Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-17597 February 7, 1922

E. W. McDANIEL, petitioner,
vs.
Honorable GALICANO APACIBLE, Secretary of Agriculture and Natural Resources of the Philippine Islands, and
JUAN CUISIA, respondents.

Ross & Lawrence for petitioner.

Acting Attorney-General Tuason for respondents.

JOHNSON, J.:

This is an original action commenced in the Supreme Court for the writ of prohibition. Its purpose is to prohibit the respondent
Honorable Galicano Apacible, as Secretary of Agriculture and Natural Resources, from granting a lease of a parcel of petroleum
land located in the municipality of San Narciso, of the Province of Tayabas, Philippine Islands, which parcel of land is
particularly described in paragraph 6 of the petition. To the petition the respondent Galicano Apacible demurred. The
respondent Juan Cuisia neither demurred nor answered.

The facts upon which the petition is based are admitted and may be stated as follows:

1. That on or about the 7th day of June, 1916, the petitioner entered upon and located, in accordance with the
provisions of Act of Congress of July 1, 1902, as well as the provisions of Act No. 624 of the Philippine
Commission, three petroleum placer mineral claims, each of an area of 64 hectares, on an unoccupied public
land in the municipality of San Narciso, Province of Tayabas, Philippine Islands;

2. That on or about the 15th day of July, 1916, the plaintiff recorded in the office of the mining recorder in the
municipality of Lucena, Province of Tayabas, Philippine Islands, notices of location of the aforesaid three placer
claims under the names of "Maglihi No. 1," "Maglihi No. 2," and "Maglihi No. 3;"

3. That the plaintiff, at all times since the 7th day of June, 1916, has remained in open and continuous
possession of said three mineral placer claims;

4. That plaintiff, in the year 1917 and in each year thereafter, performed not less than two hundred pesos (P200)
worth of labor on each of the said three mineral claims;

5. That in the year 1918 plaintiff drilled five wells on the said three mineral claims, and by means of such wells in
the said year (1918) made discoveries of petroleum on each of the said three claims;

6. That on or about the 18th day of June, 1921, the respondent Juan Cuisia made application to the respondent
Galicano Apacible, as Secretary of Agriculture and Natural Resources, under the provisions of Act No. 2932 of
the Philippine Legislature, for a lease of a parcel of petroleum land in the municipality of San Narciso, Province of
Tayabas, Philippine Islands, which said parcel of land included within its boundaries the three said mineral claims
"Maglihi No. 1," "Maglihi No. 2," and "Maglihi No. 3," which said three mineral placer claims had therefore been
located as above indicated and held by the plaintiff as above described;

7. That upon the filing of the said application for lease, as described in the paragraph immediately preceding, by
the said Juan Cuisia, the petitioner herein protested in writing to the respondent Galicano Apacible against the
 inclusion in the said lease of the said three mineral claims "Maglihi No. 1," "Maglihi No. 2," and "Maglihi No. 3,"
located and held by him as above recited;

8. That the respondent Galicano Apacible, as Secretary of Agriculture and Natural Resources, did on or about the
9th day of March, 1921, deny petitioner's said protest; and

9. That the plaintiff is informed and believed, and upon that information and belief averred, that the respondent
Galicano Apacible, as Secretary of Agriculture and Natural Resources, under and by virtue of the supposed
authority of Act No. 2932, is about to grant the application for the said lease of the respondent Juan Cuisia, and
to place him (Juan Cuisia) in possession of the said three mineral claims located and held by the petitioner.

Upon the foregoing facts the petitioner contends that said Act No. 2932, in so far as it purports to declare open to lease, lands
containing petroleum oil on which mineral claims have been validly located and held, and upon which discoveries of
petroleum oil have been made, is void and unconstitutional, in that it deprives the petitioner of his property without due
process of law and without compensation, and that the defendant Galicano Apacible, as Secretary of Agriculture and Natural
Resources, is without jurisdiction to lease to the respondent Juan Cuisia the following mineral claims "Maglihi No. 1," "Maglihi
No. 2," and "Maglihi No. 3," and prays that the writ of prohibition be issued out of this court, directing and prohibiting the
respondent Galicano Apacible to desist from issuing the lease of the mineral placer claims herein mentioned.

The respondent Galicano Apacible, as Secretary of Agriculture and Natural Resources, in support of his demurrer, contends: (a)
That the acts complained of are in conformity with the authority given by Act No. 2932; (b) that the petitioner has no vested
right in the three mineral claims; and (c) that the demurrer puts squarely in issue the constitutionality of Act No. 2932.

Act No. 2932 was approved on the 31st day of August, 1920. Section 1 provides that "all public lands containing petroleum or
other mineral oils and gas, on which no patent, at the date this Act takes effect, has been issued, are hereby withdrawn from
sale and are declared to be free and open to exploration, location and lease," etc. Said section further provides, "that parties
having heretofore filed claims for any lands containing said minerals, shall be given preference to lease their respective claims,
provided they file a petition to that effect within six months from the date of the approval of this Act."

Section 2 provides that "all such lands (public lands) may be leased by the Secretary of Agriculture and Natural Resources in the
manner and subject to the rules prescribed by the Council of State."

It will be noted from the provisions of said Act No. 2932 that "all public lands containing petroleum, etc., on which no patent,
at the date this Act takes effect (August 31, 1920), has been issued, are hereby withdrawn from sale and are declared to be free
and open to exploration, location, and lease," with a preference, however, in favor of those who had therefore filed claims for
such lands. It will be further noted, from the provisions of said Act, that "all public lands containing petroleum, etc., are hereby
withdrawn from sale and are declared to be free and open to exploration, location and lease," without any preference to any
claim or right which citizens of the Philippine Islands or the United States had therefore acquired in any public lands, and that
the only right left to them is one of "preference," and that even the preference was limited for a period of six months from the
31st day of August, 1920.

