ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5
G.R. No. 63528. September 9, 1996.* claim is performance of not less than one hundred dollars’ worth of labor or
ATOK BIG-WEDGE MINING COMPANY, petitioner, vs. HON. INTERMEDIATE
APPELLATE COURT and TUKTUKAN SAINGAN, respondents.
Natural Resources; Mines and Mining; Constitutional Law; Regalian Doctrine; All
mineral lands, as part of the country’s natural resources, belong to the Philippine
State.—All mineral lands, as part of the country’s natural resources, belong to the
Philippine State. This concept of jura regalia enshrined in the past and present
Philippine constitutions has not always been the prevailing principle in this
jurisdiction; however, the abundant resources within our coastal frontiers have in the
past filled not just one colonizer’s booty haul. Indeed, there was a time in our history
when the mining laws prevailing in this jurisdiction were compromising, to say the
least, of the Filipino people’s inherent rights to their natural wealth.
Same; Same; Same; Before the cession of the Philippine Islands to the United States,
the prevailing mining law in the colony was the Royal Decree of May, 1867, otherwise
known as The Spanish Mining Law.— Before the cession of the Philippine Islands to
the United States under the Treaty of Paris, the prevailing mining law in the colony
was the Royal Decree of May, 1867, otherwise known as The Spanish Mining Law.
Same; Same; Same; In the advent of American occupation, the Philippines was
governed by means of organic acts which were in the nature of charters serving as a
Constitution of the occupied territory from 1900 to 1935.— In the advent of American
occupation, the Philippines was governed by means of organic acts which were in the
nature of charters serving as a Constitution of the occupied territory from 1900 to
1935. Among the principal organic acts of the Philippines was the Act of Congress of
July 1, 1902 through which the United States Congress assumed the administration of
the Philippine Islands.
Same; Same; Philippine Bill of 1902; 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.— 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.”
Same; Same; Same; One of the continuing requirements under the Philippine Bill of
1902 for the subsistence of the mining claim is performance of not less than one
hundred dollars’ worth of labor or undertaking of improvements of the same value
every year.—One of the continuing requirements for the subsistence of the mining
Page |1
undertaking of improvements of the same value every year. This is a strict requisite,
the locator’s failure to comply with which shall operate to open the claim or mine to
relocation in the same manner as if no location of the same had even been made.
Unequivocal is the mandatory nature of the work or labor requirement on the mine
that the Philippine Bill specifically designates the time when the work or labor
required to be done annually on all unpatented mineral claims, shall commence.
Same; Same; Same; Regalian Doctrine; Constitutional Law; Under the 1935
Constitution, those natural resources, and for that matter, those mineral lands and
minerals with respect to which there already was “any existing right, grant, lease, or
concession at the time of the inauguration of the Government established under this
Constitution” were then considered outside the application of the jura regalia doctrine
or at least not unconditionally or totally within the contemplation of said doctrine.—
On November 15, 1935, the Constitution of the Commonwealth took effect. The 1935
Constitution declared all natural resources of the Philippines, including mineral lands
and minerals, to be property belonging to the State. However, as it turned out, not
really all of the Philippines’ natural resources were considered part of the public
domain. Those natural resources, and for that matter, those mineral lands and
minerals with respect to which there already was “any existing right, grant, lease, or
concession at the time of the inauguration of the Government established under this
Constitution,” were then considered outside the application of the jura regalia
doctrine or at least not unconditionally or totally within the contemplation of said
doctrine.
Same; Same; Same; Same; Mining Act; In contradistinction with the Philippine Bill of
1902 which was patterned after the United States Federal Mining Acts which rejected
the regalian doctrine, the Mining Act (C.A. 137) expressly adopted the regalian
doctrine following the provisions of the 1935 Constitution.— On November 7, 1936,
the First National Assembly enacted Commonwealth Act No. 137, otherwise known as
the Mining Act. In contradistinction with the Philippine Bill of 1902 which was
patterned after the United States Federal Mining Acts which rejected the regalian
doctrine, the Mining Act expressly adopted the regalian doctrine following the
provisions of the 1935 Constitution. Since said Constitution necessarily prohibits the
alienation of mining lands, the Mining Act granted only lease rights to mining
claimants who are proscribed from purchasing the mining claim itself. These
provisions of the Mining Act, however, were expressly inapplicable to mining
claimants who had located and recorded their claims under the Philippine Bill of 1902.
