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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, Banahaw Mining 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 thirty-seven (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) the Adverse Claim was filed out of time;

b) 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;

c) 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. 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;

2. 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. THE CONSENT OF PICOP IS NOT NECESSARY FOR THE


APPROVAL OF BASE METALS MPSA APPLICATION.

2. 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-Surigao Forest 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 the Philippines,
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 aforecitedpresidential 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 PICOPs consent, 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 IngratedProtected
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 PICOPscontention 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. 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
2. Shaded brown represent CADC claim.[23]

III. 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. L-24548, October 27, 1983, 125 SCRA 302].

Since timber licenses are not contracts, the non-impairment clause, which
reads:

Sec. 10. No law impairing the obligation of contracts shall be passed.

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.

EN BANC

APEX MINING CO., INC., G.R. Nos. 152613 & 152628


Petitioner,

- versus -

SOUTHEAST MINDANAO GOLD


MINING CORP., THE MINES
ADJUDICATION BOARD, PROVINCIAL
MINING REGULATORY BOARD
(PMRB-DAVAO), MONKAYO
INTEGRATED SMALL SCALE MINERS
ASSOCIATION, INC., ROSENDO
VILLAFLOR, BALITE COMMUNAL
PORTAL MINING COOPERATIVE,
DAVAO UNITED MINERS
COOPERATIVE, ANTONIO DACUDAO,
PUTING-BATO GOLD MINERS
COOPERATIVE, ROMEO ALTAMERA,
THELMA CATAPANG, LUIS GALANG,
RENATO BASMILLO, FRANCISCO
YOBIDO, EDUARDO GLORIA, EDWIN
ASION, MACARIO HERNANDEZ,
REYNALDO CARUBIO, ROBERTO
BUNIALES, RUDY ESPORTONO,
ROMEO CASTILLO, JOSE REA, GIL
GANADO, PRIMITIVA LICAYAN,
LETICIA ALQUEZA and JOEL
BRILLANTES MANAGEMENT MINING
CORPORATION,
Respondents.

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

BALITE COMMUNAL PORTAL


MINING COOPERATIVE,
Petitioner,

- versus -

SOUTHEAST MINDANAO GOLD G.R. No. 152619-20


MINING CORP., APEX MINING CO.,
INC., THE MINES ADJUDICATION
BOARD, PROVINCIAL MINING
REGULATORY BOARD (PMRB-DAVAO),
MONKAYO INTEGRATED SMALL SCALE
MINERS ASSOCIATION, INC., ROSENDO
VILLAFLOR, DAVAO UNITED MINERS
COOPERATIVE, ANTONIO DACUDAO,
PUTING-BATO GOLD MINERS
COOPERATIVE, ROMEO ALTAMERA,
THELMA CATAPANG, LUIS GALANG,
RENATO BASMILLO, FRANCISCO
YOBIDO, EDUARDO GLORIA, EDWIN
ASION, MACARIO HERNANDEZ,
REYNALDO CARUBIO, ROBERTO
BUNIALES, RUDY ESPORTONO, ROMEO
CASTILLO, JOSE REA, GIL GANADO,
PRIMITIVA LICAYAN, LETICIA
ALQUEZA and JOEL BRILLANTES
MANAGEMENT MINING
CORPORATION,
Respondents.
x------------------------x
THE MINES ADJUDICATION BOARD
AND ITS MEMBERS, THE HON. VICTOR
O. RAMOS (Chairman),
UNDERSECRETARY VIRGILIO MARCELO
(Member) and DIRECTOR HORACIO
RAMOS (Member),
Petitioners,

- versus -
G.R. No. 152870-71

Present:

PUNO, C.J.,
SOUTHEAST MINDANAO GOLD CARPIO,
MINING CORPORATION, CORONA,*
Respondent. CARPIO MORALES,
CHICO-NAZARIO,
VELASCO, JR.,*
NACHURA,**
LEONARDO-DE CASTRO,
BRION,
PERALTA,*
BERSAMIN,
DEL CASTILLO,
ABAD, and
VILLARAMA, JR., JJ.

Promulgated:

November 20, 2009


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

RESOLUTION

CHICO-NAZARIO, J.:

This resolves the motion for reconsideration dated 12 July 2006, filed by Southeast Mindanao
Gold Mining Corporation (SEM), of this Courts Decision dated 23 June 2006 (Assailed
Decision). The Assailed Decision held that the assignment of Exploration Permit (EP) 133 in
favor of SEM violated one of the conditions stipulated in the permit, i.e., that the same shall be
for the exclusive use and benefit of Marcopper Mining Corporation (MMC) or its duly
authorized agents. Since SEM did not claim or submit evidence that it was a designated agent
of MMC, the latter cannot be considered as an agent of the former that can use EP 133 and
benefit from it. It also ruled that the transfer of EP 133 violated Presidential Decree No. 463,
which requires that the assignment of a mining right be made with the prior approval of the
Secretary of the Department of Environment and Natural Resources (DENR).Moreover, the
Assailed Decision pointed out that EP 133 expired by non-renewal since it was not renewed
before or after its expiration.

The Assailed Decision likewise upheld the validity of Proclamation No. 297 absent any
question against its validity. In view of this, and considering that under Section 5 of Republic
Act No. 7942, otherwise known as the Mining Act of 1995, mining operations in mineral
reservations may be undertaken directly by the State or through a contractor, the Court
deemed the issue of ownership of priority right over the contested Diwalwal Gold Rush Area as
having been overtaken by the said proclamation. Thus, it was held in the Assailed Decision that
it is now within the prerogative of the Executive Department to undertake directly the mining
operations of the disputed area or to award the operations to private entities including
petitioners Apex and Balite, subject to applicable laws, rules and regulations, and provided that
these private entities are qualified.

SEM also filed a Motion for Referral of Case to the Court En Banc and for Oral Arguments
dated 22 August 2006.

Apex, for its part, filed a Motion for Clarification of the Assailed Decision, praying that
the Court elucidate on the Decisions pronouncement that mining operations, are now,
therefore within the full control of the State through the executive branch. Moreover, Apex
asks this Court to order the Mines and Geosciences Board (MGB) to accept its application for
an exploration permit.

In its Manifestation and Motion dated 28 July 2006, Balite echoes the same concern as
that of Apex on the actual takeover by the State of the mining industry in the disputed area to
the exclusion of the private sector. In addition, Balite prays for this Court to direct MGB to
accept its application for an exploration permit.

Camilo Banad, et al., likewise filed a motion for reconsideration and prayed that the
disputed area be awarded to them.

In the Resolution dated 15 April 2008, the Court En Banc resolved to accept the instant
cases. The Court, in a resolution dated 29 April 2008, resolved to set the cases for Oral
Argument on 1 July 2008.

During the Oral Argument, the Court identified the following principal issues to be discussed by
the parties:

1. Whether the transfer or assignment of Exploration Permit (EP) 133 by MMC to SEM
was validly made without violating any of the terms and conditions set forth in
Presidential Decree No. 463 and EP 133 itself.

2. Whether Southeast Mindanao Mining Corp. acquired a vested right over the disputed
area, which constitutes a property right protected by the Constitution.

3. Whether the assailed Decision dated 23 June 2006 of the Third Division in this case is
contrary to and overturns the earlier Decision of this Court in Apex v. Garcia (G.R. No.
92605, 16 July 1991, 199 SCRA 278).

4. Whether the issuance of Proclamation No. 297 declaring the disputed area as mineral
reservation outweighs the claims of SEM, Apex Mining Co. Inc. and Balite Communal
Portal Mining Cooperative over the Diwalwal Gold Rush Area.

5. Whether the issue of the legality/constitutionality of Proclamation No. 297 was


belatedly raised.

6. Assuming that the legality/constitutionality of Proclamation No. 297 was timely raised,
whether said proclamation violates any of the following:

a. Article XII, Section 4 of the Constitution;


b. Section 1 of Republic Act No. 3092;
c. Section 14 of the Administrative Code of 1987;
d. Section 5(a) of Republic Act No. 7586;
e. Section 4(a) of Republic Act No. 6657; and
f. Section 2, Subsection 2.1.2 of Executive Order No. 318 dated 9 June 2004.

After hearing the arguments of the parties, the Court required them to submit their
respective memoranda. Memoranda were accordingly filed by SEM, Apex, Balite and Mines
Adjudication Board (MAB).

We shall resolve the second issue before dwelling on the first, third and the rest of the
issues.
MMC or SEM Did Not Have Vested Rights Over the Diwalwal
Gold Rush Area

Petitioner SEM vigorously argues that Apex Mining Co., Inc. v. Garcia[1] vested in MMC
mining rights over the disputed area. It claims that the mining rights that MMC acquired under
the said case were the ones assigned to SEM, and not the right to explore under MMCs EP
133. It insists that mining rights, once obtained, continue to subsist regardless of the validity of
the exploration permit; thus, mining rights are independent of the exploration permit and
therefore do not expire with the permit. SEM insists that a mining right is a vested property
right that not even the government can take away. To support this thesis, SEM cites this Courts
ruling in McDaniel v. Apacible and Cuisia[2] and in Gold Creek Mining Corporation v. Rodriguez,
[3]
which were decided in 1922 and 1938, respectively.

McDaniel and Gold Creek Mining Corporation are not in point.

In 1916, McDaniel, petitioner therein, located minerals, i.e., petroleum, on an


unoccupied public land and registered his mineral claims with the office of the mining recorder
pursuant to the Philippine Bill of 1902, where a mining claim locator, soon after locating the
mine, enjoyed possessory rights with respect to such mining claim with or without a patent
therefor. In that case, the Agriculture Secretary, by virtue of Act No. 2932, approved in 1920,
which provides that all public lands may be leased by the then Secretary of Agriculture and
Natural Resources, was about to grant the application for lease of therein respondent,
overlapping the mining claims of the subject petitioner. Petitioner argued that, being a valid
locator, he had vested right over the public land where his mining claims were located. There,
the Court ruled that the mining claim perfected under the Philippine Bill of 1902, 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. The Court then declared that since
petitioner had already perfected his mining claim under the Philippine Bill of 1902, a
subsequent statute, i.e., Act No. 2932, could not operate to deprive him of his already
perfected mining claim, without violating his property right.

Gold Creek Mining reiterated the ruling in McDaniel that a perfected mining claim
under the Philippine Bill of 1902 no longer formed part of the public domain; hence, such
mining claim does not come within the prohibition against the alienation of natural resources
under Section 1, Article XII of the 1935 Constitution.

Gleaned from the ruling on the foregoing cases is that for this law to apply, it must be
established that the mining claim must have been perfected when the Philippine Bill of 1902
was still in force and effect. This is so because, unlike the subsequent laws that prohibit the
alienation of mining lands, the Philippine Bill of 1902 sanctioned the alienation of mining lands
to private individuals. 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.[4] Pursuant to this law, the holder of
the mineral claim is entitled to all the minerals that may lie within his claim, provided he does
three acts: First, he enters the mining land and locates a plot of ground measuring, where
possible, but not exceeding, one thousand feet in length by one thousand feet in breadth, in as
nearly a rectangular form as possible. [5] Second, the mining locator has to record the mineral
claim in the mining recorder within thirty (30) days after the location thereof. [6] Lastly, he must
comply with the annual actual work requirement. [7] Complete mining rights, namely, the rights
to explore, develop and utilize, are acquired by a mining locator by simply following the
foregoing requirements.

With the effectivity of the 1935 Constitution, where the regalian doctrine was adopted,
it was declared that all natural resources of the Philippines, including mineral lands and
minerals, were property belonging to the State. [8] Excluded, however, from the property of
public domain were the mineral lands and minerals that were located and perfected by virtue
of the Philippine Bill of 1902, since they were already considered private properties of the
locators.[9]

Commonwealth Act No. 137 or the Mining Act of 1936, which expressly adopted
the regalian doctrine following the provision of the 1935 Constitution, also proscribed the
alienation of mining lands and granted only lease rights to mining claimants, who were
prohibited from purchasing the mining claim itself.

When Presidential Decree No. 463, which revised Commonwealth Act No. 137, was in
force in 1974, it likewise recognized the regalian doctrine embodied in the 1973 Constitution.
It declared that all mineral deposits and public and private lands belonged to the state while,
nonetheless, recognizing mineral rights that had already been existing under the Philippine Bill
of 1902 as being beyond the purview of the regalian doctrine.[10]The possessory rights of
mining claim holders under the Philippine Bill of 1902 remained intact and effective, and such
rights were recognized as property rights that the holders could convey or pass by descent. [11]

In the instant cases, SEM does not aver or prove that its mining rights had been
perfected and completed when the Philippine Bill of 1902 was still the operative law. Surely, it
is impossible for SEM to successfully assert that it acquired mining rights over the disputed
area in accordance with the same bill, since it was only in 1984 that MMC, SEMs predecessor-
in-interest, filed its declaration of locations and its prospecting permit application in
compliance with Presidential Decree No. 463. It was on 1 July 1985 and 10 March 1986 that a
Prospecting Permit and EP 133, respectively, were issued to MMC. Considering these facts,
there is no possibility that MMC or SEM could have acquired a perfected mining claim under
the auspices of the Philippine Bill of 1902. Whatever mining rights MMC had that it invalidly
transferred to SEM cannot, by any stretch of imagination, be considered mining rights as
contemplated under the Philippine Bill of 1902 and immortalized in McDaniel and Gold Creek
Mining.

SEM likens EP 133 with a building permit. SEM likewise equates its supposed rights
attached to the exploration permit with the rights that a private property land owner has to
said landholding. This analogy has no basis in law. As earlier discussed, under the 1935, 1973
and 1987 Constitutions, national wealth, such as mineral resources, are owned by the State
and not by their discoverer. The discoverer or locator can only develop and utilize said minerals
for his own benefit if he has complied with all the requirements set forth by applicable laws
and if the State has conferred on him such right through permits, concessions or
agreements. In other words, without the imprimatur of the State, any mining aspirant does not
have any definitive right over the mineral land because, unlike a private landholding, mineral
land is owned by the State, and the same cannot be alienated to any private person as
explicitly stated in Section 2, Article XIV of the 1987 Constitution:
All lands of public domain, waters, minerals x x x and all other natural resources are
owned by the State. With the exception of agricultural lands, all other natural resources shall
not be alienated. (Emphases supplied.)

Further, a closer scrutiny of the deed of assignment in favor of SEM reveals that MMC
assigned to the former the rights and interests it had in EP 133, thus:

1. That for ONE PESO (P1.00) and other valuable consideration received by the ASSIGNOR from
the ASSIGNEE, the ASSIGNOR hereby ASSIGNS, TRANSFERS and CONVEYS unto the ASSIGNEE
whatever rights or interest the ASSIGNOR may have in the area situated in Monkayo, Davao
del Norte and Cateel, Davao Oriental, identified as Exploration Permit No. 133 and Application
for a Permit to Prospect in Bunawan, Agusan del Sur respectively. (Emphasis supplied.)

It is evident that what MMC had over the disputed area during the assignment was an
exploration permit. Clearly, the right that SEM acquired was limited to exploration, only
because MMC was a mere holder of an exploration permit. As previously explained, SEM did
not acquire the rights inherent in the permit, as the assignment by MMC to SEM was done in
violation of the condition stipulated in the permit, and the assignment was effected without
the approval of the proper authority in contravention of the provision of the mining law
governing at that time. In addition, the permit expired on 6 July 1994. It is, therefore, quite
clear that SEM has no right over the area.

Even assuming arguendo that SEM obtained the rights attached in EP 133, said rights
cannot be considered as property rights protected under the fundamental law.

An exploration permit does not automatically ripen into a right to extract and utilize the
minerals; much less does it develop into a vested right.The holder of an exploration permit only
has the right to conduct exploration works on the area awarded. Presidential Decree No. 463
defined exploration as the examination and investigation of lands supposed to contain
valuable minerals, by drilling, trenching, shaft sinking, tunneling, test pitting and other
means, for the purpose of probing the presence of mineral deposits and the extent
thereof. Exploration does not include development and exploitation of the minerals
found. Development is defined by the same statute as the steps necessarily taken to reach an
ore body or mineral deposit so that it can be mined, whereas exploitation is defined as the
extraction and utilization of mineral deposits. An exploration permit is nothing more than a
mere right accorded to its holder to be given priority in the governments consideration in the
granting of the right to develop and utilize the minerals over the area. An exploration permit is
merely inchoate, in that the holder still has to comply with the terms and conditions embodied
in the permit. This is manifest in the language of Presidential Decree No. 463, thus:

Sec. 8. x x x The right to exploit 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 persons or corporations who undertook prospecting and exploration of said area shall
be given priority.

In La Bugal-Blaan Tribal Association, Inc. v. Ramos,[12] this Court emphasized:

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. x x x.

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. (Underscoring ours.)

The non-acquisition by MMC or SEM of any vested right over the disputed area is
supported by this Courts ruling in Southeast Mindanao Gold Mining Corporation v. Balite
Portal Mining Cooperative[13]:

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 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. x x
x. (Underscoring supplied.)

Unfortunately, SEM cannot be given priority to develop and exploit the area covered by EP 133
because, as discussed in the assailed Decision, EP 133 expired by non-renewal on 6 July
1994. Also, as already mentioned, the transfer of the said permit to SEM was without legal
effect because it was done in contravention of Presidential Decree No. 463 which requires
prior approval from the proper authority. Simply told, SEM holds nothing for it to be entitled to
conduct mining activities in the disputed mineral land.

SEM wants to impress on this Court that its alleged mining rights, by virtue of its being a
transferee of EP 133, is similar to a Financial and Technical Assistance Agreement (FTAA) of a
foreign contractor, which merits protection by the due process clause of the Constitution. SEM
cites La Bugal-Blaan Tribal Association, Inc. v. Ramos,[14] as follows:

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. x x x.

Again, this argument is not meritorious. SEM did not acquire the rights attached to EP
133, since their transfer was without legal effect. Granting for the sake of argument that SEM
was a valid transferee of the permit, its right is not that of a mining contractor. An exploration
permit grantee is vested with the right to conduct exploration only, while an FTAA or MPSA
contractor is authorized to extract and carry off the mineral resources that may be discovered
in the area.[15] An exploration permit holder still has to comply with the mining project
feasibility and other requirements under the mining law. It has to obtain approval of such
accomplished requirements from the appropriate government agencies. Upon obtaining this
approval, the exploration permit holder has to file an application for an FTAA or an MPSA and
have it approved also. Until the MPSA application of SEM is approved, it cannot lawfully claim
that it possesses the rights of an MPSA or FTAA holder, thus:

x x x 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 x x x.[16]

But again, SEM is not qualified to apply for an FTAA or any mineral agreement,
considering that it is not a holder of a valid exploration permit, since EP 133 expired by non-
renewal and the transfer to it of the same permit has no legal value.

More importantly, assuming arguendo that SEM has a valid exploration permit, it cannot
assert any mining right over the disputed area, since the State has taken over the mining
operations therein, pursuant to Proclamation No. 297 issued by the President on 25 November
2002. The Court has consistently ruled that the nature of a natural resource exploration permit
is analogous to that of a license. In Republic v. Rosemoor Mining and Development
Corporation, this Court articulated:

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, 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.
[17]
(Emphasis supplied.)

