of the Bar and furnished the Office of the Bar Confidant, the
Integrated Bar of the Philippines, and the Court Administrator for circulation to all courts of the country.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Garcia, JJ., concur.

15.
THIRD DIVISION
PICOP RESOURCES, INC., G.R. No. 163509
Petitioner,
Present:

QUISUMBING, J.,
Chairperson,
- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
BASE METALS MINERAL
RESOURCES CORPORATION, Promulgated:
and THE MINES ADJUDICATION
BOARD, December 6, 2006
Respondents.
x---------------------------------------------------------------------------x

DECISION
TINGA, J.:

PICOP Resources, Inc. (PICOP) assails the Decision [1] of the Court of Appeals dated November 28, 2003 and its Resolution[2] dated May 5, 2004,
which respectively denied its petition for review and motion for reconsideration.

The undisputed facts quoted from the appellate courts Decision are as follows:

In 1987, the Central Mindanao Mining and Development Corporation (CMMCI for brevity) entered into a Mines Operating Agreement
(Agreement for brevity) with Banahaw Mining and Development Corporation (Banahaw Mining for brevity) whereby the latter agreed to act as
Mine Operator for the exploration, development, and eventual commercial operation of CMMCIs eighteen (18) mining claims located
in Agusan del Sur.

Pursuant to the terms of the Agreement, Banahaw Mining filed applications for Mining Lease Contracts over the mining claims with the
Bureau of Mines. On April 29, 1988, BanahawMining was issued a Mines Temporary Permit authorizing it to extract and dispose of precious
minerals found within its mining claims. Upon its expiration, the temporary permit was subsequently renewed thrice by the Bureau of Mines,
the last being on June 28, 1991.

Since
a
portion
of Banahaw Minings
mining
claims
was
located
in
petitioner PICOPs logging
concession
in Agusan del Sur, Banahaw Mining and petitioner PICOP entered into a Memorandum of Agreement, whereby, in mutual recognition of each
others right to the area concerned, petitioner PICOP allowed Banahaw Mining an access/right of way to its mining claims.

In 1991, Banahaw Mining converted its mining claims to applications for Mineral Production Sharing Agreements (MPSA for brevity).

While the MPSA were pending, Banahaw Mining, on December 18, 1996, decided to sell/assign its rights and interests over thirtyseven (37) mining claims in favor of private respondent Base Metals Mineral Resources Corporation (Base Metals for brevity). The transfer
included mining claims held by Banahaw Mining in its own right as claim owner, as well as those covered by its mining operating agreement
with CMMCI.
Upon being informed of the development, CMMCI, as claim owner, immediately approved the assignment made by Banahaw Mining
in favor of private respondent Base Metals, thereby recognizing private respondent Base Metals as the new operator of its claims.

On March 10, 1997, private respondent Base Metals amended Banahaw Minings pending MPSA applications with the Bureau of
Mines to substitute itself as applicant and to submit additional documents in support of the application. Area clearances from the DENR
Regional Director and Superintendent of the Agusan Marsh and Wildlife Sanctuary were submitted, as required.

On October 7, 1997, private respondent Base Metals amended MPSA applications were published in accordance with the
requirements of the Mining Act of 1995.

On November 18, 1997, petitioner PICOP filed with the Mines Geo-Sciences Bureau (MGB), Caraga Regional Office No. XIII an
Adverse Claim and/or Opposition to private respondent Base Metals application on the following grounds:

I.

THE APPROVAL OF THE APPLICATION AND ISSUANCE OF THE MPSA OF BASE METALS WILL VIOLATE THE
CONSTITUTIONAL MANDATE AGAINST IMPAIRMENT OF OBLIGATION IN A CONTRACT.

II.

THE APPROVAL OF THE APPLICATION WILL DEFEAT THE RIGHTS OF THE HEREIN ADVERSE CLAIMANT AND/OR
OPPOSITOR.

In its Answer to the Adverse Claim and/or Opposition, private respondent Base Metals alleged that:

a)

b)

c)

the Adverse Claim was filed out of time;

petitioner PICOP has no rights over the mineral resources on their concession area. PICOP is asserting a privilege which is
not protected by the non-impairment clause of the Constitution;

the grant of the MPSA will not impair the rights of PICOP nor create confusion, chaos or conflict.

Petitioner PICOPs Reply to the Answer alleged that:

a)

the Adverse Claim was filed within the reglementary period;

b)

the grant of MPSA will impair the existing rights of petitioner PICOP;

c)

the MOA between PICOP and Banahaw Mining provides for recognition by Banahaw Mining of the Presidential Warranty
awarded in favor of PICOP for the exclusive possession and enjoyment of said areas.

As a Rejoinder, private respondent Base Metals stated that:

1.

2.

it is seeking the right to extract the mineral resources in the applied areas. It is not applying for any right to the forest
resources within the concession areas of PICOP;

timber or forest lands are open to Mining Applications;

3.

the grant of the MPSA will not violate the so called presidential fiat;

4.

the MPSA application of Base Metals does not require the consent of PICOP; and

5.

it signified its willingness to enter into a voluntary agreement with PICOP on the matter of compensation for damages. In the
absence of such agreement, the matter will be brought to the Panel of Arbitration in accordance with law.

In refutation thereto, petitioner PICOP alleged in its Rejoinder that:

a) the Adverse Claim filed thru registered mail was sent on time and as prescribed by existing mining laws and rules and
regulations;

b) the right sought by private respondent Base Metals is not absolute but is subject to existing rights, such as those which the
adverse claimant had, that have to be recognized and respected in a manner provided and prescribed by existing laws as will
be expounded fully later;

c) as a general rule, mining applications within timber or forest lands are subject to existing rights as provided in Section 18 of
RA 7942 or the Philippine Mining Act of 1995 and it is an admitted fact by the private respondent that petitioner PICOP had
forest rights as per Presidential Warranty;

d) while the Presidential Warranty did not expressly state exclusivity, P.D. 705 strengthened the right of occupation, possession
and control over the concession area;

e) the provisions of Section 19 of the Act and Section 15 of IRR expressly require the written consent of the forest right holder,
PICOP.

After the submission of their respective position paper, the Panel Arbitrator issued an Order dated December 21, 1998,
the dispositive portion of which reads as:

WHEREFORE, premises considered, Mineral Production Sharing Agreement Application Nos. (XIII) 010, 011, 012 of Base
Metal Resources Corporation should be set aside.

The disapproval of private respondent Base Metals MPSA was due to the following reasons:

Anent the first issue the Panel find (sic) and so hold (sic) that the adverse claim was filed on time, it being mailed
on November 19, 1997, at Metro Manila as evidenced by Registry Receipt No. 26714. Under the law (sic) the date of mailing
is considered the date of filing.

As to whether or not an MPSA application can be granted on area subject of an IFMA [3] or PTLA[4] which is covered by a
Presidential Warranty, the panel believes it can not, unless the grantee consents thereto. Without the grantees consent, the
area is considered closed to mining location (sec. 19) (b) (No. 2), DAO No. 96-40). The Panel believe (sic) that mining
location in forest or timberland is allowed only if such forest or timberland is not leased by the government to a qualified
person or entity. If it is leased the consent of the lessor is necessary, in addition to the area clearance to be issued by the
agency concerned before it is subjected to mining operation.

Plantation is considered closed to mining locations because it is off tangent to mining. Both are extremes. They can not exist
at the same time. The other must necessarily stop before the other operate.

On the other hand, Base Metals Mineral Resources Corporation can not insist the MPSA application as assignee of Banahaw.
PICOP did not consent to the assignment as embodied in the agreement. Neither did it ratify the Deed of Assignment.
Accordingly, it has no force and effect. Thus, for lack of consent, the MPSA must fall.

On January 11, 1999, private respondent Base Metals filed a Notice of Appeal with public respondent MAB and alleged in its Appeal
Memorandum the following arguments:

1.

2.

THE CONSENT OF PICOP IS NOT NECESSARY FOR THE APPROVAL OF BASE METALS MPSA APPLICATION.

EVEN ASSUMING SUCH CONSENT IS NECESSARY, PICOP HAD CONSENTED TO BASE METALS MPSA
APPLICATION.

In Answer thereto, petitioner PICOP alleged that:

1.

Consent is necessary for the approval of private respondents MPSA application;

2.

Provisions of Memorandum Order No. 98-03 and IFMA 35 are not applicable to the instant case;

3.

Provisions of PD 705[5] connotes exclusivity for timber license holders; and

4.

MOA between private respondents assignor and adverse claimant provided for the recognition of the latters rightful
claim over the disputed areas.

Private respondent Base Metals claimed in its Reply that:

1.

The withholding of consent by PICOP derogates the States power to supervise and control the exploration, utilization
and development of all natural resources;

2.

Memorandum Order No, 98-03, not being a statute but a mere guideline imposed by the Secretary of the Department of
Environment and Natural Resources (DENR), can be applied retroactively to MPSA applications which have not yet been
finally resolved;

3.

Even assuming that the consent of adverse claimant is necessary for the approval of Base Metals application (which is
denied), such consent had already been given; and

4.

The Memorandum of Agreement between adverse claimant and Banahaw Mining proves that the Agusan-Surigao area
had been used in the past both for logging and mining operations.

After the filing of petitioner PICOPs Reply Memorandum, public respondent rendered the assailed decision setting aside the Panel
Arbitrators order. Accordingly, private respondent Base Metals MPSAs were reinstated and given due course subject to compliance with the
pertinent requirements of the existing rules and regulations. [6]

The Court of Appeals upheld the decision of the MAB, ruling that the Presidential Warranty of September 25, 1968 issued by then President Ferdinand
E. Marcos merely confirmed the timber license granted to PICOP and warranted the latters peaceful and adequate possession and enjoyment of its
concession areas. It was only given upon the request of the Board of Investments to establish the boundaries of PICOPs timber license agreement. The
Presidential Warranty did not convert PICOPs timber license into a contract because it did not create any obligation on the part of the government in favor of
PICOP. Thus, the non-impairment clause finds no application.

Neither did the Presidential Warranty grant PICOP the exclusive possession, occupation and exploration of the concession areas covered. If that were
so, the government would have effectively surrendered its police power to control and supervise the exploration, development and utilization of the countrys
natural resources.

On PICOPs contention that its consent is necessary for the grant of Base Metals MPSA, the appellate court ruled that the amendment to PTLA No. 47
refers to the grant of gratuitous permits, which the MPSA subject of this case is not. Further, the amendment pertains to the cutting and extraction of timber for
mining purposes and not to the act of mining itself, the intention of the amendment being to protect the timber found in PICOPs concession areas.

The Court of Appeals noted that the reinstatement of the MPSA does not ipso facto revoke, amend, rescind or impair PICOPs timber license. Base
Metals still has to comply with the requirements for the grant of a mining permit. The fact, however, that Base Metals had already secured the necessary Area
Status and Clearance from the DENR means that the areas applied for are not closed to mining operations.

In its Resolution[7] dated May 5, 2004, the appellate court denied PICOPs Motion for Reconsideration. It ruled that PICOP failed to substantiate its
allegation that the area applied for is a forest reserve and is therefore closed to mining operations because it did not identify the particular law which set aside
the contested area as one where mining is prohibited pursuant to applicable laws.

The case is now before us for review.

In its Memorandum[8] dated April 6, 2005, PICOP presents the following issues: (1) the 2,756 hectares subject of Base Metals MPSA are closed to
mining operations except upon PICOPs written consent pursuant to existing laws, rules and regulations and by virtue of the Presidential Warranty; (2) its
Presidential Warranty is protected by the non-impairment clause of the Constitution; and (3) it does not raise new issues in its petition.

PICOP asserts that its concession areas are closed to mining operations as these are within the Agusan-Surigao-Davao forest reserve established
under Proclamation No. 369 of then Gov. Gen. Dwight Davis. The area is allegedly also part of permanent forest established under Republic Act No. 3092 (RA
3092),[9] and overlaps the wilderness area where mining applications are expressly prohibited under RA 7586. [10] Hence, the area is closed to mining
operations under Sec. 19(f) of RA 7942.[11]

PICOP further asserts that to allow mining over a forest or forest reserve would allegedly be tantamount to changing the classification of the land from
forest to mineral land in violation of Sec. 4, Art. XII of the Constitution and Sec. 1 of RA 3092.

According to PICOP, in 1962 and 1963, blocks A, B and C within the Agusan-Surigao-Davao forest reserve under Proclamation No. 369 were
surveyed as permanent forest blocks in accordance with RA 3092. These areas cover PICOPs PTLA No. 47, part of which later became IFMA No. 35. In turn,
the areas set aside as wilderness as in PTLA No. 47 became the initial components of the NIPAS under Sec. 5(a) of RA 7586. When RA 7942 was signed into
law, the areas covered by the NIPAS were expressly determined as areas where mineral agreements or financial or technical assistance agreement
applications shall not be allowed. PICOP concludes that since there is no evidence that the permanent forest areas within PTLA No. 47 and IFMA No. 35 have
been set aside for mining purposes, the MAB and the Court of Appeals gravely erred in reinstating Base Metals MPSA and, in effect, allowing mining
exploration and mining-related activities in the protected areas.

PICOP further argues that under DENR Administrative Order (DAO) No. 96-40 implementing RA 7942, an exploration permit must be secured before
mining operations in government reservations may be undertaken. There being no exploration permit issued to Banahaw Mining or appended to its MPSA, the
MAB and the Court of Appeals should not have reinstated its application.

PICOP brings to the Courts attention the case of PICOP Resources, Inc. v. Hon. Heherson T. Alvarez,[12] wherein the Court of Appeals ruled that the
Presidential Warranty issued to PICOP for its TLA No. 43 dated July 29, 1969, a TLA distinct from PTLA No. 47 involved in this case, is a valid contract
involving mutual prestations on the part of the Government and PICOP.

The Presidential Warranty in this case is allegedly not a mere confirmation of PICOPs timber license but a commitment on the part of the Government
that in consideration of PICOPs investment in the wood-processing business, the Government will assure the availability of the supply of raw materials at
levels adequate to meet projected utilization requirements. The guarantee that PICOP will have peaceful and adequate possession and enjoyment of its
concession areas is impaired by the reinstatement of Base Metals MPSA in that the latters mining activities underneath the area in dispute will surely
undermine PICOPs supply of raw materials on the surface.

Base Metals obtention of area status and clearance from the DENR is allegedly immaterial, even misleading. The findings of the DENR
Regional Disrector and the superintendent of the Agusan Marsh and Wildlife Sanctuary are allegedly misplaced because the area applied for is not inside
the Agusan Marsh but in a permanent forest.Moreover, the remarks in the area status itself should have been considered by the MAB and the appellate court
as they point out that the application encroaches on surveyed timberland projects declared as permanent forests/forest reserves.

Finally, PICOP insists that it has always maintained that the forest areas of PTLA No. 47 and IFMA No. 35 are closed to mining operations. The
grounds relied upon in this petition are thus not new issues but merely amplifications, clarifications and detailed expositions of the relevant constitutional
provisions and statutes regulating the use and preservation of forest reserves, permanent forest, and protected wilderness areas given that the areas subject
of the MPSA are within and overlap PICOPs PTLA No. 47 and IFMA No. 35 which have been classified and blocked not only as permanent forest but also as
protected wilderness area forming an integral part of the Agusan-Davao-SurigaoForest Reserve.

In its undated Memorandum,[13] Base Metals contends that PICOP never made any reference to land classification or the exclusion of the contested
area from exploration and mining activities except in the motion for reconsideration it filed with the Court of Appeals. PICOPs object to the MPSA was allegedly
based exclusively on the ground that the application, if allowed to proceed, would constitute a violation of the constitutional proscription against impairment of
the obligation of contracts. It was upon this issue that the appellate court hinged its Decision in favor of Base Metals, ruling that the Presidential Warranty
merely confirmed PICOPs timber license. The instant petition, which raises new issues and invokes RA 3092 and RA 7586, is an unwarranted departure from
the settled rule that only issues raised in the proceedings a quo may be elevated on appeal.

Base Metals notes that RA 7586 expressly requires that there be a prior presidential decree, presidential proclamation, or executive order issued by
the President of thePhilippines, expressly proclaiming, designating, and setting aside the wilderness area before the same may be considered part of the
NIPAS as a protected area. Allegedly, PICOP has not shown that such an express presidential proclamation exists setting aside the subject area as a forest
reserve, and excluding the same from the commerce of man.

PICOP also allegedly misquoted Sec. 19 of RA 7942 by placing a comma between the words watershed and forest thereby giving an altogether
different and misleading interpretation of the cited provision. The cited provision, in fact, states that for an area to be closed to mining applications, the same
must be a watershed forest reserve duly identified and proclaimed by the President of the Philippines. In this case, no presidential proclamation exists setting
aside the contested area as such.

Moreover, the Memorandum of Agreement between Banahaw Mining and PICOP is allegedly a clear and tacit recognition by the latter that the area is
open and available for mining activities and that Banahaw Mining has a right to enter and explore the areas covered by its mining claims.

Base Metals reiterates that the non-impairment clause is a limit on the exercise of legislative power and not of judicial or quasi-judicial power. The
Constitution prohibits the passage of a law which enlarges, abridges or in any manner changes the intention of the contracting parties. The decision of the
MAB and the Court of Appeals are not legislative acts within the purview of the constitutional proscription. Besides, the Presidential Warranty is not a contract
that may be impaired by the reinstatement of the MPSA.It is a mere confirmation of PICOPs timber license and draws its life from PTLA No. 47. Furthermore,
PICOP fails to show how the reinstatement of the MPSA will impair its timber license.

Following the regalian doctrine, Base Metals avers that the State may opt to enter into contractual arrangements for the exploration, development, and
extraction of minerals even it the same should mean amending, revising, or even revoking PICOPs timber license. To require the State to secure PICOPs prior
consent before it can enter into such contracts allegedly constitutes an undue delegation of sovereign power.

Base Metals further notes that Presidential Decree No. 705 (PD 705), under which PTLA No. 47, IFMA No. 35 and the Presidential Warranty were
issued, requires notice to PICOP rather than consent before any mining activity can be commenced in the latters concession areas.

The Office of the Solicitor General (OSG) filed a Memorandum [14] dated April 21, 2005 on behalf of the MAB, contending that PICOPs attempt to raise
new issues, such as its argument that the contested area is classified as a permanent forest and hence, closed to mining activities, is offensive to due process
and should not be allowed.

The OSG argues that a timber license is not a contract within the purview of the due process and non-impairment clauses. The Presidential Warranty
merely guarantees PICOPs tenure over its concession area and covers only the right to cut, collect and remove timber therein. It is a mere collateral
undertaking and cannot amplify PICOPs rights under its PTLA No. 47 and IFMA No. 35. To hold that the Presidential Warranty is a contract separate
from PICOPs timber license effectively gives the latter PICOP an exclusive, perpetual and irrevocable right over its concession area and impairs the States
sovereign exercise of its power over the exploration, development, and utilization of natural resources.

The case of PICOP Resources, Inc. v. Hon. Heherson T. Alvarez, supra, cited by PICOP cannot be relied upon to buttress the latters claim that a
presidential warranty is a valid and subsisting contract between PICOP and the Government because the decision of the appellate court in that case is still
pending review before the Courts Second Division.

The OSG further asserts that mining operations are legally permissible over PICOPs concession areas. Allegedly, what is closed to mining
applications under RA 7942 are areas proclaimed as watershed forest reserves. The law does not totally prohibit mining operations over forest reserves. On
the contrary, Sec. 18 of RA 7942 permits mining over forest lands subject to existing rights and reservations, and PD 705 allows mining over forest lands and
forest reservations subject to State regulation and mining laws. Sec. 19(a) of RA 7942 also provides that mineral activities may be allowed even over military
and other government reservations as long as there is a prior written clearance by the government agency concerned.

The area status clearances obtained by Base Metals also allegedly show that the area covered by the MPSA is within timberland, unclassified public
forest, and alienable and disposable land. Moreover, PICOP allegedly chose to cite portions of Apex Mining Corporation v. Garcia, [15] to make it appear that the
Court in that case ruled that mining is absolutely prohibited in the Agusan-Surigao-Davao Forest Reserve. In fact, the Court held that the area is not open to
mining location because the proper procedure is to file an application for a permit to prospect with the Bureau of Forest and Development.

In addition, PICOPs claimed wilderness area has not been designated as a protected area that would operate to bar mining operations therein. PICOP
failed to prove that the alleged wilderness area has been designated as an initial component of the NIPAS pursuant to a law, presidential decree, presidential
proclamation or executive order. Hence, it cannot correctly claim that the same falls within the coverage of the restrictive provisions of RA 7586.

The OSG points out that the Administrative Code of 1917 which RA 3092 amended has been completely repealed by the Administrative Code of
1978. Sec. 4, Art. XII of the 1987 Constitution, on the other hand, provides that Congress shall determine the specific limits of forest lands and national parks,
marking clearly their boundaries on the ground. Once this is done, the area thus covered by said forest lands and national parks may not be expanded or
reduced except also by congressional legislation. Since Congress has yet to enact a law determining the specific limits of the forest lands covered by
Proclamation No. 369 and marking clearly its boundaries on the ground, there can be no occasion that could give rise to a violation of the constitutional
provision.

Moreover, Clauses 10 and 14 of PICOPs IFMA No. 35 specifically provides that the area covered by the agreement is open for mining if public interest
so requires. Likewise, PTLA No. 47 provides that the area covered by the license agreement may be opened for mining purposes.

Finally, the OSG maintains that pursuant to the States policy of multiple land use, R.A. No. 7942 provides for appropriate measures for a harmonized
utilization of the forest resources and compensation for whatever damage done to the property of the surface owner or concessionaire as a consequence of
mining operations. Multiple land use is best demonstrated by the Memorandum of Agreement between PICOP and Banahaw Mining.

First, the procedural question of whether PICOP is raising new issues in the instant petition. It is the contention of the OSG and Base Metals
that PICOPs argument that the area covered by the MPSA is classified as permanent forest and therefore closed to mining activities was raised for the first
time in PICOPs motion for reconsideration with the Court of Appeals.

Our own perusal of the records of this case reveals that this is not entirely true.

In its Adverse Claim and/or Opposition[16] dated November 19, 1997 filed with the MGB Panel of Arbitrators, PICOP already raised the argument that
the area applied for by Base Metals is classified as a permanent forest determined to be needed for forest purposes pursuant to par. 6, Sec. 3 of PD 705, as
amended. PICOP then proceeded to claim that the area should remain forest land if the purpose of the presidential fiat were to be followed. It stated:

Technically, the areas applied for by Base Metals are classified as a permanent forest being land of the public domain determined to
be needed for forest purposes (Paragraph 6, Section 3 of Presidential Decree No. 705, as amended) If these areas then are classified and
determined to be needed for forest purpose then they should be developed and should remain as forest lands. Identifying, delineating and
declaring them for other use or uses defeats the purpose of the aforecited presidential fiats. Again, if these areas would be delineated
from Oppositors forest concession, the forest therein would be destroyed and be lost beyond recovery.[17]

Base Metals met this argument head on in its Answer [18] dated December 1, 1997, in which it contended that PD 705 does not exclude mining
operations in forest lands but merely requires that there be proper notice to the licensees of the area.

Again in its Petition[19] dated January 25, 2003 assailing the reinstatement of Base Metals MPSA, PICOP argued that RA 7942 expressly prohibits
mining operations in plantation areas such as PICOPs concession area. Hence, it posited that the MGB Panel of Arbitrators did not commit grave abuse of
discretion when it ruled that without PICOPsconsent, the area is closed to mining location.

It is true though that PICOP expounded on the applicability of RA 3092, RA 7586, and RA 7942 for the first time in its motion for reconsideration of the
appellate courts Decision. It was only in its motion for reconsideration that PICOP argued that the area covered by PTLA No. 47 and IFMA No. 35 are
permanent forest lands covered by RA 7586 which cannot be entered for mining purposes, and shall remain indefinitely as such for forest uses and cannot be
excluded or diverted for other uses except after reclassification through a law enacted by Congress.

Even so, we hold that that the so-called new issues raised by PICOP are well within the issues framed by the parties in the proceedings a quo. Thus,
they are not, strictly speaking, being raised for the first time on appeal. [20] Besides, Base Metals and the OSG have been given ample opportunity, by way of
the pleadings filed with this Court, to respond to PICOPs arguments. It is in the best interest of justice that we settle the crucial question of whether the
concession area in dispute is open to mining activities.

We should state at this juncture that the policy of multiple land use is enshrined in our laws towards the end that the countrys natural resources may
be rationally explored, developed, utilized and conserved. The Whereas clauses and declaration of policies of PD 705 state:

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 utilization thereof to optimize the benefits that can be derived therefrom;
Sec. 2. Policies.The State hereby adopts the following policies:

a)

The multiple uses of forest lands shall be oriented to the development and progress requirements of the country, the
advancement of science and technology, and the public welfare;

In like manner, RA 7942, recognizing the equiponderance between mining and timber rights, gives a mining contractor the right to enter a timber
concession and cut timber therein provided that the surface owner or concessionaire shall be properly compensated for any damage done to the property as a
consequence of mining operations. The pertinent provisions on auxiliary mining rights state:

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 areas as may be necessary for his mining operations subject to forestry laws, rules and regulations: Provided, That if the
land covered by the mining area is already covered by existing 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 concessionair/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 Secretary whose decision shall be final. The
contractor shall perform reforestation work within his mining area in accordance with forestry laws, rules and regulations.