The petitioner contends, that, having located and held, and having discovered petroleum oil upon the said claims prior to the
31st day of August, 1920, he had acquired a property right in his three claims; and that said Act No. 2932 had deprived him of
that right without due process of law, in contravention of paragraph 1 of section 3 of Act of Congress of August 29, 1916, and
that said Act was therefore unconstitutional and void. In support of the contention the petitioner cites many authorities.

Mr. Lindlay, one of the highest authorities on Mining Law, has discussed extensively the question now before us. (Lindlay on
Mines, vol. I, sections 322, 539.)

The general rule is that a perfected, valid appropriation of public mineral lands operates as a withdrawal of the tract from the
body of the public domain, and so long as such appropriation remains valid and subsisting, the land covered thereby is
deemed private property. A mining claim perfected under the law is property in the highest sense, which may be sold and
conveyed and will pass by descent. It has the effect of a grant (patent) by the United States of the right of present and
exclusive possession of the lands located. And even though the locator may obtain a patent to such lands, his patent adds but
little to his security. (18 Ruling Case Law, p. 1152 and cases cited.)
The owner of a perfected valid appropriation of public mineral lands is entitled to the exclusive possession and enjoyment
against every one, including the Government itself. Where there is a valid and perfected location of a mining claim, the area
becomes segregated from the public domain and the property of the locator.

It was said by the Supreme Court of the State of Oregon, "The Government itself cannot abridge the rights of the miner to a
perfected valid location of public mineral land. The Government may not destroy the locator's right by withdrawing the land
from entry or placing it in a state of reservation." (Belk vs. Meagher, 104 U.S., 279; Sullivan vs. Iron Silver Mining Co., 143 U.S.,
431.)

A valid and subsisting location of mineral land, made and kept up in accordance with the provisions of the statutes of the
United States, has the effect of a grant by the United States of the present and exclusive possession of the lands located, and
this exclusive right of possession and enjoyment continues during the entire life of the location. There is no provision for, no
suggestion of, a prior termination thereof. (Gwillim vs. Donnellan, 115 U.S., 45; Clipper Mining Co. vs. Eli Mining and Land Co.,
194 U.S., 220.)

There is no pretense in the present case that the petitioner has not complied with all the requirements of the law in making the
location of the mineral placer claims in question, or that the claims in question were ever abandoned or forfeited by him. The
respondents may claim, however, that inasmuch as a patent has not been issued to the petitioner, he has acquired no property
right in said mineral claims. But the Supreme Court of the United States, in the cases of Union Oil Co. vs. Smith (249 U.S., 337),
and St. Louis Mining and Milling Co. vs. Montana Mining Co. (171 U.S., 650), held that even without a patent, the possessory
right of a locator after discovery of minerals upon the claim is a property right in the fullest sense, unaffected by the fact that
the paramount title to the land is in the United States. There is no conflict in the rulings of the Court upon that question. With
one voice they affirm that when the right to a patent exists, the full equitable title has passed to the purchaser or to the locator
with all the benefits, immunities, and burdens of ownership, and that no third party can acquire from the Government any
interest as against him. (Manuel vs. Wulff, 152 U.S., 504, and cases cited.)

Even without a patent, the possessory right of a qualified locator after discovery of minerals upon the claim is a property right
in the fullest sense, unaffected by the fact that the paramount title to the land is in the Government, and it is capable of
transfer by conveyance, inheritance, or devise. (Union Oil Co. vs. Smith, 249 U.S., 337; Forbes vs. Jarcey, 94 U.S., 762; Belk vs.
Meagher, 104 U.S., 279; Del Monte Mining Co. vs. Last Chance Mining Co., 171 U.S., 55; Elver vs. Wood, 208 U.S., 226, 232.)

Actual and continuous occupation of a valid mining location, based upon discovery, is not essential to the preservation of the
possessory right. The right is lost only by abandonment as by nonperformance of the annual labor required. (Union Oil Co. vs.
Smith, 249 U.S., 337; Farrell vs. Lockhart, 210 U.S., 142; Bradford vs. Morrison, 212 U.S., 389.)

The discovery of minerals in the ground by one who has a valid mineral location perfects his claim and his location not only
against third person, but also against the Government. A mining claim perfected under the law is property in the highest sense
of that term, which may be sold and conveyed, and will pass by descent, and is not therefore subject to the disposal of the
Government. (Belk vs. Meagher, 104 U.S., 279, 283; Sullivan vs. Iron Silver Mining Co., 143 U.S., 431; Consolidated Mutual Oil
Co. vs. United States, 245 Fed. Rep., 521; Van Ness vs. Rooney, 160 Cal., 131, 136, 137.)

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 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. (Union Oil Co. vs. Smith, 249 U.S., 337; Van Ness vs. Rooney, 160 Cal., 131; 27
Cyc., 546.)

From all of the foregoing arguments and authorities we must conclude that, inasmuch as the petitioner had located, held and
perfected his location of the mineral lands in question, and had actually discovered petroleum oil therein, he had acquired a
property right in said claims; that said Act No. 2932, which deprives him of such right, without due process of law, is in conflict
with section 3 of the Jones Law, and is therefore unconstitutional and void. Therefore the demurrer herein is hereby overruled,
and it is hereby ordered and decreed that, unless the respondents answer the petition herein within a period of five days from
notice hereof, that a final judgment be entered, granting the remedy prayed for in the petition. So ordered.
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 andmandamus, 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 herebyordered 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 validsubsequent 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 all-encompassing 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.