As a mere license or privilege, an exploration permit can be validly amended by the


President of the Republic when national interests suitably necessitate. The Court instructed
thus:

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 the public
welfare is promoted. x x x They may be validly amended, modified, replaced or rescinded by the
Chief Executive when national interests so require.[18]

Recognizing the importance of the countrys natural resources, not only for national
economic development, but also for its security and national defense, Section 5 of Republic Act
No. 7942 empowers the President, when the national interest so requires, to establish mineral
reservations where mining operations shall be undertaken directly by the State or through a
contractor, viz:

SEC 5. Mineral Reservations. When the national interest so requires, such as when there is a
need to preserve strategic raw materials for industries critical to national development, or
certain minerals for scientific, cultural or ecological value, the President may establish mineral
reservations upon the recommendation of the Director through the Secretary. Mining
operations in existing mineral reservations and such other reservations as may thereafter be
established, shall be undertaken by the Department or through a contractor x x x. (Emphasis
supplied.)
Due to the pressing concerns in the Diwalwal Gold Rush Area brought about by
unregulated small to medium-scale mining operations causing ecological, health and peace
and order problems, the President, on 25 November 2002, issued Proclamation No. 297, which
declared the area as a mineral reservation and as an environmentally critical area. This
executive fiat was aimed at preventing the further dissipation of the natural environment and
rationalizing the mining operations in the area in order to attain an orderly balance between
socio-economic growth and environmental protection. The area being a mineral reservation,
the Executive Department has full control over it pursuant to Section 5 of Republic Act No.
7942. It can either directly undertake the exploration, development and utilization of the
minerals found therein, or it can enter into agreements with qualified entities. Since the
Executive Department now has control over the exploration, development and utilization of
the resources in the disputed area, SEMs exploration permit, assuming that it is still valid, has
been effectively withdrawn. The exercise of such power through Proclamation No. 297 is in
accord with jura regalia, where the State exercises its sovereign power as owner of lands of
the public domain and the mineral deposits found within. Thus, Article XII, Section 2 of the
1987 Constitution emphasizes:

SEC. 2. All lands of the public domain, water, 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
product-sharing agreements with Filipino citizens, or corporations or associations at least
sixty per centum of whose capital is owned by such citizens. (Emphasis supplied.)

Furthermore, said proclamation cannot be denounced as offensive to the fundamental law


because the State is sanctioned to do so in the exercise of its police power. [19] The issues on
health and peace and order, as well the decadence of the forest resources brought about by
unregulated mining in the area, are matters of national interest. The declaration of the Chief
Executive making the area a mineral reservation, therefore, is sanctioned by Section 5 of
Republic Act No. 7942.

The Assignment of EP No. 133 by MMC in Favor of SEM


Violated Section 97 of Presidential Decree No. 463 and the
Terms and Conditions Set Forth in the Permit

SEM claims that the approval requirement under Section 97 of Presidential Decree No. 463 is
not applicable to this case, because MMC neither applied for nor was granted a mining lease
contract. The said provision states:

SEC. 97. Assignment of Mining Rights. A mining lease contract or any interest therein shall not
be transferred, assigned, or subleased without the prior approval of the Secretary: Provided,
that such transfer, assignment or sublease may be made only to a qualified person possessing
the resources and capability to continue the mining operations of the lessee and that the
assignor has complied with all the obligations of the lease: Provided, further, That such transfer
or assignment shall be duly registered with the office of the mining recorder
concerned. (Emphasis supplied.)
Exploration Permit 133 was issued in favor of MMC on 10 March 1986, when
Presidential Decree No. 463 was still the governing law.Presidential Decree No. 463 pertains to
the old system of exploration, development and utilization of natural resources through
license, concession or lease.[20]

Pursuant to this law, a mining lease contract confers on the lessee or his successors the
right to extract, to remove, process and utilize the mineral deposits found on or underneath
the surface of his mining claims covered by the lease. The lessee may also enter into a service
contract for the exploration, development and exploitation of the minerals from the lands
covered by his lease, to wit:
SEC. 44. A mining lease contract shall grant to the lessee, his heirs, successors, and assigns the
right to extract all mineral deposits found on or underneath the surface of his mining claims
covered by the lease, continued vertically downward; to remove, process, and otherwise utilize
the mineral deposits for his own benefit; and to use the lands covered by the lease for the
purpose or purposes specified therein x x x That a lessee may on his own or through the
Government, enter into a service contract for the exploration, development and exploitation
of his claims and the processing and marketing of the product thereof, subject to the rules and
regulations that shall be promulgated by the Director, with the approval of the Secretary x x
x. (Emphases supplied.)

In other words, the lessees interests are not only limited to the extraction or utilization
of the minerals in the contract area, but also to include the right to explore and develop the
same. This right to explore the mining claim or the contract area is derived from the
exploration permit duly issued by the proper authority. An exploration permit is, thus, covered
by the term any other interest therein. Section 97 is entitled, Assignment of Mining Rights.This
alone gives a hint that before mining rights -- namely, the rights to explore, develop and utilize
-- are transferred or assigned, prior approval must be obtained from the DENR Secretary. An
exploration permit, thus, cannot be assigned without the imprimatur of the Secretary of the
DENR.

It is instructive to note that under Section 13 of Presidential Decree No. 463, the
prospecting and exploration of minerals in government reservations, such as forest
reservations, are prohibited, except with the permission of the government agency
concerned. It is the government agency concerned that has the prerogative to conduct
prospecting, exploration and exploitation of such reserved lands. [21] It is only in instances
wherein said government agency, in this case the Bureau of Mines, cannot undertake said
mining operations that qualified persons may be allowed by the government to undertake such
operations. PNOC-EDC v. Veneracion, Jr.[22] outlines the five requirements for acquiring mining
rights in reserved lands under Presidential Decree No. 463: (1) a prospecting permit from the
agency that has jurisdiction over the land; (2) an exploration permit from the Bureau of Mines
and Geo-Sciences (BMGS); (3) if the exploration reveals the presence of commercial deposit,
application to BMGS by the permit holder for the exclusion of the area from the reservation;
(4) a grant by the President of the application to exclude the area from the reservation; and (5)
a mining agreement (lease, license or concession) approved by the DENR Secretary.

Here, MMC met the first and second requirements and obtained an exploration permit
over the disputed forest reserved land. Although MMC still has to prove to the government
that it is qualified to develop and utilize the subject mineral land, as it has yet to go through
the remaining process before it can secure a lease agreement, nonetheless, it is bound to
follow Section 97 of Presidential Decree No. 463. The logic is not hard to discern. If a lease
holder, who has already demonstrated to the government his capacity and qualifications to
further develop and utilize the minerals within the contract area, is prohibited from
transferring his mining rights (rights to explore, develop and utilize), with more reason will this
proscription apply with extra force to a mere exploration permit holder who is yet to exhibit his
qualifications in conducting mining operations. The rationale for the approval requirement
under Section 97 of Presidential Decree No. 463 is not hard to see. Exploration permits are
strictly granted to entities or individuals possessing the resources and capability to undertake
mining operations. Mining industry is a major support of the national economy and the
continuous and intensified exploration, development and wise utilization of mining resources is
vital for national development. For this reason, Presidential Decree No. 463 makes it
imperative that in awarding mining operations, only persons possessing the financial resources
and technical skill for modern exploratory and development techniques are encouraged to
undertake the exploration, development and utilization of the countrys natural resources. The
preamble of Presidential Decree No. 463 provides thus:

WHEREAS, effective and continuous mining operations require considerable outlays of


capital and resources, and make it imperative that persons possessing the financial resources
and technical skills for modern exploratory and development techniques be encouraged to
undertake the exploration, development and exploitation of our mineral resources;

The Court has said that a preamble is the key to understanding the statute, written to open the
minds of the makers to the mischiefs that are to be remedied, and the purposes that are to be
accomplished, by the provisions of the statute.[23] As such, when the statute itself is ambiguous
and difficult to interpret, the preamble may be resorted to as a key to understanding the
statute.

Indubitably, without the scrutiny by the government agency as to the qualifications of


the would-be transferee of an exploration permit, the same may fall into the hands of non-
qualified entities, which would be counter-productive to the development of the mining
industry. It cannot be overemphasized that the exploration, development and utilization of the
countrys natural resources are matters vital to the public interest and the general welfare;
hence, their regulation must be of utmost concern to the government, since these natural
resources are not only critical to the nations security, but they also ensure the countrys
survival as a viable and sovereign republic.[24]

The approval requirement of the Secretary of the DENR for the assignment of
exploration permits is bolstered by Section 25 of Republic Act No. 7942 (otherwise known as
the Philippine Mining Act of 1995), which provides that:

Sec. 25. Transfer or Assignment. An exploration permit may be transferred or assigned to


a qualified person subject to the approval of the Secretary upon the recommendation of the
Director.

SEM further posits that Section 97 of Presidential Decree No. 463, which requires the
prior approval of the DENR when there is a transfer of mining rights, cannot be applied to the
assignment of EP 133 executed by MMC in favor of SEM because during the execution of the
Deed of Assignment on 16 February 1994, Executive Order No. 279 [25] became the governing
statute, inasmuch as the latter abrogated the old mining system -- i.e., license, concession or
lease -- which was espoused by the former.
This contention is not well taken. While Presidential Decree No. 463 has already been repealed
by Executive Order No. 279, the administrative aspect of the former law nonetheless remains
applicable. Hence, the transfer or assignment of exploration permits still needs the prior
approval of the Secretary of the DENR. As ruled in Miners Association of the Philippines, Inc. v.
Factoran, Jr.[26]:

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. (Emphasis supplied.)

Not only did the assignment of EP 133 to SEM violate Section 97 of Presidential Decree
No. 463, it likewise transgressed one of the conditions stipulated in the grant of the said
permit. The following terms and conditions attached to EP 133 are as follows:[27]

1. That the permittee shall abide by the work program submitted with the application or
statements made later in support thereof, and which shall be considered as conditions and
essential parts of this permit;

2. That permittee shall maintain a complete record of all activities and accounting of all
expenditures incurred therein subject to periodic inspection and verification at reasonable
intervals by the Bureau of Mines at the expense of the applicant;

3. That the permittee shall submit to the Director of Mines within 15 days after the end
of each calendar quarter a report under oath of a full and complete statement of the work done
in the area covered by the permit;

4. That the term of this permit shall be for two (2) years to be effective from this date,
renewable for the same period at the discretion of the Director of Mines and upon request of
the applicant;

5. That the Director of Mines may at any time cancel this permit for violation of its
provision or in case of trouble or breach of peace arising in the area subject hereof by reason of
conflicting interests without any responsibility on the part of the government as to expenditures
for exploration that might have been incurred, or as to other damages that might have been
suffered by the permittee;

6. That this permit shall be for the exclusive use and benefit of the permittee or his duly
authorized agents and shall be used for mineral exploration purposes only and for no other
purpose.

It must be noted that under Section 90[28] of Presidential Decree No. 463, which was the
applicable statute during the issuance of EP 133, the DENR Secretary, through the Director of
the Bureau of Mines and Geosciences, was charged with carrying out the said law. Also, under
Commonwealth Act No. 136, also known as An Act Creating the Bureau of Mines, which was
approved on 7 November 1936, the Director of Mines had the direct charge of the
administration of the mineral lands and minerals; and of the survey, classification, lease or any
other form of concession or disposition thereof under the Mining Act. [29] This power of
administration included the power to prescribe terms and conditions in granting exploration
permits to qualified entities.

Thus, in the grant of EP 133 in favor of the MMC, the Director of the BMG acted within
his power in laying down the terms and conditions attendant thereto. MMC and SEM did not
dispute the reasonableness of said conditions.

Quite conspicuous is the fact that neither MMC nor SEM denied that they were unaware
of the terms and conditions attached to EP 133. MMC and SEM did not present any evidence
that they objected to these conditions. Indubitably, MMC wholeheartedly accepted these
terms and conditions, which formed part of the grant of the permit. MMC agreed to abide by
these conditions. It must be accentuated that a party to a contract cannot deny its validity,
without outrage to ones sense of justice and fairness, after enjoying its benefits. [30] Where
parties have entered into a well-defined contractual relationship, it is imperative that they
should honor and adhere to their rights and obligations as stated in their contracts, because
obligations arising from these have the force of law between the contracting parties and
should be complied with in good faith.[31] Condition Number 6 categorically states that the
permit shall be for the exclusive use and benefit of MMC or its duly authorized agents. While it
may be true that SEM, the assignee of EP 133, is a 100% subsidiary corporation of MMC,
records are bereft of any evidence showing that the former is the duly authorized agent of the
latter. This Court cannot condone such utter disregard on the part of MMC to honor its
obligations under the permit. Undoubtedly, having violated this condition, the assignment of
EP 133 to SEM is void and has no legal effect.

To boot, SEM squandered whatever rights it assumed it had under EP 133. On 6 July
1993, EP 133 was extended for twelve more months or until 6 July 1994. MMC or SEM,
however, never renewed EP 133 either prior to or after its expiration. Thus, EP 133 expired by
non-renewal on 6 July 1994. With the expiration of EP 133 on 6 July 1994, MMC lost any right
to the Diwalwal Gold Rush Area.

The Assailed Decision Resolved Facts and Issues That


Transpired after the Promulgation of Apex Mining Co., Inc. v.
Garcia

SEM asserts that the 23 June 2006 Decision reversed the 16 July 1991 Decision of the
Court en banc entitled, Apex Mining Co., Inc. v. Garcia.[32]

The assailed Decision DID NOT overturn the 16 July 1991 Decision in Apex Mining Co.,
Inc. v. Garcia.
It must be pointed out that what Apex Mining Co., Inc. v. Garcia resolved was the issue
of which, between Apex and MMC, availed itself of the proper procedure in acquiring the
right to prospect and to explore in the Agusan-Davao-Surigao Forest Reserve. Apex registered
its Declarations of Location (DOL) with the then BMGS, while MMC was granted a permit to
prospect by the Bureau of Forest Development (BFD) and was subsequently granted an
exploration permit by the BMGS. Taking into consideration Presidential Decree No. 463, which
provides that mining rights within forest reservation can be acquired by initially applying for a
permit to prospect with the BFD and subsequently for a permit to explore with the BMGS, the
Court therein ruled that MMC availed itself of the proper procedure to validly operate within
the forest reserve or reservation.

While it is true that Apex Mining Co., Inc. v. Garcia settled the issue of which between
Apex and MMC was legally entitled to explore in the disputed area, such rights, though, were
extinguished by subsequent events that transpired after the decision was promulgated. These
subsequent events, which were not attendant in Apex Mining Co., Inc. v. Garcia[33] dated 16 July
1991, are the following:

(1) the expiration of EP 133 by non-renewal on 6 July 1994;

(2) the transfer/assignment of EP 133 to SEM on 16 February 1994 which was done in violation
to the condition of EP 133 proscribing its transfer;

(3) the transfer/assignment of EP 133 to SEM is without legal effect for violating PD 463 which
mandates that the assignment of mining rights must be with the prior approval of the
Secretary of the DENR.

Moreover, in Southeast Mindanao Gold Mining Corporation v. Balite Portal Mining


Cooperative,[34] the Court, through Associate Justice Consuelo Ynares-Santiago (now retired),
declared that Apex Mining Co., Inc. v. Garcia did not deal with the issues of the expiration of EP
133 and the validity of the transfer of EP 133 to SEM, viz:

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. (Emphasis supplied.)

What is more revealing is that in the Resolution dated 26 November 1992, resolving the
motion for reconsideration of Apex Mining Co., Inc. v. Garcia, the Court clarified that the ruling
on the said decision was binding only between Apex and MMC and with respect the particular
issue raised therein. Facts and issues not attendant to the said decision, as in these cases, are
not settled by the same. A portion of the disposition of the Apex Mining Co., Inc. v.
Garcia Resolution dated 26 November 1992 decrees:

x x x The decision rendered in this case 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 the appropriate agencies. (Emphasis supplied.)

The Issue of the Constitutionality of Proclamation Is Raised


Belatedly
In its last-ditch effort to salvage its case, SEM contends that Proclamation No. 297,
issued by President Gloria Macapagal-Arroyo and declaring the Diwalwal Gold Rush Area as a
mineral reservation, is invalid on the ground that it lacks the concurrence of Congress as
mandated by Section 4, Article XII of the Constitution; Section 1 of Republic Act No. 3092;
Section 14 of Executive Order No. 292, otherwise known as the Administrative Code of 1987;
Section 5(a) of Republic Act No. 7586, and Section 4(a) of Republic Act No. 6657.

It is well-settled that when questions of constitutionality are raised, the court can
exercise its power of judicial review only if the following requisites are present: (1) an actual
and appropriate case exists; (2) there is a personal and substantial interest of the party raising
the constitutional question; (3) the exercise of judicial review is pleaded at the earliest
opportunity; and (4) the constitutional question is the lis mota of the case.

Taking into consideration the foregoing requisites of judicial review, it is readily clear that
the third requisite is absent. The general rule is that the question of constitutionality must be
raised at the earliest opportunity, so that if it is not raised in the pleadings, ordinarily it may
not be raised at the trial; and if not raised in the trial court, it will not be considered on appeal.
[35]

In the instant case, it must be pointed out that in the Reply to Respondent SEMs
Consolidated Comment filed on 20 May 2003, MAB mentioned Proclamation No. 297, which
was issued on 25 November 2002. This proclamation, according to the MAB, has rendered
SEMs claim over the contested area moot, as the President has already declared the same as a
mineral reservation and as an environmentally critical area. SEM did not put to issue the
validity of said proclamation in any of its pleadings despite numerous opportunities to
question the same. It was only after the assailed Decision was promulgated -- i.e., in SEMs
Motion for Reconsideration of the questioned Decision filed on 13 July 2006 and its Motion for
Referral of the Case to the Court En Banc and for Oral Arguments filed on 22 August 2006 --
that it assailed the validity of said proclamation.
Certainly, posing the question on the constitutionality of Proclamation No. 297 for the
first time in its Motion for Reconsideration is, indeed, too late.[36]

In fact, this Court, when it rendered the Decision it merely recognized that the
questioned proclamation came from a co-equal branch of government, which entitled it to a
strong presumption of constitutionality.[37] The presumption of its constitutionality stands
inasmuch as the parties in the instant cases did not question its validity, much less present any
evidence to prove that the same is unconstitutional. This is in line with the precept that
administrative issuances have the force and effect of law and that they benefit from the same
presumption of validity and constitutionality enjoyed by statutes.[38]

Proclamation No. 297 Is in Harmony with Article XII, Section


4, of the Constitution

At any rate, even if this Court were to consider the arguments belatedly raised by SEM,
said arguments are not meritorious.

SEM asserts that Article XII, Section 4 of the Constitution, bars the President from
excluding forest reserves/reservations and proclaiming the same as mineral reservations, since
the power to de-classify them resides in Congress.
Section 4, Article XII of the Constitution reads:

The Congress shall as soon as possible, determine by law the specific limits of forest
lands and national parks, marking clearly their boundaries on the ground. Thereafter, such
forest lands and national parks shall be conserved and may not be increased nor diminished,
except by law. The Congress shall provide, for such periods as it may determine, measures to
prohibit logging in endangered forests and in watershed areas.

The above-quoted provision says that the area covered by forest lands and national
parks may not be expanded or reduced, unless pursuant to a law enacted by Congress. Clear in
the language of the constitutional provision is its prospective tenor, since it speaks in this
manner: Congress shall as soon as possible. It is only after the specific limits of the forest lands
shall have been determined by the legislature will this constitutional restriction apply. SEM
does not allege nor present any evidence that Congress had already enacted a statute
determining with specific limits forest lands and national parks. Considering the absence of
such law, Proclamation No. 297 could not have violated Section 4, Article XII of the 1987
Constitution. In PICOP Resources, Inc. v. Base Metals Mineral Resources Corporation, [39] the
Court had the occasion to similarly rule in this fashion:

x x x 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.

