LA BUGAL-B’LAAN TRIBAL ASSOCIATION, Inc. vs RAMOS No. 7942 and DAO No.

No. 7942 and DAO No. 96-40, giving the DENR fifteen days from
G.R. No. 127882 January 27, 2004 receipt to act thereon. The DENR, however, has yet to respond or act
on petitioners’ letter.
FACTS: Petitioners thus filed the present petition for prohibition and mandamus,
On March 3, 1995, President Ramos signed into law R.A. No. 7942. with a prayer for a temporary restraining order. They allege that at the
Section 15 thereof declares that the Act “shall govern the exploration, time of the filing of the petition, 100 FTAA applications had already
development, utilization, and processing of all mineral resources.” Such been filed, covering an area of 8.4 million hectares, 64 of which
declaration notwithstanding, R.A. No. 7942 does not actually cover all applications are by fully foreign-owned corporations covering a total of
the modes through which the State may undertake the exploration, 5.8 million hectares, and at least one by a fully foreign-owned mining
development, and utilization of natural resources. company over offshore areas.
The State, being the owner of the natural resources, is accorded the
primary power and responsibility in the exploration, development and ISSUE:
utilization thereof. As such, it may undertake these activities through WHETHER OR NOT Republic Act No. 7942 IS
four modes: UNCONSTITUTIONAL.
The State may directly undertake such activities. HELD:
(2) The State may enter into co-production, joint venture or The Court hereby declares unconstitutional and void the following:
production-sharing agreements with Filipino citizens or qualified (1) provisions of Republic Act No. 7942:
corporations. (a) The proviso in Section 3 (aq),
(3) Congress may, by law, allow small-scale utilization of natural (b) Section 23,
resources by Filipino citizens. (c) Section 33 to 41,
(4) For the large-scale exploration, development and utilization of (d) Section 56,
minerals, petroleum and other mineral oils, the President may enter into (e) The second and third paragraphs of Section 81, and
agreements with foreign-owned corporations involving technical or (f) Section 90.
financial assistance. (2) All provisions of Department of Environment and Natural
R.A. No. 7942 primarily concerns itself with the second and fourth Resources Administrative Order 96-40, s. 1996 which are not in
modes. conformity with this Decision, and
Petitioners submit that, in accordance with the text of Section 2, Article (3) The Financial and Technical Assistance Agreement between the
XII of the Constitution, FTAAs should be limited to “technical or Government of the Republic of the Philippines and WMC Philippines,
financial assistance” only. They observe, however, that, contrary to the Inc.
language of the Constitution, the WMCP FTAA allows WMCP, a fully It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain
foreign-owned mining corporation, to extend more than mere financial provisions that are more favorable to WMCP, hence, these laws, to the
or technical assistance to the State, for it permits WMCP to manage and extent that they are favorable to WMCP, govern the FTAA.
operate every aspect of the mining activity In addition, R.A. No. 7942 explicitly makes certain provisions apply to
On January 10, 1997, counsels for petitioners sent a letter to the DENR pre-existing agreements.
Secretary demanding that the DENR stop the implementation of R.A.
R.A. No. 7942 is invalid insofar as said Act authorizes service contracts. APEX MINING CO., INC.,
Although the statute employs the phrase “financial and technical Petitioner,
agreements” in accordance with the 1987 Constitution, it actually treats
these agreements as service contracts that grant beneficial ownership to - versus -
foreign contractors contrary to the fundamental law.
SOUTHEAST MINDANAO GOLD MINING CORP. ET AL,
Respondents.

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

BALITE COMMUNAL PORTAL MINING COOPERATIVE,

Petitioner,

- versus -

SOUTHEAST MINDANAO GOLD MINING CORP., APEX

MINING CO., INC., ET AL,
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 -

SOUTHEAST MINDANAO GOLD MINING CORPORATION,

Respondent.

FACTS:

This resolves the motion for reconsideration dated 12 July 2006, filed by
Southeast Mindanao Gold Mining Corporation (SEM), of this Court’s
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 Decision’s
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.
ISSUE/S:
Whether Southeast Mindanao Mining Corp. (SEM) acquired a vested right over the
disputed area, which constitutes a property right protected by the Constitution.
HELD:
NO. 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, SEM’s 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 Application for a Permit to Prospect in Bunawan, Agusan del Sur
McDaniel and Gold Creek Mining. respectively. (Emphasis supplied.)

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:
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.