[1]
Rollo, pp. 131-132.
[2]
G.R. No. 92605, 199 SCRA 278 (1991).
[3]
R.A. No. 7076, Section 4.
[4]
Ibid., at Section 24.
[5]
Id., at Section 5.
[6]
Id., at Section 9.
[7]
CA Rollo, p. 187.
[8]
Rollo, p. 128.
[9]
Ibid., p.174.
[10]
Id., pp. 177-179.
[11]
Id., p.178.
[12]
Id., pp. 232-257.
[13]
Mr. Justice Romeo J. Callejo, Sr., ponente; Messrs. Justices Quirino D. Abad-Santos, Jr. and Eduardo G. Montenegro,
concurring; Mr. Justice Omar U. Amin and Mme. Justice Angelina Sandoval-Gutierrez, dissenting.
[14]
Rollo, p. 122.
[15]
Id., pp. 27-28.
[16]
Per Resolution of the Second Division of the Supreme Court dated September 11, 2000.
[17]
Rollo, pp. 85-86.
[18]
See Mariano v. Commission on Elections, 242 SCRA 211, 221 (1995) and Board of Optometry v. Colet, 260 SCRA 88, 104
(1996), citing Garcia v. Executive Secretary, 204 SCRA 516 (1991).
[19]
See Sta. Rosa Mining Co., Inc. v. Leido, Jr., 156 SCRA 1 (1987). In this analogous case, the Court refused to recognize the
continuing validity of petitioners mining claim, due to the pendency of an appeal to the Office of the President from a decision
of the Secretary of Natural Resources, upholding the Director of Mines ruling that said mining claim was cancelled and
abandoned for failure to comply with legal requirements under applicable laws.
[20]
Minutes of the Court En Banc, November 26, 1992.
[21]
See Sta. Ines Melale Forest Products Corporation v. Macaraig, Jr., 299 SCRA 491, 514-515 (1998), citing Tan v. Director of
Forestry, 125 SCRA 302, 325-326 (1983); Oposa v. Factoran, 224 SCRA 792, 811-812 (1993).
[22]
See Ysmael, Jr. & Co., Inc. v. Deputy Executive Secretary, 190 SCRA 673, 684 (1990), citing Tan v. Director of
Forestry, supra; Miners Association of the Philippines, Inc. v. Factoran, 240 SCRA 100, 118-120 (1995) and cases cited therein.
[23]
WHEREAS, tens of thousands of miners, local entrepreneurs, and service providers are earning their livelihood from the
mining operations in the Diwalwal Gold Rush Area in Mt. Diwata, Monkayo, Davao Del Norte;

WHEREAS, the advent of gold mining in the area contributed substantially in arresting the insurgency problem in the
province, and in improving the local and regional economy;

WHEREAS, the adverse environmental, safety, health, and sanitation conditions in the area resulting from the mining
operations are major concerns that need to be addressed immediately;

WHEREAS, tenurial and mining rights in the area have been characterized by conflicting claims which have to be
addressed in an atmosphere of peaceful coexistence among the various stakeholders, and within the framework of the law, so
that a comprehensive development of the area can be carried out;

WHEREAS, a rationalized gold-mining operation in the area offers the opportunity of putting in place viable measures
that would ensure the sustained livelihood of the stakeholders therein, and would optimize the benefits which may be derived
from the irreplaceable mineral resources, in accordance with the sustainable development strategy of the government;

WHEREAS, appropriate measures have to be set in place so that the necessary sanctions and penalties can be imposed,
and the appropriate compensation schemes may be applied in cases involving environmental degradation and also for the
purpose of preventing its further occurrence;

WHEREAS, the government must take adequate measures within the framework of the law to protect the livelihood of
the people; minimize, if not eliminate, the adverse effects of mining in the community; enhance safety in mining operations,
and ensure that revenues due the government from the development of mineral resources are properly paid and collected;

WHEREAS, the government still has to study prudently and exhaustively the various options available to it in
rationalizing the Diwalwal Gold Rush Area situation, as well as seek better options, if any, in coming out with a rationalization
plan that would be just and fair to all concerned parties in the Diwalwal Gold Rush Area; x x x.

Miners Association of the Philippines v. Factoran, Case Digest

G.R. No. 98332 January 16, 1995

Facts :

Former President Corazon Aquino issued Executive Order Nos 211 and 279 in the exercise of her legislative powers. EO No. 211
prescribes the interim procedures in the processing and approval of applications for the exploration, development and
utilization of minerals pursuant to Section 2, Article XII of the 1987 Constitution. EO No. 279 authorizes the DENR Secretary to
negotiate and conclude joint-venture, co-production, or production- sharing agreements for the exploration, development,
and utilization of mineral resources.

The issuance and the impeding implementation by the DENR of Administrative Order Nos. 57 which declares that all existing
mining leases or agreements which were granted after the effectivity of the 1987 Constitutionshall be converted into
production-sharing agreements within one (1) year from the effectivity of these guidelines. and Administrative Order No. 82
which provides that a failure to submit Letter of Intent and Mineral Production-Sharing Agreement within 2 years from the
effectivity of the Department Administrative Order No. 57 shall cause the abandonment of the mining, quarry, and sand and
gravel claims, after their respective effectivity dates compelled the Miners Association of the Philippines, Inc., an organization
composed of mining prospectors and claim owners and claim holders, to file the instant petition assailing their validity and
constitutionality before this Court.

Issue :
Are the two Department Administrative Orders valid?