Section 4, Article XII of the Constitution, addresses the concern of the drafters of the
1987 Constitution about forests and the preservation of national parks. This was brought about
by the drafters awareness and fear of the continuing destruction of this countrys forests. [40] In
view of this concern, Congress is tasked to fix by law the specific limits of forest lands and
national parks, after which the trees in these areas are to be taken care of. [41] Hence, these
forest lands and national parks that Congress is to delimit through a law could be changed only
by Congress.

In addition, there is nothing in the constitutional provision that prohibits the President
from declaring a forest land as an environmentally critical area and from regulating the mining
operations therein by declaring it as a mineral reservation in order to prevent the further
degradation of the forest environment and to resolve the health and peace and order
problems that beset the area.

A closer examination of Section 4, Article XII of the Constitution and Proclamation No.
297 reveals that there is nothing contradictory between the two. Proclamation No. 297, a
measure to attain and maintain a rational and orderly balance between socio-economic growth
and environmental protection, jibes with the constitutional policy of preserving and protecting
the forest lands from being further devastated by denudation. In other words, the
proclamation in question is in line with Section 4, Article XII of the Constitution, as the former
fosters the preservation of the forest environment of the Diwalwal area and is aimed at
preventing the further degradation of the same. These objectives are the very same reasons
why the subject constitutional provision is in place.
What is more, jurisprudence has recognized the policy of multiple land use in our laws
towards the end that the countrys precious natural resources may be rationally explored,
developed, utilized and conserved.[42] It has been held that forest reserves or reservations can
at the same time be open to mining operations, provided a prior written clearance by the
government agency having jurisdiction over such reservation is obtained. In other words
mineral lands can exist within forest reservations. These two terms are not anti-thetical. This is
made manifest if we read Section 47 of Presidential Decree No. 705 or the Revised Forestry
Code of the Philippines, which provides:

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. (Emphasis supplied.)

Also, Section 6 of Republic Act No. 7942 or the Mining Act of 1995, states that mining
operations in reserved lands other than mineral reservations, such as forest
reserves/reservations, are allowed, viz:

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. (Emphasis supplied.)

Since forest reservations can be made mineral lands where mining operations are conducted,
then there is no argument that the disputed land, which lies within a forest reservation, can be
declared as a mineral reservation as well.

Republic Act No. 7942 Otherwise Known as the Philippine


Mining Act of 1995, is the Applicable Law

Determined to rivet its crumbling cause, SEM then argues that Proclamation No. 297 is
invalid, as it transgressed the statutes governing the exclusion of areas already declared as
forest reserves, such as Section 1 of Republic Act No. 3092, [43] Section 14 of the Administrative
Code of 1987, Section 5(a) of Republic Act No. 7586, [44] and Section 4(a) of Republic Act No.
6657.[45]

Citing Section 1 of Republic Act No. 3092, which provides as follows:

Upon the recommendation of the Director of Forestry, with the approval of the
Department Head, the President of the Philippines shall set apart forest reserves which shall
include denuded forest lands from the public lands and he shall by proclamation declare the
establishment of such forest reserves and the boundaries thereof, and thereafter such forest
reserves shall not be entered, or otherwise disposed of, but shall remain indefinitely as such for
forest uses.

The President of the Philippines may, in like manner upon the recommendation of the
Director of Forestry, with the approval of the Department head, by proclamation, modify the
boundaries of any such forest reserve to conform with subsequent precise survey but not to
exclude any portion thereof except with the concurrence of Congress. (Underscoring supplied.)
SEM submits that the foregoing provision is the governing statute on the exclusion of areas
already declared as forest reserves. Thus, areas already set aside by law as forest reserves are
no longer within the proclamation powers of the President to modify or set aside for any other
purposes such as mineral reservation.

To bolster its contention that the President cannot disestablish forest reserves into
mineral reservations, SEM makes reference to Section 14, Chapter 4, Title I, Book III of the
Administrative Code of 1987, which partly recites:

The President shall have the power to reserve for settlement or public use, and for
specific public purposes, any of the lands of the public domain, the use of which is not
otherwise directed by law. The reserved land shall thereafter remain subject to the specific
public purpose indicated until otherwise provided by law or proclamation. (Emphases supplied.)

SEM further contends that Section 7 of Republic Act No. 7586, [46] which declares that the
disestablishment of a protected area shall be done by Congress, and Section 4(a) of Republic
Act No. 6657,[47] which in turn requires a law passed by Congress before any forest reserve can
be reclassified,militate against the validity of Proclamation No. 297.

Proclamation No. 297, declaring a certain portion of land located in Monkayo,


Compostela Valley, with an area of 8,100 hectares, more or less, as a mineral reservation, was
issued by the President pursuant to Section 5 of Republic Act No. 7942, also known as the
Philippine Mining Act of 1995.

Proclamation No. 297 did not modify the boundaries of the Agusan-Davao-Surigao
Forest Reserve since, as earlier discussed, mineral reservations can exist within forest reserves
because of the multiple land use policy. The metes and bounds of a forest reservation remain
intact even if, within the said area, a mineral land is located and thereafter declared as a
mineral reservation.

More to the point, a perusal of Republic Act No. 3092, An Act to Amend Certain Sections
of the Revised Administrative Code of 1917, which was approved on 17 August 1961, and the
Administrative Code of 1987, shows that only those public lands declared by the President as
reserved pursuant to these two statutes are to remain subject to the specific purpose. The
tenor of the cited provisions, namely: the President of the Philippinesshall set apart forest
reserves and the reserved land shall thereafter remain, speaks of future public reservations to
be declared, pursuant to these two statutes. These provisions do not apply to forest
reservations earlier declared as such, as in this case, which was proclaimed way back on 27
February 1931, by Governor General Dwight F. Davis under Proclamation No. 369.

Over and above that, Section 5 of Republic Act No. 7942 authorizes the President to
establish mineral reservations, to wit:

Sec. 5. Mineral Reservations. - When the national interest so requires, such as when
there is a need to preserve strategic raw materials for industries critical to national
development, or certain minerals for scientific, cultural or ecological value, the President may
establish mineral reservations upon the recommendation of the Director through the
Secretary. Mining operations in existing mineral reservations and such other reservations as
may thereafter be established, shall be undertaken by the Department or through a contractor x
x x. (Emphasis supplied.)
It is a rudimentary principle in legal hermeneutics that where there are two acts or
provisions, one of which is special and particular and certainly involves the matter in question,
the other general, which, if standing alone, would include the matter and thus conflict with the
special act or provision, the special act must as intended be taken as constituting an exception
to the general act or provision, especially when such general and special acts or provisions are
contemporaneous, as the Legislature is not to be presumed to have intended a conflict.

Hence, it has become an established rule of statutory construction that where one
statute deals with a subject in general terms, and another deals with a part of the same
subject in a more detailed way, the two should be harmonized if possible; but if there is any
conflict, the latter shall prevail regardless of whether it was passed prior to the general
statute. Or where two statutes are of contrary tenor or of different dates but are of equal
theoretical application to a particular case, the one specially designed therefor should prevail
over the other.

It must be observed that Republic Act No. 3092, An Act to Amend Certain Sections of the
Revised Administrative Code of 1917, and the Administrative Code of 1987, are general
laws. Section 1 of Republic Act No. 3092 and Section 14 of the Administrative Code of 1987
require the concurrence of Congress before any portion of a forest reserve can be validly
excluded therefrom. These provisions are broad since they deal with all kinds of exclusion or
reclassification relative to forest reserves, i.e., forest reserve areas can be transformed into all
kinds of public purposes, not only the establishment of a mineral reservation. Section 5 of
Republic Act No. 7942 is a special provision, as it specifically treats of the establishment of
mineral reservations only. Said provision grants the President the power to proclaim a mineral
land as a mineral reservation, regardless of whether such land is also an existing forest
reservation.

Sec. 5(a) of Republic Act No. 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.

Glaring in the foregoing enumeration of areas comprising the initial component of the NIPAS
System under Republic Act No. 7586 is the absence of forest reserves. Only protected areas
enumerated under said provision cannot be modified. Since the subject matter of
Proclamation No. 297 is a forest reservation proclaimed as a mineral reserve, Republic Act No.
7586 cannot possibly be made applicable. Neither can Proclamation No. 297 possibly violate
said law.
Similarly, Section 4(a) of Republic Act No. 6657 cannot be made applicable to the instant
case.

Section 4(a) of Republic Act No. 6657 reads:

All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account ecological,
developmental and equity considerations, shall have determined by law, the specific limits of
the public domain. (Underscoring supplied.)

Section 4(a) of Republic Act No. 6657 prohibits the reclassification of forest or mineral
lands into agricultural lands until Congress shall have determined by law the specific limits of
the public domain. A cursory reading of this provision will readily show that the same is not
relevant to the instant controversy, as there has been no reclassification of a forest or mineral
land into an agricultural land.

Furthermore, the settled rule of statutory construction is that if two or more laws of
different dates and of contrary tenors are of equal theoretical application to a particular case,
the statute of later date must prevail being a later expression of legislative will. [48]

In the case at bar, there is no question that Republic Act No. 7942 was signed into law
later than Republic Act No. 3092, the Administrative Code of 1987, [49] Republic Act No. 7586
and Republic Act No. 6657. Applying the cited principle, the provisions of Republic Act No.
3092, the Administrative Code of 1987, Republic Act No. 7586 and Republic Act No. 6657 cited
by SEM must yield to Section 5 of Republic Act No. 7942.

Camilo Banad, et al., Cannot Seek Relief from This Court

Camilo Banad and his group admit that they are members of the Balite Cooperative. They,
however, claim that they are distinct from Balite and move that this Court recognize them as
prior mining locators.
Unfortunately for them, this Court cannot grant any relief they seek. Records reveal that
although they were parties to the instant cases before the Court of Appeals, they did not file a
petition for review before this Court to contest the decision of the appellate court. The only
petitioners in the instant cases are the MAB, SEM, Balite and Apex. Consequently, having no
personality in the instant cases, they cannot seek any relief from this Court.

Apexs Motion for Clarification and Balites Manifestation and


Motion

In its Motion for Clarification, Apex desires that the Court elucidate the assailed
Decisions pronouncement that mining operations, are now, therefore within the full control of
the State through the executive branch and place the said pronouncement in the proper
perspective as the declaration in La Bugal-BLaan, which states that
The concept of control 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 enterprise. [50]

Apex states that the subject portion of the assailed Decision could send a chilling effect to
potential investors in the mining industry, who may be of the impression that the State has
taken over the mining industry, not as regulator but as an operator. It is of the opinion that the
State cannot directly undertake mining operations.
Moreover, Apex is apprehensive of the following portion in the questioned Decision The
State can also opt to award mining operations in the mineral reservation to private entities
including petitioner Apex and Balite, if it wishes. It avers that the phrase if it wishes may
whimsically be interpreted to mean a blanket authority of the administrative authority to
reject the formers application for an exploration permit even though it complies with the
prescribed policies, rules and regulations.
Apex likewise asks this Court to order the MGB to accept its application for an
exploration permit.

Balite echoes the same concern as that of Apex on the actual take-over by the State of
the mining industry in the disputed area to the exclusion of the private sector. In addition,
Balite prays that this Court direct MGB to accept Balites application for an exploration permit.

Contrary to the contention of Apex and Balite, the fourth paragraph of Section 2, Article XII of
the Constitution and Section 5 of Republic Act No. 7942 sanctions the State, through the
executive department, to undertake mining operations directly, as an operator and not as a
mere regulator of mineral undertakings. This is made clearer by the fourth paragraph of
Section 2, Article XII of the 1987 Constitution, which provides in part:

SEC. 2. x x x 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. (Emphasis supplied.)

Also, Section 5 of Republic Act No. 7942 states that the mining operations in mineral
reservations shall be undertaken by the Department of Environment and Natural Resources or
a contractor, to wit:

SEC. 5. Mineral Reservations. When the national interest so requires, such as when there
is a need to preserve strategic raw materials for industries critical to national development, or
certain minerals for scientific, cultural or ecological value, the President may establish mineral
reservations upon the recommendation of the Director through the Secretary. Mining
operations in existing mineral reservations and such other reservations as may thereafter be
established, shall be undertaken by the Department or through a contractor x x x. (Emphasis
supplied.)

Undoubtedly, the Constitution, as well as Republic Act No. 7942, allows the executive
department to undertake mining operations. Besides, La Bugal-BLaan, cited by Apex, did not
refer to the fourth sentence of Section 2, Article XII of the Constitution, but to the third
sentence of the said provision, which 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. x x x.

Pursuant to Section 5 of Republic Act No. 7942, the executive department has the option
to undertake directly the mining operations in the Diwalwal Gold Rush Area or to award mining
operations therein to private entities. The phrase if it wishes must be understood within the
context of this provision. Hence, the Court cannot dictate this co-equal branch to choose which
of the two options to select. It is the sole prerogative of the executive department to
undertake directly or to award the mining operations of the contested area.

Even assuming that the proper authority may decide to award the mining operations of
the disputed area, this Court cannot arrogate unto itself the task of determining who, among
the applicants, is qualified. It is the duty of the appropriate administrative body to determine
the qualifications of the applicants. It is only when this administrative body whimsically denies
the applications of qualified applicants that the Court may interfere. But until then, the Court
has no power to direct said administrative body to accept the application of any qualified
applicant.

In view of this, the Court cannot grant the prayer of Apex and Balite asking the Court to
direct the MGB to accept their applications pending before the MGB.

SEMs Manifestation and Motion dated 25 January 2007

SEM wants to emphasize that its predecessor-in-interest, Marcopper or MMC, complied


with the mandatory exploration work program, required under EP 133, by attaching therewith
quarterly reports on exploration work from 20 June 1986 to March 1994.

It must be observed that this is the very first time at this very late stage that SEM has
presented the quarterly exploration reports. From the early phase of this controversy, SEM did
not disprove the arguments of the other parties that Marcopper violated the terms under EP
133, among other violations, by not complying with the mandatory exploration work
program. Neither did it present evidence for the appreciation of the lower tribunals. Hence,
the non-compliance with the mandatory exploration work program was not made an issue in
any stage of the proceedings. The rule is that an issue that was not raised in the lower court or
tribunal cannot be raised for the first time on appeal, as this would violate the basic rules of
fair play, justice and due process.[51] Thus, this Court cannot take cognizance of the issue of
whether or not MMC complied with the mandatory work program.

In sum, this Court finds:

1. The assailed Decision did not overturn the 16 July 1991 Decision in Apex Mining
Co., Inc. v. Garcia. The former was decided on facts and issues that were not
attendant in the latter, such as the expiration of EP 133, the violation of the
condition embodied in EP 133 prohibiting its assignment, and the unauthorized
and invalid assignment of EP 133 by MMC to SEM, since this assignment was
effected without the approval of the Secretary of DENR;

2. SEM did not acquire vested right over the disputed area because its supposed
right was extinguished by the expiration of its exploration permit and by its
violation of the condition prohibiting the assignment of EP 133 by MMC to SEM. In
addition, even assuming that SEM has a valid exploration permit, such is a mere
license that can be withdrawn by the State. In fact, the same has been withdrawn
by the issuance of Proclamation No. 297, which places the disputed area under
the full control of the State through the Executive Department;

3. The approval requirement under Section 97 of Presidential Decree No. 463


applies to the assignment of EP 133 by MMC to SEM, since the exploration permit
is an interest in a mining lease contract;

4. The issue of the constitutionality and the legality of Proclamation No. 297 was
raised belatedly, as SEM questions the same for the first time in its Motion for
Reconsideration. Even if the issue were to be entertained, the said proclamation is
found to be in harmony with the Constitution and other existing statutes;

5. The motion for reconsideration of Camilo Banad, et al. cannot be passed upon
because they are not parties to the instant cases;

6. The prayers of Apex and Balite asking the Court to direct the MGB to accept their
applications for exploration permits cannot be granted, since it is the Executive
Department that has the prerogative to accept such applications, if ever it decides
to award the mining operations in the disputed area to a private entity;

7. The Court cannot pass upon the issue of whether or not MMC complied with the
mandatory exploration work program, as such was a non-issue and was not raised
before the Court of Appeals and the lower tribunals.

WHEREFORE, premises considered, the Court holds:

1. The Motions for Reconsideration filed by Camilo Banad, et al. and Southeast
Mindanao Gold Mining Corporation are DENIED for lack of merit;

2. The Motion for Clarification of Apex Mining Co., Inc. and the Manifestation and
Motion of the Balite Communal Portal Mining Cooperative, insofar as these
motions/manifestation ask the Court to direct the Mines and Geo-Sciences Bureau to accept
their respective applications for exploration permits, are DENIED;

3. The Manifestation and Urgent Motion dated 25 January 2007 of Southeast Mindanao
Gold Mining Corporation is DENIED.

4. The State, through the Executive Department, should it so desire, may now award
mining operations in the disputed area to any qualified entities it may determine. The Mines
and Geosciences Bureau may process exploration permits pending before it, taking into
consideration the applicable mining laws, rules and regulations relative thereto.

SO ORDERED.

LA BUGAL BLAAN TRIBAL ASSOCIATION INC., et. al. v. V. O. RAMOS, Secretary


Department of Environment and Natural Resources; H. RAMOS, Director, Mines and
Geosciences Bureau (MGB-DENR); R. TORRES, Executive Secretary; and WMC
(PHILIPPINES) INC.

The constitutional provision allowing the President to enter into FTAA is a exception to the rule that
participation in the nations natural resources is reserved exclusively to Filipinos. Provision must be
construed strictly against their enjoyment by non-Filipinos.

RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity of RA 7942, or
on March 30, 1995, the President signed a Financial and Technical Assistance Agreement (FTAA)
with WMCP, a corporation organized under Philippine laws, covering close to 100,000 hectares of
land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. On August 15, 1995, the
Environment Secretary Victor Ramos issued DENR Administrative Order 95-23, which was later
repealed by DENR Administrative Order 96-40, adopted on December 20, 1996.

Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the government and
WMCP be declared unconstitutional on ground that they allow fully foreign owned corporations like
WMCP to exploit, explore and develop Philippine mineral resources in contravention of Article XII
Section 2 paragraphs 2 and 4 of the Charter.

In January 2001, WMC a publicly listed Australian mining and exploration company sold its
whole stake in WMCP to Sagittarius Mines, 60% of which is owned by Filipinos while 40% of which is
owned by Indophil Resources, an Australian company. DENR approved the transfer and registration
of the FTAA in Sagittarius name but Lepanto Consolidated assailed the same. The latter case is still
pending before the Court of Appeals.

EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to accept, consider
and evaluate proposals from foreign owned corporations or foreign investors for contracts or
agreements involving wither technical or financial assistance for large scale exploration, development
and utilization of minerals which upon appropriate recommendation of the (DENR) Secretary, the
President may execute with the foreign proponent. WMCP likewise contended that the annulment of
the FTAA would violate a treaty between the Philippines and Australia which provides for the
protection of Australian investments.

ISSUES:

1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-owned
corporations to exploit the Philippine mineral resources.

2. Whether or not the FTAA between the government and WMCP is a service contract that permits
fully foreign owned companies to exploit the Philippine mineral resources.