Sec. 76. Entry into Private Lands and Concession Areas.Subject to prior notification, 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 surface owner, occupant, or concessionaire as a consequence of such
operations shall be properly compensated as may be provided for in the implementing rules and regulations: 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 regional director.

With the foregoing predicates, we shall now proceed to analyze PICOPs averments.

PICOP contends that its concession area is within the Agusan-Surigao-Davao Forest Reserve established under Proclamation No. 369 and is closed
to mining application citing several paragraphs of Sec. 19 of RA 7942.

The cited provision states:

Sec. 19 Areas Closed to Mining Applications.Mineral agreement or financial or technical assistance agreement applications shall not
be allowed:

(a) In military and other government reservations, except upon prior written clearance by the government agency concerned;
(d) In areas expressly prohibited by law;
(f) Old growth or virgin forests, proclaimed watershed forest reserves, wilderness areas, mangrove forests, mossy forests,
national parks, provincial/municipal forests, parks, greenbelts, game refuge and bird sanctuaries as defined by law in areas expressly
prohibited under the National Ingrated Protected Areas System (NIPAS) under Republic Act No. 7586, Department Administrative Order No.
25, series of 1992 and other laws. [emphasis supplied]

We analyzed each of the categories under which PICOP claims that its concession area is closed to mining activities and conclude
that PICOPs contention must fail.

Firstly, assuming that the area covered by Base Metals MPSA is a government reservation, defined as proclaimed reserved lands for specific
purposes other than mineral reservations,[21] such does not necessarily preclude mining activities in the area. Sec. 15(b) of DAO 96-40 provides that
government reservations may be opened for mining applications upon prior written clearance by the government agency having jurisdiction over such
reservation.

Sec. 6 of RA 7942 also provides that mining operations in reserved lands other than mineral reservations may be undertaken by the DENR, subject to
certain limitations. It provides:

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 regulations 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 recommended by the Director and approved
by the Secretary: Provided,That the party who undertook the exploration of said reservations shall be given priority. The mineral land so
awarded shall be automatically excluded from the reservation during the term of 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.

Secondly, RA 7942 does not disallow mining applications in all forest reserves but only those proclaimed as watershed forest reserves. There is no
evidence in this case that the area covered by Base Metals MPSA has been proclaimed as watershed forest reserves.

Even granting that the area covered by the MPSA is part of the Agusan-Davao-Surigao Forest Reserve, such does not necessarily signify that the
area is absolutely closed to mining activities. Contrary to PICOPs obvious misreading of our decision in Apex Mining Co., Inc. v. Garcia, supra, to the effect
that mineral agreements are not allowed in the forest reserve established under Proclamation 369, the Court in that case actually ruled that pursuant to PD
463 as amended by PD 1385, one can acquire mining rights within forest reserves, such as the Agusan-Davao-Surigao Forest Reserve, by initially applying
for a permit to prospect with the Bureau of Forest and Development and subsequently for a permit to explore with the Bureau of Mines and Geosciences.

Moreover, Sec. 18 RA 7942 allows mining even in timberland or forestty subject to existing rights and reservations. It provides:

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 private 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.

Similarly, Sec. 47 of PD 705 permits mining operations in forest lands which include the public forest, the permanent forest or forest reserves, and
forest reservations.[22]It states:

Sec. 47. Mining Operations.Mining operations in forest lands shall be regulated 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 location, prospecting, exploration, utilization, or exploitation of
mineral resources inside forest concessions shall be allowed unless proper notice has been served upon the licensees thereof and the prior
approval of the Director, secured.

Significantly, the above-quoted provision does not require that the consent of existing licensees be obtained but that they be notified before mining activities
may be commenced inside forest concessions.
DENR Memorandum Order No. 03-98, which provides the guidelines in the issuance of area status and clearance or consent for mining applications
pursuant to RA 7942, provides that timber or forest lands, military and other government reservations, forest reservations, forest reserves other than critical
watershed forest reserves, and existing DENR Project Areas within timber or forest lands, reservations and reserves, among others, are open to mining
applications subject to area status and clearance.

To this end, area status clearances or land status certifications have been issued to Base Metals relative to its mining right application, to wit:

II.

MPSA No. 010

1.
2.

III.

Portion colored green is the area covered by the aforestated Timberland Project No. 31-E, Block A and Project No. 59-C, Block A,
L.C. Map No. 2466 certified as such on June 30, 1961; and
Shaded brown represent CADC claim.[23]

MPSA No. 011

1.

The area applied covers the Timberland, portion of Project No. 31-E, Block-E, L.C. Map No. 2468 and Project No. 36-A Block II,
Alienable and Disposable Land, L.C. Map No. 1822, certified as such on June 30, 1961 and January 1, 1955, respectively;

2.

The green shade is the remaining portion of Timber Land Project;

3.

The portion colored brown is an applied and CADC areas;

4.

Red shade denotes alienable and disposable land.[24]

IV.

MPSA No. 012

Respectfully returned herewith is the folder of Base Metals Mineral Resources Corporation, applied under Mineral Production Sharing
Agreement (MPSA (XIII) 012), referred to this office per memorandum dated August 5, 1997 for Land status certification and the findings
based on available references file this office, the site is within the unclassified Public Forest of the LGU, Rosario, Agusan del Sur. The
shaded portion is the wilderness area of PICOP Resources Incorporated (PRI), Timber License Agreement. [25]

V.

MPSA No. 013

1.

The area status shaded green falls within Timber Land, portion of Project No. 31-E, Block-A, Project No. 59-C, Block-A, L.C. Map
No. 2468 certified as such on June 30, 1961;

2.

Colored brown denotes a portion claimed as CADC areas;

3.

Violet shade represent a part of reforestation project of PRI concession; and

4.

The yellow color is identical to unclassified Public Forest of said LGU and the area inclosed in Red is the wilderness area of PICOP
Resources, Inc. (PRI), Timber License Agreement.[26]

Thirdly, PICOP failed to present any evidence that the area covered by the MPSA is a protected wilderness area designated as an initial component of the
NIPAS pursuant to a law, presidential decree, presidential proclamation or executive order as required by RA 7586.

Sec. 5(a) of RA 7586 provides:

Sec. 5. Establishment and Extent of the System.The establishment and operationalization of the System shall involve the following:

(a) All areas or islands in the Philippines proclaimed, designated or set aside, pursuant to a law, presidential decree,
presidential proclamation or executive order as national park, game refuge, bird and wildlife sanctuary, wilderness area, strict nature
reserve, watershed, mangrove reserve, fish sanctuary, natural and historical landmark, protected and managed landscape/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.

Although the above-cited area status and clearances, particularly those pertaining to MPSA Nos. 012 and 013, state that portions thereof are within
the wilderness area of PICOP, there is no showing that this supposed wilderness area has been proclaimed, designated or set aside as such, pursuant to a
law, presidential decree, presidential proclamation or executive order. It should be emphasized that it is only when this area has been so designated that Sec.
20 of RA 7586, which prohibits mineral locating within protected areas, becomes operational.

From the foregoing, there is clearly no merit to PICOPs contention that the area covered by Base Metals MPSA is, by law, closed to mining activities.

Finally, we do not subscribe to PICOPs argument that the Presidential Warranty dated September 25, 1968 is a contract protected by the non-impairment
clause of the 1987 Constitution.

An examination of the Presidential Warranty at once reveals that it simply reassures PICOP of the governments commitment to uphold the terms and
conditions of its timber license and guarantees PICOPs peaceful and adequate possession and enjoyment of the areas which are the basic sources of raw
materials for its wood processing complex. The warranty covers only the right to cut, collect, and remove timber in its concession area, and does not extend to
the utilization of other resources, such as mineral resources, occurring within the concession.

The Presidential Warranty cannot be considered a contract distinct from PTLA No. 47 and IFMA No. 35. We agree with the OSGs position that it is merely a
collateral undertaking which cannot amplify PICOPs rights under its timber license. Our definitive ruling in Oposa v. Factoran[27] that a timber license is not a
contract within the purview of the non-impairment clause is edifying. We declared:

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 vs. Director of Forestry, this Court held:

x x x 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 a 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 a property or a property right, nor does it create a
vested right; nor is it taxation (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 vs. Ong Tin, 54 O.G. 7576). x x x

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary:

x x x 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(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L24548, 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.

cannot be invoked.[28] [emphasis supplied]

The Presidential Warranty cannot, in any manner, be construed as a contractual undertaking assuring PICOP of exclusive possession and enjoyment
of its concession areas.Such an interpretation would result in the complete abdication by the State in favor of PICOP of the sovereign power to control and
supervise the exploration, development and utilization of the natural resources in the area.

In closing, we should lay emphasis on the fact that the reinstatement of Base Metals MPSA does not automatically result in its approval. Base Metals
still has to comply with the requirements outlined in DAO 96-40, including the publication/posting/radio announcement of its mineral agreement application.

IN VIEW OF THE FOREGOING, the instant petition is DENIED. The Decision of the Court of Appeals November 28, 2003 is AFFIRMED. No
pronouncement as to costs.

SO ORDERED.

16. Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 160932

January 14, 2013

SPECIAL PEOPLE, INC. FOUNDATION, REPRESENTED BY ITS CHAIRMAN, ROBERTO P. CERICOS,Petitioner,

vs.
NESTOR M. CANDA, BIENVENIDO LIPA YON, JULIAN D. AMADOR, BOHOL PROVINCIAL CHIEF, REGIONAL DIRECTOR, AND NATIONAL
DIRECTOR, RESPECTIVELY, ENVIRONMENTAL MANAGEMENT BUREAU, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, AND
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, ALL SUED IN BOTH THEIR OFFICIAL AND PRIVATE
CAPACITIES, Respondents.
DECISION
BERSAMIN, J.:
The peremptory writ of mandamus is an extraordinary remedy that is issued only in extreme necessity, and the ordinary course of procedure is powerless to
afford an adequate and speedy relief to one who has a clear legal right to the performance of the act to be compelled.
Antecedents

The petitioner was a proponent of a water-resource development and utilization project in Barangay Jimilia-an in the Municipality of Loboc, Bohol that would
involve the tapping and purifying of water from the Loboc River, and the distribution of the purified water to the residents of Loboc and six other municipalities.
The petitioner applied for a Certificate of Non-Coverage (CNC) with the Environmental Management Bureau (EMB) of the Department of Environment and
Natural Resources (DENR), Region 7, seeking to be exempt from the requirement of the Environmental Compliance Certificate (ECC) under Section 4 of
Presidential Decree No. 1586 on the following justifications, to wit:
1) The whole project simply involves tapping of water from the Loboc River, filtering and purifying it, and distributing the same to the consumers in the
covered towns;
2) From the source to the filtration plant, then to the purifier stations, then finally to the consumers households, water flows through steel pipes;
3) The filtration and purifying process employs the latest technology"electrocatalytic"internationally accepted for safety and environment
friendliness;
4) No waste is generated, as the electrocatalytic process dissolves all impurities in the water;
5) The project involves no destruction [n]or harm to the environment. On the other hand, it is environment friendly. 1
Upon evaluating the nature and magnitude of the environmental impact of the project, respondent Nestor M. Canda, then Chief of EMB in Bohol, rendered his
findings in a letter dated December 4, 2001, as follows:
1) The project is located within a critical area; hence, Initial Environmental Examination is required.
2) The project is socially and politically sensitive therefore proof of social acceptability should be established. Proper indorsement from the Protected
Area Management Bureau or PAMB should be secured. 2 (Emphasis supplied)
On January 11, 2002, the petitioner appealed Candas findings to respondent EMB Region 7 Director Bienvenido L. Lipayon (RD Lipayon), claiming that it
should also be issued a CNC because the project was no different from the Loboc-Loay waterworks project of the Department of Public Works and Highways
(DPWH) that had recently been issued a CNC. 3
On April 3, 2002, RD Lipayon notified the petitioner that its documents substantially complied with the procedural aspects of the EMBs review, and that the
application was assigned EMB-DENR-7 Control No. CNC-02-080 for easy reference in case of follow-up and submission of additional requirements. 4
Later on, RD Lipayon informed the petitioner that an Initial Environmental Examination document was required for the project due to its significant impact in
the area.5
On August 26, 2002, RD Lipayon required the petitioner to submit the following documents to enable the EMB to determine whether the project was within an
environmentally critical area or not, to wit:
1. Certification from DENR, Provincial Environment and Natural Resources Office (PENRO) that it is not within areas declared by law as national
parks, watershed reserves, wildlife preservation area, sanctuaries and not within the purview of Republic Act No. 7586 or the National Integrated
Protected Areas System (NIPAS) Act, and other issuances including international commitments and declarations;
2. Certification from the DENR Regional Office/ PENRO [that] the areas within the project do not constitute the habitat for any endangered or
threatened species or indigenous wildlife (Flora and Fauna).
3. Certification from the following:

3.1. Philippine Atmospheric Geophysical and Astronomical Services Administration (PAGASA) that the area is not frequently visited or hard-hit
by typhoons. This shall refer to all areas where typhoon signal no. 3 not hoisted for at least twice a year during the last five (5) years prior to
the year of reckoning. Years to be considered shall be from January 1995 to December 2001.
3.2. Philippine Institute of Volcanology and Seismology (PHIVOLCS) that the area was not subjected to an earthquake of at least intensity VII
in the Rossi-Forel scale or its equivalent and hit by tsunamis during the period of 1638 until the year 2001.
3.3. PHIVOLCS that the area was not subjected to earthquakes of at least intensity VII in the Rossi-Forel scale or its equivalent during the
period of 1949 until the year 2001.
3.4. PAGASA that the area is not storm surge-prone.
3.5. Mines and Geosciences Bureau Region 7 (MGB 7) that the area is not located along fault lines or within fault zones and not located in
critical slope.
3.6. City Mayor and/or City Engineers Office that the area is not flood prone.
3.7. Network of Protected Areas for Agriculture (NPAA) of the Bureau of Soils and Water Management (BSWM) that the area is not classified
as Prime Agricultural Land.
4. Certification from the Provincial Tourism Office or its equivalent office that areas in your project are not set-aside as aesthetic potential tourist spot.
5. Certification from the National Water Resources Board (NWRB) that areas within your project are not recharged areas of aquifer.
6. Certification from DENR regional Office and/or Environmental Management Bureau 7 (EMB 7) that Loboc River is not characterized by one or any
combination of the following conditions:
a. Tapped for domestic purposes;
b. With controlled and/or protected areas declared by appropriate authorities; and
c. Which support wildlife and fishery activities.
A Certificate of Non-Coverage will duly be issued to your foundation once all the above mentioned required certifications are complied with.
Projects that are covered by P.D. 1586 or the Environmental Impact System (EIS) Law should not start unless the Project Proponent should secure an
Environmental Compliance Certificate (ECC), otherwise penalties shall be imposed. 6 (Emphases supplied)
On January 28, 2003, the petitioner submitted eight certifications, 7 including the certification issued by the Philippine Institute of Volcanology and Seismology
(PHIVOLCS), as follows:
That the project area, Loboc, Bohol was subjected to an earthquake of Intensity VII in the adapted Rossi-Forel scale of I-IX last February 8, 1990. The
magnitude of the earthquake is 6.8 and the highest intensity reported was VIII, based on the Rossi-Forel Intensity Scale. During the said earthquake, the PMI
Academy Building collapsed while minor cracks were sustained by the municipal hall, public school, town church and some other houses in the town. There
were reports that immediately after the earthquake, the force of the incoming waves from the sea caused Alijuan River in the town of Duero to flow inland. The
report also states that the waves affected 10-50 meters of the coastal beach of the towns of Jagna, Duero, Guindulman, Garcia Hernandez and
Valencia.8(Emphases supplied)

The petitioner failed to secure a certification from the Regional Office of the Mines and Geosciences Bureau (RO-MGB) to the effect that the project area was
not located along a fault line/fault zone or a critical slope because RO-MGB did not have the data and expertise to render such finding, and thus had to
forward the petitioners request to the MGB Central Office. 9
Upon the MGBs advice, the petitioner sought and obtained the required certification from PHIVOLCS, but the certification did not state whether the project
area was within a critical slope. Instead, the certification stated that the project site was approximately 18 kilometers west of the East Bohol Fault. 10
Given the tenor of the certification from PHIVOLCS, RD Lipayons letter dated February 4, 2003 declared that the project was within an environmentally critical
area, and that the petitioner was not entitled to the CNC, viz:
After thorough review of your submitted certifications, it was found out that the area was subjected to an earthquake of Intensity VII in the adapted Rossi-Forel
scale wherein the magnitude of the earthquake is 6.8 with the highest intensity reported of VIII and you fail to support certification that the project area is not
within critical slope. And based on the Water Usage and Classification per Department Order (DAO) 34 Series of 1990, subject river system was officially
classified as Class B intended for swimming and bathing purposes. Moreover, one component of your project involves opening of roadway connected to the
barangay road.
Therefore, we reiterate our previous stand that your project is covered by the EIS System pursuant to P.D. 1586, the Environmental Impact Statement Law. 11
On March 27, 2003, the petitioner filed a petition for mandamus and damages in the Regional Trial Court (RTC) in Loay, Bohol, 12 alleging that it was now
entitled to a CNC as a matter of right after having complied with the certification requirements; and that the EMB had earlier issued a CNC to the DPWH for a
similar waterworks project in the same area.
In the decision dated November 18, 2003,13 the RTC dismissed the petition for mandamus upon the following considerations, namely: (1) PHIVOLCS certified
that the project site had been subjected to an Intensity VII earthquake in 1990; (2) the CNC issued by the EMB to a similar waterworks project of the DPWH in
the same area was only for the construction of a unit spring box intake and pump house, and the DENR issued a cease and desist order relative to the
DPWHs additional project to put up a water filtration plant therein; (3) the determination of whether an area was environmentally critical was a task that
pertained to the EMB; (4) the assignment of a control number by the EMB to the petitioners application did not mean that the application was as good as
approved; (5) the RTC would not interfere with the primary prerogative of the EMB to review the merits of the petitioners application for the CNC; and (6) there
was already a pending appeal lodged with the DENR Secretary.
Hence, this appeal brought directly to the Court via petition for review on certiorari.
Issues
The petitioner submits the following issues:
A. WHETHER OR NOT, AFTER PETITIONERS DUE COMPLIANCE WITH THE REQUIREMENTS MANDATED BY RESPONDENTS FOR THE
ISSUANCE OF THE CERTIFICATE OF NON-COVERAGE (CNC) APPLIED FOR BY PETITIONER, IT IS NOW THE RIPENED DUTY OF
RESPONDENTS, THROUGH RESPONDENT EMB REGIONAL DIRECTOR, TO ISSUE SAID DOCUMENT IN FAVOR OF PETITIONER;
B. WHETHER OR NOT PETITIONER HAS EXHAUSTED AVAILABLE ADMINISTRATIVE REMEDIES THROUGH AN APPEAL TO RESPONDENT
DENR SECRETARY WHO HAS SAT ON SAID APPEAL UP TO THE PRESENT;
C. WHETHER OR NOT PETITIONER IS ENTITLED TO RECOVER DAMAGES FROM RESPONDENTS IN THEIR PERSONAL CAPACITY.14
The petitioner insists that RD Lipayon already exercised his discretion by finding that the application substantially complied with the procedural aspects for
review and by assigning Control No. CNC-02-080 to its application; that after the petitioner complied with the requirements enumerated in the August 26, 2002

letter of RD Lipayon, the EMB became duty-bound to issue the CNC to the petitioner; that the EMB issued a CNC to a similar project of the DPWH in the
same area; that it filed an appeal with the DENR Secretary, but the appeal remained unresolved; and that it brought the petition for mandamus precisely as a
speedier recourse.
In their comment, RD Lipayon and Canda aver that the act complained of against them involved an exercise of discretion that could not be compelled by
mandamus; that the petitioners proposed project was located within an environmentally critical area, and the activities to be done were so significant that they
would create massive earth movement and environmental degradation; that the petitioner violated the rule against forum shopping; and that the petitioner had
no cause of action against them for failure to exhaust administrative remedies.
On his part, the DENR Secretary, through the Solicitor General, contends that the petition raises questions of fact that are not proper in a petition for review;
that the petitioner should have appealed to the CA under Rule 41 of the Rules of Court; that the grant or denial of a CNC application is discretionary and
cannot be compelled by mandamus; and that the petitioner failed to exhaust administrative remedies.
Accordingly, the Court is called upon to resolve, firstly, whether the appeal directly to this Court from the RTC was proper, and, secondly, whether the petition
for mandamus was the correct recourse.
Ruling
The petition for review is denied for its lack of merit.
1.
Petitioners appeal is improper under Rule 45, Rules of Court
This appeal by certiorari is being taken under Rule 45, Rules of Court, whose Section 1 expressly requires that the petition shall raise only questions of law
which must be distinctly set forth. Yet, the petitioner hereby raises a question of fact whose resolution is decisive in this appeal. That issue of fact concerns
whether or not the petitioner established that its project was not located in an environmentally critical area. For this reason, the Court is constrained to deny
due course to the petition for review.
It is a settled rule, indeed, that in the exercise of our power of review, the Court is not a trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during the trial of the case. The Court relies on the findings of fact of the Court of Appeals or of the trial court,
and accepts such findings as conclusive and binding unless any of the following exceptions obtains, namely: (a) when the findings are grounded entirely on
speculation, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion;
(d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts are conflicting; (f) when in making its findings the Court of
Appeals or the trial court went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (g) when the
findings are contrary to the trial court; (h) when the findings are conclusions without citation of specific evidence on which they are based; (i) when the facts
set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondent; (j) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record; and (k) when the Court of Appeals or the trial court manifestly overlooked certain
relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. 15 However, none of the aforementioned exceptions
applies herein.
2.
Mandamus was an improper remedy for petitioner
We dismiss the present recourse because the petitioner failed to exhaust the available administrative remedies, and because it failed to show that it was
legally entitled to demand the performance of the act by the respondents.