Ruling :

Yes. Petitioner's insistence on the application of Presidential Decree No. 463, as amended, as the governing law on the
acceptance and approval of declarations of location and all other kinds of applications for the exploration, development, and
utilization of mineral resources pursuant to Executive Order No. 211, is erroneous. Presidential Decree No. 463, as amended,
pertains to the old system of exploration, development and utilization of natural resources through "license, concession or
lease" which, however, has been disallowed by Article XII, Section 2 of the 1987 Constitution. By virtue of the said
constitutional mandate and its implementing law, Executive Order No. 279 which superseded Executive Order No. 211, the
provisions dealing on "license, concession or lease" of mineral resources under Presidential Decree No. 463, as amended, and
other existing mining laws are deemed repealed and, therefore, ceased to operate as the governing law. In other words, in all
other areas of administration and management of mineral lands, the provisions of Presidential Decree No. 463, as amended,
and other existing mining laws, still govern. Section 7 of Executive Order No. 279 provides, thus:
Sec. 7. All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their implementing rules and
regulations, or parts thereof, which are not inconsistent with the provisions of this Executive Order, shall continue in force and
effect.

Well -settled is the rule, however, that regardless of the reservation clause, mining leases or agreements granted by the State,
such as those granted pursuant to Executive Order No. 211 referred to this petition, are subject to alterations through a
reasonable exercise of the police power of the State.
Accordingly, the State, in the exercise of its police power in this regard, may not be precluded by the constitutional restriction
on non-impairment of contract from altering, modifying and amending the mining leases or agreements granted under
Presidential Decree No. 463, as amended, pursuant to Executive Order No. 211. Police Power, being co-extensive with the
necessities of the case and the demands of public interest; extends to all the vital public needs. The passage of Executive Order
No. 279 which superseded Executive Order No. 211 provided legal basis for the DENR Secretary to carry into effect the
mandate of Article XII, Section 2 of the 1987 Constitution.
WHEREFORE, the petition is DISMISSED for lack of merit.

G.R. No. L-49143 August 21, 1989

ZAMBALES CHROMITE MINING COMPANY, INC., petitioner,

vs.
HON. MINISTER OF NATURAL RESOURCES JOSE J. LEIDO JR. and DIRECTOR OF MINES JUANITO C.
FERNANDEZ, respondents. PHILEX MINING CORPORATION and REGALIAN MINING EXPLORATION
CORPORATION, intervenors.

PARAS, J.:

This is a petition for certiorari and prohibition with preliminary injunction seeking to enjoin the Minister (now Secretary)
of Natural Resources and the Director of Mines from enforcing Presidential Decree No. 1214 dated October 14,1977
requiring all locators under the Act of Congress of July 1, 1902, as amended, to apply for mining lease contracts under
the provision of Presidential Decree No. 463 better known as the Mineral Development Resources Decree of 1974 and to
declare Presidential Decree No. 1214 unconstitutional since its enforcement would deprive petitioners of its property
without due process and without just compensation.

Petitioner Zambales Chromite Mining Company, Inc. is a mining corporation duly organized and existing under and by
virtue of the laws of the Philippines.

Petitioner claims that it is the owner and holder of sixty (60) mineral claims which it acquired through purchase in good
faith and for value 43 years ago. Said claims situated at the Municipality of Sta. Cruz, Zambales, were located and
registered in 1934 under the Act of U.S. Congress of July 1, 1902 (known as the Philippine Bill of 1902). (Petition, p. 2;
Rollo, p. 3); that from 1934 to 1977 it has to its credit a total investment of over Pl,222,640.00 for the mining exploration,
development and operation of its said sixty mining claims (Petition, p. 3; Rollo, p. 4); that on June 14, 1977 it actually and
duly flied its application for patent for each claim of said sixty (60) mineral claims (Petition, p. 4; Rollo, p. 5); that
respondent Director of Mines issued an order dated July 13,1977 approving the application of petitioner for availment of
rights on said claims under Presidential Decree No. 463 (Petition, p. 5; Rollo, p. 6); that the aforesaid sixty (60) lode
mineral claims are already private property of petitioner, following the doctrinal rule laid down in McDaniel v. Apacible
and Cuisia (42 Phil. 749; 753-754) and Gold Creek Mining Corporation v. Rodriguez, et al. (66 Phil. 259) which had already
been segregated from the public domain to which petitioner is entitled to the exclusive possession and enjoyment
against everyone; that the issuance of Presidential Decree No. 1214 on October 14, 1977 which declared open to lease
subsisting and valid patentable mining claims, lode or placer, located under the provisions of the Act of U.S. Congress of
July 1, 1902, as amended, already segregated from the public domain and owned and held by it for over 43 years and
requiring it without fail and against their will to file a mining lease application with the Mines Regional Office concerned
within a period of one year from October 14, 1977 is a deprivation of petitioner's rights to the ownership of said claims
without due process of law nor or just compensation and therefore, unconstitutional.

The Court in its resolution dated November 3,1978, gave due course to the petition and required respondents to
comment (Rollo, p. 33). The Solicitor General as counsel for public respondent, flied his comment on March 26,1979
lwph1.t

(Rollo, pp. 58-71-A).

On May 10, 1979, petitioner filed a reply (Rollo, p. 83) to the comment in compliance with the resolution of April 10,
1979. But on May 9, 1979, Baguio Gold Mining Company, Philex Mining and Regalian Mining Corporation filed with the
Court two separate motions for leave to intervene (Rollo, p. 120).
On February 10, 1981, Baguio Gold Mining Company, Philex Mining Company and Regalian Mining Corporation filed with
the court a Joint Petition for Intervention (Rollo, p. 171) raising the same issues brought up by petitioner Zambales
Chromite Mining Company regarding the constitutionality of P.D. No. 1214 based on the doctrinal mandates of the ruling
cases of McDaniel v. Apacible, 42 Phil. 749 [1922] and Gold Creek Mining Corporation v. Rodriguez, 66 Phil. 259
(1939);Salazar Mining Co. v. Rodriguez, et al., 67 Phil. 97, insofar as it invests inter alia, private ownership in patentable
mining claims to have survived to date due to a faithful compliance with the various requirements of applicable mining
laws to include the land surface of said mining claims. Petitionees memorandum was adopted by intervenors as to the
factual and legal showing of the unconstitutionality of Presidential Decree No. 1214 (Rollo, pp. 455-456).