HELD:

First Issue: RA 7942 is Unconstitutional


RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign owned
corporations to exploit the Philippine natural resources.
Article XII Section 2 of the 1987 Constitution retained the Regalian Doctrine which states that All
lands of the public domain, waters, minerals, coal, petroleum, and other 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. The same section also states that, the
exploration and development and utilization of natural resources shall be under the full control and
supervision of the State.

Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution authorizing the
State to grant licenses, concessions, or leases for the exploration, exploitation, development, or
utilization of natural resources. By such omission, the utilization of inalienable lands of the public
domain through license, concessionor lease is no longer allowed under the 1987 Constitution.

Under the concession system, the concessionaire makes a direct equity investment for the purpose of
exploiting a particular natural resource within a given area. The concession amounts to complete
control by the concessionaire over the countrys natural resource, for it is given exclusive and plenary
rights to exploit a particular resource at the point of extraction.

The 1987 Constitution, moreover, has deleted the phrase management or other forms of assistance
in the 1973 Charter. The present Constitution now allows only technical and financial assistance.
The management and the operation of the mining activities by foreign contractors, the primary
feature of the service contracts was precisely the evil the drafters of the 1987 Constitution sought to
avoid.

The constitutional provision allowing the President to enter into FTAAs is an exception to the rule
that participation in the nations natural resources is reserved exclusively to Filipinos. Accordingly,
such provision must be construed strictly against their enjoyment by non-Filipinos. Therefore, RA
7942 is invalid insofar as the said act authorizes service contracts. Although the statute employs the
phrase financial and technical agreements in accordance with the 1987 Constitution, its pertinent
provisions actually treat these agreements as service contracts that grant beneficial ownership to
foreign contractors contrary to the fundamental law.

The underlying assumption in the provisions of the law is that the foreign contractor manages the
mineral resources just like the foreign contractor in a service contract. By allowing foreign contractors
to manage or operate all the aspects of the mining operation, RA 7942 has, in effect, conveyed
beneficial ownership over the nations mineral resources to these contractors, leaving the State with
nothing but bare title thereto.

The same provisions, whether by design or inadvertence, permit a circumvention of the


constitutionally ordained 60-40% capitalization requirement for corporations or associations engaged
in the exploitation, development and utilization of Philippine natural resources.

When parts of a statute are so mutually dependent and connected as conditions, considerations,
inducements or compensations for each other as to warrant a belief that the legislature intended them
as a whole, then if some parts are unconstitutional, all provisions that are thus dependent, conditional
or connected, must fail with them.

Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited only to
merely technical or financial assistance to the State for large scale exploration, development and
utilization of minerals, petroleum and other mineral oils.
Second Issue: RP Government-WMCP FTAA is a Service Contract
The FTAA between he WMCP and the Philippine government is likewise unconstitutional since
the agreement itself is a service contract.

Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive right to
explore, exploit, utilize and dispose of all minerals and by-products that may be produced from the
contract area. Section 1.2 of the same agreement provides that EMCP shall provide all financing,
technology, management, and personnel necessary for the Mining Operations.

These contractual stipulations and related provisions in the FTAA taken together, grant WMCP
beneficial ownership over natural resources that properly belong to the State and are intended for the
benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the
vices that the fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the
contract from which they spring must be struck down.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION

BENGUET CORPORATION, G.R. No. 163101


Petitioner,
Present:
- versus - QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
DEPARTMENT OF ENVIRONMENT VELASCO, JR., JJ.
AND NATURAL RESOURCES
-MINES ADJUDICATION BOARD
and J.G. REALTY AND MINING Promulgated:
CORPORATION,
Respondents. February 13, 2008
x-----------------------------------------------------------------------------------------x

DECISION
VELASCO, JR., J.:

The instant petition under Rule 65 of the Rules of Court seeks the annulment of the December
2, 2002 Decision[1] and March 17, 2004 Resolution[2] of the Department of Environment and
Natural Resources-Mining Adjudication Board (DENR-MAB) in MAB Case No. 0124-01
(Mines Administrative Case No. R-M-2000-01) entitled Benguet Corporation (Benguet) v. J.G.
Realty and Mining Corporation (J.G. Realty). The December 2, 2002 Decision upheld the
March 19, 2001 Decision[3] of the MAB Panel of Arbitrators (POA) which canceled the Royalty
Agreement with Option to Purchase (RAWOP) dated June 1, 1987 [4] between Benguet and J.G.
Realty, and excluded Benguet from the joint Mineral Production Sharing Agreement (MPSA)
application over four mining claims. The March 17, 2004 Resolution denied Benguets Motion
for Reconsideration.

The Facts

On June 1, 1987, Benguet and J.G. Realty entered into a RAWOP, wherein J.G. Realty was
acknowledged as the owner of four mining claims respectively named as Bonito-I, Bonito-II,
Bonito-III, and Bonito-IV, with a total area of 288.8656 hectares, situated in Barangay
Luklukam, Sitio Bagong Bayan, Municipality of Jose Panganiban, Camarines Norte. The parties
also executed a Supplemental Agreement[5] dated June 1, 1987. The mining claims were covered
by MPSA Application No. APSA-V-0009 jointly filed by J.G. Realty as claimowner and
Benguet as operator.

In the RAWOP, Benguet obligated itself to perfect the rights to the mining claims and/or
otherwise acquire the mining rights to the mineral claims. Within 24 months from the execution
of the RAWOP, Benguet should also cause the examination of the mining claims for the purpose
of determining whether or not they are worth developing with reasonable probability of
profitable production. Benguet undertook also to furnish J.G. Realty with a report on the
examination, within a reasonable time after the completion of the examination. Moreover, also
within the examination period, Benguet shall conduct all necessary exploration in accordance
with a prepared exploration program. If it chooses to do so and before the expiration of the
examination period, Benguet may undertake to develop the mining claims upon written notice
to J.G. Realty. Benguet must then place the mining claims into commercial productive stage
within 24 months from the written notice.[6] It is also provided in the RAWOP that if the mining
claims were placed in commercial production by Benguet, J.G. Realty should be entitled to a
royalty of five percent (5%) of net realizable value, and to royalty for any production done by
Benguet whether during the examination or development periods.
Thus, on August 9, 1989, the Executive Vice-President of Benguet, Antonio N. Tachuling,
issued a letter informing J.G. Realty of its intention to develop the mining claims. However, on
February 9, 1999, J.G. Realty, through its President, Johnny L. Tan, then sent a letter to the
President of Benguet informing the latter that it was terminating the RAWOP on the following
grounds:

a. The fact that your company has failed to perform the obligations set forth
in the RAWOP, i.e., to undertake development works within 2 years from the
execution of the Agreement;

b. Violation of the Contract by allowing high graders to operate on our claim.

c. No stipulation was provided with respect to the term limit of the RAWOP.

d. Non-payment of the royalties thereon as provided in the RAWOP. [7]

In response, Benguets Manager for Legal Services, Reynaldo P. Mendoza, wrote J.G.
Realty a letter dated March 8, 1999,[8] therein alleging that Benguet complied with its
obligations under the RAWOP by investing PhP 42.4 million to rehabilitate the mines, and that
the commercial operation was hampered by the non-issuance of a Mines Temporary Permit by
the Mines and Geosciences Bureau (MGB) which must be considered as force majeure,
entitling Benguet to an extension of time to prosecute such permit. Benguet further claimed that
the high graders mentioned by J.G. Realty were already operating prior to Benguets taking over
of the premises, and that J.G. Realty had the obligation of ejecting such small scale miners.
Benguet also alleged that the nature of the mining business made it difficult to specify a time
limit for the RAWOP. Benguet then argued that the royalties due to J.G. Realty were in fact in
its office and ready to be picked up at any time. It appeared that, previously, the practice by J.G.
Realty was to pick-up checks from Benguet representing such royalties. However, starting
August 1994, J.G. Realty allegedly refused to collect such checks from Benguet. Thus, Benguet
posited that there was no valid ground for the termination of the RAWOP. It also reminded J.G.
Realty that it should submit the disagreement to arbitration rather than unilaterally terminating
the RAWOP.

On June 7, 2000, J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of


the RAWOP[9] with the Legaspi City POA, Region V, docketed as DENR Case No. 2000-01 and
entitled J.G. Realty v. Benguet.

On March 19, 2001, the POA issued a Decision,[10] dwelling upon the issues of (1) whether the
arbitrators had jurisdiction over the case; and (2) whether Benguet violated the RAWOP
justifying the unilateral cancellation of the RAWOP by J.G. Realty. The dispositive portion
stated:

WHEREFORE, premises considered, the June 01, 1987 [RAWOP] and its
Supplemental Agreement is hereby declared cancelled and without effect. BENGUET
is hereby excluded from the joint MPSA Application over the mineral claims
denominated as BONITO-I, BONITO-II, BONITO-III and BONITO-IV.

SO ORDERED.
Therefrom, Benguet filed a Notice of Appeal [11] with the MAB on April 23, 2001, docketed as
Mines Administrative Case No. R-M-2000-01. Thereafter, the MAB issued the
assailed December 2, 2002 Decision. Benguet then filed a Motion for Reconsideration of the
assailed Decision which was denied in the March 17, 2004 Resolution of the MAB. Hence,
Benguet filed the instant petition.

The Issues

1. There was serious and palpable error when the Honorable Board failed to
rule that the contractual obligation of the parties to arbitrate under the Royalty
Agreement is mandatory.

2. The Honorable Board exceeded its jurisdiction when it sustained the


cancellation of the Royalty Agreement for alleged breach of contract despite the
absence of evidence.

3. The Questioned Decision of the Honorable Board in cancelling the


RAWOP prejudice[d] the substantial rights of Benguet under the contract to the unjust
enrichment of JG Realty.[12]

Restated, the issues are: (1) Should the controversy have first been submitted to arbitration
before the POA took cognizance of the case?; (2) Was the cancellation of the RAWOP
supported by evidence?; and (3) Did the cancellation of the RAWOP amount to unjust
enrichment of J.G. Realty at the expense of Benguet?
The Courts Ruling

Before we dwell on the substantive issues, we find that the instant petition can be denied
outright as Benguet resorted to an improper remedy.
The last paragraph of Section 79 of Republic Act No. (RA) 7942 or the Philippine Mining Act
of 1995 states, A petition for review by certiorari and question of law may be filed by the
aggrieved party with the Supreme Court within thirty (30) days from receipt of the order or
decision of the [MAB].

However, this Court has already invalidated such provision in Carpio v. Sulu Resources
Development Corp.,[13] ruling that a decision of the MAB must first be appealed to the Court of
Appeals (CA) under Rule 43 of the Rules of Court, before recourse to this Court may be
had. We held, thus:

To summarize, there are sufficient legal footings authorizing a review of the MAB
Decision under Rule 43 of the Rules of Court. First, Section 30 of Article VI of the 1987
Constitution, mandates that [n]o law shall be passed increasing the appellate jurisdiction of the
Supreme Court as provided in this Constitution without its advice and consent. On the other
hand, Section 79 of RA No. 7942 provides that decisions of the MAB may be reviewed by this
Court on a petition for review by certiorari. This provision is obviously an expansion of the
Courts appellate jurisdiction, an expansion to which this Court has not consented. Indiscriminate
enactment of legislation enlarging the appellate jurisdiction of this Court would unnecessarily
burden it.
Second, when the Supreme Court, in the exercise of its rule-making power,
transfers to the CA pending cases involving a review of a quasi-judicial bodys
decisions, such transfer relates only to procedure; hence, it does not impair the
substantive and vested rights of the parties. The aggrieved partys right to appeal is
preserved; what is changed is only the procedure by which the appeal is to be made or
decided. The parties still have a remedy and a competent tribunal to grant this remedy.

Third, the Revised Rules of Civil Procedure included Rule 43 to provide a


uniform rule on appeals from quasi-judicial agencies. Under the rule, appeals from
their judgments and final orders are now required to be brought to the CA on a
verified petition for review. A quasi-judicial agency or body has been defined as an
organ of government, other than a court or legislature, which affects the rights of
private parties through either adjudication or rule-making. MAB falls under this
definition; hence, it is no different from the other quasi-judicial bodies enumerated
under Rule 43. Besides, the introductory words in Section 1 of Circular No. 1-
91among these agencies areindicate that the enumeration is not exclusive or
conclusive and acknowledge the existence of other quasi-judicial agencies which,
though not expressly listed, should be deemed included therein.

Fourth, the Court realizes that under Batas Pambansa (BP) Blg. 129 as
amended by RA No. 7902, factual controversies are usually involved in decisions of
quasi-judicial bodies; and the CA, which is likewise tasked to resolve questions of
fact, has more elbow room to resolve them. By including questions of fact among the
issues that may be raised in an appeal from quasi-judicial agencies to the CA,
Section 3 of Revised Administrative Circular No. 1-95 and Section 3 of Rule 43
explicitly expanded the list of such issues.

According to Section 3 of Rule 43, [a]n appeal under this Rule may be taken to
the Court of Appeals within the period and in the manner herein provided whether the
appeal involves questions of fact, of law, or mixed questions of fact and law. Hence,
appeals from quasi-judicial agencies even only on questions of law may be brought to
the CA.

Fifth, the judicial policy of observing the hierarchy of courts dictates that direct
resort from administrative agencies to this Court will not be entertained, unless the
redress desired cannot be obtained from the appropriate lower tribunals, or unless
exceptional and compelling circumstances justify availment of a remedy falling within
and calling for the exercise of our primary jurisdiction. [14]

The above principle was reiterated in Asaphil Construction and Development Corporation v.
Tuason, Jr. (Asaphil).[15] However, the Carpio ruling was not applied to Asaphil as the petition
in the latter case was filed in 1999 or three years before the promulgation of Carpio in
2002. Here, the petition was filed on April 28, 2004 when the Carpio decision was already
applicable, thus Benguet should have filed the appeal with the CA.

Petitioner having failed to properly appeal to the CA under Rule 43, the decision of the
MAB has become final and executory. On this ground alone, the instant petition must be denied.

Even if we entertain the petition although Benguet skirted the appeal to the CA via Rule
43, still, the December 2, 2002 Decision and March 17, 2004 Resolution of the DENR-MAB in
MAB Case No. 0124-01 should be maintained.

First Issue: The case should have first been brought to


voluntary arbitration before the POA
Secs. 11.01 and 11.02 of the RAWOP pertinently provide:

11.01 Arbitration

Any disputes, differences or disagreements between BENGUET and the OWNER


with reference to anything whatsoever pertaining to this Agreement that cannot be
amicably settled by them shall not be cause of any action of any kind whatsoever in
any court or administrative agency but shall, upon notice of one party to the other, be
referred to a Board of Arbitrators consisting of three (3) members, one to be selected
by BENGUET, another to be selected by the OWNER and the third to be selected by
the aforementioned two arbitrators so appointed.

xxxx
11.02 Court Action

No action shall be instituted in court as to any matter in dispute as hereinabove stated,


except to enforce the decision of the majority of the Arbitrators. [16]

Thus, Benguet argues that the POA should have first referred the case to voluntary arbitration
before taking cognizance of the case, citing Sec. 2 of RA 876 on persons and matters subject to
arbitration.

On the other hand, in denying such argument, the POA ruled that:

While the parties may establish such stipulations clauses, terms and conditions as they
may deem convenient, the same must not be contrary to law and public policy. At a
glance, there is nothing wrong with the terms and conditions of the agreement. But to
state that an aggrieved party cannot initiate an action without going to arbitration
would be tying ones hand even if there is a law which allows him to do so. [17]

The MAB, meanwhile, denied Benguets contention on the ground of estoppel, stating:

Besides, by its own act, Benguet is already estopped in questioning the jurisdiction of
the Panel of Arbitrators to hear and decide the case. As pointed out in the appealed
Decision, Benguet initiated and filed an Adverse Claim docketed as MAC-R-M-2000-
02 over the same mining claims without undergoing contractual arbitration. In this
particular case (MAC-R-M-2000-02) now subject of the appeal, Benguet is likewise
in estoppel from questioning the competence of the Panel of Arbitrators to hear and
decide in the summary proceedings J.G. Realtys petition, when Benguet itself did not
merely move for the dismissal of the case but also filed an Answer with counterclaim
seeking affirmative reliefs from the Panel of Arbitrators. [18]

Moreover, the MAB ruled that the contractual provision on arbitration merely provides for an
additional forum or venue and does not divest the POA of the jurisdiction to hear the case.[19]

In its July 20, 2004 Comment, [20] J.G. Realty reiterated the above rulings of the POA and MAB.
It argued that RA 7942 or the Philippine Mining Act of 1995 is a special law which should
prevail over the stipulations of the parties and over a general law, such as RA 876. It also argued
that the POA cannot be considered as a court under the contemplation of RA 876 and that
jurisprudence saying that there must be prior resort to arbitration before filing a case with the
courts is inapplicable to the instant case as the POA is itself already engaged in arbitration.

On this issue, we rule for Benguet.


Sec. 2 of RA 876 elucidates the scope of arbitration:
Section 2. Persons and matters subject to arbitration.Two or more persons or parties
may submit to the arbitration of one or more arbitrators any controversy existing between
them at the time of the submission and which may be the subject of an action, or the parties
to any contract may in such contract agree to settle by arbitration a controversy thereafter
arising between them. Such submission or contract shall be valid, enforceable and
irrevocable, save upon such grounds as exist at law for the revocation of any contract.

Such submission or contract may include question[s] arising out of valuations, appraisals
or other controversies which may be collateral, incidental, precedent or subsequent to any issue
between the parties. (Emphasis supplied.)

In RA 9285 or the Alternative Dispute Resolution Act of 2004, the Congress reiterated the
efficacy of arbitration as an alternative mode of dispute resolution by stating in Sec. 32 thereof
that domestic arbitration shall still be governed by RA 876. Clearly, a contractual stipulation
that requires prior resort to voluntary arbitration before the parties can go directly to court is not
illegal and is in fact promoted by the State. Thus, petitioner correctly cites several cases
whereby arbitration clauses have been upheld by this Court.[21]

Moreover, the contention that RA 7942 prevails over RA 876 presupposes a conflict between
the two laws. Such is not the case here. To reiterate, availment of voluntary arbitration before
resort is made to the courts or quasi-judicial agencies of the government is a valid contractual
stipulation that must be adhered to by the parties. As stated in Secs. 6 and 7 of RA 876:

Section 6. Hearing by court.A party aggrieved by the failure, neglect or refusal of


another to perform under an agreement in writing providing for arbitration may petition
the court for an order directing that such arbitration proceed in the manner provided for
in such agreement. Five days notice in writing of the hearing of such application shall be served
either personally or by registered mail upon the party in default. The court shall hear the
parties, and upon being satisfied that the making of the agreement or such failure to
comply therewith is not in issue, shall make an order directing the parties to proceed to
arbitration in accordance with the terms of the agreement. If the making of the agreement
or default be in issue the court shall proceed to summarily hear such issue. If the finding be
that no agreement in writing providing for arbitration was made, or that there is no default
in the proceeding thereunder, the proceeding shall be dismissed. If the finding be that a
written provision for arbitration was made and there is a default in proceeding thereunder,
an order shall be made summarily directing the parties to proceed with the arbitration in
accordance with the terms thereof.

xxxx

Section 7. Stay of civil action.If any suit or proceeding be brought upon an issue arising
out of an agreement providing for the arbitration thereof, the court in which such suit or
proceeding is pending, upon being satisfied that the issue involved in such suit or proceeding is
referable to arbitration, shall stay the action or proceeding until an arbitration has been had in
accordance with the terms of the agreement: Provided, That the applicant, for the stay is not in
default in proceeding with such arbitration. (Emphasis supplied.)
In other words, in the event a case that should properly be the subject of voluntary arbitration is
erroneously filed with the courts or quasi-judicial agencies, on motion of the defendant, the
court or quasi-judicial agency shall determine whether such contractual provision for arbitration
is sufficient and effective. If in affirmative, the court or quasi-judicial agency shall then order
the enforcement of said provision. Besides, in BF Corporation v. Court of Appeals, we already
ruled:

In this connection, it bears stressing that the lower court has not lost its
jurisdiction over the case. Section 7 of Republic Act No. 876 provides that
proceedings therein have only been stayed. After the special proceeding of arbitration
has been pursued and completed, then the lower court may confirm the award made
by the arbitrator.[22]

J.G. Realtys contention, that prior resort to arbitration is unavailing in the instant case because
the POAs mandate is to arbitrate disputes involving mineral agreements, is misplaced. A
distinction must be made between voluntary and compulsory arbitration. In Ludo and Luym
Corporation v. Saordino, the Court had the occasion to distinguish between the two types of
arbitrations:
Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC, compulsory
arbitration has been defined both as the process of settlement of labor disputes by
a government agency which has the authority to investigate and to make an
award which is binding on all the parties, and as a mode of arbitration where the
parties are compelled to accept the resolution of their dispute through arbitration by a
third party. While a voluntary arbitrator is not part of the governmental unit or
labor departments personnel, said arbitrator renders arbitration services provided
for under labor laws.[23] (Emphasis supplied.)