It is axiomatic, to begin with, that a party who seeks the intervention of a court of law upon an administrative concern should first avail himself of all the
remedies afforded by administrative processes. The issues that an administrative agency is authorized to decide should not be summarily taken away from it
and submitted to a court of law without first giving the agency the opportunity to dispose of the issues upon due deliberation. 16 The court of law must allow the
administrative agency to carry out its functions and discharge its responsibilities within the specialized areas of its competence. 17 This rests on the theory that
the administrative authority is in a better position to resolve questions addressed to its particular expertise, and that errors committed by subordinates in their
resolution may be rectified by their superiors if given a chance to do so. 18
The records show that the petitioner failed to exhaust the available administrative remedies. At the time RD Lipayon denied the petitioners application for the
CNC, Administrative Order No. 42 dated November 2, 2002 19had just vested the authority to grant or deny applications for the ECC in the Director and
Regional Directors of the EMB. Notwithstanding the lack of a specific implementing guideline to what office the ruling of the EMB Regional Director was to be
appealed, the petitioner could have been easily guided in that regard by the Administrative Code of 1987, which provides that the Director of a line bureau,
such as the EMB,20 shall have supervision and control over all division and other units, including regional offices, under the bureau. 21 Verily, supervision and
control include the power to "review, approve, reverse or modify acts and decisions of subordinate officials or units." 22 Accordingly, the petitioner should have
appealed the EMB Regional Directors decision to the EMB Director, who exercised supervision and control over the former.
It is relevant to mention that the DENR later promulgated Administrative Order No. 2003-30 23 in order to define where appeals should be taken, providing as
follows:
Section 6. Appeal
Any party aggrieved by the final decision on the ECC/CNC applications may, within 15 days from receipt of such decision, file an appeal on the following
grounds:
a. Grave abuse of discretion on the part of the deciding authority, or
b. Serious errors in the review findings.
The DENR may adopt alternative conflict/dispute resolution procedures as a means to settle grievances between proponents and aggrieved parties to avert
unnecessary legal action. Frivolous appeals shall not be countenanced.
The proponent or any stakeholder may file an appeal to the following:
1wphi1
Deciding Authority

Where to file the appeal

EMB Regional Office Director

Office of the EMB Director

EMB Central Office Director

Office of the DENR Secretary

DENR Secretary

Office of the President

Moreover, the petitioner states in its pleadings that it had a pending appeal with the DENR Secretary.1wphi1 However, the records reveal that the subject of
the appeal of the petitioner was an undated resolution of the DENR Regional Director, Region VII, denying its application for the CNC, 24 not the decision of RD
Lipayon. Nonetheless, even assuming that the pending appeal with the DENR Secretary had related to RD Lipayons decision, the petitioner should still have
waited for the DENR Secretary to resolve the appeal in line with the principle of exhaustion of administrative remedies. Its failure to do so rendered its resort to
mandamus in the RTC premature. The omission is fatal, because mandamus is a remedy only when there is no appeal, nor any plain, speedy and adequate
remedy in the ordinary course of law.25

Another reason for denying due course to this review is that the petitioner did not establish that the grant of its application for the CNC was a purely ministerial
in nature on the part of RD Lipayon. Hence, mandamus was not a proper remedy.
The CNC is a certification issued by the EMB certifying that a project is not covered by the Environmental Impact Statement System (EIS System) and that the
project proponent is not required to secure an ECC. 26 The EIS System was established by Presidential Decree (P.D.) No. 1586 pursuant to Section 4 of P.D.
No. 1151 (Philippine Environmental Policy) that required all entities to submit an EIS for projects that would have a significant effect on the environment, thus:
Section 4. Environmental Impact Statements. Pursuant to the above enunciated policies and goals, all agencies and instrumentalities of the national
government, including government-owned or controlled corporations, as well as private corporations, firms and entities shall prepare, file and include in every
action, project or undertaking which significantly affects the quality of the environment a detailed statement on
(a) the environmental impact of the proposed action, project or undertaking
(b) any adverse environmental effect which cannot be avoided should the proposal be implemented
(c) alternative to the proposed action
(d) a determination that the short-term uses of the resources of the environment are consistent with the maintenance and enhancement of the longterm productivity of the same; and
(e) whenever a proposal involves the use of depletable or non-renewable resources, a finding must be made that such use and commitment are
warranted.
xxxx
P.D. No. 1586 exempted from the requirement of an EIS the projects and areas not declared by the President of the Philippines as environmentally
critical,27 thus:
Section 5. Environmentally Non-Critical Projects. - All other projects, undertakings and areas not declared by the Presidents as environmentally critical shall be
considered as non-critical and shall not be required to submit an environmental impact statement. The National Environmental Protection Council, thru the
Ministry of Human Settlements may however require non-critical projects and undertakings to provide additional environmental safeguards as it may deem
necessary.
On December 14, 1981, the President issued Proclamation No. 2146 declaring areas and types of projects as environmentally critical and within the scope of
the EIS System, as follows:
A. Environmentally Critical Projects
I. Heavy Industries
a. Non-ferrous metal industries
b. Iron and steel mills
c. Petroleum and petro-chemical industries including oil and gas
d. Smelting plants

II. Resource Extractive Industries

a. Major mining and quarrying projects
b. Forestry projects
1. Logging
2. Major wood processing projects
3. Introduction of fauna (exotic-animals) in public/private forests
4. Forest occupancy
5. Extraction of mangrove products
6. Grazing
c. Fishery Projects
1. Dikes for fishpond development projects
III. Infrastructure Projects
a. Major dams
b. Major power plants (fossil-fueled, nuclear fueled, hydroelectric or geothermal)
c. Major reclamation projects
d. Major roads and bridges.
B. Environmentally Critical Areas
1. All areas declared by law as national parks, watershed reserves, wildlife preserves and sanctuaries;
2. Areas set aside as aesthetic potential tourist spots;
3. Areas which constitute the habitat for any endangered or threatened species of indigenous Philippine Wildlife (flora and fauna);
4. Areas of unique historic, archaeological, or scientific interests;
5. Areas which are traditionally occupied by cultural communities or tribes;
6. Areas frequently visited and/or hard-hit by natural calamities (geologic hazards, floods, typhoons, volcanic activity, etc.);

7. Areas with critical slopes;

8. Areas classified as prime agricultural lands;
9. Recharged areas of aquifers;
10. Water bodies characterized by one or any combination of the following conditions;
a. tapped for domestic purposes
b. within the controlled and/or protected areas declared by appropriate authorities
c. which support wildlife and fishery activities
11. Mangrove areas characterized by one or any combination of the following conditions:
a. with primary pristine and dense young growth;
b. adjoining mouth of major river systems;
c. near or adjacent to traditional productive fry or fishing grounds;
d. which act as natural buffers against shore erosion, strong winds and storm floods;
e. on which people are dependent for their livelihood.
12. Coral reef, characterized by one or any combination of the following conditions:
a. with 50% and above live coralline cover;
b. spawning and nursery grounds for fish;
c. which act as natural breakwater of coastlines.
Projects not included in the foregoing enumeration were considered non-critical to the environment and were entitled to the CNC.
The foregoing considerations indicate that the grant or denial of an application for ECC/CNC is not an act that is purely ministerial in nature, but one that
involves the exercise of judgment and discretion by the EMB Director or Regional Director, who must determine whether the project or project area is
classified as critical to the environment based on the documents to be submitted by the applicant.
The petitioner maintains that RD Lipayon already exercised his discretion in its case when he made his finding that the application substantially complied with
the procedural requirements for review. As such, he was then obliged to issue the CNC once the petitioner had submitted the required certifications.
The petitioner errs on two grounds.

Firstly, RD Lipayon had not yet fully exercised his discretion with regard to the CNC application when he made his finding. It is clear that his finding referred to
the "procedural requirements for review" only. He had still to decide on the substantive aspect of the application, that is, whether the project and the project
area were considered critical to the environment. In fact, this was the reason why RD Lipayon required the petitioner to submit certifications from the various
government agencies concerned. Surely, the required certifications were not mere formalities, because they would serve as the bases for his decision on
whether to grant or deny the application.
Secondly, there is no sufficient showing that the petitioner satisfactorily complied with the requirement to submit the needed certifications. For one, it submitted
no certification to the effect that the project site was not within a critical slope. Also, the PHIVOLCSs certification showed that the project site had experienced
an Intensity VII earthquake in 1990, a fact that sufficed to place the site in the category of "areas frequently visited and/or hard-hit by natural calamities."
Clearly, the petitioner failed to establish that it had the legal right to be issued the CNC applied for, warranting the denial of its application.
It is not amiss for us to observe, therefore, that the petitioner grossly misunderstood the nature of the remedy of mandamus. To avoid similar misunderstanding
of the remedy hereafter, a short exposition on the nature and office of the remedy is now appropriate.
The writ of mandamus is of very ancient and obscure origin. It is believed that the writ was originally part of the class of writs or mandates issued by the
English sovereign to direct his subjects to perform a particular act or duty.28 The earliest writs were in the form of letters missive, and were mere personal
commands. The command was a law in itself, from which there was no appeal. The writ of mandamus was not only declaratory of a duty under an existing law,
but was a law in itself that imposed the duty, the performance of which it commanded. 29The King was considered as the fountain and source of justice, and
when the law did not afford a remedy by the regular forms of proceedings, the prerogative powers of the sovereign were invoked in aid of the ordinary powers
of the courts.30
A judicial writ of mandamus, issued in the Kings name out of the court of Kings Bench that had a general supervisory power over all inferior jurisdictions and
officers, gradually supplanted the old personal command of the sovereign. 31 The court of Kings Bench, acting as the general guardian of public rights and in
the exercise of its authority to grant the writ, rendered the writ of mandamus the suppletory means of substantial justice in every case where there was no
other specific legal remedy for a legal right, and ensured that all official duties were fulfilled whenever the subject-matter was properly within its control. 32 Early
on, the writ of mandamus was particularly used to compel public authorities to return the petitioners to public offices from which they had been unlawfully
removed.33
Mandamus was, therefore, originally a purely prerogative writ emanating from the King himself, superintending the police and preserving the peace within the
realm.34 It was allowed only in cases affecting the sovereign, or the interest of the public at large. 35 The writ of mandamus grew out of the necessity to compel
the inferior courts to exercise judicial and ministerial powers invested in them by restraining their excesses, preventing their negligence and restraining their
denial of justice.36
Over time, the writ of mandamus has been stripped of its highly prerogative features and has been assimilated to the nature of an ordinary remedy.
Nonetheless, the writ has remained to be an extraordinary remedy in the sense that it is only issued in extraordinary cases and where the usual and ordinary
modes of proceeding and forms of remedy are powerless to afford redress to a party aggrieved, and where without its aid there would be a failure of justice. 37
The writ of mandamus has also retained an important feature that sets it apart from the other remedial writs, i.e., that it is used merely to compel action and to
coerce the performance of a pre-existing duty.38 In fact, a doctrine well-embedded in our jurisprudence is that mandamus will issue only when the petitioner
has a clear legal right to the performance of the act sought to be compelled and the respondent has an imperative duty to perform the same. 39 The petitioner
bears the burden to show that there is such a clear legal right to the performance of the act, and a corresponding compelling duty on the part of the
respondent to perform the act.40
A key principle to be observed in dealing with petitions for mandamus is that such extraordinary remedy lies to compel the performance of duties that are
purely ministerial in nature, not those that are discretionary.41 A purely ministerial act or duty is one that an officer or tribunal performs in a given state of facts,
in a prescribed manner, in obedience to the mandate of a legal authority, without regard to or the exercise of its own judgment upon the propriety or
impropriety of the act done. The duty is ministerial only when its discharge requires neither the exercise of official discretion or judgment. 42

The petitioner's disregard of the foregoing fundamental requisites for mandamus rendered its petition in the RTC untenable and devoid of merit.
WHEREFORE, the Court DENIES the petition for review on certiorari; and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
17. Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. Nos. 120865-71 December 7, 1995

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL TRIAL COURT OF BINANGONAN RIZAL;
FLEET DEVELOPMENT, INC. and CARLITO ARROYO; THE MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163, REGIONAL TRIAL COURT OF PASIG; MANILA
MARINE LIFE BUSINESS RESOURCES, INC. represented by, MR. TOBIAS REYNALD M. TIANGCO; MUNICIPALITY OF TAGUIG, METRO MANILA
and/or MAYOR RICARDO D. PAPA, JR., respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79, REGIONAL TRIAL COURT OF MORONG, RIZAL;
GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT CORPORATION and R. J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY OF
JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162, REGIONAL TRIAL COURT OF PASIG, METRO
MANILA; IRMA FISHING & TRADING CORP.; ARTM FISHING CORP.; BDR CORPORATION, MIRT CORPORATION and TRIM CORPORATION;
MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; BLUE
LAGOON FISHING CORP. and ALCRIS CHICKEN GROWERS, INC.; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA
VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.

COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; AGP
FISH VENTURES, INC., represented by its PRESIDENT ALFONSO PUYAT; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA
VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161, REGIONAL TRIAL COURT OF PASIG, METRO
MANILA; SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING CORP.; MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or
MAYOR ISIDRO B. PACIS,respondents.

HERMOSISIMA, JR., J.:

It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption and extravagance of the rich or fishing in the murky
waters of the Pasig River and the Laguna Lake or making a clearing in the forest so that he can produce food for his family, to understand why protecting
birds, fish, and trees is more important than protecting him and keeping his family alive.
How do we strike a balance between environmental protection, on the one hand, and the individual personal interests of people, on the other?
Towards environmental protection and ecology, navigational safety, and sustainable development, Republic Act No. 4850 created the "Laguna Lake
Development Authority." This Government Agency is supposed to carry out and effectuate the aforesaid declared policy, so as to accelerate the development
and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns, in the act clearly named, within the context of the national and
regional plans and policies for social and economic development.
Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of Republic Act No. 4850 because of the concern for the
rapid expansion of Metropolitan Manila, the suburbs and the lakeshore towns of Laguna de Bay, combined with current and prospective uses of the lake for
municipal-industrial water supply, irrigation, fisheries, and the like. Concern on the part of the Government and the general public over: the environment
impact of development on the water quality and ecology of the lake and its related river systems; the inflow of polluted water from the Pasig River, industrial,
domestic and agricultural wastes from developed areas around the lake; the increasing urbanization which induced the deterioration of the lake, since water
quality studies have shown that the lake will deteriorate further if steps are not taken to check the same; and the floods in Metropolitan Manila area and the
lakeshore towns which will influence the hydraulic system of Laguna de Bay, since any scheme of controlling the floods will necessarily involve the lake and its
river systems, likewise gave impetus to the creation of the Authority.
Section 1 of Republic Act No. 4850 was amended to read as follows:
Sec. 1. Declaration of Policy. It is hereby declared to be the national policy to promote, and accelerate the development and balanced growth
of the Laguna Lake area and the surrounding provinces, cities and towns hereinafter referred to as the region, within the context of the
national and regional plans and policies for social and economic development and to carry out the development of the Laguna Lake region
with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological
systems, and the prevention of undue ecological disturbances, deterioration and pollution. 1
Special powers of the Authority, pertinent to the issues in this case, include:
Sec. 3. Section 4 of the same Act is hereby further amended by adding thereto seven new paragraphs to be known as paragraphs (j), (k), (l),
(m), (n), (o), and (p) which shall read as follows:
xxx xxx xxx

(j) The provisions of existing laws to the contrary notwithstanding, to engage in fish production and other aqua-culture projects
in Laguna de Bay and other bodies of water within its jurisdiction and in pursuance thereof to conduct studies and make
experiments, whenever necessary, with the collaboration and assistance of the Bureau of Fisheries and Aquatic Resources,
with the end in view of improving present techniques and practices. Provided, that until modified, altered or amended by the
procedure provided in the following sub-paragraph, the present laws, rules and permits or authorizations remain in force;
(k) For the purpose of effectively regulating and monitoring activities in Laguna de Bay, the Authority shall have exclusive
jurisdiction to issue new permit for the use of the lake waters for any projects or activities in or affecting the said lake including
navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like, and to impose necessary
safeguards for lake quality control and management and to collect necessary fees for said activities and projects: Provided,
That the fees collected for fisheries may be shared between the Authority and other government agencies and political subdivisions in such proportion as may be determined by the President of the Philippines upon recommendation of the Authority's
Board: Provided, further, That the Authority's Board may determine new areas of fishery development or activities which it
may place under the supervision of the Bureau of Fisheries and Aquatic Resources taking into account the overall
development plans and programs for Laguna de Bay and related bodies of water: Provided, finally, That the Authority shall
subject to the approval of the President of the Philippines promulgate such rules and regulations which shall govern fisheries
development activities in Laguna de Bay which shall take into consideration among others the following: socio-economic
amelioration of bonafide resident fishermen whether individually or collectively in the form of cooperatives, lakeshore town
development, a master plan for fishpen construction and operation, communal fishing ground for lake shore town residents,
and preference to lake shore town residents in hiring laborer for fishery projects;
(l) To require the cities and municipalities embraced within the region to pass appropriate zoning ordinances and other
regulatory measures necessary to carry out the objectives of the Authority and enforce the same with the assistance of the
Authority;
(m) The provisions of existing laws to the contrary notwithstanding, to exercise water rights over public waters within the
Laguna de Bay region whenever necessary to carry out the Authority's projects;
(n) To act in coordination with existing governmental agencies in establishing water quality standards for industrial, agricultural
and municipal waste discharges into the lake and to cooperate with said existing agencies of the government of the
Philippines in enforcing such standards, or to separately pursue enforcement and penalty actions as provided for in Section 4
(d) and Section 39-A of this Act: Provided, That in case of conflict on the appropriate water quality standard to be enforced
such conflict shall be resolved thru the NEDA Board. 2
To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential Decree No. 813 were not thought to be completely
effective, the Chief Executive, feeling that the land and waters of the Laguna Lake Region are limited natural resources requiring judicious management to
their optimal utilization to insure renewability and to preserve the ecological balance, the competing options for the use of such resources and conflicting
jurisdictions over such uses having created undue constraints on the institutional capabilities of the Authority in the light of the limited powers vested in it by its
charter, Executive Order No. 927 further defined and enlarged the functions and powers of the Authority and named and enumerated the towns, cities and
provinces encompassed by the term "Laguna de Bay Region".
Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which include in particular the sharing of fees:
Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake Region: To effectively regulate and monitor activities in
the Laguna de Bay region, the Authority shall have exclusive jurisdiction to issue permit for the use of all surface water for any projects or
activities in or affecting the said region including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like.
For the purpose of this Executive Order, the term "Laguna de Bay Region" shall refer to the Provinces of Rizal and Laguna; the Cities of San
Pablo, Pasay, Caloocan, Quezon, Manila and Tagaytay; the towns of Tanauan, Sto. Tomas and Malvar in Batangas Province; the towns of

Silang and Carmona in Cavite Province; the town of Lucban in Quezon Province; and the towns of Marikina, Pasig, Taguig, Muntinlupa, and
Pateros in Metro Manila.
Sec 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use of the lake water and its tributaries for all beneficial
purposes including but not limited to fisheries, recreation, municipal, industrial, agricultural, navigation, irrigation, and waste disposal
purpose; Provided, that the rates of the fees to be collected, and the sharing with other government agencies and political subdivisions, if
necessary, shall be subject to the approval of the President of the Philippines upon recommendation of the Authority's Board, except fishpen
fee, which will be shared in the following manner; 20 percent of the fee shall go to the lakeshore local governments, 5 percent shall go to the
Project Development Fund which shall be administered by a Council and the remaining 75 percent shall constitute the share of LLDA.
However, after the implementation within the three-year period of the Laguna Lake Fishery Zoning and Management Plan, the sharing will be
modified as follows: 35 percent of the fishpen fee goes to the lakeshore local governments, 5 percent goes to the Project Development Fund
and the remaining 60 percent shall be retained by LLDA; Provided, however, that the share of LLDA shall form part of its corporate funds and
shall not be remitted to the National Treasury as an exception to the provisions of Presidential Decree No. 1234. (Emphasis supplied)
It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake" in this manner:
Sec 41. Definition of Terms.
(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the same shall refer to Laguna de Bay which is that area
covered by the lake water when it is at the average annual maximum lake level of elevation 12.50 meters, as referred to a datum 10.00 meters
below mean lower low water (M.L.L.W). Lands located at and below such elevation are public lands which form part of the bed of said lake.
Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the Laguna Lake Region interpreted the provisions of this law to
mean that the newly passed law gave municipal governments the exclusive jurisdiction to issue fishing privileges within their municipal waters because R.A.
7160 provides:
Sec. 149. Fishery Rentals, Fees and Charges.
(a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rental fees or charges
therefor in accordance with the provisions of this Section.
(b) The Sangguniang Bayan may:
(1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic beds or bangus fry areas, within a definite
zone of the municipal waters, as determined by it; . . . .
(2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag or fry of other species and fish from the
municipal waters by nets, traps or other fishing gears to marginal fishermen free from any rental fee, charges or any other
imposition whatsoever.
xxx xxx xxx
Sec. 447. Power, Duties, Functions and Compensation. . . . .
xxx xxx xxx

(XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of constructing fish corrals or fishpens, or the
taking or catching of bangus fry, prawn fry or kawag-kawag or fry of any species or fish within the municipal waters.
xxx xxx xxx
Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big fishpen operators took advantage of the occasion
to establish fishpens and fishcages to the consternation of the Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied almost one-third of
the entire lake water surface area, increasing the occupation drastically from 7,000 hectares in 1990 to almost 21,000 hectares in 1995. The Mayor's permit to
construct fishpens and fishcages were all undertaken in violation of the policies adopted by the Authority on fishpen zoning and the Laguna Lake carrying
capacity.
To be sure, the implementation by the lakeshore municipalities of separate independent policies in the operation of fishpens and fishcages within their claimed
territorial municipal waters in the lake and their indiscriminate grant of fishpen permits have already saturated the lake area with fishpens, thereby aggravating
the current environmental problems and ecological stress of Laguna Lake.
In view of the foregoing circumstances, the Authority served notice to the general public that:
In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS given on June 23, 1993 at Pila, Laguna pursuant to
Republic Act 4850 as amended by Presidential Decree 813 and Executive Order 927 series of 1983 and in line with the policies and programs
of the Presidential Task Force on Illegal Fishpens and Illegal Fishing, the general public is hereby notified that:
1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which were not registered or to which no application
for registration and/or permit has been filed with Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightly as
illegal.
2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall be subject to demolition which shall be undertaken by
the Presidential Task Force for Illegal Fishpen and Illegal Fishing.
3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall, without prejudice to demolition of their structures
be criminally charged in accordance with Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation of the same laws. Violations
of these laws carries a penalty of imprisonment of not exceeding 3 years or a fine not exceeding Five Thousand Pesos or both at the
discretion of the court.
All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in accordance with the foregoing Notice shall have
one (1) month on or before 27 October 1993 to show cause before the LLDA why their said fishpens, fishcages and other aqua-culture
structures should not be demolished/dismantled.
One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed fishpens, fishcages and other aqua-culture structures
advising them to dismantle their respective structures within 10 days from receipt thereof, otherwise, demolition shall be effected.
Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various regional trial courts, to wit: (a) Civil Case No. 759-B,
for Prohibition, Injunction and Damages, Regional Trial Court, Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil
Case No. 64049, for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and Trading Corp., ARTM Fishing Corp., BDR Corp., MIRT
Corp. and TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and Injunction, Regional Trial Court, Branch 163, Pasig, filed by Manila Marine Life
Business Resources, Inc. and Tobias Reynaldo M. Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78,
Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78,
Morong, Rizal, filed by Blue Lagoon and Alcris Chicken Growers, Inc.; (f) Civil Case No. 554-, for Certiorari and Prohibition, Regional Trial Court, Branch 79,

Morong, Rizal, filed by Greenfields Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil Case No. 64124, for Injunction, Regional Trial
Court, Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and Eastern Lagoon Fishing Corp. and Minamar Fishing Corporation.
The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss were invariably denied. Meanwhile, temporary
restraining order/writs of preliminary mandatory injunction were issued in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing the
fishpens and similar structures in question.
Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed by the Authority with this court. Impleaded as partiesrespondents are concerned regional trial courts and respective private parties, and the municipalities and/or respective Mayors of Binangonan, Taguig and
Jala-jala, who issued permits for the construction and operation of fishpens in Laguna de Bay. The Authority sought the following reliefs, viz.:
(A) Nullification of the temporary restraining order/writs of preliminary injunction issued in Civil Cases Nos. 64125, 759 and 566;
(B) Permanent prohibition against the regional trial courts from exercising jurisdiction over cases involving the Authority which is a co-equal
body;
(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not repeal, alter or modify the provisions of R.A. 4850, as
amended, empowering the Authority to issue permits for fishpens, fishcages and other aqua-culture structures in Laguna de Bay and that, the
Authority the government agency vested with exclusive authority to issue said permits.
By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the Court of Appeals.
In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated petitions, the Court of Appeals holding that: (A) LLDA is not
among those quasi-judicial agencies of government whose decision or order are appealable only to the Court of Appeals; (B) the LLDA charter does vest
LLDA with quasi-judicial functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter insofar as fishing privileges in Laguna de Bay are
concerned had been repealed by the Local Government Code of 1991; (D) in view of the aforesaid repeal, the power to grant permits devolved to and is now
vested with their respective local government units concerned.
Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging the following errors:
1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR WHEN IT RULED THAT THE LAGUNA LAKE
DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL AGENCY.
2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT R.A. 4850 AS AMENDED BY P.D.
813 AND E.O. 927 SERIES OF 1983 HAS BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID RULING IS CONTRARY TO
ESTABLISHED PRINCIPLES AND JURISPRUDENCE OF STATUTORY CONSTRUCTION.
3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE POWER TO ISSUE FISHPEN
PERMITS IN LAGUNA DE BAY HAS BEEN DEVOLVED TO CONCERNED (LAKESHORE) LOCAL GOVERNMENT UNITS.
We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which agency of the Government the Laguna Lake Development
Authority or the towns and municipalities comprising the region should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance
of permits for fishery privileges is concerned?
Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the provisions of Presidential Decree No. 813, and Section 2 of
Executive Order No. 927, cited above, specifically provide that the Laguna Lake Development Authority shall have exclusive jurisdiction to issue permits for
the use of all surface water for any projects or activities in or affecting the said region, including navigation, construction, and operation of fishpens, fish

enclosures, fish corrals and the like. On the other hand, Republic Act No. 7160, the Local Government Code of 1991, has granted to the municipalities the
exclusive authority to grant fishery privileges in municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster, mussels or
other aquatic beds or bangus fry area within a definite zone of the municipal waters.
We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws creating the Laguna Lake Development Authority and
granting the latter water rights authority over Laguna de Bay and the lake region.
The Local Government Code of 1991 does not contain any express provision which categorically expressly repeal the charter of the Authority. It has to be
conceded that there was no intent on the part of the legislature to repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made clear
and expressed.
It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special law. Republic Act No. 7160, the Local Government
Code of 1991, is a general law. It is basic in statutory construction that the enactment of a later legislation which is a general law cannot be construed to have
repealed a special law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a particular case or class of cases, is not repealed by a
subsequent statute, general in its terms, provisions and application, unless the intent to repeal or alter is manifest, although the terms of the general law are
broad enough to include the cases embraced in the special law." 3
Where there is a conflict between a general law and a special statute, the special statute should prevail since it evinces the legislative intent more clearly than
the general statute. The special law is to be taken as an exception to the general law in the absence of special circumstances forcing a contrary conclusion.
This is because implied repeals are not favored and as much as possible, effect must be given to all enactments of the legislature. A special law cannot be
repealed, amended or altered by a subsequent general law by mere implication. 4
Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government Code of 1991.
Considering the reasons behind the establishment of the Authority, which are environmental protection, navigational safety, and sustainable development,
there is every indication that the legislative intent is for the Authority to proceed with its mission.
We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna de Bay, like any other single body of water has its
own unique natural ecosystem. The 900 km lake surface water, the eight (8) major river tributaries and several other smaller rivers that drain into the lake, the
2,920 km basin or watershed transcending the boundaries of Laguna and Rizal provinces, greater portion of Metro Manila, parts of Cavite, Batangas, and
Quezon provinces, constitute one integrated delicate natural ecosystem that needs to be protected with uniform set of policies; if we are to be serious in our
aims of attaining sustainable development. This is an exhaustible natural resource a very limited one which requires judicious management and optimal
utilization to ensure renewability and preserve its ecological integrity and balance."
"Managing the lake resources would mean the implementation of a national policy geared towards the protection, conservation, balanced growth and
sustainable development of the region with due regard to the inter-generational use of its resources by the inhabitants in this part of the earth. The authors of
Republic Act 4850 have foreseen this need when they passed this LLDA law the special law designed to govern the management of our Laguna de Bay
lake resources."
"Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where lakeshore local government units exercise exclusive
dominion over specific portions of the lake water. The garbage thrown or sewage discharged into the lake, abstraction of water therefrom or construction of
fishpens by enclosing its certain area, affect not only that specific portion but the entire 900 km of lake water. The implementation of a cohesive and
integrated lake water resource management policy, therefore, is necessary to conserve, protect and sustainably develop Laguna de Bay." 5
The power of the local government units to issue fishing privileges was clearly granted for revenue purposes. This is evident from the fact that Section 149 of
the New Local Government Code empowering local governments to issue fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under
the heading, "Specific Provisions On The Taxing And Other Revenue Raising Power Of Local Government Units."