The Solicitor General as counsel for public respondent submitted his memorandum on February 12,1982 (Rollo, pp.
468499) while petitioner filed its reply to said memorandum on April 3, 1982 (Rollo, pp. 505-560).

Counsel for petitioner on August 20, 1982 filed a motion to refer this case to the Court En Bane for action and decision
(Rollo, p. 536) and on September 8,1982, the Court resolved to issue a temporary restraining order, effective as of said
date and continuing until otherwise ordered by the Court (Rollo, p. 562).

On February 11, 1988 the Court acting on the motion for intervention filed by counsel for intervenor Francisco N.
Calinisan dated January 6,1988, and considering that this case has long been submitted for decision, resolved to deny the
aforesaid motion for having been filed late (Reno, p. 597).

The principal issue raised by the petitioner and by the erstwhile intervenors, is: whether or not under the provision of
P.D. No. 1214 there was deprivation of property without due process of law and just compensation which makes said
decree unconstitutional.

Their contention that a perfected and valid appropriation of public mineral lands operates as a withdrawal of the tract of
land from the public domain and is deemed to be already private property, is without basis in fact and in law (Comment,
Rollo, p. 61)

This issue has been resolved in a recent decision of this Court in Sta. Rosa Mining Co., Inc. vs. Leido Jr. (156 SCRA 1
[1987]) where it was held that while rulings in McDaniel v. Apacible (42 Phil. 749 [1922]). and Gold Creek Mining Corp. v.
Rodriguez (66 Phil. 259 [1938]) cited by the petitioner, true enough, recognize the right of a locator of a mining claim as a
property right; such right is not absolute. It is merely a possessory right more so if petitioner's claims are still unpatented.
It can be lost through abandonment or forfeiture or they may be revoked on valid legal grounds.

In the case at bar, there is no showing that petitioner has complied with all the terms and conditions prescribed by law
prior to November 1, 1935; that there should be not only a valid and subsisting location of the mineral land but that
there should be, thereafter, continuous compliance with all the requirements of law such as the performance of annual
assessment works and payment of real estate taxes. In fact, petitioner filed its application only in 1977 for a patent, or 43
years after it allegedly located and registered the mining claims (Rollo, p. 63).lwph1.t

As to the issue of constitutionality, the Court categorically stated that P.D. No. 1214 is constitutional. The Court ruled:

...It is a valid exercise of the sovereign power of the State, as owner, over lands of the public domain, of
which petitioner's mining claims still form a part, and over the patrimony of the nation, of which mineral
deposits are a valuable asset. It may be underscored, in this connection, that the Decree does not cover
all mining claims located under the Phil. Bill of 1902, but only those claims over which their locators had
failed to obtain a patent. And even then, such locators may still avail of the renewable twenty-five year
(25) lease prescribed by Pres. Decree No. 463, the Mineral Development Resources Decree of 1974.

Mere location does not mean absolute ownership over the affected land or the 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 appropriate 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. (Santa Rosa Mining Co., Inc. vs. Leido Jr., supra, pp. 8-9)

P.D. No. 1214 is in accord with Section 8, Article XIV of the 1973 Constitution and presently in Section 2, Article XII of the
1987 Constitution where the same constitutional mandate is restated.

On June 2,1988, the Court granted a motion filed by counsel for petitioner dated May 20,1988 to admit a manifestation
and motion wherein petitioner prayed that the "Court allow the petitioner to change the original prayer in its petition
dated October 10, 1978 with a new prayer directing public respondents to dispose of petitioner's application on its own
merit unaffected and without regard to the provision of P.D. 1214 . . ." (p. 631, Rollo)

Records show that petitioner Zambales Chromite filed its patent application over its 60 mining claims on June 14,1977
and to order such disposal of said "application on its own merit" is not within the scope of the jurisdiction of the Court.
For, even assuming claimant to be a holder of a subsisting and valid patentable mining claim, this Court has held that it
can no longer proceed with the acquisition of a mining patent in view of P.D. No. 1214, issued on October 14,
1977, directing holder of subsisting and patentable mining claims, lode or placer, located under the provisions of the Act
of Congress on July 1, 1902, as amended, to file a mining lease application . . . within one year from the approval of the
Decree and upon the filing thereof, holders of said claims shall be considered to have waived their rights to the issuance
of mining patents therefor: Provided, however, that the non-filing of the application for mining lease by the holders
thereby within the period herein prescribed shall cause the forfeiture of all his rights to the claim." (Director of Lands v.
Kalahi Investments, Inc., G.R. No. L-48066, January 31, 1989). (Emphasis supplied)

PREMISES CONSIDERED, the instant petition is DENIED for lack of merit.

SO ORDERED

ASAPHIL CONSTRUCTION G.R. NO. 134030

AND DEVELOPMENT
CORPORATION, Present:
Petitioner,
PANGANIBAN, C.J.
YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

VICENTE TUASON, JR.,

INDUPLEX, INC. and MINES
ADJUDICATION BOARD, Promulgated:
Respondents. April 25, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
AUSTRIA-MARTINEZ, J.:

The present petition for review under Rule 45 of the Rules of Court assails the
Decision of the Mines Adjudication Board (MAB) dated August 18, 1997, modifying the
Decision dated December 11, 1991 of the Regional Executive Director, DENR-Region
V, Legaspi City. The dispositive portion of the MAB Decision reads:

WHEREFORE, the Decision dated December 11, 1991 of the Regional

Executive Director is hereby MODIFIED. The Agreement to Operate Mining
Claim, datedMay 29, 1976 is hereby CANCELLED and/or REVOKED and the appeal
in so far as the Contract to Sell and Purchase Perlite Ore, dated March 24, 1975 is
hereby DISMISSED for lack of merit.