There is a clear distinction between compulsory and voluntary arbitration. The arbitration
provided by the POA is compulsory, while the nature of the arbitration provision in the RAWOP
is voluntary, not involving any government agency. Thus, J.G. Realtys argument on this matter
must fail.
As to J.G. Realtys contention that the provisions of RA 876 cannot apply to the instant case
which involves an administrative agency, it must be pointed out that Section 11.01 of the
RAWOP states that:

[Any controversy with regard to the contract] shall not be cause of any action of any
kind whatsoever in any court or administrative agency but shall, upon notice of one
party to the other, be referred to a Board of Arbitrators consisting of three (3)
members, one to be selected by BENGUET, another to be selected by the OWNER
and the third to be selected by the aforementioned two arbiters so appointed.
[24]
(Emphasis supplied.)

There can be no quibbling that POA is a quasi-judicial body which forms part of the DENR, an
administrative agency. Hence, the provision on mandatory resort to arbitration, freely entered
into by the parties, must be held binding against them.[25]

In sum, on the issue of whether POA should have referred the case to voluntary arbitration, we
find that, indeed, POA has no jurisdiction over the dispute which is governed by RA 876, the
arbitration law.
However, we find that Benguet is already estopped from questioning the POAs jurisdiction. As
it were, when J.G. Realty filed DENR Case No. 2000-01, Benguet filed its answer and
participated in the proceedings before the POA, Region V. Secondly, when the adverse March
19, 2001 POA Decision was rendered, it filed an appeal with the MAB in Mines Administrative
Case No. R-M-2000-01 and again participated in the MAB proceedings. When the adverse
December 2, 2002 MAB Decision was promulgated, it filed a motion for reconsideration with
the MAB. When the adverse March 17, 2004 MAB Resolution was issued, Benguet filed a
petition with this Court pursuant to Sec. 79 of RA 7942 impliedly recognizing MABs
jurisdiction. In this factual milieu, the Court rules that the jurisdiction of POA and that of MAB
can no longer be questioned by Benguet at this late hour. What Benguet should have done was
to immediately challenge the POAs jurisdiction by a special civil action for certiorari when
POA ruled that it has jurisdiction over the dispute. To redo the proceedings fully participated in
by the parties after the lapse of seven years from date of institution of the original action with
the POA would be anathema to the speedy and efficient administration of justice.
Second Issue: The cancellation of the RAWOP
was supported by evidence

The cancellation of the RAWOP by the POA was based on two grounds: (1) Benguets
failure to pay J.G. Realtys royalties for the mining claims; and (2) Benguets failure to seriously
pursue MPSA Application No. APSA-V-0009 over the mining claims.
As to the royalties, Benguet claims that the checks representing payments for the
royalties of J.G. Realty were available for pick-up in its office and it is the latter which refused
to claim them. Benguet then thus concludes that it did not violate the RAWOP for nonpayment
of royalties. Further, Benguet reasons that J.G. Realty has the burden of proving that the former
did not pay such royalties following the principle that the complainants must prove their
affirmative allegations.

With regard to the failure to pursue the MPSA application, Benguet claims that the
lengthy time of approval of the application is due to the failure of the MGB to approve it. In
other words, Benguet argues that the approval of the application is solely in the hands of the
MGB.

Benguets arguments are bereft of merit.

Sec. 14.05 of the RAWOP provides:

14.05 Bank Account

OWNER shall maintain a bank account at ___________ or any other bank from time
to time selected by OWNER with notice in writing to BENGUET where BENGUET
shall deposit to the OWNERs credit any and all advances and payments which may
become due the OWNER under this Agreement as well as the purchase price herein
agreed upon in the event that BENGUET shall exercise the option to purchase
provided for in the Agreement. Any and all deposits so made by BENGUET shall
be a full and complete acquittance and release to [sic] BENGUET from any
further liability to the OWNER of the amounts represented by such
deposits. (Emphasis supplied.)
Evidently, the RAWOP itself provides for the mode of royalty payment by Benguet. The fact
that there was the previous practice whereby J.G. Realty picked-up the checks from Benguet is
unavailing. The mode of payment is embodied in a contract between the parties. As such, the
contract must be considered as the law between the parties and binding on both. [26] Thus, after
J.G. Realty informed Benguet of the bank account where deposits of its royalties may be made,
Benguet had the obligation to deposit the checks. J.G. Realty had no obligation to furnish
Benguet with a Board Resolution considering that the RAWOP itself provided for such payment
scheme.

Notably, Benguets claim that J.G. Realty must prove nonpayment of its royalties is both
illogical and unsupported by law and jurisprudence.

The allegation of nonpayment is not a positive allegation as claimed by Benguet. Rather,


such is a negative allegation that does not require proof and in fact transfers the burden of proof
to Benguet. Thus, this Court ruled in Jimenez v. National Labor Relations Commission:

As a general rule, one who pleads payment has the burden of proving it. Even where the
plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to
prove payment, rather than on the plaintiff to prove non-payment. The debtor has the burden of
showing with legal certainty that the obligation has been discharged by payment.
[27]
(Emphasis supplied.)

In the instant case, the obligation of Benguet to pay royalties to J.G. Realty has been
admitted and supported by the provisions of the RAWOP. Thus, the burden to prove such
obligation rests on Benguet.

It should also be borne in mind that MPSA Application No. APSA-V-0009 has been pending
with the MGB for a considerable length of time. Benguet, in the RAWOP, obligated itself to
perfect the rights to the mining claims and/or otherwise acquire the mining rights to the mineral
claims but failed to present any evidence showing that it exerted efforts to speed up and have
the application approved. In fact, Benguet never even alleged that it continuously followed-up
the application with the MGB and that it was in constant communication with the government
agency for the expeditious resolution of the application. Such allegations would show that,
indeed, Benguet was remiss in prosecuting the MPSA application and clearly failed to comply
with its obligation in the RAWOP.

Third Issue: There is no unjust enrichment in the instant case

Based on the foregoing discussion, the cancellation of the RAWOP was based on valid grounds
and is, therefore, justified. The necessary implication of the cancellation is the cessation of
Benguets right to prosecute MPSA Application No. APSA-V-0009 and to further develop such
mining claims.

In Car Cool Philippines, Inc. v. Ushio Realty and Development Corporation, we defined unjust
enrichment, as follows:

We have held that [t]here is unjust enrichment when a person unjustly retains a
benefit to the loss of another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good conscience. Article 22
of the Civil Code provides that [e]very person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to him. The
principle of unjust enrichment under Article 22 requires two conditions: (1) that a
person is benefited without a valid basis or justification, and (2) that such benefit is
derived at anothers expense or damage.

There is no unjust enrichment when the person who will benefit has a valid
claim to such benefit.[28] (Emphasis supplied.)

Clearly, there is no unjust enrichment in the instant case as the cancellation of the RAWOP,
which left Benguet without any legal right to participate in further developing the mining
claims, was brought about by its violation of the RAWOP. Hence, Benguet has no one to blame
but itself for its predicament.

WHEREFORE, we DISMISS the petition, and AFFIRM the December 2, 2002 Decision and
March 17, 2004 Resolution of the DENR-MAB in MAB Case No. 0124-01 upholding the
cancellation of the June 1, 1987 RAWOP. No costs.
SO ORDERED.

THIRD DIVISION

[G.R. No. 148267. August 8, 2002]

ARMANDO C. CARPIO, petitioner, vs. SULU RESOURCES DEVELOPMENT


CORPORATION, respondent.

DECISION
PANGANIBAN, J.:

Decisions and final orders of the Mines Adjudication Board (MAB) are appealable to
the Court of Appeals under Rule 43 of the 1997 Rules of Court. Although
not expressly included in the Rule, the MAB is unquestionably a quasi-judicial agency
and stands in the same category as those enumerated in its provisions.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
challenging the August 31, 2000 Decision and May 3, 2001 Resolution of the Court of
[1] [2]

Appeals (CA) in CA-GR SP No. 46830. The Assailed Decision disposed as follows:

WHEREFORE,premisesconsidered,thepetitionforreviewisherebyDENIED. [3]

Reconsideration was denied in the assailed Resolution.

The Facts
In the challenged Decision, the CA summarized the facts of this case as follows:

Thiscaseoriginatedfromapetitionfiledbyrespondent[SuluResourcesDevelopment
Corporation]forMinesProductionSharingAgreement(MPSA)No.MPSAIV131,covering
certainareasinAntipolo,Rizal.Petitioner[ArmandoC.Carpio]filedanopposition/adverseclaim
thereto,alleging,interalia,thathislandholdingsinCupangandAntipolo,Rizalwillbecoveredby
respondentsclaim,thusheenjoysapreferentialrighttoexploreandextractthequarryresourceson
hisproperties.

Afterdueproceedingswereheld,thePanelofArbitratorsoftheMinesandGeoSciencesBureauof
theDENRrenderedaResolutiondatedSeptember26,1996,upholdingpetitioners
opposition/adverseclaim.ThisdispositiveportionofsaidResolutionreads:

xxx.WHEREFORE,theopposition/adverseclaimsofARMANDOC.CARPIOishereby
UPHELD.Accordingly,thepropertiesofCARPIOareorderedexcludedfromtheareaofPMPSA
IV131ofSULURESOURCESDEVELOPMENTCORPORATION,andtheareanotcoveredby
theadverseclaimassubjecttomininglocationsinaccordancewithexistinglaws,rulesand
regulations.

SOORDERED.

RespondentappealedtheforegoingResolutiontotheMinesAdjudicationBoard.Meanwhile,
petitionerfiledamotiontodismissappealonthegroundofrespondentsfailuretocomplywiththe
requirementsoftheNewMiningActsImplementingRulesandRegulations.

OnJune20,1997,theMinesAdjudicationBoardrenderedtheassailedOrderdismissingpetitioners
opposition/adverseclaim.ThedispositiveportionoftheassailedOrderprovides:

WHEREFORE,inviewoftheforegoingpremises,thisResolutionofthePanelofArbitratorsof
RegionIVdatedSeptember26,1996,isherebySETASIDEandtheadverseclaim/oppositionof
CARPIODISMISSED.Accordingly,thePMSPAofSULUshouldbegivendueprocessand
evaluatedsubjecttothepertinentprovisionsofRA7942andDAO9640.

SOORDERED.

PetitionerfiledamotionforreconsiderationofsaidOrderwhichwasdeniedbytheBoardper
OrderdatedNovember24,1997,thedecretalportionofwhichprovides:

WHEREFORE,theMotionforReconsiderationisherebyDENIEDforlackofmerit. [4]

Ruling of the Court of Appeals

Citing Section 79 of Chapter XIII of the Philippine Mining Act of 1995 (RA 7942), the
CA ruled that it did not have jurisdiction to review the Decision of the Mines Adjudication
Board (MAB). The adjudication of conflicting mining claims is completely administrative in
nature, as held in Pearson v. Intermediate Appellate Court. Under RA 7942, the
[5]

settlement of disputes involving rights to mining areas, mineral agreements, and surface
owners, occupants and claimholders/concessionaires shall pertain exclusively to a Panel
of Arbitrators in the regional office of the Department of Environment and Natural
Resources, whose decisions are appealable to the Mines Adjudication Board. Under
Section 79 of RA 7942, the findings of fact by the MAB as well as its decision or order
shall be final and executory.
Inasmuch as the issue raised by petitioner relates to whether an overlap or a conflict
between his properties and the area covered by the application of respondent has been
proven, MABs finding thereon was binding and conclusive, and the Boards Decision was
already final and executory.
Hence, this Petition. [6]

Issue

In his Memorandum, petitioner raises this sole issue for our consideration:

WhetherornotappealsfromtheDecisionorFinalOrdersoftheMinesAdjudicationBoardshould
bemadedirectlytotheSupremeCourtascontendedbytherespondentandtheCourtofAppeals,or
suchappealsbefirstmadetotheCourtofAppealsascontendedbyhereinpetitioner.[7]

This Courts Ruling

The Petition is meritorious.

Sole Issue:
Appellate Jurisdiction over MAB Decisions

Petitioner submits that appeals from the decisions of the MAB should be filed with the
CA. First, the Supreme Court has authority, under Section 5(5) of Article VIII of the
Philippine Constitution, to promulgate rules of procedure in all courts, including all quasi-
judicial agencies such as the MAB. Second, Section 3 of Rule 43 of the 1997 Rules of
Civil Procedure authorizes appeals to the CA from judgments or final orders of quasi-
judicial tribunals by means of petitions for review. Third, the MAB gravely abused its
discretion in deliberately, willfully and unlawfully disregarding petitioners rights to the land
unduly included in the questioned application for a Mines Productive Sharing Agreement
(MPSA).
En contrario, the CA ruled and respondent agrees that the settlement of disputes
involving rights to mining areas and overlapping or conflicting claim is a purely
administrative matter, over which the MAB has appellate jurisdiction. The latters factual
findings, decisions and final orders on such matters are final and executory as provided in
Section 79 of Chapter XIII of the Philippine Mining Act of 1995 and as held in Pearson v.
IAC. Since the appeal of petitioner pertains to the factual matter of whether he was able to
prove the existence of the overlap or conflict between his claimed area and that covered
by respondents application, then the findings of the MAB should be deemed final and
executory.
The CA refused to take jurisdiction over the case because, under Section 79 of the
Philippine Mining Act of 1995, petitions for review of MAB decisions are to be brought
directly to the Supreme Court. The provision reads in part:

xxxxxxxxx

Apetitionforreviewbycertiorariandquestionoflawmaybefiledbytheaggrievedpartywiththe
SupremeCourtwithinthirty(30)daysfromreceiptoftheorderordecisionoftheBoard.

We hold that respondents reliance on Pearson is misplaced. The claimant therein sued
in the then Court of First Instance (CFI) to prevent the execution of a Decision rendered by
the panel of investigators of the Bureau of Mines and the Office of the President. Despite
a Motion to Dismiss filed by the mining companies, the CFI ordered the creation of a
committee to determine the correct tie-point of their claims. So, the mining companies
went to the then Intermediate Appellate Court (IAC) via a Petition for Certiorari under Rule
65. The claimants averred that the appellate court had no jurisdiction.
In the case at bar, petitioner went to the CA through a Petition for Review on Certiorari
under Rule 43, seeking a reversal of the MAB Decision. Given the difference in the reason
for and the mode of appeal, it is obvious that Pearson is not applicable here.
Still, we can draw one lesson. Far from dismissing the case on the ground of lack of
jurisdiction, Pearson expressly held that the CA had jurisdiction over the petition for
certiorari, because Section 9 of BP Blg. 129 (The Judiciary Reorganization Act of 1980),
now incorporated in Section 4, Rule 65 of the 1997 Rules of Civil Procedure, vested the
then IAC with original jurisdiction to issue writs of certiorari and prohibition, among other
auxillary writs x x x. However, even though the Supreme Court has concurrent jurisdiction
with the CA and the Regional Trial Courts to issue a writ of mandamus, prohibition or
certiorari, litigants are well advised against taking a direct recourse to this Court without
initially seeking proper relief from the lower courts, in accordance with the hierarchy of
courts.[8]

In Pearson, what was under review was the ruling of the CFI to take cognizance of the
case which had been earlier decided by the MAB, not the MAB Decision itself which was
promulgated by the CA under Rule 43. The present petitioner seeks a review of the latter.
Pearson held that the nature of the primary powers granted by law to the then
secretary of agriculture and natural resources as well as to the director of mines were
executive or administrative, such as granting of license, permits, lease and contracts[;] or
approving, rejecting, reinstating or canceling applications[;] or deciding conflicting
applications. These powers should be distinguished from litigants disagreements or
controversies that are civil or contractual in nature, which may be adjudicated only by the
courts of justice. The findings of fact of the MAB, which exercises appellate jurisdiction
over decisions or orders of the panel of arbitrators, are conclusive and binding on the
parties; its decisions or orders on these are final and executory. But petitions for certiorari
may be filed with the appropriate courts. In short, the Court held that the appellate
[9]

jurisdiction of the IAC (now the CA) in Pearson fell under Rule 65 -- not 43 -- because
what was being impugned was grave abuse of discretion on the part of the CFI.
Pearson, however, should be understood in the light of other equally relevant
jurisprudence. In Fabian v. Desierto, the Court clarified that appeals from judgments and
[10]

final orders of quasi-judicial agencies are now required to be brought to the CA, under the
requirements and conditions set forth in Rule 43. This Rule was adopted precisely to
provide a uniform rule of appellate procedure from quasi-judicial agencies. [11]

Section 27 of RA 6770 which is similarly worded as Section 79 of the Philippine


[12]

Mining Act, was struck down by Fabian as unconstitutional, because it had broadened the
appellate jurisdiction of the Supreme Court without its consent, in violation of Section 30 of
Article VI of the Constitution. In short, Section 27 of RA 6770 which provides that
[13]

all administrative decisions of the Office of the Ombudsman may be appealed to the
Supreme Court, was unconstitutional.
In another case, held invalid in the light of Rule 43 of the 1997 Rules of Court was
Section 3(2) of Executive Order No. 561, which had declared that decisions of the
Commission on Settlement of Land Problems (COSLAP) were appealable exclusively to
the Supreme Court. There is no convincing reason why appeals from the COSLAP
[14]

should be treated differently from those arising from other quasi-judicial bodies, the
decisions of which are directly appealable to the CA under Rule 43 of the 1997 Rules.
Finally, Metro Construction, Inc. v. Chat ham Properties, Inc. held that Section 19 of
[15]

Executive Order No. 1008 -- which had deemed arbitral awards of the Construction
Industry Arbitration Commission (CIAC) to be appealable to the Supreme Court on
questions of law -- was modified by Circular No. 1-91, Batas Pambansa Blg. 129 as
amended by RA 7902, Revised Administrative Circular 1-95, and Rule 43 of the Rules of
Court. Reiterating Fabian, the Court ruled that appeals were procedural and remedial in
nature; hence, constitutionally subject to this Courts rule-making power.
In the present case, it is claimed that a petition for review is improper because
petitioners challenge is purely factual, bearing only on the MAB ruling that there was no
overlap or conflict between the litigants claims.
We clarify. Factual controversies are usually involved in administrative actions; and the
CA is prepared to handle such issues because, unlike this Court, it is mandated to rule on
questions of fact. In Metro Construction, we observed that not only did the CA have
[16]

appellate jurisdiction over CIAC decisions and orders, but the review of such decisions
included questions of fact and law. At the very least when factual findings of the MAB are
[17]

challenged or alleged to have been made in grave abuse of discretion as in the present
case, the CA may review them, consistent with the constitutional duty of the judiciary.
[18]

To summarize, there are sufficient legal footings authorizing a review of the MAB
Decision under Rule 43 of the Rules of Court. First, Section 30 of Article VI of the 1987
Constitution, mandates that [n]o law shall be passed increasing the appellate jurisdiction
of the Supreme Court as provided in this Constitution without its advice and consent. On
the other hand, Section 79 of RA No. 7942 provides that decisions of the MAB may be
reviewed by this Court on a petition for review by certiorari. This provision is obviously an
expansion of the Courts appellate jurisdiction, an expansion to which this Court has not
consented. Indiscriminate enactment of legislation enlarging the appellate jurisdiction of
this Court would unnecessarily burden it. [19]

Second, when the Supreme Court, in the exercise of its rule-making power, transfers
to the CA pending cases involving a review of a quasi-judicial bodys decisions, such
transfer relates only to procedure; hence, it does not impair the substantive and vested
rights of the parties. The aggrieved partys right to appeal is preserved; what is changed is
only the procedure by which the appeal is to be made or decided. The parties still have a
[20]

remedy and a competent tribunal to grant this remedy.