Same; Same; Same; Same; Same; Parity Rights; The nationalism underlying the
adoption of the regalian doctrine in the 1935 Constitution was eroded by the “Parity
Rights” amendment.—The nationalism underlying the adoption of the regalian
doctrine in the 1935 Constitution was further eroded by the amendment thereto
 ENVIRONMENTAL LAW & NATURAL RESOURCES
which was adopted by the First Congress on September 18, 1946 and approved by a
majority at the elections held on March 11, 1947. This amendment which came in the
form of an “Ordinance Appended to the Constitution” is what is known as the “Parity
Rights” amendment. It provided that, notwithstanding the adoption in the
Constitution of the regalian doctrine and the proscription against aliens participating
in the natural wealth of the nation, excepted therefrom were the citizens of the
United States and its business enterprises which would have the equal right in the
disposition, exploitation, development and utilization of our natural resources, among
them, our mining lands and minerals for the period from July 4, 1946 to July 3, 1974.
Same; Same; Same; Mining Act; Under the Mining Act, the provisions of the
Philippine Bill of 1902 regarding mining claims, insofar as the mining lands and
mining claims acquired before the effectivity of the 1935 Constitution are concerned
continued to be in effect, and annual performance of labor or undertaking of
improvements on the mine remained an annual requirement, non-compliance with
which resulted in the mine becoming again open to relocation but now subject to the
lease provisions of the Mining Act.—In the meantime, the provisions of the Philippine
Bill of 1902 regarding mining claims, insofar as the mining lands and mining claims
acquired before the effectivity of the 1935 Constitution are concerned, continued to
be in effect. Annual performance of labor or undertaking of improvements on the
mine remained an annual requirement, non-compliance with which resulted in the
mine becoming again open to relocation but now subject to the lease provisions of
the Mining Act. The intention for this annual work requirement to be a strict
prerequisite to maintenance of a claimant’s rights under the Philippine Bill of 1902
apparently not lost on subsequent legislators, they took the same as an absolute
prerequisite with grave consequences and believed it necessary to expressly enact a
law waiving this requirement during the period from January 1, 1952 to January 1,
1954 as the circumstances then necessitated the same.
Same; Same; Same; Same; The filing of affidavits of annual assessment work, which
procedure is not even provided for in the Philippine Bill of 1902, is required only for
purposes of proving that there had actually been work or improvement done but
such filing could not have been intended to replace the actual work requirement.—
The Philippine Bill of 1902 clearly required the annual performance of work on the
mine or the undertaking of improvements thereon in order for the mine claim locator
to continue enjoying all the rights accruing to him as such under the said Bill. This
and nothing short of this was the requirement. The filing of affidavits of annual
assessment work, which procedure is not even provided for in the Philippine Bill of
1902, is required only for purposes of proving that there had actually been work or
improvements done. Such filing could not have been intended to replace the actual
work requirement, and nary is there a basis in law to support any conclusion to the
contrary, notwithstanding what was appearing to be the practice of mine claim
Session 5 Page |2
locators of annually filing affidavits of annual assessment but wilfully not undertaking
actual work or tangible improvement on the mine site.
Same; Same; Same; Executive Order No. 141 (1968) established the status of
unpatented mining claims which have not complied with the annual work
requirement as having been abandoned and open for relocation, their declarations of
location being accordingly cancelled.— On August 1, 1968, then President Marcos
issued Executive Order (E.O.) No. 141. Whereas mining claim holders under the
Philippine Bill of 1902 “x x x are of the impression that they may hold on to their
claims indefinitely by the mere filing of affidavits of annual assessment work x x x,”
E.O. No. 141 precisely declared that “such impression is not correct, for what matters
in maintaining and preserving possessory title to the claim is the continuous
performance of the required assessment work, not the filing of an affidavit which may
be disproved by findings on the ground.” Consequently, E.O. No. 141 established the
status of such unpatented mining claims which have not complied with the annual
work requirement, as having been abandoned and opened for relocation, their
declarations of location being accordingly cancelled.