On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-culture structures is for the purpose of effectively
regulating and monitoring activities in the Laguna de Bay region (Section 2, Executive Order No. 927) and for lake quality control and management. 6 It does
partake of the nature of police power which is the most pervasive, the least limitable and the most demanding of all State powers including the power of
taxation. Accordingly, the charter of the Authority which embodies a valid exercise of police power should prevail over the Local Government Code of 1991 on
matters affecting Laguna de Bay.
There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the Laguna de Bay area. Section 3 of Executive Order
No. 927 provides for the proper sharing of fees collected.
In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that, considering the provisions of Section 4 of Republic
Act No. 4850 and Section 4 of Executive Order No. 927, series of 1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of
Appeals, 231 SCRA 304, 306, which we quote:
xxx xxx xxx
As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB), except in cases where the
special law provides for another forum. It must be recognized in this regard that the LLDA, as a specialized administrative agency, is
specifically mandated under Republic Act No. 4850 and its amendatory laws to carry out and make effective the declared national policy of
promoting and accelerating the development and balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and
Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan with due regard and adequate provisions for environmental
management and control, preservation of the quality of human life and ecological systems, and the prevention of undue ecological
disturbances, deterioration and pollution. Under such a broad grant of power and authority, the LLDA, by virtue of its special charter, obviously
has the responsibility to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the
discharge of wastes from the surrounding areas. In carrying out the aforementioned declared policy, the LLDA is mandated, among others, to
pass upon and approve or disapprove all plans, programs, and projects proposed by local government offices/agencies within the region,
public corporations, and private persons or enterprises where such plans, programs and/or projects are related to those of the LLDA for the
development of the region.
xxx xxx xxx
. . . . While it is a fundamental rule that an administrative agency has only such powers as are expressly granted to it by law, it is likewise a
settled rule that an administrative agency has also such powers as are necessarily implied in the exercise of its express powers. In the
exercise, therefore, of its express powers under its charter, as a regulatory and quasi-judicial body with respect to pollution cases in the
Laguna Lake region, the authority of the LLDA to issue a "cease and desist order" is, perforce, implied. Otherwise, it may well be reduced to a
"toothless" paper agency.
there is no question that the Authority has express powers as a regulatory and quasi-judicial body in respect to pollution cases with authority to issue a
"cease and desist order" and on matters affecting the construction of illegal fishpens, fishcages and other aqua-culture structures in Laguna de Bay.
The Authority's pretense, however, that it is co-equal to the Regional Trial Courts such that all actions against it may only be instituted before the Court
of Appeals cannot be sustained. On actions necessitating the resolution of legal questions affecting the powers of the Authority as provided for in its
charter, the Regional Trial Courts have jurisdiction.
In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, has not
repealed the provisions of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive
jurisdiction to issue permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of municipalities situated therein and the authority to
exercise such powers as are by its charter vested on it.

Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of protecting and developing the Laguna Lake Region.
Otherwise stated, the abrogation of this power would render useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake
Development Authority. This, the Local Government Code of 1991 had never intended to do.
WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they relate to the authority of the Laguna Lake
Development Authority to grant fishing privileges within the Laguna Lake Region.
The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78, Morong, Rizal; Judge Herculano Tech, RTC, Branch 70,
Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163, Pasig, Metro Manila, are hereby declared null and void and ordered set aside for having
been issued with grave abuse of discretion.
The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct and operate fishpens, fishcages and other aquaculture structures within the Laguna Lake Region, their previous issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B.
Pacis, Municipality of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega, Municipality of Jala-jala, specifically, are likewise
declared null and void and ordered cancelled.
The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued by Municipal Mayors within the Laguna Lake Region,
specifically, permits issued to Fleet Development, Inc. and Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M.
Tiangco; Greenfield Ventures Industrial Development Corporation and R.J. Orion Development Corporation; IRMA Fishing And Trading Corporation, ARTM
Fishing Corporation, BDR Corporation, Mirt Corporation and Trim Corporation; Blue Lagoon Fishing Corporation and ALCRIS Chicken Growers, Inc.; AGP
Fish Ventures, Inc., represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation, and MINAMAR Fishing
Corporation, are hereby declared illegal structures subject to demolition by the Laguna Lake Development Authority.
SO ORDERED.
Davide, Jr., Bellosillo and Kapunan, JJ., concur.

18. THIRD DIVISION

[G.R. No. 147767. January 14, 2004]
MANUEL E. ZAMORA, petitioner, vs. GOVERNOR JOSE R. CABALLERO, ANESIO M. RANARIO, in his capacity as Provincial
Administrator, MARIANO KINTANAR, in his capacity as Provincial Auditor, CARMEN R. RASUL, in his capacity as Provincial
Treasurer, ROLANDO L. OSORIO, BELINDA G. APAWAN, ARMANDO L. SERAS, RUWEL PETER S. GONZAGA, ARMANDO C. CODILLA,
RAUL B. BASAES, GRACIANO C. ARAFOL, JR.,respondents.
DECISION
CARPIO-MORALES, J.:
Petitioner Manuel Zamora, a member of the Sangguniang Panlalawigan of Compostela Valley (the Sanggunian), seeks to invalidate all acts executed and
resolutions issued by the Sanggunian during its sessions held on February 8 and 26, 2001 for lack of quorum.

It appears that on February 6, 2001, Vice-Governor Reynaldo Navarro sent a written notice of a special session on February 7, 2001. [1] Upon the request
of Governor Jose R. Caballero, however, the scheduled special session was reset to February 8, 2001 without the benefit of a written notice. [2]
On February 8, 2001, the Sanggunian thus held a special session to, among other things, allow the Governor to deliver his State of the Province Address.
As only seven members of the fourteen-member Sanggunian were present, [3] no resolution was considered.
On February 26, 2001, the Sanggunian held its 4 th regular session during which it issued Resolution No. 05 [4] declaring the entire province of Compostela
Valley under a state of calamity and Resolution No. 07 [5] authorizing the Governor to, on behalf of the province, enter into a construction contract (Contract)
with Allado Construction Company, Inc. (the Allado Company) for the completion of Phase II of the construction of the capitol building. During the same
session, the Sanggunian accepted the letter of irrevocable resignation submitted by Board Member Gemma Theresa M. Sotto. [6]
While only eight members of the Sanggunian were present at the commencement of the session on February 26, 2001, the Journal of the Proceedings
(Journal) and Resolution Nos. 05 and 07 showed that a total of thirteen members attended it. [7]
Petitioner thus filed a petition [8] before the Regional Trial Court (RTC) of Nabunturan, Compostela Valley against the Governor, et al., challenging the
validity of the acts of the Sanggunian on February 26, 2001, alleging that while the Journal and Resolutions indicated the presence of 13 members, the
Sanggunian nonetheless conducted official business without a quorum [9] as only seven of its fourteen members were actually present when the irrevocable
letter of resignation of Board Member Sotto was noted, [10] and the motions to declare the entire province of Compostela Valley under a state of calamity [11] and
to authorize the Governor to enter into the Contract with the Allado Company [12] were approved.[13]
Petitioner additionally alleged that when the vote respecting Resolution No. 05 was taken, only the remaining six members voted for the adoption thereof,
the then presiding officer Board Member Rolando Osorio not having cast his vote; [14] that when Resolution No. 07 was taken up, however, then presiding
officer Osorio,[15] relinquished his seat to Board Member Graciano Arafol after the six members present unanimously voted on the said resolution in the
affirmative, following which Osorio cast his vote as a member also in the affirmative, thereby authorizing the Governor to enter into the Contract with Allado
Company; and that Board Member Arafol thereafter relinquished his seat as presiding officer to Board Member Osorio who once again assumed the duties of
a presiding officer.[16]
Petitioner furthermore challenged the validity of the special session of February 8, 2001 for lack of quorum, there being only seven members of the
Sanggunian in attendance, and for lack of written notice sent to all members at least 24 hours before the holding of the special session in accordance with
Section 52 (d)[17] of the Local Government Code of 1991 (LGC). [18]
Respondents, on the other hand, contended that since Board Member Sotto was in the United States [19] at the time the questioned acts were executed
and resolutions adopted, the actual number of Board Members then in the country was thirteen which should be the basis of the determination of a quorum.
Branch 3 of the RTC of Nabunturan, at Compostela Valley, by Order [20] of April 24, 2001, dismissed the petition upon the following ratiocination:
. . . Gemma Theresa M. Sotto should not be counted as member for the purpose of determining the number to constitute a quorum because she is in the
United States of America. However, sub-paragraph (b) [of section 53 of the Local Government Code] states and provides for compulsion of any member
absent without any justifiable cause.
This is interpreted by the Supreme Court in the case of Jose Avelino, petitioner vs. Mariano J. Cuenco, respondent, G.R. No. L-2821, March 4, 1949.
Gemma Theresa M. Sotto is beyond the reach of the legal processes of the Sangguniang Panlalawigan and could not be arrested to compel her to attend its
session. Quorum should be determined on the basis of the actual number of members of the body concerned rather than upon its full membership which is
fourteen (14). Therefore, in this case, with seven (7) members of the thirteen (13) members present in constitutive of a quorum. x x x

Moreover, Presidential Decree 1818[21] prohibits the issuance of a restraining order or injunction in any case involving government infrastructure projects.
[22]
(Emphases omitted)
Hence, the present petition for Certiorari under Rule 45, faulting the trial court for erroneously (1) applying the case of Avelino v. Cuenco[23] to a
controversy involving a local government unit; (2) taking judicial notice of Board Member Sottos being in the United States without proof thereof; and (3) ruling
that to grant a Temporary Restraining Order would be in violation of P.D. 1818. [24]
Respondents question the authority of the Court to look beyond the Journal and Resolutions of the Sanggunian [25] and assert that the construction of the
capitol building[26] cannot be enjoined. And they too assert that the presence of thirteen members at the February 26, 2001 session should be conclusive on
the strength of Arroyo v. De Venecia[27] and U.S. v. Pons.[28]Citation of these cases is misplaced, however.
In Arroyo v. De Venecia, this Court refused to inquire into allegations that the House of Representatives failed to comply with the rules of procedures
which the House itself promulgatedabsent any showing that there was a violation of a constitutional provision or of the rights of private individuals.
In U.S. v. Pons, this Court did not go beyond the legislative journals which it found clear and explicit, it holding that to disprove the entries in the journals,
evidence must be adduced based merely upon the memory or recollection of witnesses in contrast to journals which are the acts of the Government or
sovereign itself.[29]
In the instant case, this Court is not called upon to inquire into the Sanggunians compliance with its own rules. Rather, it is called upon to determine
whether the Sanggunian complied with the LGC, a law enacted by Congress, and its Implementing Rules.
Moreover, the Journal of the Sanggunian is far from clear and explicit as to the presence of a quorum when the questioned acts were taken. It does not
indicate how many members were actually present when the body voted on the motions leading to the adoption of Resolution Nos. 05 and 07. While the
Journal and the Resolutions show that 13 members attended thesession,[30] the Journal shows that only six members were called by the presiding officer to
vote on the motions.[31] Six members whose names appear in attendance, namely: Vice Governor Navarro and Board Members Zamora, Yanong, Castillo,
Andres and Gentugaya, were not called and, save for the absent Vice Governor,[32] no explanation was given therefor.
Coincidentally, in Resolutions 05 and 07, the names of the Board Members who were not called upon to vote, including petitioner as he had in the
meantime left, are followed by two asterisks (**).
Additionally, it was clearly noted by petitioner, when he asked permission to leave the session, that only seven members were left:
SP Member ZAMORA : Mr. President, I move to adjourn, Mr. President.
SP Member ARAFOL : Objection Mr. President.
SP Member ZAMORA : Mr. President, before the objection, before objection Mr. President, I would like to invite everybody to go at my service I have a patient
nga gi-pagawas na sa hospital nga i-uli na sa Awao, its been there for one hour so I really have to go I have to carry that patient to Awao Mr. President.
SP Member OSORIO : You are excused Honorable
SP Member ZAMORA : Okay, then remember that youre only seven Mr. President.
SP Member ARAFOL : No problem.

SP Member ZAMORA : Okay so its alright for you to decide. The seven of you. I would like to manifest in the record that before further discussion that
SP Member GONZAGA : Mr. President he is already excused Mr. President.
SP Member ZAMORA : Yes but I would like to make statement first for the record, for the record. That I do not want Mr. President that the incident of the of
the State of the Province Address will be repeated Mr. President, wherein there are only seven members present and the quorum was declared Mr. President.
xxx
SP Member GONZAGA : Thats only your opinion . . .[33] (Underscoring supplied)
Respondents themselves admit that there were only seven members present when the motions were voted upon:
26. Nevertheless, even if that remark constituted a proper question on quorum, it is a matter of fact that there were still seven (7) members present. x x x
[T]here is a quorum since seven is a majority of thirteen (13). x x x [34] (Emphasis supplied.)
Clearly, this Court is constrained to look into the proceedings of the Sanggunian as recorded in the Journal and not just rely on Resolution Nos. 05 and 07
to determine who and how many participated in the consideration thereof. The placing of the asterisks after the names of five members in the Resolutions is
highly irregular and suspicious especially since both resolutions indicate that petitioner, whose name is also followed by asterisks, was present even if it is
clear from the Journal that he had already left the session before the Sanggunian took note of the resignation of Board Member Sotto and voted on the
motions.
Respondents other contention that the construction of the capitol building cannot be enjoined in light of Malaga v. Penachos, Jr.[35] fails to convince.
In Malaga, this Court declared that although Presidential Decree No. 1818 prohibits any court from issuing injunctions in cases involving infrastructure
projects, the prohibition extends only to the issuance of injunctions or restraining orders against administrative acts in controversies involving facts or the
exercise of discretion in technical cases. On issues clearly outside this dimension and involving questions of law, this Court declared that courts could not be
prevented from exercising their power to restrain or prohibit administrative acts. [36]
Respondents maintain that the exception in Malaga as indicated above should not be applied in the instant case because there was therein a defect in
the compliance with procedural rules on bidding. In contrast, respondents stress, the bidding for the construction of the capitol building in which the winner
was the Allado Company was not defective, they adding that Resolution 07 simply authorized the Governor to formalize the Contract necessary for the full
implementation of the project.[37]
This Court fails to see the essential difference between Malaga and the instant case.
In both cases, the defect in the Contract relates to the non-compliance with the mandate of a law respecting requirements before validly entering into a
contract. In Malaga, the defect pertained to bidding. In the present case, the alleged defect pertains to the required number of votes necessary to authorize the
Governor to enter into a construction contract.
Clearly then, what is at issue in this case is not the propriety or the wisdom of entering into the Contract for the construction of the capitol building, which
is beyond the power of this Court to enjoin, but the Sanggunians compliance with the requirements prescribed under the LGC before it may grant the
Governor authority to enter into the Contract, which issue falls under the exception to the proscription against injunctions in cases involving infrastructure
projects, as held in Malaga.

On the applicability of Avelino[38] to the present case: The issue in said case was whether there was a quorum in a meeting attended by only 12 of 24
senators, one having been in the hospital while another was out of the country. This Court held that although the total membership of the Senate was 24, the
presence of 12 members already constituted a quorum since the 24 th member was outside the country and beyond the coercive power of the Senate. [39]
In the instant case, there is nothing on record, save for respondents allegation, to show that Board Member Sotto was out of the country and to thereby
conclude that she was outside the coercive power of the Sanggunian when the February 8 and 26, 2001 sessions were held. In fact it is undisputed that the
leave form filed by said Board Member before the Department of Interior and Local Government (DILG) did not mention that she was going out of the country.
[40]
Petitioners contention that the trial court cannot take judicial notice of Board Member Sottos whereabouts is thus well taken. On this score, the instant case
is outside the application of the doctrine in Avelino.
A court may take judicial notice of matters of public knowledge, or those which are capable of unquestionable determination or ought to be known to
judges because of their judicial functions.[41] With respect to disputed facts, however, the court must receive evidence thereof, with notice to the parties. [42]
Also, in Avelino, the legislative body involved was the Senate and the applicable rule on quorum was that embodied in Article VI, Section 10 of the 1935
Constitution which reads:
Section 10. x x x
(2) A majority of each House shall constitute a quorum to do business, but a smaller number may adjourn from day to day and may compel the
attendance of absent Members in such manner and under such penalties as such House may provide. [43] (Emphasis supplied)
The present case, however, involves a local legislative body, the Sangguniang Panlalawigan of Compostela Valley Province, and the applicable rule respecting
quorum is found in Section 53(a) of the LGC which provides:
Section 53. Quorum.(a) A majority of all members of the sanggunian who have been elected and qualified shall constitute a quorum to transact official business. Should a
question of quorum be raised during a session, the presiding officer shall immediately proceed to call the roll of the members and thereafter announce the
results. (Emphasis supplied)
Quorum is defined as that number of members of a body which, when legally assembled in their proper places, will enable the body to transact its proper
business or that number which makes a lawful body and gives it power to pass upon a law or ordinance or do any valid act. [44] Majority, when required to
constitute a quorum, means the number greater than half or more than half of any total. [45] In fine, the entire membership must be taken into account in
computing the quorum of the sangguniang panlalawigan, for while the constitution merely states that majority of each House shall constitute a quorum,
Section 53 of the LGC is more exacting as it requires that the majority of all members of the sanggunian . . . elected and qualified shall constitute a quorum.
The difference in the wordings of the Constitution and the LGC is not merely a matter of style and writing as respondents would argue, but is actually a
matter of meaning and intention. [46] The qualification in the LGC that the majority be based on those elected and qualified was meant to allow sanggunians to
function even when not all members thereof have been proclaimed. [47] And, while the intent of the legislature in qualifying the quorum requirement was to
allow sanggunians to function even when not all members thereof have been proclaimed and have assumed office, the provision necessarily applies when,
after all the members of the sanggunian have assumed office, one or some of its members file for leave. What should be important then is the concurrence of
election to and qualification for the office. And election to, and qualification as member of, a local legislative body are not altered by the simple expedient of
filing a leave of absence.

The trial court should thus have based its determination of the existence of a quorum on the total number of members of the Sanggunian without regard
to the filing of a leave of absence by Board Member Sotto. The fear that a majority may, for reasons of political affiliation, file leaves of absence in order to
cripple the functioning of the sanggunian is already addressed by the grant of coercive power to a mere majority of sanggunian members present when there
is no quorum.[48]
A sanggunian is a collegial body. Legislation, which is the principal function and duty of the sanggunian, requires the participation of all its members so
that they may not only represent the interests of their respective constituents but also help in the making of decisions by voting upon every question put upon
the body. The acts of only a part of the Sanggunian done outside the parameters of the legal provisions aforementioned are legally infirm, highly questionable
and are, more importantly, null and void. And all such acts cannot be given binding force and effect for they are considered unofficial acts done during an
unauthorized session.
Board Member Sotto is then deemed not resigned because there was no quorum when her letter of irrevocable resignation was noted by the
Sanggunian. For the same reason, Resolution Nos. 05 and 07 are of no legal effect.
Even assuming arguendo that there were indeed thirteen members present during the questioned February 26, 2001 session, Resolution No. 05
declaring the entire province of Compostela Valley under state of calamity is still null and void because the motion for its approval was approved by only six
members.[49] When there are thirteen members present at a session, the vote of only six members can not, at any instance, be deemed to be in compliance
with Section 107(g)[50] of the Rules and Regulations Implementing the LGC which requires the concurrence of the approval by the majority of the members
present and the existence of a quorum in order to validly enact a resolution.
The motion to grant the Governor authority to enter into the construction contract is also deemed not approved in accordance with the law even if it
received seven affirmative votes, which is already the majority of thirteen, due to the defect in the seventh vote. For as priorly stated, as the Journal confirms,
after all six members voted in the affirmative, Board Member Osorio, as acting presiding officer, relinquished his seat to Board Member Arafol and thereafter
cast his vote as a member in favor of granting authority to the Governor.[51]
This Court is faced with an act clearly intended to circumvent an express prohibition under the law a situation that will not be condoned. [52] The LGC
clearly limits the power of presiding officers to vote only in case of a tie, to wit:
Section 49. Presiding Officer. (a) The vice-governor shall be the presiding officer of the sangguniang panlalawigan x x x. The presiding officer shall vote
only to break a tie.
(b) In the event of inability of the regular presiding officer to preside at a sanggunian session, the members present and constituting a quorum shall elect from
among themselves a temporary presiding officer. x x x (Italics in the original. Emphasis supplied.)
While acting as presiding officer, Board Member Osorio may not, at the same time, be allowed to exercise the rights of a regular board member including
that of voting even when there is no tie to break. A temporary presiding officer who merely steps into the shoes of the presiding officer could not have greater
power than that possessed by the latter [53] who can vote only in case of a tie.
Lastly, for a resolution authorizing the governor to enter into a construction contract to be valid, the vote of the majority of all members of the Sanggunian,
and not only of those present during the session, is required in accordance with Section 468 [54] of the LGC in relation to Article 107 [55] of its Implementing
Rules.
Even including the vote of Board Member Osorio, who was then the Acting Presiding Officer, Resolution No. 07 is still invalid. Applying Section 468 of the
LGC and Article 107 of its Implementing Rules, there being fourteen members in the Sanggunian, the approval of eight members is required to authorize the
governor to enter into the Contract with the Allado Company since it involves the creation of liability for payment on the part of the local government unit.

WHEREFORE, the petition is hereby GRANTED. The assailed Order of the Regional Trial Court of Nabunturan, Compostela Valley dated April 24, 2001
is hereby reversed and set aside.
Resolution Nos. 05 and 07 of the Sangguniang Panlalawigan of Compostela Valley approved on February 26, 2001 declaring the entire Province of
Compostela Valley under a state of calamity and granting authority to the Provincial Governor to enter into a general construction agreement, respectively, are
hereby declared null and void.
SO ORDERED.
Vitug, (Chairman), Sandoval-Gutierrez, and Corona, JJ., concur.
19. SECOND DIVISION
[G.R. No. 132209. April 29, 2005]
CARLOS C. BUENDIA, petitioner, vs. CITY OF ILIGAN, respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari assailing the Decision[1] of the Regional Trial Court (RTC) of Lanao del Norte, Branch 2, which set aside
the Order[2] of the National Water Resources Board (NWRB), the dispositive portion of which reads:
WHEREFORE, the writ of certiorari prayed for is hereby granted and the question (sic) NWRB order of March 10, 1994, is hereby set aside and rendered of
no effect for being issued in grave abuse of discretion.[3]
THE FACTS
On 05 October 1992, petitioner Buendia filed with the NWRB an application for the appropriation of water from a spring located within his property in
Ditucalan, Iligan City. Said application was docketed as Application No. 11913 (for commercial purposes) and No. 11917 (for domestic water supply). [4]
In the absence of protests to the applications being timely filed, the NWRB, after evaluating petitioners applications, issued on 25 June 1993, Water
Permits No. 13842 and No. 13827[5] in his favor.
On 17 November 1993, almost five (5) months after petitioners Water Permits were issued, respondent City of Iligan filed with the NWRB an Opposition
and/or Appeal[6] contesting the issuance of said water permits to petitioner. The Opposition and/or Appeal sought to serve as both a protest against petitioners
water permit applications, as well as an appeal to the NWRBs grant of the water permits to petitioner.
On 10 March 1994, the NWRB issued an Order [7] dismissing respondents Opposition and/or Appeal. The Opposition part was dismissed for being filed out
of time, while the Appeal part was dismissed as a consequence of the denial of the opposition to the application, i.e., in the absence of a verified protest
having been seasonably filed, no water rights controversy arose; hence, there was no decision from which respondent may appeal from.