Third, the Revised Rules of Civil Procedure included Rule 43 to provide a uniform rule
on appeals from quasi-judicial agencies. Under the rule, appeals from their judgments
[21]

and final orders are now required to be brought to the CA on a verified petition for review.
A quasi-judicial agency or body has been defined as an organ of government, other than
[22]

a court or legislature, which affects the rights of private parties through either adjudication
or rule-making. MAB falls under this definition; hence, it is no different from the other
[23]

quasi-judicial bodies enumerated under Rule 43. Besides, the introductory words in
Section 1 of Circular No. 1-91 -- among these agencies are -- indicate that the
enumeration is not exclusive or conclusive and acknowledge the existence of other quasi-
judicial agencies which, though not expressly listed, should be deemed included therein. [24]

Fourth, the Court realizes that under Batas Pambansa (BP) Blg. 129 as amended by
[25]

RA No. 7902, factual controversies are usually involved in decisions of quasi-judicial


[26]

bodies; and the CA, which is likewise tasked to resolve questions of fact, has more elbow
room to resolve them. By including questions of fact among the issues that may be
[27]

raised in an appeal from quasi-judicial agencies to the CA, Section 3 of Revised


Administrative Circular No. 1-95 and Section 3 of Rule 43 explicitly expanded the list of
such issues.
According to Section 3 of Rule 43, [a]n appeal under this Rule may be taken to the
Court of Appeals within the period and in the manner herein provided whether the appeal
involves questions of fact, of law, or mixed questions of fact and law. Hence, appeals from
quasi-judicial agencies even only on questions of law may be brought to the CA.
Fifth, the judicial policy of observing the hierarchy of courts dictates that direct resort
from administrative agencies to this Court will not be entertained, unless the redress
desired cannot be obtained from the appropriate lower tribunals, or unless exceptional and
compelling circumstances justify availment of a remedy falling within and calling for the
exercise of our primary jurisdiction. [28]

Consistent with these rulings and legal bases, we therefore hold that Section 79 of RA
7942 is likewise to be understood as having been modified by Circular No. 1-91, BP Blg.
129 as amended by RA 7902, Revised Administrative Circular 1-95, and Rule 43 of the
Rules of Court. In brief, appeals from decisions of the MAB shall be taken to the CA
through petitions for review in accordance with the provisions of Rule 43 of the 1997 Rules
of Court.
WHEREFORE, the Petition is GRANTED, and the assailed Decision and
Resolution REVERSED and SET ASIDE. The Petition in CA-GR SP No. 46830
is REINSTATED, and the CA is ordered to RESOLVE it on the merits with deliberate
dispatch. No costs.
SO ORDERED.
Puno, (Chairman), Sandoval-Gutierrez, and Carpio, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

CELESTIAL NICKEL MINING G.R. No. 169080


EXPLORATION CORPORATION,
Petitioner,
Present:
- versus -
QUISUMBING, J., Chairperson,
CARPIO MORALES,
MACROASIA CORPORATION TINGA,
(formerly INFANTA MINERAL AND VELASCO, JR., and
INDUSTRIAL CORPORATION), CHICO-NAZARIO,* JJ.
BLUE RIDGE MINERAL
CORPORATION, and LEBACH
MINING CORPORATION,
Respondents.

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

BLUE RIDGE MINERAL G.R. No. 172936


CORPORATION,
Petitioner,

- versus -

HON. ANGELO REYES in his


capacity as SECRETARY of
the DEPARTMENT OF
ENVIRONMENT AND NATURAL Promulgated:
RESOURCES, HON. GUILLERMO
ESTABILLO in his capacity as
REGIONAL DIRECTOR of the December 19, 2007
MINES AND GEOSCIENCES
BUREAU, REGION IV-B of the
DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES, and
MACROASIA CORPORATION
(formerly INFANTA MINERAL AND
INDUSTRIAL CORPORATION),
Respondents.

x ---------------------------------------------- x
CELESTIAL NICKEL MINING G.R. No. 176226
EXPLORATION CORPORATION,
Petitioner,

- versus -

BLUE RIDGE MINERAL


CORPORATION and MACROASIA
CORPORATION (formerly INFANTA
MINERAL AND INDUSTRIAL
CORPORATION),
Respondents.
x ---------------------------------------------- x

MACROASIA CORPORATION G.R. No. 176319


(formerly INFANTA MINERAL AND
INDUSTRIAL CORPORATION),
Petitioner,

- versus -

BLUE RIDGE MINERAL


CORPORATION and CELESTIAL
NICKEL MINING EXPLORATION
CORPORATION,
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case
Before us are four (4) petitions. The first is a Petition for Review on Certiorari [1] under
Rule 45 docketed as G.R. No. 169080, wherein petitioner Celestial Nickel Mining Exploration
Corporation (Celestial) seeks to set aside the April 15, 2005 Decision [2] of the Court of Appeals
(CA) in CA-G.R. SP No. 87931. The CA affirmed the November 26, 2004 Resolution of the
Mines Adjudication Board (MAB) in MAB Case Nos. 056-97 and 057-97 (DENR Case Nos.
97-01 and 97-02), upholding the authority of the Department of Environment and Natural
Resources (DENR) Secretary to grant and cancel mineral agreements. Also assailed is
the August 3, 2005 Resolution[3] of the CA denying the Motion for Reconsideration of the
assailed Decision.

The second is a Petition for Certiorari[4] under Rule 65 docketed as G.R. No. 172936,
wherein petitioner Blue Ridge Mineral Corporation (Blue Ridge) seeks to annul and set aside
the action of then Secretary Michael T. Defensor, in his capacity as DENR Secretary, approving
and signing two Mineral Production Sharing Agreements (MPSAs) in favor of Macroasia
Corporation (Macroasia) denominated as MPSA Nos. 220-2005-IVB and 221-2005-IVB.

And the third and fourth are petitions for review on certiorari[5] under Rule 45 docketed
as G.R. No. 176226 and G.R. No. 176319, wherein petitioners Celestial and Macroasia,
respectively, seek to set aside the May 18, 2006 Decision [6] of the CA in CA-G.R. SP No.
90828. The CA reversed and set aside the November 26, 2004 and July 12, 2005 Resolutions of
the MAB, and reinstated the October 24, 2000 Decision in MAB Case Nos. 056-97 and 057-97,
granting Blue Ridge the prior and preferential right to file its application over the mining claims
of Macroasia. These petitions likewise seek to set aside the January 19, 2007 Resolution[7] of the
CA denying petitioners motions for reconsideration of the assailed Decision.

Through our July 5, 2006 Resolution,[8] we consolidated the first two cases. While in our
subsequent April 23, 2007[9] and July 11, 2007[10]Resolutions, we consolidated the four cases as
they arose from the same facts.

The undisputed facts as found by the CA in CA-G.R. SP No. 87931 are as follows:

On September 24, 1973, the then Secretary of Agriculture and Natural Resources and Infanta
Mineral and Industrial Corporation (Infanta) entered into a Mining Lease Contract (V-1050) for
a term of 25 years up to September 23, 1998 for mining lode claims covering an area of 216
hectares at Sitio Linao, Ipilan, Brookes Point, Palawan. The mining claims of Infanta covered
by lode/lease contracts were as follows:

Contract No. Area Date of Issuance


LLC-V-941 18 hectares January 17, 1972
LC-V-1050 216 hectares September 24, 1973
LLC-V-1060 16 hectares October 30, 1973
LLC-V-1061 144 hectares October 30, 1973
LLC-V-1073 144 hectares April 18, 1973
MLC-MRD-52 306 hectares April 26, 1978
MLC-MRC-53 72 hectares April 26, 1978
Infantas corporate name was changed to Cobertson Holdings Corporation on January 26,
1994 and subsequently to its present name, Macroasia Corporation, on November 6, 1995.

Sometime in 1997, Celestial filed a Petition to Cancel the subject mining lease contracts and
other mining claims of Macroasia including those covered by Mining Lease Contract No. V-
1050, before the Panel of Arbitrators (POA) of the Mines and Geo-Sciences Bureau (MGB) of
the DENR. The petition was docketed as DENR Case No. 97-01.

Blue Ridge, in an earlier letter-petition, also wrote the Director of Mines to seek cancellation of
mining lease contracts and other mining rights of Macroasia and another entity, Lebach Mining
Corporation (Lebach), in mining areas in Brookes Point. The petition was eventually docketed
as DENR Case No. 97-02.

Celestial is the assignee of 144 mining claims covering such areas contiguous to Infantas (now
Macroasia) mining lode claims. Said area was involved in protracted administrative disputes
with Infanta (now Macroasia), Lecar & Sons, Inc., and Palawan Nickel Mining
Corporation. Celestial also holds an MPSA with the government which covers 2,835 hectares
located at Ipilan/Maasin, Brookes Point, Palawan and two pending applications covering
another 4,040 hectares in Barangay Mainit also in Brookes Point.

Celestial sought the cancellation of Macroasias lease contracts on the following


grounds: (1) the nonpayment of Macroasia of required occupational fees and municipal taxes;
(2) the non-filing of Macroasia of Affidavits of Annual Work Obligations; (3) the failure of
Macroasia to provide improvements on subject mining claims; (4) the concentration of
Macroasia on logging; (5) the encroachment, mining, and extraction by Macroasia of nickel ore
from Celestials property; (6) the ability of Celestial to subject the mining areas to commercial
production; and (7) the willingness of Celestial to pay fees and back taxes of Macroasia.

In the later part of the proceedings, Macroasia intervened in the case and submitted its position
paper refuting the grounds for cancellation invoked by Celestial.[11]

The Ruling of the Panel of Arbitrators in


DENR Case Nos. 97-01 and 97-02

Based on the records of the Bureau of Mines and findings of the field investigations, the
POA found that Macroasia and Lebach not only automatically abandoned their areas/mining
claims but likewise had lost all their rights to the mining claims. The POA granted the petition
of Celestial to cancel the following Mining Lease Contracts of Macroasia: LLC-V-941, LLC-V-
1050, LLC-V-1060, LLC-V-1061, LLC-V-1073, MLC-MRD-52, and MLC-MRC-53; and found
the claims of the others indubitably meritorious. It gave Celestial the preferential right to
Macroasias mining areas.[12] It upheld Blue Ridges petition regarding DENR Case No. 97-02,
but only as against the Mining Lease Contract areas of Lebach (LLC-V-1153, LLC-V-1154, and
LLC-V-1155), and the said leased areas were declared automatically abandoned. It gave Blue
Ridge priority right to the aforesaid Lebachs areas/mining claims.[13]
Blue Ridge and Macroasia appealed before the MAB, and the cases were docketed as
MAB Case Nos. 056-97 and 057-97, respectively.

Lebach did not file any notice of appeal with the required memorandum of appeal; thus,
with respect to Lebach, the above resolution became final and executory.

The Rulings of the Mines Adjudication Board in


MAB Case Nos. 056-97 and 057-97 (DENR Case Nos. 97-01 and 97-02)

The MAB resolved the issues of timeliness and perfection of Macroasias appeal;
Macroasias abandonment of its mining claims; and the preferential right over the abandoned
mining claims of Macroasia.

Conformably with Section 51 of Consolidated Mines Administrative Order (CMAO)


[14]
implementing Presidential Decree No. (PD) 463[15] and our ruling in Medrana v. Office of the
President (OP),[16] the MAB affirmed the POA findings that Macroasia abandoned its mining
claims. The MAB found that Macroasia did not comply with its work obligations from 1986 to
1991. It based its conclusion on the field verifications conducted by the MGB, Region IV and
validated by the Special Team tasked by the MAB. [17] However, contrary to the findings of the
POA, the MAB found that it was Blue Ridge that had prior and preferential rights over the
mining claims of Macroasia, and not Celestial.

Thus, on October 24, 2000, the MAB promulgated its Decision upholding the Decision of
the POA to cancel the Mining Lode/Lease Contracts of Macroasia; declaring abandoned the
subject mining claims; and opening the mining area with prior and preferential rights to Blue
Ridge for mining applications, subject to strict compliance with the procedure and requirements
provided by law. In case Blue Ridge defaults, Celestial could exercise the secondary priority
and preferential rights, and subsequently, in case Celestial also defaults, other qualified
applicants could file.[18]
Both Celestial and Macroasia moved for reconsideration. [19] Celestial asserted that it had
better rights than Blue Ridge over the mining claims of Macroasia as it had correctly filed its
petition, and filed its MPSA application after Macroasias lease contract expired on January 17,
1997 and after the POAs resolution was issued on September 1, 1997. Moreover, it argued that
priority was not an issue when the contested area had not yet been declared
abandoned. Thus, Blue Ridges MPSA application filed on June 17, 1996 had no effect and
should not be considered superior since Macroasias lease contracts were still valid and
subsisting and could not have been canceled by Macroasias mere failure to perform annual
work obligations and pay corresponding royalties/taxes to the government.

Macroasia, in its Motion for Reconsideration, reiterated that it did not abandon its mining
claims, and even if mining was not listed among its purposes in its amended Articles of
Incorporation, its mining activities were acts that were only ultra vires but were ratified as a
secondary purpose by its stockholders in subsequent amendments of its Articles of
Incorporation.
Before the MAB could resolve the motions for reconsideration, on March 16, 2001,
Macroasia filed its Supplemental Motion for Reconsideration[20] questioning the jurisdiction of
the POA in canceling mining lease contracts and mining claims. Macroasia averred that the
power and authority to grant, cancel, and revoke mineral agreements is exclusively lodged with
the DENR Secretary. Macroasia further pointed out that in arrogating upon itself such power,
the POA whimsically and capriciously discarded the procedure on conferment of mining rights
laid down in Republic Act No. (RA) 7942, The Philippine Mining Act of 1995, and DENR
Administrative Order No. (AO) 96-40,[21] and perfunctorily and improperly awarded its mining
rights to Blue Ridge and Celestial.

Subsequently, on November 26, 2004, the MAB issued a Resolution [22] vacating its
October 24, 2000 Decision, holding that neither the POA nor the MAB had the power to revoke
a mineral agreement duly entered into by the DENR Secretary, ratiocinating that there was no
provision giving the POA and MAB the concurrent power to manage or develop mineral
resources. The MAB further held that the power to cancel or revoke a mineral agreement was
exclusively lodged with the DENR Secretary; that a petition for cancellation is not a mining
dispute under the exclusive jurisdiction of the POA pursuant to Sec. 77 of RA 7942; and that the
POA could only adjudicate claims or contests during the MPSA application and not when the
claims and leases were already granted and subsisting.

Moreover, the MAB held that there was no abandonment by Macroasia because the
DENR Secretary had not decided to release Macroasia from its obligations. The Secretary may
choose not to release a contractor from its obligations on grounds of public interest. Thus,
through its said resolution, the MAB rendered its disposition, as follows:

WHEREFORE, premises considered, the assailed Decision of October 24, 2000 is


hereby VACATED. The seven (7) mining lease contracts of Macroasia Corporation
(formerly Infanta Mineral & Industrial Corporation) are DECLARED SUBSISTING
prior to their expirations without prejudice to any Decision or Order that the Secretary
may render on the same. NO PREFERENTIAL RIGHT over the same mining claims
is accorded to Blue Ridge Mineral Corporation or Celestial Nickel Mining
Exploration Corporation also without prejudice to the determination by the Secretary
over the matter at the proper time.[23]

After the issuance of the MAB Resolution, Celestial and Blue Ridge went through
divergent paths in their quest to protect their individual interests.

On January 10, 2005, Celestial assailed the November 26, 2004 MAB Resolution before
the CA in a petition for review[24] under Rule 43 of the Rules of Court. The petition
entitled Celestial Nickel Mining Exploration Corporation v. Macroasia Corporation, et al. was
docketed as CA-G.R. SP No. 87931.

On the other hand, Blue Ridge first filed a Motion for Reconsideration[25] which was
denied.[26] On August 26, 2005, Blue Ridge questioned the MABs November 26, 2004 and July
12, 2005 Resolutions before the CA in a petition for review [27] entitled Blue Ridge Mineral
Corporation v. Mines Adjudication Board, et al. docketed as CA-G.R. SP No. 90828.
CA-G.R. SP No. 87931 filed by Celestial was heard by the 12th Division of the CA;
while Blue Ridges CA-G.R. SP No. 90828 was heard by the Special 10th Division. Ironically,
the two divisions rendered two (2) diametrically opposing decisions.

The Ruling of the Court of Appeals Twelfth Division

On April 15, 2005, in CA-G.R. SP No. 87931, the CA 12th Division affirmed the
November 26, 2004 MAB Resolution which declared Macroasias seven mining lease contracts
as subsisting; rejected Blue Ridges claim for preferential right over said mining claims; and
upheld the exclusive authority of the DENR Secretary to approve, cancel, and revoke mineral
agreements. The CA also denied Celestials Motion for Reconsideration [28] of the assailed August
3, 2005 Resolution.[29]

Hence, Celestial filed its Petition for Review on Certiorari[30] docketed as G.R. No.
169080, before this Court.

The Ruling of the Court of Appeals Special Tenth Division

On May 18, 2006, the CA Special 10th Division in CA-G.R. SP No. 90828 granted Blue
Ridges petition; reversed and set aside the November 26, 2004 and July 12, 2005 Resolutions of
the MAB; and reinstated the October 24, 2000 Decision in MAB Case Nos. 056-97 and 057-
97. The Special Tenth Division canceled Macroasias lease contracts; granted Blue Ridge prior
and preferential rights; and treated the cancellation of a mining lease agreement as a mining
dispute within the exclusive jurisdiction of the POA under Sec. 77 of RA 7942, explaining that
the power to resolve mining disputes, which is the greater power, necessarily includes the lesser
power to cancel mining agreements.