Same; Same; Same; Constitutional Law; Regalian Doctrine; Unlike the 1935
Constitution, the 1973 Constitution did not expressly qualify the application of the
regalian doctrine as being subject to any right granted before the effectivity of the
1935 Constitution or the 1973 Constitution for that matter but the conditional
application of the regalian doctrine could be found in Presidential Decree No. 463
(1974).—On January 17, 1973, the 1973 Constitution came into force and effect.
Unlike the former Charter, the 1973 Constitution did not expressly qualify the
application of the regalian doctrine as being subject to any right granted before the
effectivity of the 1935 Constitution or the 1973 Constitution for that matter. It
provided: “SEC. 8. All lands of the public domain, waters, minerals, coal, petroleum
and other mineral oils, all forces of potential energy, fisheries, wildlife, and other
natural resources of the Philippines belong to the State. x x x.” But the conditional
application of the regalian doctrine under the 1973 Constitution could be found in
Presidential Decree (P.D.) No. 463, enacted on May 17, 1974, which revised the
Mining Act (C.A. No. 137). While the said decree declares that “x x x all mineral
deposits in public or private lands x x x belong to the State, inalienably and
imprescriptively x x x,” it also recognizes whatever rights or reservations had already
been existing with respect to certain mining lands, apparently alluding to the rights of
mining claim holders under the Philippine Bill of 1902.
Same; Same; Same; Same; P.D. No. 1214 required all holders of unpatented mining
claims to secure mining lease contracts under P.D. No. 463.— Even under P.D. 463
which was enacted in 1974, the possessory rights of mining claim holders under the
Philippine Bill of 1902 remained effective for as long as said holders complied with the
annual actual work requirement. But on October 14, 1977, P.D. No. 1214 required all
 ENVIRONMENTAL LAW & NATURAL RESOURCES
the holders of unpatented mining claims to secure mining lease contracts under P.D.
No. 463. Faced with the grave consequence of forfeiture of all their rights to their
claims, holders of subsisting and valid patentable mining claims located under the
Philippine Bill of 1902 were to file mining lease applications therefor within one (1)
year from the effectivity of the said decree. The filing of such mining lease
applications was considered a waiver of the holders’ rights to the issuance of mining
patents for their claims. Corollarily, non-filing of applications for mining lease by the
holders thereof within the one-year period would cause the forfeiture of all their
rights to their claims.
Same; Same; Same; Same; Police Power; Even vested rights may be taken away by
the State in the exercise of its absolute police power.— The earlier chronicle of the
evolution of the mining laws, past and present, in this jurisdiction was not without a
predetermined purpose. The detailing of the provisions of those laws, especially of
the Philippine Bill of 1902, was certainly deliberate. It is undeniable at this point that
the determination of the rights of a mining claim holder under the said Bill is best
undertaken on the basis of the very source of those rights, that is, the Bill itself. And
any alteration or change in the nature of those rights must be conceded for as long
as such is statutorily and constitutionally sanctioned, for even vested rights may be
taken away by the State in the exercise of its absolute police power.
Same; Same; Same; Under the Philippine Bill of 1902, the mining claim holder, upon
locating and recording of his claim, has the right to acquire for himself all mineral
deposits found within his claim to the exclusion of everyone, including the
Government.—Under the Philippine Bill of 1902, the mining claim holder, upon
locating and recording of his claim, has the right to acquire for himself all mineral
deposits found within his claim to the exclusion of everyone, including the
Government. Such rights are necessarily possessory as they are essentially utilitarian
and exploitative. Such rights accruing to the mining claim locator are personal to him
in the sense that no conclusion as to the nature of the land may definitively be made
based solely on the fact that a mining claim has been recorded as regards a particular
land. However, insofar as his rights are exclusive and no other person may undertake
mining activities on a recorded mining claim, unless the same has been abandoned or
the works thereon not done, the mining locator’s rights are also protected against
adverse mining claims of third persons. He also has the right to immediately or
eventually secure a patent on his mining claim and in the event that he postpones
securing a patent, his rights to exclusive possession and exploitation of his mining
claim subsist for as long as he complies with the continuing requirement of annually
performing work or undertaking improvements at the mine site.