SO ORDERED.[1]

On March 24, 1975, respondent Vicente Tuason, Jr. [2] (Tuason) entered into a
Contract for Sale and Purchase of Perlite Ore with Induplex, Inc. (Induplex),
wherein Induplex agreed to buy all the perlite ore that may be found and mined
in Tuasons mining claim located in Taysa, Daraga, Albay. In exchange, Induplex will
assist Tuason in securing and perfecting his right over the mining claim.[3]

Thereafter, Tuason executed on May 29, 1976, an Agreement to Operate Mining

Claims in favor of petitioner Asaphil Construction and Development Corporation
(Asaphil).[4]

On November 9, 1990, Tuason filed with the Bureau of Mines, Department of

Environment and Natural Resources (DENR), a complaint againstAsaphil and Induplex for
declaration of nullity of the two contracts, namely, the Contract for Sale and Purchase
of Perlite Ore, and the Agreement to Operate Mining Claims. Tuason alleged in his
complaint that the stockholders of Induplex formed and organized Ibalon Mineral
Resources, Inc. (Ibalon), an entity whose purpose is to mine any and all kinds of minerals,
and has in fact been mining, extracting and utilizing the perlite ore in Ibalons mining
claim; that this is in violation of the condition imposed by the Board of Investments (BOI)
on Induplex in its Joint Venture Agreement with Grefco, Inc. dated September 3, 1974,
prohibiting Induplex from mining perlite ore, through an operating agreement or any other
method; that Induplex acquired the majority stocks ofAsaphil on January 14, 1989, and
that 95% of Ibalons shares were also transferred to Virgilio R. Romero, who is a
stockholder of Induplex, Asaphil andIbalon. Tuason claimed that said acts
adversely affected, not only his interest as claimowner, but the governments interest as
well.[5]

Asaphil filed its Answer, praying for the dismissal of the complaint on the ground
that the DENR has no jurisdiction over the case.[6]

Induplex filed a Motion to Dismiss the complaint, also on ground of lack of

jurisdiction. Induplex contended that to fall within the jurisdiction of the DENR, the
controversy should involve a mining property and the contending parties must be
claimholders and/or mining operators; and that the dispute in this case involves mineral
product and not a mining property, and the protagonists are claimholders (Tuason) and a
buyer (Induplex).[7]

The DENR, through the Regional Executive Director, found merit

in Induplexs arguments and dismissed the complaint. The dispositive portion of the
Regional Executive Directors Decision reads:

WHEREFORE, in view of the foregoing, the instant complaint should be, as

it is hereby dismissed.

SO ORDERED.[8]

On appeal, the MAB rendered the herein assailed Decision dated August 18,
1997. The MAB ruled that the complaint is for the cancellation and revocation of the
Agreement to Operate Mining Claims, which is within the jurisdiction of the DENR under
Section 7 of Presidential Decree No. 1281. The MAB also found that the acquisition
by Induplex of the majority stocks of Asaphil, and Induplexs assumption of the mining
operation violated the BOI prohibition. With regard, however, to the validity of the
Contract for Sale and Purchase of Perlite Ore, the MAB ruled that the evidence does not
supportTuasons plea for its cancellation.[9]

Asaphil and Induplex filed a motion for reconsideration which was denied by the
MAB per Order dated March 23, 1998.[10]

Hence, the herein petition by Asaphil on the following grounds:

A. THE BOARD A QUO HAS DECIDED A QUESTION OF SUBSTANCE UNDER THE

RECENTLY ENACTED MINING ACT OF 1995 (R.A. NO. 7942), NOT
THERETOFORE DETERMINED BY THIS HONORABLE TRIBUNAL

BY VIOLATING ARTICLE 1930 OF THE CIVIL CODE OF

THE PHILIPPINES WHEN IT CANCELLED ASAPHILS AGENCY (COUPLED
WITH AN INTEREST) UNDER THE OPERATING AGREEMENT.
BY VIOLATING ASAPHILS CONSTITUTIONAL RIGHT TO DUE PROCESS OF
LAW WHEN THE BOARD ADJUDICATED UPON ALLEGED VIOLATION OF
THE AGREEMENT ON THE PART OF ASAPHIL, BUT WITHOUT RECEIVING
EVIDENCE OF ANY SUCH VIOLATION.
BY IGNORING ASAPHILS 52.5% INTEREST UNDER THE OPERATING
AGREEMENT WHICH GIVES TO ASAPHIL THE RIGHT TO DETERMINE
WHETHER OR NOT THE OPERATING AGREEMENT MUST BE CANCELLED.
BY INVALIDATING THE OPERATING AGREEMENT WITHOUT RECEIVING
EVIDENCE ON THE PURPORTED GROUND FOR INVALIDATION.
BY NOT ADJUDICATING UPON THE RIGHTS AND OBLIGATION OF
TUASON AND ASAPHIL UNDER THE OPERATING AGREEMENT WHICH IS
ACTUALLY IN THE NATURE OF A JOINT VENTURE AGREEMENT, BY
REASON OF THE FINANCIAL RAMIFICATIONS THEREOF.
B. THE BOARD A QUO HAS DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JUDICIAL PROCEEDINGS