On February 20, 2006, Celestial filed a Most Urgent Motion for Issuance of a Temporary
Restraining Order/Preliminary Prohibitory Injunction/Mandatory Injunction [31] to defer and
preclude the issuance of MPSA to Macroasia by the MGB and the DENR Secretary. We denied
this motion in our February 22, 2006 Resolution.[32]

Upon inquiry with the DENR, Blue Ridge discovered that sometime in December 2005
two MPSAs, duly approved and signed by the DENR Secretary, had been issued in favor of
Macroasia. Thus, we have the instant Petition for Certiorari[33] filed by Blue Ridge docketed
as G.R. No. 172936under Rule 65, seeking to invalidate the two MPSAs issued to Macroasia.

In the meantime, on June 7, 2006, Celestial filed its Motion for Partial
Reconsideration[34] of the May 18, 2006 CA Decision in CA-G.R. SP No. 90828, while
Macroasia filed its motion for reconsideration of the same CA decision on July 7, 2006. The
motions were denied in the assailed January 19, 2007 CA Resolution. Hence, on March 8, 2007,
Celestial filed the third petition[35] docketed as G.R. No. 176226, assailing the CAs May 18,
2006 Decision and January 19, 2007 Resolution, insofar as these granted Blue Ridges prior and
preferential rights. While on March 9, 2007, Macroasia filed the fourth petition[36] docketed
as G.R. No. 176319, also assailing the CAs May 18, 2006 Decision and January 19,
2007 Resolution.
The Issues

In G.R. No. 169080, petitioner Celestial raises the following issues for our consideration:

(1) Whether or not Macroasia, for reasons of public policy is estopped from assailing
the alleged lack of jurisdiction of the Panel of Arbitrators and the Mines Adjudication
Board only after receiving an adverse judgment therefrom? [sic]

(2) Whether or not it is only the Secretary of the DENR who has the jurisdiction to
cancel mining contracts and privileges? [sic]

(3) Whether or not a petition for the cancellation of a mining lease contract or
privilege is a mining dispute within the meaning of the law? [sic]
(4) Whether or not Infantas (Macroasia) mining lease contract areas were deemed
abandoned warranting the cancellation of the lease contracts and the opening of
the areas to other qualified applicants? [sic]
(5) Whether or not Macroasia/Infanta had lost its right to participate in this case after
it failed to seasonably file its appeal and after its lease contracts had been declared
abandoned and expired without having been renewed by the government? [sic]

(6) Whether or not Celestial has the preferential right to apply for the 23 DE LARA
claims which were included in Infantas (Macroasia) expired lease contract (LLC-V-
941) and the other areas declared as lapsed or abandoned by MGB-Region 4 and the
Panel of Arbitrators?[37] [sic]

In G.R. No. 172936, petitioner Blue Ridge raises the following grounds for the allowance of the
petition:

At the outset, the instant petition must be given due course and taken cognizance of by
the Honorable Court considering that exceptional and compelling circumstances
justify the availment of the instant petition and the call for the exercise of the
Honorable Courts primary jurisdiction.

A. The exploration, development and utilization of minerals, petroleum and other


mineral oils are imbued with public interest. The action of then Secretary Defensor,
maintained and continued by public respondent Secretary Reyes, was tainted with
grave abuse of discretion, has far-reaching consequences because of the magnitude of
the effect created thereby.

B. The issues in the instant petition have already been put to fore by Celestial with the
First Division of the Honorable Court, and hence, this circumstance justifies the
cognizance by the Honorable Court of the instant petition.

II

It was grave abuse of discretion amounting to lack and/or excess of jurisdiction for
then Secretary Defensor to have issued the subject MPSAs in favor of private
respondent Macroasia, considering that:
A. Non-compliance of the mandatory requirements by private respondent Macroasia
prior to approval of the subject MPSAs should have precluded then Secretary
Defensor from approving subject MPSAs.

B. Petitioner Blue Ridge has the prior and preferential right to file its mining
application over the mining claims covered by the subject MPSAs, pursuant to
the Decision dated 24 October 2000 of the Board and as affirmed by
the Decision dated 18 May 2006 of the Court of Appeals in CA-G.R. SP No.
90828.[38]
In G.R. No. 176226, petitioner Celestial ascribes the following errors to the CA for our
consideration:

(1) That in reinstating and adopting as its own the Decision of the Mine Adjudication
Board affirming the abandonment and cancellation of the mining areas/claims of
Macroasia (Infanta) but awarding the prior or preferential rights to Blue Ridge, the
Hon. Court of Appeals had decided a question of substance in a way not in accord
with the Law (RA 7942) or with the applicable decisions of the Supreme Court; in
other words, errors of law had been committed by the Hon. Court of Appeals in
granting preferential rights to Blue Ridge;

(2) That the Hon. Court of Appeals has so far departed from the accepted and usual
course of judicial proceedings or so far sanctioned such departure by the Mines
Adjudication Board in its Decision of May 18, 2006 and Resolution of January 19,
2007 because:

(A) The findings of fact of the Hon. Court of Appeals are contradictory
or inconsistent with the findings of the Panel of Arbitrators;

(B) There is grave abuse of discretion on the part of the Hon. Court of
Appeals in its appreciation of the facts, the evidence and the law thereby
leading it to make the erroneous conclusion that Blue Ridge, not Celestial, is
entitled to the Award of prior/preferential rights over the mining areas declared
as abandoned by Macroasia;

(C) There is likewise, a grave abuse of discretion on the part of the Hon.
Court of Appeals in that the said Court did not even consider some of the issues
raised by Celestial;

(D) That the findings of the Hon. Court of Appeals are mere conclusions
not supported by substantial evidence and without citation of the specific
evidence upon which they are based; they were arrived at arbitrarily or in
disregard of contradiction of the evidence on record and findings of the Panel
of Arbitrators in the Resolution of September 1, 1997;

(E) That the findings of the Hon. Court of Appeals are premised on the
absence of evidence but such findings are contradicted by the evidence on
record and are violative of the provisions of RA 7942 and its Implementing
Rules and Regulations.[39]

In G.R. No. 176319, petitioner Macroasia raises the following grounds for the allowance
of the petition:
I.
The Court of Appeals (Special Tenth Division) should have dismissed the Petition of
Blue Ridge outright since the issues, facts and matters involved in the said Petition are
identical to those which had already been painstakingly passed upon, reviewed and
resolved by the Court of Appeals Twelfth Division in CA-G.R. SP No. 87931

II.

The Court of Appeals (Special Tenth Division) gravely erred in denying Macroasias
Motion to Inhibit Associate Justice Rosmari Carandang from hearing and deciding the
Petition

III.

There were no factual nor legal bases for the Court of Appeals to rule that Macroasia
had waived its right to question the jurisdiction of the Mines Adjudication Board

IV.

Republic Act No. 7942 contains provisions which unequivocally indicate that only the
Secretary of the Department of Environment and Natural Resources has the power and
authority to cancel mining lease agreements

V.

The Court of Appeals (Special Tenth Division) gravely erred in perfunctorily


transferring Macroasias mining lease agreements to Blue Ridge without observing the
required procedure nor providing any basis therefor [40]

The Courts Ruling

The petitions under G.R. Nos. 169080, 172936, and 176226 are bereft of merit, while the
petition under G.R. No. 176319 is meritorious.

The pith of the controversy, upon which the other issues are hinged is, who has authority
and jurisdiction to cancel existing mineral agreements under RA 7942 in relation to PD 463 and
pertinent rules and regulations.

G.R. Nos. 169080, 176226 and 176319

We will jointly tackle G.R. Nos. 169080, 176266, and 176319 as the issues and
arguments of these three are inextricably intertwined.

Core Issue: Jurisdiction over Cancellation of Mineral Agreements

Petitioner Celestial maintains that while the jurisdiction to approve mining lease contracts
or mineral agreements is conferred on the DENR Secretary, Sec. 77(a) of RA 7942 by
implication granted to the POA and MAB the authority to cancel existing mining lease contracts
or mineral agreements.
On the other hand, respondent Macroasia strongly asserts that it is the DENR Secretary
who has the exclusive and primary jurisdiction to grant and cancel existing mining lease
contracts; thus, the POA and MAB have no jurisdiction to cancel much less to grant any
preferential rights to other mining firms.

Before we resolve this core issue of jurisdiction over cancellation of mining lease
contracts, we first need to look back at previous mining laws pertinent to this issue.

Under PD 463, The Mineral Resources Development Decree of 1974, which took effect
on May 17, 1974, applications for lease of mining claims were required to be filed with the
Director of the Bureau of Mines, within two (2) days from the date of their recording. [41] Sec. 40
of PD 463 provided that if no adverse claim was filed within (15) days after the first date of
publication, it was conclusively presumed that no adverse claim existed and thereafter no
objection from third parties to the grant of the lease could be heard, except protests pending at
the time of publication. The Secretary would then approve and issue the corresponding mining
lease contract. In case of any protest or adverse claim relating to any mining claim and lease
application, Secs. 48 and 50 of PD 463 prescribed the procedure. Under Sec. 48, the protest
should be filed with the Bureau of Mines. Under Sec. 50, any party not satisfied with the
decision or order of the Director could, within five (5) days from receipt of the decision or
order, appeal to the Secretary. The decisions of the Secretary were likewise appealable within
five (5) days from receipts by the affected party to the President of the Philippines whose
decision shall be final and executory. PD 463 was, however, silent as to who was authorized to
cancel the mineral agreements.

On July 10, 1987, President Corazon C. Aquino issued Executive Order No. (EO)
211. Under Sec. 2 of EO 211, the processing, evaluation, and approval of all mining
applications, declarations of locations, operating agreements, and service contracts were
governed by PD 463, as amended. EO 211 likewise did not contain any provision on the
authority to cancel operating agreements and service contracts.

On July 25, 1987, EO 279 was issued by President Aquino. It authorized the DENR
Secretary to negotiate and enter into, for and in behalf of the Government, joint venture, co-
production, or production-sharing agreements for the exploration, development, and utilization
of mineral resources with any Filipino citizen, corporation, or association, at least 60% of
whose capital was owned by Filipino citizens.[42] The contract or agreement was subject to the
approval of the President.[43] With respect to contracts of foreign-owned corporations or foreign
investors involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, the DENR Secretary could recommend approval of
said contracts to the President.[44] EO 279 provided that PD 463 and its implementing rules and
regulations, which were not inconsistent with EO 279, continued in force and effect. [45] Again,
EO 279 was silent on the authority to cancel mineral agreements.

RA 7942, The Philippine Mining Act of 1995 enacted on March 3, 1995, repealed the
provisions of PD 463 inconsistent with RA 7942. Unlike PD 463, where the application was
filed with the Bureau of Mines Director, the applications for mineral agreements are now
required to be filed with the Regional Director as provided by Sec. 29 of RA 7942. The proper
filing gave the proponent the prior right to be approved by the Secretary and thereafter to be
submitted to the President. The President shall provide a list to Congress of every approved
mineral agreement within 30 days from its approval by the Secretary. Again, RA 7942 is silent
on who has authority to cancel the agreement.

Compared to PD 463 where disputes were decided by the Bureau of Mines Director
whose decisions were appealable to the DENR Secretary and then to the President, RA 7942
now provides for the creation of quasi-judicial bodies (POA and MAB) that would have
jurisdiction over conflicts arising from the applications and mineral agreements. Secs. 77, 78,
and 79 lay down the procedure, thus:

SEC. 77. Panel of Arbitrators.There shall be a panel of arbitrators in the regional office of the
Department composed of three (3) members, two (2) of whom must be members of the
Philippine Bar in good standing and one [1] licensed mining engineer or a professional in a
related field, and duly designated by the Secretary as recommended by the Mines and
Geosciences Bureau Director. Those designated as members of the panel shall serve as such in
addition to their work in the Department without receiving any additional compensation. As
much as practicable, said members shall come from the different bureaus of the Department in
the region. The presiding officer thereof shall be selected by the drawing of lots. His tenure as
presiding officer shall be on a yearly basis. The members of the panel shall perform their duties
and obligations in hearing and deciding cases until their designation is withdrawn or revoked by
the Secretary. Within thirty (30) working days, after the submission of the case by the parties for
decision, the panel shall have exclusive and original jurisdiction to hear and decide on the
following:

(a) Disputes involving rights to mining areas;

(b) Disputes involving mineral agreements or permits;

(c) Disputes involving surface owners, occupants and claimholders/concessionaires; and

(d) Disputes pending before the Bureau and the Department at the date of the effectivity of this
Act.

SEC. 78. Appellate Jurisdiction.The decision or order of the panel of arbitrators may be appealed
by the party not satisfied thereto to the Mines Adjudication Board within fifteen (15) days from
receipt thereof which must decide the case within thirty (30) days from submission thereof for
decision.

SEC. 79. Mines Adjudication Board.The Mines Adjudication Board shall be composed of three
(3) members. The Secretary shall be the chairman with the Director of the Mines and
Geosciences Bureau and the Undersecretary for Operations of the Department as members
thereof.

xxxx

A petition for review by certiorari and question of law may be filed by the aggrieved
party with the Supreme Court within thirty (30) days from receipt of the order or
decision of the Board.

RA 7942 is also silent as to who is empowered to cancel existing lease contracts and
mineral agreements.

Meanwhile, in Southeast Mindanao Gold Mining Corp. v. MAB, we explained that the
decision of the MAB can first be appealed, via a petition for review, to the CA before elevating
the case to this Court.[46]
After a scrutiny of the provisions of PD 463, EO 211, EO 279, RA 7942 and its
implementing rules and regulations, executive issuances, and case law, we rule that the DENR
Secretary, not the POA, has the jurisdiction to cancel existing mineral lease contracts or mineral
agreements based on the following reasons:

1. The power of the DENR Secretary to cancel mineral agreements emanates from his
administrative authority, supervision, management, and control over mineral resources under
Chapter I, Title XIV of Book IV of the Revised Administrative Code of 1987, viz:

Chapter 1General Provisions

Section 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
countrys forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other
natural resources x x x

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 States
constitutional mandate to control and supervise the exploration, development,
utilization, and conservation of the countrys natural resources.

xxxx

Sec. 4. Powers and Functions.The Department shall:

xxxx

(2) Formulate, implement and supervise the implementation of the governments


policies, plans, and programs pertaining to the management, conservation,
development, use and replenishment of the countrys natural resources;

xxxx

(4) Exercise supervision and control over forest lands, alienable and disposable
public lands, mineral resources x x x

xxxx

(12) Regulate the development, disposition, extraction, exploration and use of the
countrys forest, land, water and mineral resources;

(13) Assume responsibility for the assessment, development,


protection, licensing and regulation as provided for by law, where applicable, of all
energy and natural resources; the regulation and monitoring of service
contractors, licensees, lessees, and permit for the extraction, exploration,
development and use of natural resources products; x x x

xxxx
(15) Exercise exclusive jurisdiction on the management and disposition of
all lands of the public domain x x x

Chapter 2The Department Proper

xxxx

Sec. 8. The Secretary.The Secretary shall:

xxxx

(3) Promulgate rules, regulations and other issuances necessary in carrying


out the Departments mandate, objectives, policies, plans, programs and projects.

(4) Exercise supervision and control over all functions and activities of the
Department;

(5) Delegate authority for the performance of any administrative or substantive


function to subordinate officials of the Department x x x (Emphasis supplied.)

It is the DENR, through the Secretary, that manages, supervises, and regulates the use and
development of all mineral resources of the country. It has exclusive jurisdiction over the
management of all lands of public domain, which covers mineral resources and deposits from
said lands. It has the power to oversee, supervise, and police our natural resources which
include mineral resources. Derived from the broad and explicit powers of the DENR and its
Secretary under the Administrative Code of 1987 is the power to approve mineral agreements
and necessarily to cancel or cause to cancel said agreements.

2. RA 7942 confers to the DENR Secretary specific authority over mineral resources.

Secs. 8 and 29 of RA 7942 pertinently provide:

SEC. 8. Authority of the Department.The Department shall be the primary government


agency responsible for the conservation, management, development, and proper use of
the States mineral resources including those in reservations, watershed areas, and
lands of the public domain. The Secretary shall have the authority to enter into
mineral agreements on behalf of the Government upon the recommendation of
the Director, promulgate such rules and regulations as may be necessary to
implement the intent and provisions of this Act.

SEC. 29. Filing and approval of Mineral Agreements.x x x.

The filing of a proposal for a mineral agreement shall give the proponent the prior
right to areas covered by the same. The proposed mineral agreement will be
approved by the Secretary and copies thereof shall be submitted to the President.
Thereafter, the President shall provide a list to Congress of every approved mineral
agreement within thirty (30) days from its approval by the Secretary. (Emphasis
supplied.)
Sec. 29 is a carry over of Sec. 40 of PD 463 which granted jurisdiction to the DENR
Secretary to approve mining lease contracts on behalf of the government, thus:

SEC. 40. Issuance of Mining Lease Contract.If no adverse claim is filed within
fifteen (15) days after the first date of publication, it shall be conclusively presumed
that no such adverse claim exists and thereafter no objection from third parties to the
grant of the lease shall be heard, except protest pending at the time of publication, and
the Secretary shall approve and issue the corresponding mining lease x x x.

To enforce PD 463, the CMAO containing the rules and regulations implementing PD 463 was
issued. Sec. 44 of the CMAO provides:

SEC. 44. Procedure for Cancellation.Before any mining lease contract is cancelled for
any cause enumerated in Section 43 above, the mining lessee shall first be notified in
writing of such cause or causes, and shall be given an opportunity to be heard, and to
show cause why the lease shall not be cancelled.

If, upon investigation, the Secretary shall find the lessee to be in default, the
former may warn the lessee, suspend his operations or cancel the lease
contract (emphasis supplied).
Sec. 4 of EO 279 provided that the provisions of PD 463 and its implementing rules and
regulations, not inconsistent with the executive order, continue in force and effect.

When RA 7942 took effect on March 3, 1995, there was no provision on who could
cancel mineral agreements. However, since the aforequoted Sec. 44 of the CMAO
implementing PD 463 was not repealed by RA 7942 and DENR AO 96-40, not being contrary
to any of the provisions in them, then it follows that Sec. 44 serves as basis for the DENR
Secretarys authority to cancel mineral agreements.

Since the DENR Secretary had the power to approve and cancel mineral agreements
under PD 463, and the power to cancel them under the CMAO implementing PD 463, EO 211,
and EO 279, then there was no recall of the power of the DENR Secretary under RA
7942. Historically, the DENR Secretary has the express power to approve mineral agreements
or contracts and the implied power to cancel said agreements.

It is a well-established principle that in the interpretation of an ambiguous provision of


law, the history of the enactment of the law may be used as an extrinsic aid to determine the
import of the legal provision or the law.[47] History of the enactment of the statute constitutes
prior laws on the same subject matter. Legislative history necessitates review of the origin,
antecedents and derivation of the law in question to discover the legislative purpose or intent.
[48]
It can be assumed that the new legislation has been enacted as continuation of the existing
legislative policy or as a new effort to perpetuate it or further advance it.[49]

We rule, therefore, that based on the grant of implied power to terminate mining or
mineral contracts under previous laws or executive issuances like PD 463, EO 211, and EO 279,
RA 7942 should be construed as a continuation of the legislative intent to authorize the DENR
Secretary to cancel mineral agreements on account of violations of the terms and conditions
thereof.