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
G.R. No. 98332 January 16, 1995
MINERS ASSOCIATION OF THE PHILIPPINES, INC., petitioner,
vs.
HON. FULGENCIO S. FACTORAN, JR., Secretary of Environment
and Natural Resources, and JOEL D. MUYCO, Director of Mines and
Geosciences Bureau, respondents.
FACTS:
Pursuant to Section 6 of Executive Order No. 279, authorizing the
DENR Secretary to negotiate and conclude joint venture, co-
production, or production-sharing agreements for the exploration,
development and utilization of mineral resources, and prescribing the
guidelines for such agreements and those agreements involving technical
or financial assistance by foreign-owned corporations for large-scale
exploration, development, and utilization of minerals, the DENR
Secretary issued DENR Administrative Order No. 57, series of 1989,
entitled "Guidelines on Mineral Production Sharing Agreement under
Executive Order No. 279." Under the transitory provision of said
DENR Administrative Order No. 57, embodied in its Article 9, all
existing mining leases or agreements which were granted after the
effectivity of the 1987 Constitution pursuant to Executive Order No.
211, except small scale mining leases and those pertaining to sand and
gravel and quarry resources covering an area of twenty (20) hectares or
less, shall be converted into production-sharing agreements within one
(1) year from the effectivity of these guidelines.
The Secretary of the DENR then further issued DENR Administrative
Order No. 82, series of 1990, laying down the "Procedural Guidelines
on the Award of Mineral Production Sharing Agreement (MPSA)
through Negotiation."
The issuance and the impending implementation by the DENR of
Administrative Order Nos. 57 and 82 after their respective effectivity
dates compelled the Miners Association of the Philippines, Inc. to file
the instant petition assailing their validity and constitutionality before
this Court.
Petitioner Miners Association of the Philippines, Inc., mainly contends
that the administrative orders do not conform with Executive Order
Nos. 211 and 279, petitioner contends that both orders violate the non-
impairment of contract provision under Article III, Section 10 of the
1987 Constitution on the ground that Administrative Order No. 57
unduly pre-terminates existing mining leases and other mining
agreements and automatically converts them into production-sharing
agreements within one (1) year from its effectivity date. On the other
hand, Administrative Order No. 82 declares that failure to submit
Letters of Intent and Mineral Production-Sharing Agreements within
two (2) years from the date of effectivity of said guideline or on July 17,
1991 shall cause the abandonment of their mining, quarry and sand
gravel permits.
Petitioner argued that Executive Order No. 279 does not contemplate
automatic conversion of mining lease agreements into mining
production-sharing agreement as provided under Article 9,
Administrative Order No. 57 and/or the consequent abandonment of
mining claims for failure to submit LOIs and MPSAs under Section 3,
Administrative Order No. 82 because Section 1 of said Executive Order
No. 279 empowers the DENR Secretary to negotiate and enter into
voluntary agreements which must set forth the minimum terms and
conditions provided under Section 2 thereof. Moreover, petitioner
contends that the power to regulate and enter into mining agreements
does not include the power to preterminate existing mining lease
agreements.
ISSUE:
Whether or not DENR Administrative Order Nos. 57 and 82 issued by
the DENR Secretary are unconstitutional.
HELD:
NO. DENR Administrative Order Nos. 57 and 82 are not
unconstitutional.
The questioned administrative orders are reasonably directed to the
accomplishment of the purposes of the law under which they were
issued and were intended to secure the paramount interest of the public, petition. A mineral production-sharing agreement (MPSA) requires a
their economic growth and welfare. The validity and constitutionality of meeting of the minds of the parties after negotiations arrived at in good
Administrative Order Nos. 57 and 82 must be sustained, and their force faith and in accordance with the procedure laid down in the subsequent
and effect upheld. Administrative Order No. 82.
Administrative Order No. 57 applies only to all existing mining leases or
agreements which were granted after the effectivity of the 1987
Constitution pursuant to Executive Order No. 211. It bears mention
that under the text of Executive Order No. 211, there is a reservation
clause which provides that the privileges as well as the terms and
conditions of all existing mining leases or agreements granted after the
effectivity of the 1987 Constitution, pursuant to Executive Order No.
211, shall be subject to any and all modifications or alterations which
Congress may adopt pursuant to Article XII, Section 2 of the 1987
Constitution. Hence, the strictures of the non-impairment of contract
clause under Article III, Section 10 of the 1987 Constitution do not
apply to the aforesaid mining leases or agreements granted after the
effectivity of the 1987 Constitution, pursuant to Executive Order No.
211. They can be amended, modified or altered by a statute passed by
Congress to achieve the purposes of Article XII, Section 2 of the 1987
Constitution.
Moreover, nowhere in Administrative Order No. 57 is there any
provision which would lead us to conclude that the questioned order
authorizes the automatic conversion of mining leases and agreements
granted after the effectivity of the 1987 Constitution, pursuant to
Executive Order No. 211, to production-sharing agreements. The
provision in Article 9 of Administrative Order No. 57 that "all such
leases or agreements shall be converted into production sharing
agreements within one (1) year from the effectivity of these guidelines"
could not possibly contemplate a unilateral declaration on the part of the
Government that all existing mining leases and agreements are
automatically converted into production-sharing agreements. On the
contrary, the use of the term "production-sharing agreement" in the
same provision implies negotiation between the Government and the
applicants, if they are so minded. Negotiation negates compulsion or
automatic conversion as suggested by petitioner in the instant