1. BY INVALIDATING THE OPERATING AGREEMENT WITHOUT

RECEIVING EVIDENCE ON THE PURPORTED GROUND FOR
INVALIDATION.
2. THE ACTUATION OF THE MINES ADJUDICATION BOARD IS
UNCONSTITUTIONAL, AS IT DEPRIVES THE PETITIONER OF ITS RIGHT
TO PRESENT EVIDENCE ON THE ISSUE OF WHETHER OR NOT THE
 OPERATING AGREEMENT HAS BEEN VIOLATED, VIRTUALLLY
DEPRIVING THE PETITIONER OF ITS PROPRIETARY RIGHTS WITHOUT
DUE PROCESS OF LAW.
3. THE MINES ADJUDICATION BOARD ERRED IN ENTERTAINING
TUASONS APPEAL FROM THE ORDER OF DISMISSAL, AS THE
LATTER WAS CONCERNED SOLELY WITH THE ISSUE OF
JURISDICTION WHICH, BEING A MATTER OF LAW, IS COGNIZABLE
BY THIS HONORABLE TRIBUNAL AND/OR BY THE COURT OF
APPEALS.
4. GRANTING THAT THE MINES ADJUDICATION BOARD COULD
VALIDLY ASSUME THE FACTS (WITHOUT RECEIVING EVIDENCE),

a) THE MINES ADJUDICATION BOARD NONETHELESS ERRED IN

ANNULLING THE OPERATING AGREEMENT BETWEEN TUASON
AND ASAPHIL, ON THE MERE CIRCUMSTANCE THAT A
STOCKHOLDER OF INDUPLEX HAD BECOME A STOCKHOLDER
OF ASAPHIL IN 1990.
b) THE MINES ADJUDICATION BOARD LIKEWISE ERRED IN
ANNULING THE OPERATING AGREEMENT BETWEEN TUASON
AND ASAPHIL ON THE BASIS OF THE ASAPAHILS PURPORTED
VIOLATION OF THE TERMS OF THE OPERATING AGREEMENT.
5. THE MINES ADJUDICATION BOARD FURTHER ERRED IN ANNULING
THE OPERATING AGREEMENT BETWEEN TUASON AND ASAPHIL
AND AT THE SAME TIME THE BOARD UPHELD THE VALIDITY OF THE
SUPPLY CONTRACT BETWEEN TUASON AND INDUPLEX BASED ON
THE SAME INVALIDATING CAUSE.[11] (Emphasis supplied)

Petitioners arguments may be summed up into two basic issues: first, whether or
not the DENR has jurisdiction over Tuasons complaint for the annulment of the Contract
for Sale and Purchase of Perlite Ore between Tuason and Induplex, and the Agreement to
Operate Mining Claims between Tuasonand Asaphil; and second, whether or not the MAB
erred in invalidating the Agreement to Operate Mining Claims.

As a preliminary matter, it should be stated that MAB decisions are appealable to

the Court of Appeals (CA) under Rule 43 of the Rules of Court. InCarpio v. Sulu Resources
Development Corp.,[12] the Court clarified that while Section 79 of the Philippine Mining Act
of 1995 provides that petitions for review of MAB decisions are to be brought directly to
the Supreme Court, the MAB is a quasi-judicial agency whose decisions should be brought
to the CA. However, considering that the Carpio case was rendered in 2002, and the
petition before the Court was filed in 1999; and considering further that the issues raised,
specially the issue of the DENRs jurisdiction, and the fact that the records of the case are
already before the Court, it is more appropriate and practical to resolve the petition in
order to avoid further delay.[13]

With regard to the issue of jurisdiction, the DENR Regional Executive Director
opined that the DENR does not have jurisdiction over the case, while the MAB ruled that
the DENR has jurisdiction.

The Court upholds the finding of the DENR Regional Executive Director that the
DENR does not have jurisdiction over Tuasons complaint.

At the time of the filing of the complaint, the jurisdiction of the DENR over mining
disputes and controversies is governed by P.D. No. 1281, entitled Revising
Commonwealth Act No. 136, Creating the Bureau of Mines, and for Other
Purposes.[14] Particularly, P.D. No. 1281 vests the Bureau of Mines (now the Mines and
Geo-Sciences Bureau) of the DENR with jurisdictional supervision and control over all
holders of mining claims or applicants for and/or grantees of mining licenses, permits,
leases and/or operators thereof, including mining service contracts and service contractors
insofar as their mining activities are concerned.[15] Under Section 7 of P.D. No. 1281, the
Bureau of Mines also has quasi-judicial powers over cases involving the following:

(a) a mining property subject of different agreements entered into by the

claim holder thereof with several mining operators;

(b) complaints from claimowners that the mining property subject of an

operating agreement has not been placed into actual operations within the
period stipulated therein; and

(c) cancellation and/or enforcement of mining contracts due to the

refusal of the claimowner/operator to abide by the terms and conditions
thereof.
 In Pearson v. Intermediate Appellate Court,[16] this Court observed that the trend has
been to make the adjudication of mining cases a purely administrative matter, although
it does not mean that administrative bodies have complete rein over mining disputes. In
several cases on mining disputes, the Court recognized a distinction between (1) the
primary powers granted by pertinent provisions of law to the then Secretary of Agriculture
and Natural Resources (and the bureau directors) of an executive or administrative nature,
such as granting of license, permits, lease and contracts, or approving, rejecting,
reinstating or canceling applications, or deciding conflicting applications, and (2)
controversies or disagreements of civil or contractual nature between litigants which are
questions of a judicial nature that may be adjudicated only by the courts of justice.[17]