3. Under RA 7942, the power of control and supervision of the DENR Secretary over the
MGB to cancel or recommend cancellation of mineral rights clearly demonstrates the authority
of the DENR Secretary to cancel or approve the cancellation of mineral agreements.

Under Sec. 9 of RA 7942, the MGB was given the power of direct supervision of mineral
lands and resources, thus:

Sec. 9. Authority of the Bureau.The Bureau shall have direct charge in the
administration and disposition of mineral lands and mineral resources and shall
undertake geological, mining, metallurgical, chemical, and other researches as
well as geological and mineral exploration surveys. The Director shall
recommend to the Secretary the granting of mineral agreements to duly qualified
persons and shall monitor the compliance by the contractor of the terms and
conditions of the mineral agreements. The Bureau may confiscate surety,
performance and guaranty bonds posted through an order to be promulgated by the
Director. The Director may deputize, when necessary, any member or unit of the
Philippine National Police, barangay, duly registered nongovernmental organization
(NGO) or any qualified person to police all mining activities. (Emphasis supplied.)

Corollary to the power of the MGB Director to recommend approval of mineral


agreements is his power to cancel or recommend cancellation of mining rights covered by said
agreements under Sec. 7 of DENR AO 96-40, containing the revised Implementing Rules and
Regulations of RA 7942.Sec. 7 reads:

Sec. 7. Organization and Authority of the Bureau.

xxxx

The Bureau shall have the following authority, among others:

a. To have direct charge in the administration and disposition of mineral land and
mineral resources;

xxxx

d. To recommend to the Secretary the granting of mineral agreements or to endorse to


the Secretary for action by the President the grant of FTAAs [Financial and Technical
Assistance Agreements], in favor of qualified persons and to monitor compliance by
the Contractor with the terms and conditions of the mineral agreements and FTAAs.

e. To cancel or to recommend cancellation after due process, mining rights,


mining applications and mining claims for non-compliance with pertinent laws, rules
and regulations.
It is explicit from the foregoing provision that the DENR Secretary has the authority to
cancel mineral agreements based on the recommendation of the MGB Director. As a matter of
fact, the power to cancel mining rights can even be delegated by the DENR Secretary to the
MGB Director. Clearly, it is the Secretary, not the POA, that has authority and jurisdiction over
cancellation of existing mining contracts or mineral agreements.

4. The DENR Secretarys power to cancel mining rights or agreements through the MGB
can be inferred from Sec. 230, Chapter XXIV of DENR AO 96-40 on cancellation, revocation,
and termination of a permit/mineral agreement/FTAA. Sec. 230 provides:

Section 230. Grounds

The following grounds for cancellation revocation and termination of a Mining


Permit Mineral Agreement/FTAA.

a. Violation of any of the terms and conditions of the Permits or Agreements;

b. Nonpayment of taxes and fees due the government for two (2) consecutive years;
and

c. Falsehood or omission of facts in the application for exploration [or Mining]


Permit Mineral Agreement/FTAA or other permits which may later, change or
affect substantially the facts set forth in said statements.

Though Sec. 230 is silent as to who can order the cancellation, revocation, and termination of a
permit/mineral agreement/FTAA, it has to be correlated with the power of the MGB under Sec.
7 of AO 96-40 to cancel or to recommend cancellation, after due process, mining rights, mining
applications and mining claims for noncompliance with pertinent laws, rules and
regulations. As the MGB is under the supervision of the DENR Secretary, then the logical
conclusion is that it is the DENR Secretary who can cancel the mineral agreements and not the
POA nor the MAB.

5. Celestial and Blue Ridge are not unaware of the stipulations in the Mining Lease Contract
Nos. V-1050 and MRD-52,[50] the cancellation of which they sought from the POA. It is clear
from said lease contracts that the parties are the Republic of the Philippines represented by the
Secretary of Agriculture and Natural Resources (now DENR Secretary) as lessor, and Infanta
(Macroasia) as lessee. Paragraph 18 of said lease contracts provides:

Whenever the LESSEE fails to comply with any provision of [PD 463, and]
Commonwealth Acts Nos. 137, 466 and 470, [both as amended,] and/or the rules and
regulations promulgated thereunder, or any of the covenants therein, the LESSOR
may declare this lease cancelled and, after having given thirty (30) days notice in
writing to the LESSEE, may enter and take possession of the said premises, and said
lessee shall be liable for all unpaid rentals, royalties and taxes due the Government on
the lease up to the time of the forfeiture or cancellation, in which event, the LESSEE
hereby covenants and agrees to give up the possession of the property leased.
(Emphasis supplied.)
Thus, the government represented by the then Secretary of Agriculture and Natural Resources
(now the DENR Secretary) has the power to cancel the lease contracts for violations of existing
laws, rules and regulations and the terms and conditions of the contracts. Celestial and Blue
Ridge are now estopped from challenging the power and authority of the DENR Secretary to
cancel mineral agreements.

However, Celestial and Blue Ridge insist that the power to cancel mineral agreements is also
lodged with the POA under the explicit provisions of Sec. 77 of RA 7942.

This postulation is incorrect.

Sec. 77 of RA 7942 lays down the jurisdiction of POA, to wit:

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

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 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 or 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 from 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 95-936, 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 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.

On the other hand, Celestial and Blue Ridge contend that POA has jurisdiction over their
petitions for the cancellation of Macroasias lease agreements banking on POAs jurisdiction over
disputes involving mineral agreements or permits under Sec. 77 (b) of RA 7942.

Such position is bereft of merit.

As earlier discussed, the DENR Secretary, by virtue of his powers as administrative head
of his department in charge of the management and supervision of the natural resources of the
country under the 1987 Administrative Code, RA 7942, and other laws, rules, and regulations,
can cancel a mineral agreement for violation of its terms, even without a petition or request
filed for its cancellation, provided there is compliance with due process. Since the cancellation
of the mineral agreement is approved by the DENR Secretary, then the recourse of the
contractor is to elevate the matter to the OP pursuant to AO 18, Series of 1987 but not with the
POA.

Matched with the legal provisions empowering the DENR Secretary to cancel a mineral
agreement is Sec. 77 (b) of RA 7942 which grants POA jurisdiction over disputes involving
mineral agreements.

A dispute is defined as a conflict or controversy; a conflict of claims or rights; an assertion of a


right, claim or demand on one side; met by contrary claims or allegations on the other. [51] It is
synonymous to a cause of action which is an act or omission by which a party violates a right of
another.[52]

A petition or complaint originating from a dispute can be filed or initiated only by a real party-
in-interest. The rules of court define a real party-in-interest as the party who stands to be
benefited or injured by the judgment in the suit or the party entitled to the avails of the suit.
[53]
Every action, therefore, can only be prosecuted in the name of the real party-in-interest. [54] It
has been explained that a real party-in-interest plaintiff is one who has a legal right, while a real
party-in-interest-defendant is one who has a correlative legal obligation whose act or omission
violates the legal right of the former.[55]

On the other hand, interest means material interest, an interest in issue and to be affected by the
decree, as distinguished from mere interest in the question involved, or a mere incidental
interest. It is settled in this jurisdiction that one having no right or interest to protect cannot
invoke the jurisdiction of the court as a party-plaintiff in an action. [56] Real interest is defined as
a present substantial interest, as distinguished from a mere expectancy, or a future, contingent,
subordinate or consequential interest.[57]

From the foregoing, a petition for the cancellation of an existing mineral agreement covering an
area applied for by an applicant based on the alleged violation of any of the terms thereof, is not
a dispute involving a mineral agreement under Sec. 77 (b) of RA 7942. It does not pertain to a
violation by a party of the right of another. The applicant is not a real party-in-interest as he
does not have a material or substantial interest in the mineral agreement but only a prospective
or expectant right or interest in the mining area. He has no legal right to such mining claim and
hence no dispute can arise between the applicant and the parties to the mineral agreement. The
court rules therefore that a petition for cancellation of a mineral agreement anchored on the
breach thereof even if filed by an applicant to a mining claim, like Celestial and Blue Ridge,
falls within the jurisdiction of the DENR Secretary and not POA. Such petition is excluded
from the coverage of the POAs jurisdiction over disputes involving mineral agreements under
Sec. 77 (b) of RA 7942.

Macroasia not estopped from raising the issue of jurisdiction on appeal

On the related issue of estoppel, petitioner Celestial argues that Macroasia is estopped
from raising and questioning the issue of the jurisdiction of the POA and MAB over the petition
for cancellation of its mining lease contracts, when Macroasia raised it only in its Supplemental
Motion for Reconsideration.

We rule that the principle of estoppel does not apply.

Indeed, Macroasia was not the one that initiated the instant case before the POA, and thus
was not the one that invoked the jurisdiction of the POA. Hence, on appeal, Macroasia is not
precluded from raising the issue of jurisdiction as it may be invoked even on appeal. [58] As a
matter of fact, a party can raise the issue of jurisdiction at any stage of the proceedings.

Petitioner Celestials reliance on Villela v. Gozun[59] to support the contention that the POA
has jurisdiction to hear and decide a petition to cancel existing mining lease contracts, is
misplaced. In said case, we dismissed the petition on the ground of non-exhaustion of
administrative remedies and disregarded judicial hierarchy as no compelling reason was shown
to warrant otherwise. While we pointed out the authority of the POA, there was no categorical
pronouncement on the jurisdictional issue.

No valid pronouncement of abandonment due to lack of jurisdiction over petition to


cancel
As we are not a trier of facts, we need not make any finding on the various investigations
done by the MGB and MAB on the issue of Macroasias non-compliance with its work
obligations and nonpayment of taxes and fees. Verily, the law does not impose automatic
cancellation of an existing mining lease contract, as it is a question of fact which must be
determined by the MGB which can recommend the cancellation of the mineral or lease
agreements to the DENR Secretary. Be that as it may, since the POA and MAB have no
jurisdiction over the petition for cancellation of existing mining lease contracts of Macroasia,
they could not have made any binding pronouncement that Macroasia had indeed abandoned
the subject mining claims.Besides, it is the DENR Secretary who has the authority to cancel
Macroasias existing mining lease contracts whether on grounds of abandonment or any valid
grounds for cancellation.

Decision in CA-G.R. SP No. 90828 not in accord with the law

With our resolution of the issue on the lack of jurisdiction of the POA and the MAB over
petitions to cancel existing mining lease contracts or mineral agreements, it is thus clear that the
May 18, 2006 Decision in CA-G.R. SP No. 90828 must be nullified for being not in accord with
the law and the April 15, 2005 Decision in CA-G.R. SP No. 87931 must be upheld.

Notwithstanding the nullification of the May 18, 2006 Decision of the Special Tenth
Division in CA-G.R. SP No. 90828, the rendition of two conflicting decisions of the two CA
Divisions over the same challenged resolutions of the MAB should be avoided in the future as
this is anathema to stability of judicial decisions and orderly administration of justice.

The chronology of events reveals the following:

1. January 10, 2005 petitioner Celestial filed its petition docketed as CA-G.R. SP No.
87931 with the CA.

2. April 15, 2005 the CA through its Twelfth Division rendered its Decision in CA-G.R.
SP No. 87931 affirming the November 26, 2004 MAB Resolution.

3. July 12, 2005 respondent Blue Ridge filed its petition docketed as CA-G.R. SP No.
90828 with the CA. It is clear that the Blue Ridge petition was filed with the CA three months
after the decision in CA-G.R. SP No. 87931 was promulgated.

4. May 18, 2006 the CA through its Special Tenth Division rendered its Decision setting
aside the November 26, 2004 and July 12, 2005 Resolutions of the MAB and reinstating
the October 24, 2000 MAB Decision.

From these facts, the CA Special Tenth Division should have ordered the consolidation of
the petition in CA-G.R. SP No. 90828 by CA-G.R. SP No. 87931 pursuant to the Internal Rules
of the CA, the latter having the earlier docket number. Had it done so, then the occurrence of
the conflicting decisions could have been prevented. The CA Special Tenth Division should
have abided by our ruling in Nacuray v. NLRC, where we held, Consequently, a division cannot
and should not review a case already passed upon by another Division of this Court. It is only
proper, to allow the case to take its rest after having attained finality.[60]

The CA should take the appropriate steps, including the adoption or amendment of the
rules, to see to it that cases or petitions arising from the same questioned decision, order, or
resolution are consolidated to steer clear of contrary or opposing decisions of the different CA
Divisions and ensure that incidents of similar nature will not be replicated.

G.R. No. 172936

No showing that the DENR Secretary gravely abused his discretion

Now, going to the substance of the petition in G.R. No. 172936. A scrutiny of the records
shows that the DENR Secretary did not gravely abuse his discretion in approving and signing
MPSA Nos. 220-2005-IVB and 221-2005-IVB in favor of Macroasia.

Petitioner Blue Ridge anchors its rights on the May 18, 2006 Decision in CA-G.R. SP
No. 90828, which we have unfortunately struck down. Blue Ridges argument in assailing the
approval and issuance of the subject MPSAs that it has been accorded preferential right by the
CA has no leg to stand on.

The October 24, 2000 MAB Decision, nullified by the subsequent November 26,
2004 Resolution, is unequivocal that Blue Ridge was granted only prior and preferential
rights to FILE its mining application over the same mining claims. [61] What was accorded Blue
Ridge was only the right to file the mining application but with no assurance that the application
will be recommended for approval by the MGB and finally approved by the DENR Secretary.

Moreover, a preferential right would at most be an inchoate right to be given priority in


the grant of a mining agreement. It has not yet been transformed into a legal and vested right
unless approved by the MGB or DENR Secretary. Even if Blue Ridge has a preferential right
over the subject mining claims, it is still within the competence and discretion of the DENR
Secretary to grant mineral agreements to whomever he deems best to pursue the mining claims
over and above the preferential status given to Blue Ridge. Besides, being simply a preferential
right, it is ineffective to dissolve the pre-existing or subsisting mining lease contracts of
Macroasia.

The DENR Secretary has full discretion in the grant of mineral agreements

Blue Ridge also argues that the Secretary gravely abused his discretion in approving the
subject MPSAs without Macroasia complying with the mandatory requirements for mineral
agreement applications under Sec. 35 of DENR AO 96-40. Petitioner specifically cited Sec. 36
of DENR AO 96-40 to the effect that no Mineral Agreement shall be approved unless the
requirements under this section are fully complied with and any adverse
claim/protest/opposition thereto is finally resolved by the Panel of Arbitrators. Moreover, Blue
Ridge contends that the MPSAs were approved even prior to the issuance of the Compliance
Certificate[62] by the National Commission on Indigenous Peoples under the OP, which is a
requisite pre-condition for the issuance of an MPSA.

We are not persuaded.

Blue Ridge cites Sec. 38 (not Sec. 36) of DENR AO 96-40 as basis for claiming that then
DENR Secretary Defensor committed grave abuse of discretion in granting MPSA Nos. 220-
2005-IVB and 221-2005-IVB to Macroasia. Petitioners postulation cannot be entertained for the
reason that the issuance of the mining agreements was not raised before the MGB Director and
DENR Secretary, nor was it amply presented before the CA. There is even a counter-charge
that Blue Ridge has not complied with the legal requirements for a mining application. The rule
is established that questions raised for the first time on appeal before this Court are not proper
and have to be rejected. Furthermore, the resolution of these factual issues would relegate the
Court to a trier of facts. The Blue Ridge plea is hindered by the factual issue bar rule where
factual questions are proscribed under Rule 65. Lastly, there was no exhaustion of
administrative remedies before the MGB and DENR. Thus, Blue Ridges petition must fail.

Primary jurisdiction of the DENR Secretary in determining whether to grant or not


a mineral agreement

Verily, RA 7942, similar to PD 463, confers exclusive and primary jurisdiction on the
DENR Secretary to approve mineral agreements, which is purely an administrative function
within the scope of his powers and authority. In exercising such exclusive primary jurisdiction,
the DENR Secretary, through the MGB, has the best competence to determine to whom mineral
agreements are granted. Settled is the rule that the courts will defer to the decisions of the
administrative offices and agencies by reason of their expertise and experience in the matters
assigned to them pursuant to the doctrine of primary jurisdiction. Administrative decisions on
matter within the jurisdiction of administrative bodies are to be respected and can only be set
aside on proof of grave abuse of discretion, fraud, or error of law. [63] Unless it is shown that the
then DENR Secretary has acted in a wanton, whimsical, or oppressive manner, giving undue
advantage to a party or for an illegal consideration and similar reasons, this Court cannot look
into or review the wisdom of the exercise of such discretion. Blue Ridge failed in this regard.

Delineation of powers and functions is accorded the three branches of government for the
smooth functioning of the different governmental services. We will not disturb nor interfere in
the exercise of purely administrative functions of the executive branch absent a clear showing
of grave abuse of discretion.

Without a restraining order or injunction, litigation will not deter the DENR from
exercising its functions

While it is true that the subject mining claims are under litigation, this does not preclude
the DENR and its Secretary from carrying out their functions and duties without a restraining
order or an injunctive writ. Otherwise, public interest and public service would unduly suffer by
mere litigation of particular issues where government interests would be unduly affected. In the
instant case, it must be borne in mind that the government has a stake in the subject mining
claims. Also, Macroasia had various valid existing mining lease contracts over the subject
mining lode claims issued by the DENR. Thus, Macroasia has an advantage over Blue
Ridge and Celestial insofar as the administrative aspect of pursuing the mineral agreements is
concerned.

WHEREFORE, the petitions under G.R. Nos. 169080,


172936, and 176229 are DISMISSED for lack of merit, while the petition under G.R. No.
176319 is hereby GRANTED. The assailed April 15, 2005 Decision and August 3,
2005 Resolution of the CA in CA-G.R. SP No. 87931 are hereby AFFIRMED IN TOTO. And
the May 18, 2006 Decision and January 19, 2007 Resolution of the CA in CA-G.R. SP No.
90828 are hereby REVERSED and SET ASIDE. In view of the foregoing considerations, we
find no grave abuse of discretion on the part of the then DENR Secretary in the approval and
issuance of MPSA Nos. 220-2005-IVB and 221-2005-IVB. Costs against Celestial Nickel
Mining Exploration Corporation and Blue Ridge Mineral Corporation.

SO ORDERED.

FIRST DIVISION

DIDIPIO EARTH-SAVERS MULTI-PURPOSE G.R. No. 157882


ASSOCIATION, INCORPORATED
(DESAMA), MANUEL BUTIC, CESAR
MARIANO, LAURO ABANCE, BEN
TAYABAN, ANTONIO DINGCOG, TEDDY B.
KIMAYONG, ALONZO ANANAYO,
ANTONIO MALAN-UYA, JOSE BAHAG, Present:
ANDRES INLAB, RUFINO LICYAYO,
PANGANIBAN, C.J.
ALFREDO CULHI, CATALILNA
Chairperson,
INABYUHAN, GUAY DUMMANG, GINA
YNARES-SANTIAGO,
PULIDO, EDWIN ANSIBEY, CORAZON
AUSTRIA-MARTINEZ,
SICUAN, LOPEZ DUMULAG, FREDDIE
CALLEJO, SR., and
AYDINON, VILMA JOSE, FLORENTINA
CHICO-NAZARIO, JJ.
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, 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 Arimco Mining 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 large-scale 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 Nueva Vizcaya
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:

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.

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 Vizcaya and 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 of Republic
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
Piat[24] where an ordinance divided the City of Manilainto 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-of-way 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-Limay transmission 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, installtheir
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 its implementing 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. 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-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 ortechnical 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 x x 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 shiftbeing 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.