Respondent City of Iligan did not move for a reconsideration of said order, nor did it appeal to the appropriate Executive Department, [8] but instead filed on
09 September 1994, with the RTC of Lanao del Norte, Branch 2, a Petition for Certiorari assailing the legality of the NWRB Order for being issued in excess of
its jurisdiction and/or with grave abuse of discretion amounting to lack of jurisdiction.
Respondent sought to annul the NWRB Order on the following specific grounds:
1. The NWRB did not notify the City of Iligan of Buendias Water Permit Application No. 11913 and No. 11917. Neither did the NWRB give the City of
Iligan an opportunity to be heard with respect to the applications because no public hearing was conducted; and
2. The NWRBs March 10, 1994 Order was issued without due process, the NWRB having arbitrarily and despotically denied the City of Iligans
Opposition and/or Appeal notwithstanding the fact that the latter was not furnished a copy (sic) of Buendias Water Permits. [9]
In his Answer, petitioner prayed for the dismissal of the petition claiming inter-alia that: (a) the petition was not filed within a reasonable period, as it was
filed more than five (5) months after petitioner received a copy of the order it seeks to annul; (b) the petition lacks cause of action for failure of the City of Iligan
to file a Motion for Reconsideration which is a prerequisite to the filing of a petition for certiorari; (c) the City of Iligan did not exhaust all administrative
remedies, since it did not avail itself of its right to appeal as provided under the Administrative Code of 1987; and (d) the NWRB appropriately dismissed the
Opposition and/or Appeal.[10]
After all the issues were joined with the filing of the last pleading, the case was set for pre-trial. As reflected in the pre-trial order of 28 June 1996 which
was amended on 02 July 1996, the parties specifically agreed to limit the issue of the case to whether or not the NWRB Order dated March 10, 1994 was
rendered by the NWRB with grave abuse of discretion or contrary to law.[11]
On 15 August 1997, the trial court rendered the assailed decision. Although the court a quo upheld the dismissal of the Opposition and/or Appeal on
procedural grounds, it nonetheless annulled the NWRB Order, to wit:
From the aforesaid established facts, it could be safely deduced that as early as October 22, 1992 or eight months prior to the issuance of respondent
Buendias water permits on June 23, 1993, petitioner City of Iligan was already aware of respondent Buendias water permit application and had all the
opportunity to protest or oppose the same.
In this particular case, as emphatically stressed in respondent Buendias memorandum, it is not disputed that no verified protest or opposition was filed during
all the time, respondent Buendias applications were being processed by respondent NWRB. Hence, under the prevailing circumstances, it being uncontested,
no water rights controversy arose and respondent NWRB directly evaluated the technical aspect of the applications pursuant to the Implementing Rules and
Regulations as explained above. In fact, on March 11-12, 1993, respondent NWRB, had conducted the physical investigation of the spring, which is the
subject matter of the application.
Accordingly, based only upon the foregoing considerations, it would appear that respondent NWRB was correct in dismissing petitioners Opposition and/or
Appeal because there is nothing which can be the subject of an appeal as there is nothing for respondent NWRB to decide considering the absence of water
rights controversy.
Considering, however, that the instant case is a clash between an individual or private right as against an assertion for the public welfare, involving, as a
matter of fact, the water supply for the City of Iligan, this Court has to examine more closely the facts and the law in their broadest perspective. A more careful
scrutiny of the records as well as the stipulations of facts and admissions by the parties, as herein above specified, reveal material and substantial aspects of
the case, not taken into consideration by the respondent NWRB, which entirely changes the complexion of the case. [12] [Emphases ours]

According to the lower court, the appropriation by the Iligan City Waterworks Sewerage System (ICWSS) and its predecessors-in-interest of the water
source at Ditucalan spring was from 1927 up to the present, as shown by the following:
1. That the Iligan Waterworks Sewerage System has been existing as early as 1927 and the same was taken over by the NAWASA on April 1, 1956;
2. That in 1971, R. A. No. 6234 was passed and by virtue of the same, the MWSS took over the NAWASA, and on August 19, 1973, a Memorandum
of Agreement (MOA) was issued between the MWSS and the City Mayor of Iligan, transferring the power of the MWSS to Iligan City. [13]
Thus, following the rule on acquisitive prescription that the right to the use of public water may be acquired through prescription for twenty (20) years, the
court a quo ruled that the ICWSS had already acquired by acquisitive prescription the right to appropriate water from the Ditucalan spring prior to Buendias
application for water rights before the NWRB and that the Board no longer had any jurisdiction to issue any water right over the same water source.
Thereafter, on 30 September 1997, petitioner filed a Motion for Reconsideration, which was subsequently denied by the trial court in an Order [14] dated 05
January 1998.
Raising purely questions of law, petitioner filed the present petition.
ISSUES
In this Petition for Certiorari, petitioner raises the following issues:
1. Whether the court a quo went beyond the issues it was empowered to adjudicate, as delineated in the Pre-Trial Order, and thus departed from the accepted
and usual course of judicial proceedings, as well as deprived petitioner of his right to present evidence to support the case;
2. Assuming that the court a quo may validly pass upon the issue of who has the better right to appropriate water from petitioners property, whether it decided
this question of substance in accord with law or with the applicable decisions of the Supreme Court;
3. Whether the court a quo correctly ruled that since respondent had already acquired by acquisitive prescription the right to appropriate water from the
Ditucalan spring then the NWRB no longer had any jurisdiction to issue any water right over the same water source; and
4. Whether the court a quo correctly ruled that respondent has the right to appropriate water under its charter, Republic Act No. 525.
RULING OF THE COURT
In order to properly settle the issues raised in the instant case, a perusal of the NWRB Order of 10 March 1994 is of utmost importance since, as
determined by the parties during pre-trial and recognized by the trial court in its decision, the pivotal issue of the case is the legality of the NWRB Order
dismissing respondents Opposition and/or Appeal.
It bears stressing that respondents Opposition and/or Appeal was dismissed by the NWRB solely on procedural grounds, the opposition being filed out of
time. According to the NWRB:
As against this gratuitous claim by the oppositors, however, the record is replete with evidence that Iligan City, was in point of fact and in law, very much aware
of these applications as early as October 22, 1992, yet no verified protest nor opposition was filed by Iligan City during all the time that these applications were
being processed, investigated and evaluated and despite having ample opportunity to do so

On the other point raised which pertains to the appeal issue, a careful examination of these articles alluded to (Art. 88 and 89, P.D. 1067) shows beyond doubt
that these refers to decisions of the Council (now Board) on water rights controversies or disputes, which in this particular case does not exist. In the case at
bar, there was NO decision of a water right controversy in the pre-issuance of subject water permits which may be the subject of an appeal. Considering
further that there was NO verified protest seasonably filed against said applications, logically therefore, there is no controversy to speak of .
In essence, the Opposition and/or Appeal filed by Iligan City, has no leg to stand on, because it was filed OUT OF TIME and secondly, because of want of
legal and factual basis.[15] [Italics ours]
Clearly, therefore, the only question which the court a quo should have resolved is whether or not the NWRB had correctly dismissed the Opposition
and/or Appeal for being filed out of time. To said issue, the trial court opined:
In this particular case, as emphatically stressed in respondent Buendias memorandum, it is not disputed that no verified protest or opposition was filed during
all the time, respondent Buendias applications were being processed by respondent NWRB. Hence, under the prevailing circumstances, it being uncontested,
no water rights controversy arose
Accordingly, based only upon the foregoing considerations, it would appear that respondent NWRB was correct in dismissing petitioners Opposition and/or
Appeal because there is nothing which can be the subject of an appeal as there is nothing for respondent NWRB to decide considering the absence of water
rights controversy.[16] [Emphasis Ours]
Respondents penchant for disregarding the rules of procedure is evident from the facts of the case. Both the NWRB and the trial court deduced that as
early as 22 October 1992 or eight (8) months prior to the issuance of petitioners water permits, respondent City of Iligan was already aware of Buendias
applications and had all the opportunity to protest the same but failed to do so and instead, filed its opposition and/or appeal almost five months after the
permits have been issued. Further, from receipt of the NWRB order denying its opposition and/or appeal, respondent did not file a Motion for Reconsideration
but proceeded to file a Petition for Certiorari with the RTC after almost six (6) months from the issuance of said order. Certainly, filing said petition almost six
(6) months later does not fall within what this Court considers as a reasonable period to institute a petition for certiorari. Although the applicable rules on
special civil action for certiorari, at the time of the filing of the petition, did not provide for a definite time frame within which to file the petition, [17] this Court has
ruled, as early as 20 January 1992 in a Resolution in PHILEC Workers Union v. Hon. Romeo A. Young,[18] that the special civil action for certiorari under Rule
65 of the Rules of Court must be filed within a reasonable period of only three (3) months. [19]
The failure to file the certiorari petition within a reasonable time renders the petitioner [respondent in this case] susceptible to the adverse legal
consequences of laches.[20] The essence of laches is the failure, or neglect, for an unreasonable and unexplained length of time to do that which, by exercising
due diligence, could or should have been done earlier; it is the negligence or omission to assert a right within a reasonable time, warranting a presumption that
the party entitled to assert it either has abandoned it or declined to assert it. [21]
Notwithstanding the conclusion that the dismissal of said opposition and/or appeal was in accordance with law, the court a quo proceeded to resolve the
question of as to who between the City of Iligan and Carlos Buendia has the better right to the water source, certainly going beyond the issue delineated in the
pre-trial. The RTC reasoned:
Considering, however, that the instant case is a clash between an individual or private right as against an assertion for the public welfare, involving, as a
matter of fact, the water supply for the City of Iligan, this Court has to examine more closely the facts and the law in their broadest perspective. A more careful
scrutiny of the records as well as the stipulations of facts and admissions by the parties, as herein above specified, reveal material and substantial aspects of
the case, not taken into consideration by the respondent NWRB, which entirely changes the complexion of the case. [22]
Absent a discussion by the NWRB of the substantial issues raised in the Opposition and/or Appeal, the trial court should not have decided said questions
especially since they were not passed upon by the Board which exercises original jurisdiction over issues involving water rights controversies. [23]

Time and again, this Court has upheld the doctrine of primary jurisdiction in deference to the specialized expertise of administrative agencies to act on
certain matters. As held by the Court in the case of Industrial Enterprises, Inc. v. Court of Appeals:[24]
. . . [I]f the case is such that its determination requires the expertise, specialized skills and knowledge of the proper administrative bodies because technical
matters or intricate questions of facts are involved, then relief must first be obtained in an administrative proceeding before a remedy will be supplied by the
courts even though the matter is within the proper jurisdiction of a court.
Therefore, the question of as to who between the City of Iligan and Carlos Buendia has the better right to the water source should have been left to the
determination of the NWRB via a timely protest filed during the pendency of the water permit applications. However, said issue could not have been
adjudicated upon by the NWRB since the application was never properly contested. Hence, in the absence of a timely protest filed before the NWRB, no water
rights controversy arose wherein the NWRB can properly discuss the substantial issues raised by respondent.
Furthermore, Articles 16 and 17 of the Water Code of the Philippines provide:
Art. 16. Any person who desires to obtain a water permit shall file an application with the Council [now Board] who shall make known said application to the
public for any protests.
In determining whether to grant or deny an application, the Council [now Board] shall consider the following: protests filed, if any; prior permits granted; the
availability of water; the water supply needed for beneficial use; possible adverse effects; land-use economics; and other relevant factors.
Upon approval of an application, a water permit shall be issued and recorded.
Art. 17. The right to the use of water is deemed acquired as of the date of filing of the application for a water permit in case of approved permits, or as of the
date of actual use in a case where no permit is required. [Emphases ours]
From a reading of the above provisions, it is evident that after an application to obtain a water permit has been made known to the public, any interested
party must file his protest thereto, in order that the application may be properly evaluated. Otherwise, after the application for a water permit has been
approved, the grantee of the permit now acquires an exclusive right to use the water source, reckoned from the date of the filing of the applications. Thus, after
petitioners right to the water permit has been properly adjudicated, respondent may no longer belatedly question said grant. By virtue of respondents failure to
lodge a timely protest, petitioner has already acquired the right to appropriate the water from the spring inside the latters property.
In conclusion, the failure of respondent City of Iligan to timely oppose the water permit applications, and later on to file the Petition for Certiorari within a
reasonable time has the effect of rendering the grant of the water permits to petitioner Buendia final and executory.
As to the issue of acquisitive prescription, the Court cannot now accept hook, line, and sinker the lower courts findings on the issue based on two
reasons. First, said determination was not passed upon by the agency that exercises original jurisdiction to settle said question of fact, which brings us to the
conclusion that the court a quo should have declined to decide on the matter. Second, such determination is contradicted by the allegations made by the City
of Iligan in a previous case that has become final involving the same parties. It has been established in the decision [25] of the RTC of Lanao del Norte, Branch
1, entitled, Buendia v. City of Iligan, and affirmed by the Court of Appeals,[26] that respondent entered petitioners property only in 1974 and constructed an intake dam thereon for purposes of appropriating water from the spring only in 1978. According to the said decision:
On the other hand, the defendant City of Iligans allegations that its entry and clearing over the area in1974 was acted upon in good faith as allowed by the
administratrix of the estate of plaintiffs father in the person of Aurea Buendia is right. But its failure later on to obtain the consent and knowledge of the true
owner when it constructed the in-take dam over the land in 1978 constitute bad faith[27]

Therefore, based on respondents previous allegations, the ICWSS cannot be said to have acquired a right to the use of the water source by acquisitive
prescription, since it only entered the premises two (2) years before the enactment of the Water Code of the Philippines and only eighteen (18) years before
petitioner applied with the NWRB for water permits. Furthermore, respondents alleged exercise of its right to appropriate the water source since 1927 is
negated by its belated application with the NWRB for water permits. If indeed the City of Iligan has the right to appropriate water from the spring located inside
petitioners property, then respondent would not have filed said application after the water permits over said water source have already been issued to
petitioner.
As to the fourth issue of whether or not respondent has the right to appropriate water under its charter, suffice it to say that a perusal of the charter of the
City of Iligan (Rep. Act No. 525) shows no grant of the power to appropriate water resources. Section 15 of the charter merely provides for the power to
provide for the maintenance of waterworks for supplying water to the inhabitants of the city.
WHEREFORE, premises considered, the petition is hereby GRANTED and the Decision of the Regional Trial Court of Lanao del Norte, Branch 2, dated
15 August 1997, is hereby SET ASIDE. The Order of the National Water Resources Board dated 10 March 1994 is AFFIRMED. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
20. SECOND DIVISION
[G.R. No. 125018. April 6, 2000]
REMMAN ENTERPRISES, INC., petitioner, vs. COURT OF APPEALS and CRISPIN E. LAT, respondents. francis
DECISION
BELLOSILLO, J.:
REMMAN ENTERPRISES, INC. (REMMAN), and CRISPIN E. LAT are adjoining landowners in Barangay Bugtong Na Pulo, Lipa City. The land of Lat
containing an area of 1.8 hectares is agricultural and planted mostly with fruit trees while REMMAN occupies a land area of fifteen (15) hectares six (6)
hectares of which are devoted to its piggery business. REMMAN's land is one and a half (1) meters higher in elevation than that of respondent Lat.
Sometime in July 1984 Lat noticed that REMMAN's waste disposal lagoon was already overflowing and inundating one-fourth (1/4) of Lat's plantation. He
made several representations with REMMAN but they fell on deaf ears. On 14 March 1985, after almost one (1) hectare of Lat's plantation was already
inundated with water containing pig manure, as a result of which the trees growing on the flooded portion started to wither and die, Lat filed a complaint for
damages with preliminary mandatory injunction against REMMAN. Lat alleged that the acidity of the soil in his plantation increased because of the overflow of
the water heavy with pig manure from REMMAN's piggery farm.
REMMAN denied all the allegations of Lat and raised as an affirmative defense that measures such as the construction of additional lagoons were already
adopted to contain the waste water coming from its piggery to prevent any damage to the adjoining estates.
After conducting an ocular inspection and evaluating the evidence of both parties the Regional Trial Court found that indeed REMMANs waste disposal lagoon
overflowed with the contaminated water flooding one (1) hectare of Lat's plantation. The waste water was ankle-deep and caused death and destruction to one
(1) jackfruit tree, fifteen (15) coconut trees, one hundred twenty-two (122) coffee trees, and an unspecified number of mango trees, bananas and vegetables.
As a consequence, the trial court ordered REMMAN to indemnify Lat P186,975.00 for lost profits for three (3) crop years and P30,000.00 as attorney's fees.
[1]
marie

The decision of the court a quo was affirmed in toto by the Court of Appeals.[2]
In this Petition for Review on Certiorari REMMAN prays that we pass upon the findings of the trial court as well as of the appellate court. REMMAN insists that
factual findings of lower courts may be passed upon, reviewed and reversed: (a) when the conclusion is a finding grounded entirely on speculation, surmises
or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion; (d) when the judgment
is based on a misapprehension of facts; (e) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if
properly considered, would justify a different conclusion; (f) when the conclusions of the Court of Appeals are not supported by the evidence on record; (g)
when facts of substance were overlooked which, if correctly considered, might have changed the outcome of the case; and, (h) when the findings of the Court
of Appeals are not in accord with what reasonable men would readily accept are the correct inferences from the evidence extant in the records. [3]
Indeed, in the abovementioned instances, the factual milieu of a particular case may be passed upon, reversed or modified by this Court. But examination of
the record reveals that all the above instances are unavailing. From this point of view alone the instant petition is dismissible. Nevertheless, we shall discuss
them hereunder to dispose finally of the contentions of REMMAN.
First, REMMAN argues that its liability for the damages suffered by Lat was not clearly established.
We disagree. During the ocular inspection conducted by the lower court where representatives of both parties were present, it was established that the waste
water containing pig manure was continuously flowing from REMMAN's piggery farm to Lat's plantation. The water was ankle-deep and flooded one (1)
hectare of Lat's plantation. The overflow of the "acidic, malodorous and polluted water" continued from June 1984 to March 1985 thus destroying one (1)
jackfruit tree, fifteen (15) coconut trees, one hundred an twenty-two (122) coffee trees, and an unspecified number of mango trees, bananas and vegetables. [4]
In addition, the appellate court found that there was indeed negligence on the part of REMMAN which directly caused the damage to the plantation of Lat.
Thus -novero
x x x Negligence was clearly established. It is uncontroverted that the land of appellee was flooded on account of the overflow of acidic,
malodorous and polluted water coming from the adjacent piggery farm of appellant sometime in May 1984. This resulted in the impairment of
the productivity of appellee's land as well as the eventual destruction and death of several fruit trees, such as coconuts, coffee, jackfruits,
bananas and other plants x x x x Appellant cannot avoid liability because their negligence was the proximate cause of the damage. Appellee's
property was practically made a catch-basin of polluted water and other noxious substances emptying from appellant's piggery which could
have been prevented had it not been for the negligence of appellant arising from its: (a) failure to monitor the increases in the level of water in
the lagoons before, during and after the heavy downpours which occurred during the rainy months of 1984; (b) failure to augment the existing
lagoons prior to the incident, notwithstanding the fact that at the time of the flooding, the piggery had grown to a capacity of 11,000 heads, and
considering that it was reasonably forseeable that the existing waste disposal facilities were no longer adequate to accomodate the increasing
volume of waste matters in such a big farm; and more importantly, (c) the repeated failure to comply with their promise to appellee. [5]
Second, REMMAN argues that the trial court as well as the Court of Appeals should not have rejected its request for the production of Lat's income tax
returns. According to REMMAN had Lat's income tax returns been produced, the issue of the alleged damages suffered by Lat would have been settled.
This argument is moot, if not trite. For this matter has been laid to rest when we affirmed the Court of Appeals' decision in an earlier case involving the same
parties.[6] In sustaining the trial court's quashal of the subpoena duces tecum previously issued compelling Lat to produce his income tax returns for the years
1982-1986, the appellate court explained that the production of the income tax returns would not necessarily serve to prove the special and affirmative
defenses set up by REMMAN nor rebut Lat's testimony regarding the losses he sustained due to the piggery. The tax returns per se could not reflect the total
amount of damages suffered by Lat, as income losses from a portion of the plantation could be offset by any profit derived from the rest of the plantation or
from other sources of income. Conversely, losses incurred from other sources of income would be totally unrelated to the income from the particular portion of
the plantation flooded with waste matter coming from REMMAN's piggery.[7]
Third, REMMAN contends that the damages allegedly sustained by Lat have not been satisfactorily established. nigel

We a not convinced. The factual findings of the court a quo rightly support its conclusions on this respect Coming now to the issue of damages, We find appellant's allegations not well-taken. Appellant contends that actual and compensatory
damages require evidentiary proof, and there being no evidence presented as to the necessity of the award for damages, it was erroneous for
the lower court to have made such award. It must be remembered that after the ocular inspection, the court a quo rendered an inventory of
dead and rotten trees and plants found in appellee's property. Appellee also testified on the approximate annual harvest and fair market value
thereof. Significantly, no opposition or controverting evidence was presented by appellant on the matter. Hence, appellant is bound thereby
and cannot now be heard to complain. As correctly held by the court a quo:
An ocular inspection has been conducted by the trial court. The inventory of the trees damaged and the itemized valuation placed therein by private
respondent after the ocular inspection which is not rebutted by the petitioner, is the more accurate indicator of the said amount prayed for as
damages. If the valuation is indeed unreasonable, petitioner should present controverting evidence of the fair market value of the crops involved. The
trial court held that the private respondent himself had been subjected to extensive cross and re-cross examination by the counsel for the petitioner on
the amount of damages.[8]
Finally, REMMAN complains that the damages, if any, were due to a fortuitous event.
Again cannot agree with petitioner. We defer instead to the findings opinions expressed by the lower courts Even assuming that the heavy rains constituted an act of God, by reason of their negligence, the fortuitous event became humanized,
rendering appellants liable for the ensuing damages. In National Power Corporation v. Court of Appeals, 233 SCRA 649 (1993), the Supreme
Court held: ella
Accordingly, petitioners cannot be heard to invoke the act of God or force majeure to escape liability for the loss or damage sustained by private
respondents since they, the petitioners, were guilty of negligence. This event then was not occasioned exclusively by an act of God or force majeure; a
human factor - negligence or imprudence - had intervened. The effect then of the force majeure in question may be deemed to have, even if only
partly, resulted from the participation of man. Thus, the whole occurrence was thereby humanized, as it were, and removed from the rules applicable
to acts of God.
As regards the alleged natural easement imposed upon the property of appellee, resort to pertinent provisions of applicable law is imperative.
Under the Civil Code, it is provided:
Art. 637. Lower estates are obliged to receive the waters which naturally and without the intervention of man descend from the higher estates, as well
as the stones or earth which they carry with them.
The owner of the lower estate cannot construct works which will impede this easement; neither can the owner of the higher estate make works which
will increase the burden.
A similar provision is found in the Water Code of the Philippines (P.D. No.1067), which provides:
Art. 50. Lower estates are obliged to receive the water which naturally and without the intervention of man flow from the higher estates, as well as the
stone or earth which they carry with them.
The owner of the lower estate cannot construct works which will impede this natural flow, unless he provides an alternative method of drainage;
neither can the owner of the higher estate make works which will increase this natural flow. marinella

As worded, the two (2) aforecited provisions impose a natural easement upon the lower estate to receive the waters which naturally and
without the intervention of man descend from higher states. However, where the waters which flow from a higher state are those which are
artificially collected in man-made lagoons, any damage occasioned thereby entitles the owner of the lower or servient estate to compensation.
[9]

On the basis of the foregoing discussion, it is crystal clear that REMMAN is directly accountable to Lat for the damages sustained by him. The negligence of
REMMAN in maintaining the level of waste water in its lagoons has been satisfactorily established. The extent of damages suffered by Lat remains unrebutted;
in fact, has been proved.
WHEREFORE, the petition is DENIED. The 19 October 1995 Decision of the Court of Appeals affirming that of the Regional Trial Court-Br. 16, Lipa City,
holding petitioner Remman Enterprises, Inc. (REMMAN) liable to private respondent Crispin E. Lat for damages and to indemnify the latter P186,975.00 for
lost profits for three (3) crop years and P30,000.00 as attorneys fees, is AFFIRMED. Costs against petitioner.
SO ORDERED.
Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur. alonzo
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-17821

November 29, 1963

PRIMITIVO LOVINA, and NELLY MONTILLA, plaintiffs-appellees,

vs.
HON. FLORENCIO MORENO, as Secretary of Public Works and Communications, and BENJAMIN YONZON, defendants-appellants.
Gil R. Carlos and Associates for plaintiffs-appellees.
Office of the Solicitor General for defendants-appellants.
REYES, J.B.L., J.:
This is an appeal from a decision of the Court of First Instance of Manila (Branch X), in its Civil Case No. 41639, enjoining the Secretary of Public Works and
Communications from causing the removal of certain dams and dikes in a fishpond owned by Primitivo and Nelly Lovina in the Municipality of Macabebe
Province of Pampanga, covered by T.C.T. No. 15905.
The cause started by a petition of numerous residents of the said municipality to the Secretary of Public Works and Communications, complaining that
appellees had blocked the "Sapang Bulati", a navigable river in Macabebe, Pampanga, and asking that the obstructions be ordered removed, under the
provisions of Republic Act No. 2056. After notice and hearing to the parties, the said Secretary found the constructions to be a public nuisance in navigable
waters, and, in his decision dated 11 August 1959, ordered the land owners, spouses Lovina, to remove five (5) closures of Sapang Bulati; otherwise, the
Secretary would order their removal at the expense of the respondent. After receipt of the decision, the respondent filed a petition in the Court of First Instance
of Manila to restrain the Secretary from enforcing his decision. The trial court, after due hearing, granted a permanent injunction, which is now the subject of
the present appeal.