The allegations in Tuasons complaint do not make out a case for a mining dispute or
controversy within the jurisdiction of the DENR. While the Agreement to Operate Mining
Claims is a mining contract, the ground upon which the contract is sought to be annulled is
not due to Asaphils refusal to abide by the terms and conditions of the agreement, but
due to Induplexs alleged violation of the condition imposed by the BOI in its Joint Venture
Agreement with Grefco, Inc.. Also, Tuason sought the nullity of the Contract for Sale and
Purchase of Perlite Ore, based on the same alleged violation. Obviously, this raises a
judicial question, which is proper for determination by the regular courts.[18] A judicial
question is raised when the determination of the question involves the exercise of a
judicial function; that is, the question involves the determination of what the law is and
what the legal rights of the parties are with respect to the matter in controversy.[19]

The DENR is not called upon to exercise its technical knowledge or expertise over
any mining operations or dispute; rather, it is being asked to determine the validity of the
agreements based on circumstances beyond the respective rights of the parties under the
two contracts. In Gonzales v. Climax Mining Ltd.,[20] the Court ruled that:

x x x whether the case involves void or voidable contracts is still a judicial

question. It may, in some instances, involve questions of fact especially with
regard to the determination of the circumstances of the execution of the
contracts. But the resolution of the validity or voidness of the contracts
 remains a legal or judicial question as it requires the exercise of judicial
function. It requires the ascertainment of what laws are applicable to the
dispute, the interpretation and application of those laws, and the rendering of a
judgment based thereon. Clearly, the dispute is not a mining conflict. It is
essentially judicial. The complaint was not merely for the determination of
rights under the mining contracts since the very validity of those contracts is
put in issue. (Emphasis supplied)

Thus, the DENR Regional Executive Director was correct in dismissing the complaint
for lack of jurisdiction over Tuasons complaint; consequently, the MAB committed an
error in taking cognizance of the appeal, and in ruling upon the validity of the contracts.

Given the DENRs lack of jurisdiction to take cognizance of Tuasons complaint, the
Court finds it unnecessary to rule on the issue of validity of the contracts, as this should
have been brought before and resolved by the regular trial courts, to begin with.

WHEREFORE, the petition is GRANTED. The Decision of the Mines Adjudication

Board dated August 18, 1997 is SET ASIDE, and the Decision dated December 11, 1991 of
the Regional Executive Director, DENR-Region V, Legaspi City, dismissing the complaint for
lack of jurisdiction, isREINSTATED.

Costs against respondent.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson
CONSUELO YNARES-SANTIAGO ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

LEPANTO CONSOLIDATED MINING COMPANY v. WMC RESOURCES INTERNATIONAL PTY. LTD. and WMC
(PHILIPPINES), INC.

412 SCRA 101 (2003), THIRD DIVISION

In a contract denominated as Tampakan Option Agreement, respondent WMC Resources International

Pty. Ltd. (WMC), through its local subsidiary Western Mining Corporation (Philippines), Inc. (WMCP),
acquired the mining claims in Tampakan, South Cotabato of the Tampakan Companies. The
Tampakan Option Agreement was amended by subsequent agreements under which the Tampakan
Companies were given preferential option to acquire the shares of WMC in WMCP and Hillcrest Inc. in the
event WMC decided to sell them. WMC, by a Sale and Purchase Agreement, sold to Lepanto
Consolidated Mining Company (Lepanto) its shares of stock. As the Tampakan Companies later availed of
their preferential right under the Tampakan OptionAgreement, a Sale and Purchase Agreement was
concluded between WMC and the Tampakan Companies over the same shares of stock priorly purchased
by Lepanto.

The Tampakan Companies notified the Director of the Mines and Geosciences Bureau (MGB) of the DENR
of the exercise of their preemptive right to buy WMCs equity in WMCP and Hillcrest, Inc. Lepanto wrote
the DENR Secretary about the invalidity of said agreement and reiterated its request for the approval of
its acquisition of the disputed shares.

Lepanto subsequently filed before the Regional Trial Court (RTC) of Makati a complaint against WMC,
WMCP, Tampakan Companies. WMC et al. filed before theRTC a Joint Motion to Dismiss on the ground of
forum shopping. The RTC denied WCM et al.s Motion to Dismiss. On appeal, the CA granted the petition
of respondents ruling that Lepanto is guilty of forum shopping. Petitioners filed a motion for
reconsideration with the CA. The CA denied said motion.

ISSUE:
Whether or not Lepanto is guilty of forum shopping

HELD:

It is clear from the proceedings before the DENR, specifically before the MGB, that the issue of which
between petitioner and respondent Tampakan Companies possesses the better right to acquire the
mining rights, claims and interests held by WMC through its local subsidiary WMCP, especially with
respect to the 1995 FTAA, had been brought to the fore. The MGB cannot just assess the qualifications
of petitioner and of the Tampakan Companies as potential transferee or assignee of the rights and
obligations of WMCP under the FTAA without also resolving the issue of which has priority of right to
become one.

True, the questioned agreements of sale between Lepanto and WMC on one hand and between WMC
and the Tampakan Companies on the other pertain to transfer of shares of stock from one entity to
another. But said shares of stock represent ownership of mining rights or interest in mining agreements.
Hence, the power of the MGB to rule on the validity of the questioned agreements of sale, which was
raised by Lepanti before the DENR, is inextricably linked to the very nature of suchagreements over which
the MGB has jurisdiction under the law. Unavoidably, there is identity of reliefs that Lepanto seeks from
both the MGB and the RTC.

Forum shopping exists when both actions involve the same transactions, same essential facts and
circumstances and raise identical causes of actions, subject matter, and issues. Such elements are
evidently present in both the proceedingsbefore the MGB and before the trial court. The case instituted
with the RTC was thus correctly ordered dismissed by the appellate court on the ground of
forumshopping. Besides, not only did Lepanto commit forum shopping but it also failed
to exhaust administrative remedies by opting to go ahead in seeking reliefs from the court even while
those same reliefs were appropriately awaiting resolution by the MGB.