The respondents-appellants, Florencio Moreno, Secretary of Public Works and Communications, and Benjamin Yonzon, investigator, question the jurisdiction
of the trial court, and attribute to it the following errors:
1. The trial court erred in holding in effect, that Republic Act No. 2056 is unconstitutional:
2. The trial court erred in receiving evidence de novo at the trial of the case;
3. The trial court erred in substituting its judgment for that of defendant Secretary of Public Works and Communications and in reversing the latter's
finding that the stream in question is a navigable river which was illegally closed by plaintiffs;
4. The trial court erred in holding that the Sapang Bulati is a private stream; and
5. The lower court erred in not holding that plaintiffs should first exhaust administrative remedy before filing the instant petition.
The position of the plaintiffs-appellees in the court below was that Republic Act No. 2056 is unconstitutional because it invests the Secretary of Public Works
and Communications with sweeping, unrestrained, final and unappealable authority to pass upon the issues of whether a river or stream is public and
navigable, whether a dam encroaches upon such waters and is constitutive as a public nuisance, and whether the law applies to the state of facts, thereby
Constituting an alleged unlawful delegation of judicial power to the Secretary of Public Works and Communications.
Sections 1 and 2 of Republic Act 2056 provides:
Section 1. Any provision or provisions of law to the contrary notwithstanding, the construction or building of dams, dikes or any other works which
encroaches into any public navigable river, stream, coastal waters and any other navigable public waters or waterways as well as the construction or
building of dams, dikes or any other works in areas declared as communal fishing grounds, shall be ordered removed as public nuisances or a
prohibited constructions as herein provided: Provided, however, That the Secretary of Public Works and Communications may authorize the
construction of any such work when public interest or safety so requires or when it is absolutely necessary for the protection of private property.
Section 2. When it is found by the Secretary of Public Works and Communications, after due notice and hearing, that any dam, dike or any other
works now existing or may there after be constructed encroaches into any public navigable waters, or that they are constructed in areas declared as
communal fishing grounds, he shall have the authority to order the removal of any such works and shall give the party concerned a period not to
exceed thirty days for the removal of the same: Provided, That fishpond constructions or works on communal fishing grounds introduced in good faith
before the areas we proclaimed as fishing grounds shall be exempted from the provisions of this Act, provided such constructions or works do not
obstruct or impede the free passage of any navigable river, stream, or would not cause inundations of agricultural areas: Provided, further, That should
the party concerned fail to comply with the order of the Secretary of Public Works and Communications within the period so stated in the order, such
removal shall be effected by the Secretary of Public Works and Communications at the expense of the said party within ten days following the
expiration of the period given the party concerned: Provided, furthermore, That the investigation and hearing to be conducted by the Secretary of
Public Works and Communications under this section shall be terminated and decided by him within a period which shall not exceed ninety days from
the time he shall have been notified in writing or a written complaint shall have been filed with him by any interested party apprising him of the
existence of a dam, dike or any other works that encroaches into any other public navigable river, stream, coastal waters or any other public navigable
waters or waterways and in areas declared as communal fishing grounds: Provided, still furthermore, That the failure on the part of the Secretary of
Public Works and Communications without justifiable or valid reason to terminate and decide a case or effect the removal of any such works, as
provided for in this section, shall constitute an offense punishable under section three of this Act: And provided, finally, That the removal of any such
works shall not impair fishponds completed or about to be completed which do not encroach or obstruct any public navigable river or stream and/or
which would not cause inundations of agricultural areas and which have been constructed in good faith before the area was declared communal
fishing grounds.
The objections of the appellees to the constitutionality of Republic Act No. 2056, not only as an undue delegation of judicial power to the Secretary of Public
Works but also for being unreasonable and arbitrary, are not tenable. It will be noted that the Act (R.A. 2056) merely empowers the Secretary to remove

unauthorized obstructions or encroachments upon public streams, constructions that no private person was anyway entitled to make, because the bed of
navigable streams is public property, and ownership thereof is not acquirable by adverse possession (Palanca vs. Commonwealth, 69 Phil. 449).
It is true that the exercise of the Secretary's power under the Act necessarily involves the determination of some questions of fact, such as the existence of the
stream and its previous navigable character; but these functions, whether judicial or quasi-judicial, are merely incidental to the exercise of the power granted
by law to clear navigable streams of unauthorized obstructions or encroachments, and authorities are clear that they are, validly conferable upon executive
officials provided the party affected is given opportunity to be heard, as is expressly required by Republic Act No. 2056, section 2.
It thus appears that the delegation by Congress to executive or administrative agencies of functions of judicial, or at least, quasi-judicial functions is
incidental to the exercise by such agencies of their executive or administrative powers, is not in violation of the Separation of Powers so far as that
principle is recognized by the Federal Constitution nor is it in violation of due process of law. (3 Willoughby on the Const. of the U.S., pp. 1654-1655)
The mere fact that an officer is required by law to inquire the existence of certain facts and to apply the law thereto in order to determine what his
official conduct shall be and the fact that these acts may affect private, rights do not constitute an exercise of judicial powers. Accordingly, a statute
may give to non-judicial officers the power to declare the existence of facts which call into operation its provisions, and similarly may grant to
commissioners and other subordinate officer, power to ascertain and determine appropriate facts as a basis for procedure in the enforcement of
particular laws. (11 Am. Jur., Const. Law, p. 950, sec. 235)
s. 237. Powers to determine cases within Statute. One important class of cases in which discretion may properly be vested in administrative
officers, which class is almost an operation of the general rule relating to the ascertainment of facts, consists of those cases in which a general rule or
prohibition is laid down and power is vested in an executive officer to determine when particular cases do or do not fall within such rule or prohibition.
Power exercised under such statutes, calling for the exercise of judgment in the execution of a ministerial act, is never judicial in nature within the
sense prohibited by the Constitution. (11 Am. Jur., Const. Law, sec. 237, p. 952)
A direct precedent can be found in the "Bridge cases" upholding the constitutionality of the U.S. River and Harbor Act of March 3, 1899, that empowered (sec.
18) the Secretary of War to take action, after hearing, for the removal or alteration of bridges unreasonably obstructing navigation. On the issue of undue
delegation of power, the U.S. Supreme Court ruled as follows:
Congress thereby declared that whenever the Secretary of War should find any bridge theretofore or thereafter constructed over any of the navigable
waterways of the United States to be an unreasonable obstruction to the free navigation of such waters on account of insufficient height, width of
span, or otherwise, it should be the duty of the Secretary, after hearing the parties concerned, to take action looking to the removal or alteration of the
bridge, so as to render navigation through or under it reasonably free, easy, and unobstructed. As this court repeatedly has held, this is not an
unconstitutional delegation of legislative or judicial power to the Secretary. Union Bridge Co. vs. United States, 204 U.S. 364, 385, 51 L. ed. 523, 533,
27 Sup. Ct. Rep. 367; Monongahela Bridge Co. v. United States, 216 U.S. 177, 192,54 L. ed. 435, 441, 30 Sup. Ct. Rep. 356; Hannibal Bridge Co. v.
United States, 221 U.S. 194. 205, 55 L. ed. 699, 703, 31 Sup. Ct. Rep. 603. The statute itself prescribes the general rule applicable to all navigable
waters, and merely charged the Secretary of War with the duty of ascertaining in each case, upon notice to the parties concerned, whether the
particular bridge came within the general rule. Of course, the Secretary's finding must be based upon the conditions as they exist at the time he acts.
But the law imposing this duty upon him speaks from the time of its enactment. (Louisville Bridge Co. v. U.S., 61 L. ed. 395). (Emphasis supplied)
Appellees invoke American rulings that abatement as nuisances of properties of great value can not be done except through court proceedings; but these
rulings refer to summary abatements without previous hearing, and are inapplicable to the case before us where the law provides, and the investigator actually
held, a hearing with notice to the complainants and the, appellees, who appeared therein. It is noteworthy that Republic Act 2605 authorizes removal of the
unauthorized dikes either as "public nuisances or as prohibited constructions" on public navigable streams, and those of appellees clearly are in the latter
class.
It may not be amiss to state that the power of the Secretary of Public Works to investigate and clear public streams free from unauthorized encroachments and
obstructions was granted as far back as Act 3208 of the old Philippine Legislature, and has been upheld by this Court (Palanca vs. Commonwealth, supra;
Meneses vs. Commonwealth, 69 Phil. 647). We do not believe that the absence of an express appeal to the courts under the present Republic Act 2056 is a
substantial difference, so far as the Constitution is concerned, for it is a well-known rule that due process does not have to be judicial process; and moreover,

the judicial review of the Secretary's decision would always remain, even if not expressly granted, whenever his act violates the law or the Constitution, or
imports abuse of discretion amounting to excess of jurisdiction.
The argument that the action of the Secretary amounts to a confiscation of private property leads us directly to the issue of fact whether a navigable portion of
the Bulati creek had once traversed the registered lot of the appellees Lovina and connected with Manampil creek that borders said lot on the northwest
before it was closed by Jose de Leon, Lovina's predecessor. The Secretary of Public Works has found from the evidence before him that, originally,
the sapang (creek) Bulati flowed across the property in question, and connected the Nasi river with sapang Manampil; that in 1926 or thereabouts, the Bulati
creek was 2 meters deep at high tide and 1/2 meter deep at low tide, and the people used it as fishing grounds and as a communication way, navigating along
its length in bancas; that former registered owner, Jose de Jesus, closed about meters of the course of the sapangBulati that lay within the lot in question by
constructing dams or dikes at both sides and converting the lot into a fishpond.
The appellees, on the other hand, rely on the 1916 registration plan of the property (Exh. C), showing it to be merely bounded by the Bulati creek on the
southeast, as well as on the testimony introduced at the hearing of prohibition case (over the objection of the Government counsel) that the Bulati creek did
not enter the property.
The Court of First Instance found that "according to the location plan, Exhibit "C", the "Bulati creek, on which dikes and dams in question were constructed
was a mere estero and could not be considered a navigable stream then." It is not explained how such fact could appear solely from the plan Exhibit "C" (no
other proof being referred to), unless indeed the court below so concluded from the fact that in said plan the Bulati creek does not appear to run within the
registered lot. The conclusion of lower court is not supported by its premises, because by law, the issuance of a Torrens title does not confer title navigable
streams (which are fluvial highways) within registered property, nor is it conclusive on their non-existence, unless the boundaries of such streams had been
expressly delimited in the registration plan (Act 496, sec. 39 cf. Palanca vs. Commonwealth, 69 Phil. 449; Meneses Commonwealth, 69 Phil. 647), so that
delimitation of their course may be made even after the decree of registration has become final. In the present case, in truth the very plan of the appellees,
Exhibit "C", shows parallel reentrant lines, around its point 65 and between points 44 and that indicate the existence of a stream connecting the sapang Bulati
on the southeast and the sapang Manampil on the northwest, and which the surveyor apparently failed delimit for some undisclosed reason. That the stream
was the prolongation of the sapang Bulati, that formerly flow across the registered lot, is also shown by the fact that appellees' plan Exhibit "C", the westward
continuation the Bulati creek (west of point 65), which bounds the registered lot, is labelled "Etero Mabao". The plan thus corroborates the previously
summarized testimony laid before investigator Yonzon and relied upon by the Secretary in his administrative decision. Even more, appellees' own caretaker,
Yambao, showed investigator Yonzon the old course of the Bulati within the fishpond itself; and this evidence is, likewise, confirmed by the cross-section
profile of the ground near the dams in question (See plan Annex "AA" of Yonzon's Report), where the old channel of the creek is clearly discernible. To be
sure, appellees contend that they were not shown this plan; but in their evidence before the court of first instance, they never attempted, or offered, to prove
that said plan is incorrect.
That the creek was navigable in fact before it was closed was also testified to by the government witnesses, whose version is corroborated as we have seen.
Considering the well-established rule that findings of fact in executive decisions in matters within their jurisdiction are entitled to respect from the courts in the
absence of fraud, collusion, or grave abuse of discretion (Com. of Customs vs. Valencia, 54 O.G. 3505), none of which has been shown to exist in this case,
we agree with appellant that the court below erred in rejecting the findings of fact of the Secretary of Public Works.
The findings of the Secretary can not be enervated by new evidence not laid down before him, for that would be tantamount to holding a new investigation,
and to substitute for the discretion and judgment of the Secretary the discretion and judgment of the court, to whom the statute had entrusted the case. It is
immaterial that the present action should be one for prohibition or injunction and not one for certiorari, in either event the case must be resolved upon the
evidence submitted to the Secretary, since a judicial review of executive decisions does not import a trial de novo, but only an ascertainment of whether the
executive findings are not in violation of the constitution or of the laws, and are free from fraud or imposition, and whether they find reasonable support in the
evidence.1 Here, the proof preponderates in favor of the Secretary's decision.
Nevertheless, we, agree with appellees that they can not be charged with failure to exhaust administrative remedies, for the Secretary's decision is that of the
President, in the absence of disapproval (Villena vs. Secretary of the interior, 67 Phil. 451).

Finally, there being a possibility that when they purchased the property in question the appellees Lovina were not informed of the illegal closure of the Bulati
creek, their action, if any, against their vendor, should be, and is hereby, reserved.
In resume, we rule:
(1) That Republic Act No. 2056 does not constitute an unlawful delegation of judicial power to the Secretary of Public Works;
(2) That absence of any mention of a navigable stream within a property covered by Torrens title does not confer title to it nor preclude a subsequent
investigation and determination of its existence;
(3) That the findings of fact of the Secretary of Public Works under Republic Act No. 2056 should be respected in the absence of illegality, error of law, fraud,
or imposition, so long as the said, findings are supported by substantial evidence submitted to him.
(4) That ownership of a navigable stream or of its bed is not acquirable by prescription.
WHEREFORE, the decision appealed from is reversed, and the writs of injunction issued therein are annulled and set aside. Costs against appellees Lovina.
Bengzon, C.J., Padilla, Bautista Angelo, Barrera, Paredes, Regala and Makalintal, JJ., concur.
Dizon, J., took no part.
22. Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-63742 April 17, 1989
TANJAY WATER DISTRICT, represented by Engr. JOEL B. BORROMEO, Manager, petitioner,
vs.
HON. PEDRO GABATON, MUN. OF PAMPLONA, APOLINARIO ARNAIZ, ROMULO ALPAS, WENCESLAO DURAN, SERGIO SALMA, APOLLO BOBON,
CATALINO ORTEGA, FRANCISCO ZERNA, ANTONIO DIVINAGRACIA, PEDRO SINCERO, DIONISIO TABALOC, ROMEO RAMIREZ, FRANCISCO
CABILAO and ESPERIDION MOSO, respondents.
G.R. No. 84300 April 17, 1989
JOSEFINO DATUIN, petitioner,
vs.
TARLAC WATER DISTRICT, respondent.
Rodulfo O. Navarro and Baldomero Limbaga for petitioner in G.R. No. 63742.
Joaquin R. Hitosis for respondents in G.R. No. 63742.
Isabelo C. Salamida for petitioner in G.R. No. 84300.

Conrado C. Ginelo Jr. for respondent in G.R. No. 84300.

Bernardito A. Florido for Philippine Association of Water Districts.
Reuben A. Espancho for Esperidion Moso.

GRIO-AQUINO, J.:
The common issue in these consolidated cases is whether or not water districts created under PD No. 198, as amended, are private corporations or
government-owned or controlled corporations. Another issue in G.R. No. 63742 is whether respondent Judge acted without, or in excess of, jurisdiction or with
grave abuse of discretion in dismissing Civil Case No. 8144 for alleged lack of jurisdiction over the subject matter.
I. G.R. No. 63742
On March 3, 1983, petitioner Tanjay Water District, represented by its manager, Joel B. Borromeo, filed in the Regional Trial Court of Negros Oriental,
Dumaguete City, 7th Judicial Region, Civil Case No. 8144, an action for injunction with preliminary mandatory injunction and damages, against respondent
Municipality of Pamplona and its officials to prevent them from interfering in the management of the Tanjay Waterworks System.
Respondent Judge set the hearing of the application for injunction on March 16, 1983. The Municipality and its officials answered the complaint. Esperidion
Moso filed a separate answer.
When the case was called for hearing on March 16, 1983, respondent Judge gave the parties five (5) days to submit their respective position papers on the
issue of the court's jurisdiction (or lack of it), over the action. The respondents' position paper questioned the court's jurisdiction over the case and asked for its
dismissal of the complaint (Annex F). Instead of a position paper, the petitioner filed a reply with opposition to the motion to dismiss (Annex G).
On March 25, 1983, respondent Judge issued an order dismissing the complaint for lack of jurisdiction over the subject matter (water) and over the parties
(both being government instrumentalities) by virtue of Art. 88 of PD No. 1067 and PD No. 242. He declared that the petitioner's recourse to the court was
premature because the controversy should have been ventilated first before the National Water Resources Council pursuant to Arts. 88 and 89 of PD No.
1067. He further ruled that as the parties are government instrumentalities, the dispute should be administratively settled in accordance with PD No. 242.
Petitioner filed a petition for certiorari in this Court alleging that respondent Judge acted without or in excess of jurisdiction or with grave abuse of discretion in
dismissing the case.
II. G.R. No. 84300
Petitioner Josefino Datuin filed a complaint for illegal dismissal against respondent Tarlac Water District in the Department of Labor and Employment (DOLE)
which decided in his favor. However, upon respondent's motion for reconsideration (which was treated as an appeal) the National Labor Relations Commission
(NLRC) reversed the decision and dismissed the complaint "for lack of jurisdiction," holding that as the respondent Tarlac Water District is a corporation
created by a special law (PD No. 198), its officers and employees belong to the civil service and their separation from office should be governed by Civil
Service Rules and Regulations.
Petitioner contends that this case is similar to the case of Tanjay Water District versus Hon. Pedro C. Gabaton, et al., G.R. No. 63742, because the lone issue
in both cases is whether or not water districts created under PD No. 198, as amended, are private corporations or government-owned or controlled
corporations. The two cases were consolidated pursuant to the resolution dated July 25, 1988 of this Court.

Actually the question of the corporate personality of local water districts is not new. The Court ruled in the recent case of Hagonoy Water District vs. NLRC,
G.R. No. 81490, August 31, 1988, that they are quasi public corporations whose employees belong to the civil service, hence, the dismissal of those
employees shall be governed by the civil service law, rules and regulations. The pertinent part of this Court's decision reads as follows:
The only question here is whether or not local water districts are government owned or controlled corporations whose employees are subject
to the provisions of the Civil Service Law. The Labor Arbiter asserted jurisdiction over the alleged illegal dismissal of private respondent
Villanueva by relying on Section 25 of Presidential Decree No. 198, known as the 'Provincial Water Utilities Act of 1973' which went into effect
on 25 May 1973, and which provides as follows:
Exemption from Civil Service. The district and its employees, being engaged in a proprietary function, are hereby exempt from the
provisions of the Civil Service Law. Collective Bargaining shall be available only to personnel below supervisory levels: Provided, however,
That the total of all salaries, wages, emoluments, benefits or other compensation paid to all employees in any month shall not exceed fifty
percent (50%) of average net monthly revenue, said net revenue representing income from water sales and sewerage service charges, less
pro-rata share of debt service and expenses for fuel or energy for pumping during the preceding fiscal year.
The Labor Arbiter failed to take into account the provisions of Presidential, Decree No. 1479, which went into effect on 11 June 1978. P.D. No.
1479 wiped away Section 25 of P.D. 198 quoted above, and Section 26 of P.D. 198 was renumbered as Section 25 in the following manner:
Section 26. of the same decree P.D. 198 is hereby amended to read as Section 25 as follows:
Section 25. Authorization. The district may exercise all the powers which are expressly granted by this Title or which are necessarily
implied from or incidental to the powers and purposes herein stated. For the purpose of carrying out the objectives of this Act, a district is
hereby granted the power of eminent domain, the exercise thereof shall, however, be subject to review by the Administration.
Thus, Section 25 of P.D. 198 exempting the employees of water districts from the application of the Civil Service Law was removed from the
statute books.
This is not the first time that officials of the Department of Labor and Employment have taken the position that the Labor Arbiter here adopted.
In Baguio Water District vs. Cresenciano B. Trajano etc., et al. (127 SCRA 730 [1984]), the petitioner Water District sought review of a
decision of the Bureau of Labor Relations which affirmed that of a Med-Arbiter calling for a certification election among the regular rank-andfile employees of the Baguio Water District (BWD). In granting the petition, the Court said
The Baguio Water District was formed pursuant to Title II Local Water District Law of P.D. No. 198, as amended. The BWD is by Sec. 6
of that decree 'a quasi-public corporation performing public service and supplying public wants'.
xxxxxx
We grant the petition for the following reasons:
I. Section 25 of P.D. No. 198 was repealed by Sec. 3 of P.D. No. 1479; Section 26 of P.E. No. 198 was amended to read as Sec. 25 by Sec. 4
of P.D. No. 1479. The amendatory decree took effect on June 11, 1978.
xxxxxxxxx
3. The BWD is a corporation created pursuant to a special law P.D. No. 198, as amended. As such its officers and employees are part of
the Civil Service. (Sec. 1, Art. XII-B, [1973] Constitution; P.D. No. 868.)

The hiring and firing of employees of government-owned or controlled corporations are governed by the Civil Service Law and Civil Service Rules and
Regulations. In National Housing Corporation vs. Juco, 134 SCRA 172,176, We held:
There should no longer be any question at this time that employees of government-owned or controlled corporations are governed by the civil
service law and civil service rules and regulations.
Section 1, Article XII-B of the [1973] Constitution specifically provides:
The Civil Service embraces every branch, agency, subdivision, and instrumentality of the Government, including every government-owned or
controlled corporation ... .
The 1935 Constitution had a similar provision in its Section 1, Article XII which stated:
A Civil Service embracing all branches and subdivisions of the Government shall be provided by law.
The inclusion of 'government-owned or controlled corporations' within the embrace of the civil service shows a deliberate effort of the framers
to plug an earlier loophole which allowed government-owned or controlled corporations to avoid the full consequences of the allencompassing coverage of the civil service system. The same explicit intent is shown by the addition of 'agency' and 'instrumentality' to
branches and subdivisions of the Government. All offices and firms of the government are covered.
The amendments introduced in 1973 are not Idle exercises or meaningless gestures. They carry the strong message that civil service
coverage is broad and all-embracing insofar as employment in the government in any of its governmental or corporate arms is concerned.
xxxxxxxxx
Section 1 of Article XII-B, 1973 Constitution uses the word 'every' to modify the phrase 'government-owned or controlled corporation'
'Every' means each one of a group, without exception. It means all possible and all, taken one by one. Of course, our decision in this case
refers to a corporation created as a government-owned or controlled entity. It does not cover cases involving private firms taken over by the
government in foreclosure or similar proceedings. We reserve judgment on these latter cases when the appropriate controversy is brought to
this Court. (Emphasis ours)
Significantly, Article XIB Section 2(l) of the 1987 Constitution provides that "(t)he civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the government, including government-owned or controlled corporations with original charters." Inasmuch as PD No. 198, as amended, is the
original charter of the petitioner, Tanjay Water District, and respondent Tarlac Water District and all water districts in the country, they come under the coverage
of the civil service law, rules and regulations. (Sec. 35, Art VIII and Sec. 37, Art. IX of PD No. 807.)
In G.R. No. 63742, respondent Judge ruled that as the subject matter of Civil Case No. 8144 was water, the case should have been brought first to the
National Water Resources Council in accordance with Articles 88 and 89 of PD No. 1067, and, as the parties are government instrumentalities (The Tanjay
Water District and the Municipality of Pamplona), the dispute should be administratively settled in accordance with PD No. 242.
Articles 88 and 89 of The Water Code (PD No. 1067, promulgated on January 25, 1977) provide as follows:
ART. 88. The [Water Resources] Council shall have original jurisdiction over all disputes relating to appropriation, utilization, exploitation,
development, control, conservation and protection of waters within the meaning and context of the provisions of this Code.

The decisions of the Council on water rights controversies shall be immediately executory and the enforcement thereof may be suspended
only when a bond, in an amount fixed by the Council to answer for damages occasioned by the suspension or stay of execution, shall have
been filed by the appealing party, unless the suspension is by virtue of an order of a competent court.
All disputes shall be decided within sixty (60) days after the parties submit the same for decision or resolution.
The Council shall have the power to issue writs of execution and enforce its decisions with the assistance of local or national police agencies.
ART. 89. The decisions of the Council on water rights controversies may be appealed to the Court of First Instance of the province where the
subject matter of the controversy is situated within fifteen (15) days from the date the party appealing receives a copy of the decision, on any
of the following grounds: (2) grave abuse of discretion question of law; and (3) questions of fact and law. (Emphasis supplied.)
Inasmuch as Civil Case No. 8144 involves the appropriation, utilization and control of water, We hold that the jurisdiction to hear and decide the dispute in the
first instance, pertains to the Water Resources Council as provided in PD No. 1067 which is the special law on the subject. The Court of First Instance (now
Regional Trial Court) has only appellate jurisdiction over the case.
P.D. No. 242 which was issued on July 9, 1973, prescribes administrative procedures for the settlement of:
.... all disputes, claims and controversies solely between or among the departments, bureaus, offices, agencies and instrumentalities of the
National Government, including government-owned or controlled corporations but excluding constitutional offices or agencies, arising from the
interpretation and application of statutes, contracts or agreements.
by either the Secretary of Justice, or the Solicitor General, or the Government Corporate Counsel, depending on the parties involved and whether the case
raises pure questions of law or mixed questions of law and fact.
P.D. No. 242 is inapplicable to this case because the controversy herein did not arise from the "interpretation and application of statutes, contracts, or
agreements" of the parties herein. As previously stated, it involves the appropriation, utilization, and control of water.
Our determination in the earlier cases (Baguio Water District vs. Trajano, 127 SCRA 730; Hagonoy Water District vs. NLRC, G.R. No. 81490, August 31, 1988)
that water districts are government instrumentalities and that their employees belong to the civil service, disposes of Datuin's petition in G.R. No. 84300. The
National Labor Relations Commission has no jurisdiction over his complaint for illegal dismissal.
WHEREFORE, both petitions in G.R. Nos. 63742 and 84300 are dismissed without prejudice to the petitioners in G.R. No. 63742 filing their complaint in the
National Water Resources Council and the petitioner in G.R. No. 84300 seeking redress in the Civil Service Commission. No costs.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.
23. Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 165641

August 25, 2010

ENGR. RANULFO C. FELICIANO, in his capacity as General Manager of the Leyte Metropolitan Water District (LMWD), Tacloban City, Petitioner,
NAPOLEON G. ARANEZ, in his capacity as President and Chairman of "No Tax, No Impairment of Contracts Coalition, Inc.," Petitioner-inintervention,
vs.
HON. CORNELIO C. GISON, Undersecretary, Department of Finance, Respondent.
DECISION
BRION, J.:
Before this Court is the Petition for Review on Certiorari1 under Rule 45 of the Rules of Court filed by Leyte Metropolitan Water District (LMWD) through its
General Manager, Engr. Ranulfo C. Feliciano, which seeks to set aside the July 14, 2004 decision of the Court of Appeals (CA)2 that in turn affirmed the ruling
of the Court of Tax Appeals (CTA) in CTA Case No. 6165.3 The CTA dismissed LMWDs petition for lack of jurisdiction to try the case.
Joining the petitioner is the "No Tax, No Impairment of Contracts Coalition, Inc." (Coalition), a corporation represented by its President and Chairman,
Napoleon G. Aranez, which filed a motion for leave to admit complaint-petition in intervention on February 17, 2005. 4 The Court granted said motion and
required the Coalition, together with LMWD, to submit their respective memoranda in a resolution dated July 5, 2006. 5
BACKGROUND FACTS
The present petition arose from the tax case initiated by LMWD after it filed with the Department of Finance (DOF) a petition requesting that certain water
supply equipment and a motor vehicle, particularly a Toyota Hi-Lux pick-up truck, be exempted from tax. These properties were given to LMWD through a
grant by the Japanese Government for the rehabilitation of its typhoon-damaged water supply system.
In an indorsement dated July 5, 1995, the DOF granted the tax exemption on the water supply equipment but assessed the corresponding tax and duty on the
Toyota Hi-Lux pick-up truck.6 On June 9, 2000, LMWD moved to reconsider the disallowance of the tax exemption on the subject vehicle. The DOF, through
then Undersecretary Cornelio C. Gison, denied LMWDs request for reconsideration because the tax exemption privileges of government agencies and
government owned and controlled corporations (GOCCs) had already been withdrawn by Executive Order No. 93. 7 This prompted LMWD, through its General
Manager Engr. Ranulfo C. Feliciano, to appeal to the CTA.
After considering the evidence presented at the hearing, the CTA found LMWD to be a GOCC with an original charter. For this reason, the CTA resolved to
dismiss LMWDs appeal for lack of jurisdiction to take cognizance of the case. 8 The CTAs resolution was without prejudice to the right of LMWD to refile the
case, if it so desires, in the appropriate forum. Likewise, the CTA denied LMWDs motion to reconsider the dismissal of its appeal. 9
LMWD filed a petition for review10 with the CA raising the issues of whether the CTA decided the case in accord with the evidence presented and the
applicable law, and whether the LMWD is a GOCC with original charter. The CA found the petition to be unmeritorious and affirmed the CTAs ruling that the
LMWD is a GOCC with original charter, and not a private corporation or entity as LMWD argued. Hence, the present petition for review on certiorari filed by
LMWD with this Court.
THE PETITION
LMWD appeals to us primarily to determine whether water districts are, by law, GOCCs with original charter. Citing the Constitution and Presidential Decree
(P.D.) No. 198,11 LMWD claims that water districts are private corporations and as such are entitled to certain tax exemptions under the law. LMWD argues
that P.D. No. 198 is a general law, similar to the Corporation Code and other general laws, and is not a special law. Because it is a general law, water
districts constituted under its terms are private corporations, not a government-owned or controlled corporation (GOCC) with original charter.

In support of its position, LMWD points out provisions in P.D. No. 198 that it claims implements the general policy of the decree as enunciated in its Section 2,
specifically, Section 512 (pertaining to the purpose of water districts), Section 6 (formation of a water district), as amended by P.D. No. 1479, 13 and Section 7
(filing of resolution forming a water district), as amended by P.D. No. 768, 14 of Chapter II. LMWD concludes from this examination that P.D. No. 198 is not an
original charter but a general act authorizing the formation of water districts on a local option basis, similar to the Corporation Code (Batas Pambansa Blg. 68).
In drawing parallelism with the Corporation Code, LMWD cites (1) the Resolution of Formation passed by the sanggunian under PD 198 for the creation of a
water district as an equivalent to the Articles of Incorporation and By-laws under the Corporation Code, and (2) the filing of the Resolution of Formation of the
water district with the LWUA as the counterpart of the issuance of the Certificate of Filing of the Articles of Incorporation and By-laws to the private corporation
by the Securities and Exchange Commission (SEC). The juridical personality of a water district is acquired on the date of filing of the resolution in the same
way that the juridical personality of a private corporation is acquired on the date of issuance of the certificate of filing with the SEC.
LMWD further claims that the Constitution does not limit the meaning of the term "general law" to the Corporation Code, as there are other general laws such
as Republic Act (R.A.) No. 693815 (including R.A. No. 6939 -- An Act Creating the Cooperative Development Authority), and R.A. No. 6810. 16 Under R.A. No.
6938 and R.A. No. 6810, any group of individuals can form a cooperative and a Countryside and Barangay Business Enterprise (CBBE), respectively, and
acquire a juridical personality separate and distinct from their creators, members or officers provided that they comply with all the requirements under said
laws. In the same manner, any group of individuals in a given local government unit can form and organize themselves into a water district provided that they
comply with the requirements under P.D. No. 198.
Part of LMWDs theory is that P.D. No. 198 is not the operative act that created the local water districts; they are created through compliance with the nine
separate and distinct operative acts found in the Procedural Formation of a Water District prescribed under Section 6 of P.D. No. 198 and its Implementing
Rules and Regulations. The last step of these operative acts is the filing of the Resolution of Formation of the sanggunian concerned with the LWUA after the
latter has determined that such resolution has conformed to the requirements of Section 6 and the policy objectives in Section 2 of P.D. No. 198, as
amended.17 According to LMWD, no water district is formed by the enactment of P.D. No. 198. The decree merely authorized the formation of water districts by
the sanggunian, in the same manner that the Corporation Code authorizes the formation of private corporations.
LMWD theorizes that what is actually chartered, formed and created under P.D. No. 198 is the Local Water Utilities Administration (LWUA), as provided in
Section 49 of the decree. This provision establishing LWUAs charter and the policy statement in Section 2 of P.D. No. 198, are in stark contrast to the decrees
failure to provide an express provision on what constitutes the water districts charter, leading to the inference that the decree is not the charter of the water
districts but merely authorizes their formation, on a local option basis.
THE PETITION-IN-INTERVENTION
On February 17, 2005, Napoleon G. Aranez (Aranez), acting in behalf of the "No Tax, No Impairment of Contracts Coalition, Inc." (Coalition) filed a motion for
leave to admit complaint-petition in intervention in connection with the petition for review on certiorari filed by LMWD with this Court. Aranez is the Coalitions
president and chairman. The Coalition claims to indirectly represent all the water district concessionaires of the entire country figuring to more or less four
hundred million, aside from the 26,000 concessionaires situated in the city of Tacloban and the municipalities of Dagami, Palo, Pastrana, Sta. Fe, TabonTabon, Tanauan, Tolosa -- all within the province of Leyte.
The petition in intervention raises three main arguments: (1) that the water districts are not GOCCs as they are quasi-public corporations or private
corporations exercising public functions, (2) that classifying the water districts as GOCCs will result in an unjust disregard of the "non-impairment of contracts"
clause in the Constitution, and (3) that the appealed CA decision, if not corrected or reversed, would result in a nationwide crisis and would create social
unrest.
Interestingly, the Coalition sets forth the premise that P.D. No. 198 is not entirely a special law or a general law, but a composite law made up of both laws:
Title II Local Water District Law being the general law, and Title III Local Water Utilities Law being the special law or charter. For the rest of the petition in
intervention, the Coalition adopts supporting arguments similar, if not exactly the same, as those of LMWDs.

THE COURTS RULING

We find no merit in the petition and the petition in intervention, particularly in their core position that water districts are private corporations, not GOCCs. The
question is a long-settled matter that LMWD and the Coalition seek to revive and to re-litigate in their respective petitions.
The present petition is not the first instance that the petitioner LMWD, through Engr. Ranulfo C. Feliciano, has raised for determination by this Court the
corporate classification of local water districts.18 LMWD posed this exact same question in Feliciano v. Commission on Audit (COA).19 In ruling that local water
districts, such as the LMWD, are GOCCs with special charter, the Court even pointed to settled jurisprudence 20 culminating in Davao City Water District v. Civil
Service Commission21 and recently reiterated in De Jesus v. COA. 22
In Feliciano, LMWD likewise claimed that it is a private corporation and therefore, should not be subject to the audit jurisdiction of the COA. LMWD then
argued that P.D. No. 198 is not an "original charter" that would place the water districts within the audit jurisdiction of the COA as defined in Section 2 (1),
Article IX-D of the 1987 Constitution.23 Neither did P.D. No. 198 expressly direct the creation of the water districts. LMWD posited that the decree merely
provided for their formation on an optional or voluntary basis and what actually created the water districts is the approval of
the Sanggunian Resolution.24 Significantly, these are the very same positions that the LMWD and the Coalition (as petitioner-intervenor) submit in the present
petition.
Our ruling in Feliciano squarely addressed the difference between a private corporation created under general law and a GOCC created by a special charter,
and we need only to quote what Feliciano said:
We begin by explaining the general framework under the fundamental law. The Constitution recognizes two classes of corporations. The first refers to private
corporations created under a general law. The second refers to government-owned or controlled corporations created by special charters. Section 16, Article
XII of the Constitution provides:
Sec. 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or
controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.
The Constitution emphatically prohibits the creation of private corporations except by a general law applicable to all citizens. The purpose of this constitutional
provision is to ban private corporations created by special charters, which historically gave certain individuals, families or groups special privileges denied to
other citizens.
In short, Congress cannot enact a law creating a private corporation with a special charter. Such legislation would be unconstitutional. Private corporations
may exist only under a general law. If the corporation is private, it must necessarily exist under a general law. Stated differently, only corporations created
under a general law can qualify as private corporations. Under existing laws, that general law is the Corporation Code, except that the Cooperative Code
governs the incorporation of cooperatives.
The Constitution authorizes Congress to create government-owned or controlled corporations through special charters. Since private corporations cannot
have special charters, it follows that Congress can create corporations with special charters only if such corporations are government-owned or controlled.
Obviously, LWDs [referring to local water districts] are not private corporations because they are not created under the Corporation Code. LWDs are not
registered with the Securities and Exchange Commission. Section 14 of the Corporation Code states that "[A]ll corporations organized under this code shall
file with the Securities and Exchange Commission articles of incorporation x x x." LWDs have no articles of incorporation, no incorporators and no
stockholders or members. There are no stockholders or members to elect the board directors of LWDs as in the case of all corporations registered with the
Securities and Exchange Commission. The local mayor or the provincial governor appoints the directors of LWDs for a fixed term of office. This Court has
ruled that LWDs are not created under the Corporation Code, thus:

From the foregoing pronouncement, it is clear that what has been excluded from the coverage of the CSC are those corporations created pursuant to the
Corporation Code. Significantly, petitioners are not created under the said code, but on the contrary, they were created pursuant to a special law and are
governed primarily by its provision. (Emphasis supplied)" (Citations Omitted)25
Feliciano further categorically held that P.D. No. 198 constitutes the special charter by virtue of which local water districts exist. Unlike private corporations that
derive their legal existence and power from the Corporation Code, water districts derive their legal existence and power from P.D. No. 198. Section 6 of the
decree in fact provides that water districts "shall exercise the powers, rights and privileges given to private corporations under existing laws, in addition to the
powers granted in, and subject to such restrictions imposed under this Act." Therefore, water districts would not have corporate powers without P.D. No. 198.
As already mentioned above, the Court reiterated this ruling i.e. that a water district is a government-owned and controlled corporation with a special charter
since it is created pursuant to a special law, PD 198 albeit with respect to the authority of the COA to audit water districts, in De Jesus v. COA. 26
In light of these settled rulings, specifically rendered conclusive on LMWD by Feliciano v. COA and the application of the principle of "conclusiveness of
judgment," we cannot but deny the present petition and petition in intervention.
The principle of doctrine of "conclusiveness of judgment" a branch of the rule on res judicata27 provides that issues actually and directly resolved in a
former suit cannot again be raised in any future case between the same parties involving a different cause of action. Where there has been a previous final
judgment on the merits between the same parties or substantially the same parties, rendered by a court of competent jurisdiction over the matter and the
parties, the matters or issues raised and adjudged in the previous final judgment shall be conclusive on the parties although they are now litigating a different
cause of action28 and shall continue to be binding between the same parties for as long as the facts on which that judgment was predicated continue to be the
facts of the case or incident before the court. 29
No doubt exists that the judgment in Feliciano v. COA was a final judgment rendered by a court with competent jurisdiction over the subject matter and the
parties. The decision was in fact a ruling of this Court on the same issue posed in the present case. The ruling was also on the merits as it squarely responded
to the issues the parties raised on the basis of their submitted arguments. There was, likewise, between Feliciano v. COA and the present case a substantial
identity of parties and issue presented.
In both cases, the main petitioner has been LMWD, represented by its General Manager Engr. Ranulfo C. Feliciano. While the respondents in these cases
were different government offices the Commission on Audit and the Department of Finance they nevertheless represented and spoke for the same
government; thus, a substantial identity of respondents obtained in resolving the same contentious issue of whether local water districts should be treated as
private corporations and not as GOCCs with special charter.
IN VIEW OF THE FOREGOING, we hereby DENY the petition and the petition for intervention for lack of merit and accordingly AFFIRM the decision of the
Court of Appeals dated July 14, 2004 affirming the ruling of the Court of Tax Appeals in CTA Case No. 6165. Costs against the petitioners.
SO ORDERED.
ARTURO D. BRION
Associate Justice
25. THIRD DIVISION
UNIVERSAL
DIVISION),
Petitioner,

ROBINA

CORP.

(CORN

G.R. No. 191427

Present:

- versus LAGUNA
LAKE
AUTHORITY,
Respondent.

DEVELOPMENT

CARPIO MORALES, J., Chairperson,

BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.

Promulgated:
May 30, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CARPIO MORALES, J.:
The present petition for review on certiorari assails the Court of Appeals Decision [1] dated October 27, 2009 and Resolution dated February 23, 2010 in CA-G.
R. SP No. 107449.
Universal Robina Corp. (petitioner) is engaged in, among other things, the manufacture of animal feeds at its plant in Bagong Ilog, Pasig City.
Laguna Lake Development Authority (LLDA), respondent, through its Pollution Control Division Monitoring and Enforcement Section, after conducting
on March 14, 2000 a laboratory analysis of petitioners corn oil refinery plants wastewater, found that it failed to comply with government standards provided
under Department of Environment and Natural Resources (DENR) Administrative Orders (DAOs) Nos. 34 and 35, series of 1990.
LLDA later issued on May 30, 2000 an Ex-Parte Order requiring petitioner to explain why no order should be issued for the cessation of its operations
due to its discharge of pollutive effluents into the Pasig River and why it was operating without a clearance/permit from the LLDA.
Still later, the LLDA, after receiving a phone-in complaint conducted on August 31, 2000, another analysis of petitioners wastewater, which showed its
continued failure to conform to its effluent standard in terms of Total Suspended Solids (TSS), Biochemical Oxygen Demand (BOD), Color and Oil/Grease.
Hearings on petitioners pollution case were thereafter commenced on March 1, 2001.
Despite subsequent compliance monitoring and inspections conducted by the LLDA, petitioners wastewater failed to conform to the parameters set by the
aforementioned DAOs.
In early 2003, petitioner notified LLDA of its plan to upgrade the wastewater treatment facility (WTF) of its corn oil refinery plant in an effort to comply with
environmental laws, an upgrade that was completed only in 2007.

On May 9, 2007 on its request,[2] a re-sampling of petitioners wastewater was conducted which showed that petitioners plant finally complied with
government standards.
Petitioner soon requested for a reduction of penalties, by Manifestation and Motion [3] filed on August 24, 2007 to which it attached copies of its Daily Operation
Reports and Certifications[4] to show that accrued daily penalties should only cover a period of 560 days.
After conducting hearings, the LLDA issued its Order to Pay[5] (OP) dated January 21, 2008, the pertinent portion of which reads:
After careful evaluation of the case, respondent is found to be discharging pollutive wastewater computed in two periods reckoned
from March 14, 2000 the date of initial sampling until November 3, 2003 the date it requested for a re-sampling covering 932 days in
consideration of the interval of time when subsequent monitoring was conducted after an interval of more than 2 years and from March 15,
2006 the date when re-sampling was done until April 17, 2007 covering 448 days[6] for a total of 1,247 days.
WHEREFORE, premises considered, respondent is hereby ordered to pay within fifteen (15) days from receipt hereof the
accumulated daily penalties amounting to a total of Pesos: One Million Two Hundred Forty-Seven (Thousand) Pesos Only (PHP
1,247,000.00) prior to dismissal of the case and without prejudice of filing another case for its subsequent violations. (emphasis and
underscoring supplied)

Petitioner moved to reconsider, praying that it be ordered to pay only accumulated daily penalties in the sum of Five Hundred Sixty Thousand
(P560,000) Pesos[7] on grounds that the LLDA erred in first, adopting a straight computation of the periods of violation based on the flawed assumption that
petitioner was operating on a daily basis without excluding, among others, the period during which the LLDA Laboratory underwent rehabilitation work from
December 1, 2000 to June 30, 2001 (covering 212 days); and second, in disregarding the Daily Operation Reports and Certifications which petitioner
submitted to attest to the actual number of its operating days, i.e., 560 days.
By Order[8] of July 11, 2008, the LLDA denied petitioners motion for reconsideration and reiterated its order to pay the aforestated penalties, disposing
of the issues thusly:
On the first issue, while it is true that the Authority failed to state in its OP dated 21 January 2008 the basis for actual computation of
the accumulated daily penalties, the Authority would like to explain that its computation was based on the following, to wit:
The computation of accumulated daily penalties was reckoned period [sic] from 14 March 2000 the date of initial sampling to 03
November 2003 the date when its letter request for re-sampling was received which covers 932 days computed at 6 days per week operation
as reflected in the Reports of Inspection. Since subsequent inspection conducted after two (2) years and four (4) months, such period was
deducted from the computation. Likewise, the period when the LLDA Laboratory was rehabilitated from December 1, 2000 to June 30, 2001
was also deducted with a total of Two Hundred Twelve (212) days.

On the second claim, the same cannot be granted for lack of legal basis since the documents submitted are self-serving. The period
from 15 March 2006 to 17 April 2007 was computed from the date of re-sampling when it failed to conform to the standards set by law up to
the date of receipt of its letter request for re-sampling prior to its compliance on May 9, 2007. The period covers 342 days.
Hence, respondent is found to be discharging pollutive wastewater not conforming with the standards set by law computed from
March 14, 2000 November 3, 2003 covering 932 days and from March 15, 2006 April 17, 2007 covering 342 days for a total of 1,274 days.

Petitioner challenged by certiorari the twin orders before the Court of Appeals, attributing to LLDA grave abuse of discretion in disregarding its
documentary evidence, and maintaining that the lack of any plain, speedy or adequate remedy from the enforcement of LLDAs order justified such recourse
as an exception to the rule requiring exhaustion of administrative remedies prior to judicial action.
By Decision of October 27, 2009 the appellate court affirmed both LLDA orders, which it found to be amply supported by substantial evidence, the
computation of the accumulated daily penalties being in accord with prevailing DENR guidelines. The appellate court held that while petitioner may have
offered documentary evidence to support its assertion that the days when it did not operate must be excluded from the computation, the LLDA has the
prerogative to disregard the same for being unverified, hence, unreliable.
The appellate court went on to chide petitioners petition for certiorari as premature since the law provides for an appeal from decisions or orders of the
LLDA to the DENR Secretary or the Office of the President, a remedy which should have first been exhausted before invoking judicial intervention. [9]
Petitioners motion for reconsideration having been denied by Resolution of February 23, 2010, it filed the present petition.
Petitioner cites deprivation of due process and lack of any plain, speedy or adequate remedy as grounds which exempted it from complying with the
rule on exhaustion of administrative remedies.
The petition fails.
The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system. The thrust of the rule is that courts must
allow administrative agencies to carry out their functions and discharge their responsibilities within the specialized areas of their respective competence. [10] The
rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier resolution of controversies. Comity and convenience also impel
courts of justice to shy away from a dispute until the system of administrative redress has been completed. [11]
Executive Order No. 192[12] (EO 192) was issued on June 10, 1987 for the salutary purpose of reorganizing the DENR, charging it with the task of
promulgating rules and regulations for the control of water, air and land pollution as well as of promulgating ambient and effluent standards for water and air

quality including the allowable levels of other pollutants and radiations. EO 192 also created the Pollution Adjudication Board under the Office of the DENR
Secretary which took over the powers and functions of the National Pollution Control Commission with respect to the adjudication of pollution cases, including
the latters role as arbitrator for determining reparation, or restitution of the damages and losses resulting from pollution.[13]
Petitioner had thus available administrative remedy of appeal to the DENR Secretary. Its contrary arguments to show that an appeal to the DENR
Secretary would be an exercise in futility as the latter merely adopts the LLDAs findings is at best, speculative and presumptuous.
As for petitioners invocation of due process, it fails too. The appellate court thus aptly brushed aside this claim, in this wise:
Due process, as a constitutional precept, does not always and in all situations require a trial-type proceeding. Due process is satisfied
when a person is notified of the charge against him and given an opportunity to explain or defend himself. In administrative proceedings, the
filing of charges and giving reasonable opportunity for the person so charged to answer the accusations against him constitute the minimum
requirements of due process. The essence of due process is simply to be heard, or as applied to administrative proceedings, an
opportunity to explain ones side, or an opportunity to seek a reconsideration of the action or ruling complained of.
. . . Administrative due process cannot be fully equated with due process in its strict judicial sense for it is enough that the
party is given the chance to be heard before the case against him is decided.
Here, petitioner URC was given ample opportunities to be heard it was given show cause orders and allowed to participate in hearing to rebut
the allegation against it of discharging pollutive wastewater to the Pasig River, it was given the chance to present evidences in support of its
claims, it was notified of the assailed Order to Pay, and it was allowed to file a motion for reconsideration. Given these, we are of the view that
the minimum requirements of administrative due process have been complied with in this case. [14] (emphasis in the original)

In fine, the assailed LLDA orders of January 21, 2008 and July 11, 2008 correctly reckoned the two periods within which petitioner was found to have
continued discharging pollutive wastewater and applied the penalty as provided for under Article VI, Section 32 of LLDA Resolution No. 33, Series of 1996.
[15]

LLDAs explanation that behind its inclusion of certain days in its computation of the imposable penalties that it had already deducted not just the period

during which the LLDA Laboratory underwent rehabilitation work from December 1, 2000 to June 30, 2001 (covering 212 days) but had also excluded from the
computation the period during which no inspections or compliance monitorings were conducted (a period covering two years and four months) is well-taken.
It is noted that during the hearing on June 19, 2007, the LLDA gave petitioner the opportunity to submit within fifteen (15) days.any valid documents to
show proof of its non-operating dates that would be necessary for the possible reduction of the accumulated daily penalties, [16] but petitioner failed to comply
therewith.
As earlier noted, petitioner filed a Manifestation and Motion to which it attached Daily Operation Reports and Certifications, which voluminous
documents were, however, unverified in derogation of Rule X, Section 2 [17] of the 2004 Revised Rules, Regulations and Procedures Implementing Republic Act
No. 4850. Absent such verification, the LLDA may not be faulted for treating such evidence to be purely self-serving.

Respecting LLDAs decision not to attach any evidentiary weight to the Daily Operation Reports or Certifications, recall that the LLDA conducted an
analysis of petitioners wastewater discharge on August 31, 2000, upon receiving a phone-in complaint. And it conducted too an analysis on May 3, 2002 in the
course of periodic compliance monitoring. The Daily Operation Reports for both August 31, 2000 [18] and May 3, 2002[19] submitted by petitioner clearly manifest
that the plant did not operate on those dates. On the other hand, LLDAs Investigation Report and Report of Inspection [20] dated August 31, 2000 and May 3,
2002, respectively, disclose otherwise. Petitioner never disputed the factual findings reflected in these reports. Thus spawns doubts on the veracity and
accuracy of the Daily Operation Reports.
Petitioner asserts that LLDA had not credited it for undertaking remedial measures to rehabilitate its wastewater treatment facility, despite the
prohibitive costs and at a time when its income from the agro-industrial business was already severely affected by a poor business climate; and that the
enforcement of the assailed LLDA orders amounted to a gross disincentive to its business.
Without belaboring petitioners assertions, it must be underscored that the protection of the environment, including bodies of water, is no less urgent or
vital than the pressing concerns of private enterprises, big or small. Everyone must do their share to conserve the national patrimonys meager resources for
the benefit of not only this generation, but of those to follow. The length of time alone it took petitioner to upgrade its WTF (from 2003 to 2007), a move arrived
at only under threat of continuing sanctions, militates against any genuine concern for the well-being of the countrys waterways.
WHEREFORE, the petition is DENIED. The October 27, 2009 Decision and the February 23, 2010 Resolution, of the Court of Appeals in CA-G. R. SP
No. 107449, are AFFIRMED.

SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice
26. Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 110120 March 16, 1994

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs.
COURT OF APPEALS, HON. MANUEL JN. SERAPIO, Presiding Judge RTC, Branch 127, Caloocan City, HON. MACARIO A. ASISTIO, JR., City Mayor
of Caloocan and/or THE CITY GOVERNMENT OF CALOOCAN,respondents.
Alberto N. Hidalgo and Ma. Teresa T. Oledan for petitioner.

The City Legal Officer & Chief, Law Department for Mayor Macario A. Asistio, Jr. and the City Government of Caloocan.

ROMERO, J.:
The clash between the responsibility of the City Government of Caloocan to dispose off the 350 tons of garbage it collects daily and the growing concern and
sensitivity to a pollution-free environment of the residents of Barangay Camarin, Tala Estate, Caloocan City where these tons of garbage are dumped
everyday is the hub of this controversy elevated by the protagonists to the Laguna Lake Development Authority (LLDA) for adjudication.
The instant case stemmed from an earlier petition filed with this Court by Laguna Lake Development Authority (LLDA for short) docketed as G.R.
No. 107542 against the City Government of Caloocan, et al. In the Resolution of November 10, 1992, this Court referred G.R. No. 107542 to the Court of
Appeals for appropriate disposition. Docketed therein as CA-G.R. SP
No. 29449, the Court of Appeals, in a decision 1 promulgated on January 29, 1993 ruled that the LLDA has no power and authority to issue a cease and desist
order enjoining the dumping of garbage in Barangay Camarin, Tala Estate, Caloocan City. The LLDA now seeks, in this petition, a review of the decision of the
Court of Appeals.
The facts, as disclosed in the records, are undisputed.
On March 8, 1991, the Task Force Camarin Dumpsite of Our Lady of Lourdes Parish, Barangay Camarin, Caloocan City, filed a letter-complaint 2 with the
Laguna Lake Development Authority seeking to stop the operation of the 8.6-hectare open garbage dumpsite in Tala Estate, Barangay Camarin, Caloocan City
due to its harmful effects on the health of the residents and the possibility of pollution of the water content of the surrounding area.
On November 15, 1991, the LLDA conducted an on-site investigation, monitoring and test sampling of the leachate 3 that seeps from said dumpsite to the
nearby creek which is a tributary of the Marilao River. The LLDA Legal and Technical personnel found that the City Government of Caloocan was maintaining
an open dumpsite at the Camarin area without first securing an Environmental Compliance Certificate (ECC) from the Environmental Management Bureau
(EMB) of the Department of Environment and Natural Resources, as required under Presidential Decree No. 1586, 4 and clearance from LLDA as required
under Republic Act No. 4850, 5 as amended by Presidential Decree No. 813 and Executive Order No. 927, series of 1983. 6
After a public hearing conducted on December 4, 1991, the LLDA, acting on the complaint of Task Force Camarin Dumpsite, found that the water collected
from the leachate and the receiving streams could considerably affect the quality, in turn, of the receiving waters since it indicates the presence of bacteria,
other than coliform, which may have contaminated the sample during collection or handling. 7 On December 5, 1991, the LLDA issued a Cease and Desist
Order 8 ordering the City Government of Caloocan, Metropolitan Manila Authority, their contractors, and other entities, to completely halt, stop and desist from
dumping any form or kind of garbage and other waste matter at the Camarin dumpsite.
The dumping operation was forthwith stopped by the City Government of Caloocan. However, sometime in August 1992 the dumping operation was resumed
after a meeting held in July 1992 among the City Government of Caloocan, the representatives of Task Force Camarin Dumpsite and LLDA at the Office of
Environmental Management Bureau Director Rodrigo U. Fuentes failed to settle the problem.
After an investigation by its team of legal and technical personnel on August 14, 1992, the LLDA issued another order reiterating the December 5, 1991, order
and issued an Alias Cease and Desist Order enjoining the City Government of Caloocan from continuing its dumping operations at the Camarin area.
On September 25, 1992, the LLDA, with the assistance of the Philippine National Police, enforced its Alias Cease and Desist Order by prohibiting the entry of
all garbage dump trucks into the Tala Estate, Camarin area being utilized as a dumpsite.
Pending resolution of its motion for reconsideration earlier filed on September 17, 1992 with the LLDA, the City Government of Caloocan filed with the
Regional Trial Court of Caloocan City an action for the declaration of nullity of the cease and desist order with prayer for the issuance of writ of injunction,

docketed as Civil Case No. C-15598. In its complaint, the City Government of Caloocan sought to be declared as the sole authority empowered to promote the
health and safety and enhance the right of the people in Caloocan City to a balanced ecology within its territorial jurisdiction. 9
On September 25, 1992, the Executive Judge of the Regional Trial Court of Caloocan City issued a temporary restraining order enjoining the LLDA from
enforcing its cease and desist order. Subsequently, the case was raffled to the Regional Trial Court, Branch 126 of Caloocan which, at the time, was presided
over by Judge Manuel Jn. Serapio of the Regional Trial Court, Branch 127, the pairing judge of the recently-retired presiding judge.
The LLDA, for its part, filed on October 2, 1992 a motion to dismiss on the ground, among others, that under Republic Act No. 3931, as amended by
Presidential Decree No. 984, otherwise known as the Pollution Control Law, the cease and desist order issued by it which is the subject matter of the
complaint is reviewable both upon the law and the facts of the case by the Court of Appeals and not by the Regional Trial Court. 10
On October 12, 1992 Judge Manuel Jn. Serapio issued an order consolidating Civil Case No. C-15598 with Civil Case No. C-15580, an earlier case filed by
the Task Force Camarin Dumpsite entitled "Fr. John Moran, et al. vs. Hon. Macario Asistio." The LLDA, however, maintained during the trial that the foregoing
cases, being independent of each other, should have been treated separately.
On October 16, 1992, Judge Manuel Jn. Serapio, after hearing the motion to dismiss, issued in the consolidated cases an order 11 denying LLDA's motion to
dismiss and granting the issuance of a writ of preliminary injunction enjoining the LLDA, its agent and all persons acting for and on its behalf, from enforcing or
implementing its cease and desist order which prevents plaintiff City of Caloocan from dumping garbage at the Camarin dumpsite during the pendency of this
case and/or until further orders of the court.
On November 5, 1992, the LLDA filed a petition for certiorari, prohibition and injunction with prayer for restraining order with the Supreme Court, docketed as
G.R. No. 107542, seeking to nullify the aforesaid order dated October 16, 1992 issued by the Regional Trial Court, Branch 127 of Caloocan City denying its
motion to dismiss.
The Court, acting on the petition, issued a Resolution 12 on November 10, 1992 referring the case to the Court of Appeals for proper disposition and at the
same time, without giving due course to the petition, required the respondents to comment on the petition and file the same with the Court of Appeals within
ten (10) days from notice. In the meantime, the Court issued a temporary restraining order, effective immediately and continuing until further orders from it,
ordering the respondents: (1) Judge Manuel Jn. Serapio, Presiding Judge, Regional Trial Court, Branch 127, Caloocan City to cease and desist from
exercising jurisdiction over the case for declaration of nullity of the cease and desist order issued by the Laguna Lake Development Authority (LLDA); and (2)
City Mayor of Caloocan and/or the City Government of Caloocan to cease and desist from dumping its garbage at the Tala Estate, Barangay Camarin,
Caloocan City.
Respondents City Government of Caloocan and Mayor Macario A. Asistio, Jr. filed on November 12, 1992 a motion for reconsideration and/or to quash/recall
the temporary restraining order and an urgent motion for reconsideration alleging that ". . . in view of the calamitous situation that would arise if the respondent
city government fails to collect 350 tons of garbage daily for lack of dumpsite (i)t is therefore, imperative that the issue be resolved with dispatch or with
sufficient leeway to allow the respondents to find alternative solutions to this garbage problem."
On November 17, 1992, the Court issued a Resolution 13 directing the Court of Appeals to immediately set the case for hearing for the purpose of determining
whether or not the temporary restraining order issued by the Court should be lifted and what conditions, if any, may be required if it is to be so lifted or whether
the restraining order should be maintained or converted into a preliminary injunction.
The Court of Appeals set the case for hearing on November 27, 1992, at 10:00 in the morning at the Hearing Room, 3rd Floor, New Building, Court of
Appeals. 14 After the oral argument, a conference was set on December 8, 1992 at 10:00 o'clock in the morning where the Mayor of Caloocan City, the General
Manager of LLDA, the Secretary of DENR or his duly authorized representative and the Secretary of DILG or his duly authorized representative were required
to appear.
It was agreed at the conference that the LLDA had until December 15, 1992 to finish its study and review of respondent's technical plan with respect to the
dumping of its garbage and in the event of a rejection of respondent's technical plan or a failure of settlement, the parties will submit within 10 days from notice

their respective memoranda on the merits of the case, after which the petition shall be deemed submitted for resolution. 15 Notwithstanding such efforts, the
parties failed to settle the dispute.
On April 30, 1993, the Court of Appeals promulgated its decision holding that: (1) the Regional Trial Court has no jurisdiction on appeal to try, hear and decide
the action for annulment of LLDA's cease and desist order, including the issuance of a temporary restraining order and preliminary injunction in relation
thereto, since appeal therefrom is within the exclusive and appellate jurisdiction of the Court of Appeals under Section 9, par. (3), of Batas Pambansa Blg. 129;
and (2) the Laguna Lake Development Authority has no power and authority to issue a cease and desist order under its enabling law, Republic Act No. 4850,
as amended by P.D. No. 813 and Executive Order
No. 927, series of 1983.
The Court of Appeals thus dismissed Civil Case No. 15598 and the preliminary injunction issued in the said case was set aside; the cease and desist order of
LLDA was likewise set aside and the temporary restraining order enjoining the City Mayor of Caloocan and/or the City Government of Caloocan to cease and
desist from dumping its garbage at the Tala Estate, Barangay Camarin, Caloocan City was lifted, subject, however, to the condition that any future dumping of
garbage in said area, shall be in conformity with the procedure and protective works contained in the proposal attached to the records of this case and found
on pages 152-160 of the Rollo, which was thereby adopted by reference and made an integral part of the decision, until the corresponding restraining and/or
injunctive relief is granted by the proper Court upon LLDA's institution of the necessary legal proceedings.
Hence, the Laguna Lake Development Authority filed the instant petition for review on certiorari, now docketed as G.R. No. 110120, with prayer that the
temporary restraining order lifted by the Court of Appeals be re-issued until after final determination by this Court of the issue on the proper interpretation of
the powers and authority of the LLDA under its enabling law.
On July, 19, 1993, the Court issued a temporary restraining order 16 enjoining the City Mayor of Caloocan and/or the City Government of Caloocan to cease
and desist from dumping its garbage at the Tala Estate, Barangay Camarin, Caloocan City, effective as of this date and containing until otherwise ordered by
the Court.
It is significant to note that while both parties in this case agree on the need to protect the environment and to maintain the ecological balance of the
surrounding areas of the Camarin open dumpsite, the question as to which agency can lawfully exercise jurisdiction over the matter remains highly open to
question.
The City Government of Caloocan claims that it is within its power, as a local government unit, pursuant to the general welfare provision of the Local
Government Code, 17 to determine the effects of the operation of the dumpsite on the ecological balance and to see that such balance is maintained. On the
basis of said contention, it questioned, from the inception of the dispute before the Regional Trial Court of Caloocan City, the power and authority of the LLDA
to issue a cease and desist order enjoining the dumping of garbage in the Barangay Camarin over which the City Government of Caloocan has territorial
jurisdiction.
The Court of Appeals sustained the position of the City of Caloocan on the theory that Section 7 of Presidential Decree No. 984, otherwise known as the
Pollution Control law, authorizing the defunct National Pollution Control Commission to issue an ex-parte cease and desist order was not incorporated in
Presidential Decree No. 813 nor in Executive Order No. 927, series of
1983. The Court of Appeals ruled that under Section 4, par. (d), of Republic Act No. 4850, as amended, the LLDA is instead required "to institute the necessary
legal proceeding against any person who shall commence to implement or continue implementation of any project, plan or program within the Laguna de Bay
region without previous clearance from the Authority."
The LLDA now assails, in this partition for review, the abovementioned ruling of the Court of Appeals, contending that, as an administrative agency which was
granted regulatory and adjudicatory powers and functions by Republic Act No. 4850 and its amendatory laws, Presidential Decree No. 813 and Executive
Order No. 927, series of 1983, it is invested with the power and authority to issue a cease and desist order pursuant to Section 4 par. (c), (d), (e), (f) and (g) of
Executive Order No. 927 series of 1983 which provides, thus:
Sec. 4. Additional Powers and Functions. The authority shall have the following powers and functions:

xxx xxx xxx

(c) Issue orders or decisions to compel compliance with the provisions of this Executive Order and its implementing rules and regulations only
after proper notice and hearing.
(d) Make, alter or modify orders requiring the discontinuance of pollution specifying the conditions and the time within which such
discontinuance must be accomplished.
(e) Issue, renew, or deny permits, under such conditions as it may determine to be reasonable, for the prevention and abatement of pollution,
for the discharge of sewage, industrial waste, or for the installation or operation of sewage works and industrial disposal system or parts
thereof.
(f) After due notice and hearing, the Authority may also revoke, suspend or modify any permit issued under this Order whenever the same is
necessary to prevent or abate pollution.
(g) Deputize in writing or request assistance of appropriate government agencies or instrumentalities for the purpose of enforcing this
Executive Order and its implementing rules and regulations and the orders and decisions of the Authority.
The LLDA claims that the appellate court deliberately suppressed and totally disregarded the above provisions of Executive Order No. 927, series of 1983,
which granted administrative quasi-judicial functions to LLDA on pollution abatement cases.
In light of the relevant environmental protection laws cited which are applicable in this case, and the corresponding overlapping jurisdiction of government
agencies implementing these laws, the resolution of the issue of whether or not the LLDA has the authority and power to issue an order which, in its nature
and effect was injunctive, necessarily requires a determination of the threshold question: Does the Laguna Lake Development Authority, under its Charter and
its amendatory laws, have the authority to entertain the complaint against the dumping of garbage in the open dumpsite in Barangay Camarin authorized by
the City Government of Caloocan which is allegedly endangering the health, safety, and welfare of the residents therein and the sanitation and quality of the
water in the area brought about by exposure to pollution caused by such open garbage dumpsite?
The matter of determining whether there is such pollution of the environment that requires control, if not prohibition, of the operation of a business
establishment is essentially addressed to the Environmental Management Bureau (EMB) of the DENR which, by virtue of Section 16 of Executive Order No.
192, series of 1987, 18 has assumed the powers and functions of the defunct National Pollution Control Commission created under Republic Act No. 3931.
Under said Executive Order, a Pollution Adjudication Board (PAB) under the Office of the DENR Secretary now assumes the powers and functions of the
National Pollution Control Commission with respect to adjudication of pollution cases. 19
As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB), except in cases where the special law
provides for another forum. It must be recognized in this regard that the LLDA, as a specialized administrative agency, is specifically mandated under Republic
Act No. 4850 and its amendatory laws to carry out and make effective the declared national policy 20 of promoting and accelerating the development and
balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and
Caloocan 21 with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological
systems, and the prevention of undue ecological disturbances, deterioration and pollution. Under such a broad grant and power and authority, the LLDA, by
virtue of its special charter, obviously has the responsibility to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants
emanating from the discharge of wastes from the surrounding areas. In carrying out the aforementioned declared policy, the LLDA is mandated, among others,
to pass upon and approve or disapprove all plans, programs, and projects proposed by local government offices/agencies within the region, public
corporations, and private persons or enterprises where such plans, programs and/or projects are related to those of the LLDA for the development of the
region. 22
In the instant case, when the complainant Task Force Camarin Dumpsite of Our Lady of Lourdes Parish, Barangay Camarin, Caloocan City, filed its lettercomplaint before the LLDA, the latter's jurisdiction under its charter was validly invoked by complainant on the basis of its allegation that the open dumpsite

project of the City Government of Caloocan in Barangay Camarin was undertaken without a clearance from the LLDA, as required under Section 4, par. (d), of
Republic Act. No. 4850, as amended by P.D. No. 813 and Executive Order No. 927. While there is also an allegation that the said project was without an
Environmental Compliance Certificate from the Environmental Management Bureau (EMB) of the DENR, the primary jurisdiction of the LLDA over this case
was recognized by the Environmental Management Bureau of the DENR when the latter acted as intermediary at the meeting among the representatives of
the City Government of Caloocan, Task Force Camarin Dumpsite and LLDA sometime in July 1992 to discuss the possibility of
re-opening the open dumpsite.
Having thus resolved the threshold question, the inquiry then narrows down to the following issue: Does the LLDA have the power and authority to issue a
"cease and desist" order under Republic Act No. 4850 and its amendatory laws, on the basis of the facts presented in this case, enjoining the dumping of
garbage in Tala Estate, Barangay Camarin, Caloocan City.
The irresistible answer is in the affirmative.
The cease and desist order issued by the LLDA requiring the City Government of Caloocan to stop dumping its garbage in the Camarin open dumpsite found
by the LLDA to have been done in violation of Republic Act No. 4850, as amended, and other relevant environment laws, 23 cannot be stamped as an
unauthorized exercise by the LLDA of injunctive powers. By its express terms, Republic Act No. 4850, as amended by P.D. No. 813 and Executive Order No.
927, series of 1983, authorizes the LLDA to "make, alter or modify order requiring the discontinuance or pollution." 24(Emphasis supplied) Section 4, par. (d)
explicitly authorizes the LLDA to make whatever order may be necessary in the exercise of its jurisdiction.
To be sure, the LLDA was not expressly conferred the power "to issue and ex-parte cease and desist order" in a language, as suggested by the City
Government of Caloocan, similar to the express grant to the defunct National Pollution Control Commission under Section 7 of P.D. No. 984 which, admittedly
was not reproduced in P.D. No. 813 and E.O. No. 927, series of 1983. However, it would be a mistake to draw therefrom the conclusion that there is a denial of
the power to issue the order in question when the power "to make, alter or modify orders requiring the discontinuance of pollution" is expressly and clearly
bestowed upon the LLDA by Executive Order No. 927, series of 1983.
Assuming arguendo that the authority to issue a "cease and desist order" were not expressly conferred by law, there is jurisprudence enough to the effect that
the rule granting such authority need not necessarily be express. 25 While it is a fundamental rule that an administrative agency has only such powers as are
expressly granted to it by law, it is likewise a settled rule that an administrative agency has also such powers as are necessarily implied in the exercise of its
express powers. 26 In the exercise, therefore, of its express powers under its charter as a regulatory and quasi-judicial body with respect to pollution cases in
the Laguna Lake region, the authority of the LLDA to issue a "cease and desist order" is, perforce, implied. Otherwise, it may well be reduced to a "toothless"
paper agency.
In this connection, it must be noted that in Pollution Adjudication Board v. Court of Appeals, et al., 27 the Court ruled that the Pollution Adjudication Board (PAB)
has the power to issue an ex-parte cease and desist order when there is prima facie evidence of an establishment exceeding the allowable standards set by
the anti-pollution laws of the country. Theponente, Associate Justice Florentino P. Feliciano, declared:
Ex parte cease and desist orders are permitted by law and regulations in situations like that here presented precisely because stopping the
continuous discharge of pollutive and untreated effluents into the rivers and other inland waters of the Philippines cannot be made to wait until
protracted litigation over the ultimate correctness or propriety of such orders has run its full course, including multiple and sequential appeals
such as those which Solar has taken, which of course may take several years. The relevant pollution control statute and implementing
regulations were enacted and promulgated in the exercise of that pervasive, sovereign power to protect the safety, health, and general welfare
and comfort of the public, as well as the protection of plant and animal life, commonly designated as the police power. It is a constitutional
commonplace that the ordinary requirements of procedural due process yield to the necessities of protecting vital public interests like those
here involved, through the exercise of police power. . . .
The immediate response to the demands of "the necessities of protecting vital public interests" gives vitality to the statement on ecology embodied in the
Declaration of Principles and State Policies or the 1987 Constitution. Article II, Section 16 which provides:

The State shall protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of
nature.
As a constitutionally guaranteed right of every person, it carries the correlative duty of non-impairment. This is but in consonance with the declared policy of
the state "to protect and promote the right to health of the people and instill health consciousness among them." 28 It is to be borne in mind that the Philippines
is party to the Universal Declaration of Human Rights and the Alma Conference Declaration of 1978 which recognize health as a fundamental human right. 29
The issuance, therefore, of the cease and desist order by the LLDA, as a practical matter of procedure under the circumstances of the case, is a proper
exercise of its power and authority under its charter and its amendatory laws. Had the cease and desist order issued by the LLDA been complied with by the
City Government of Caloocan as it did in the first instance, no further legal steps would have been necessary.
The charter of LLDA, Republic Act No. 4850, as amended, instead of conferring upon the LLDA the means of directly enforcing such orders, has provided
under its Section 4 (d) the power to institute "necessary legal proceeding against any person who shall commence to implement or continue implementation of
any project, plan or program within the Laguna de Bay region without previous clearance from the LLDA."
Clearly, said provision was designed to invest the LLDA with sufficiently broad powers in the regulation of all projects initiated in the Laguna Lake region,
whether by the government or the private sector, insofar as the implementation of these projects is concerned. It was meant to deal with cases which might
possibly arise where decisions or orders issued pursuant to the exercise of such broad powers may not be obeyed, resulting in the thwarting of its laudabe
objective. To meet such contingencies, then the writs of mandamus and injunction which are beyond the power of the LLDA to issue, may be sought from the
proper courts.
Insofar as the implementation of relevant anti-pollution laws in the Laguna Lake region and its surrounding provinces, cities and towns are concerned, the
Court will not dwell further on the related issues raised which are more appropriately addressed to an administrative agency with the special knowledge and
expertise of the LLDA.
WHEREFORE, the petition is GRANTED. The temporary restraining order issued by the Court on July 19, 1993 enjoining the City Mayor of Caloocan and/or
the City Government of Caloocan from dumping their garbage at the Tala Estate, Barangay Camarin, Caloocan City is hereby made permanent.
SO ORDERED.
Feliciano, Bidin, Melo and Vitug, JJ., concur.

#Footnotes