Same; Same; Same; The Philippine Bill of 1902 did not foreclose a subsequent act on
the part of the State to limit the time within which a patent must be secured under
threat of forfeiture of rights provided for under the Philippine Bill of 1902.— Insofar as
Session 5 Page |3
the Philippine Bill of 1902 does not provide a specific time within which the mining
claim holder must secure a patent, his rights to possession and use of the mining
land appear to be unconditional, the option not at all to secure a patent being
available to him in the absence of a deadline or ultimatum therefor. The Philippine Bill
of 1902, however, did not foreclose a subsequent act on the part of the State to limit
the time within which the said patent must be secured under threat of forfeiture of
rights provided for under the Philippine Bill of 1902. Thus, in the sense that the rights
of a mining claim holder may in the future be curtailed by failure to obtain a patent,
especially if we recall that Section 36 of the said Bill itself foretold the subsequent
promulgation of regulations regarding mining claims, such rights cannot also be said
to be truly unconditional or absolute.
Same; Same; Same; The process of recording mining claims could not have been
intended to be the operative act of classifying lands into mineral lands.— We also
learn from our reading of our past and present mining laws in their proper historical
perspectives, that the process of recording mining claims could not have been
intended to be the operative act of classifying lands into mineral lands. The recording
of a mining claim only operates to reserve to the registrant exclusive rights to
undertake mining activities upon the land subject of the claim. The power to classify
lands into mineral lands could not have been intended under the Philippine Bill of
1902 to be vested in just anyone who records a mining claim. In fact, this
strengthens our holding that the rights of a mining claimant are confined to
possessing the land for purposes of extracting therefrom minerals in exclusion of any
or all other persons whose claims are subsequent to the original mining locator.
Same; Same; Same; Rights of a mining claim holder under the Philippine Bill of 1902
were not absolute or in the nature of ownership, and neither were they intended to
be so.—Thus, it can be said (1) that the rights under the Philippine Bill of 1902 of a
mining claim holder over his claim has been made subject by the said Bill itself to the
strict requirement that he actually performs work or undertakes improvements on the
mine every year and does not merely file his affidavit of annual assessment, which
requirement was correctly identified and declared in E.O. No. 141; and (2) that the
same rights have been terminated by P.D. No. 1214, a police power enactment,
under which non-application for mining lease amounts to waiver of all rights under
the Philippine Bill of 1902 and application for mining lease amounts to waiver of the
right under said Bill to apply for patent. In the light of these substantial conditions
upon the rights of a mining claim holder under the Philippine Bill of 1902, there
should remain no doubt now that such rights were not, in the first place, absolute or
in the nature of ownership, and neither were they intended to be so.
PETITION for review on certiorari of a decision of the then Intermediate Appellate
Court.
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 Page |4

The facts are stated in the opinion of the Court. possession. Supporting his oral testimony, applicant [private
     Antonio P. Barredo for petitioner. respondent] submitted tax declarations . . . both dated March 20,
     Cating & Almora Law Office for private respondent. 1948, the former for a rural land and the latter for urban land and
improvement therein. The receipt showing payment of the taxes on
HERMOSISIMA, JR., J.: such tax declarations is dated Feb. 8, 1949 . . . The said tax
declarations . . . show that they cancel tax declaration No. 439
dated Feb. 10, 1947 which was presented by the Oppositor
In the face of two sets of divergent rulings of the Supreme Court on the nature of the
[petitioner] Atok Big Wedge Mining Company as its Exhibit 14, and
rights of mining claimants over the land where their claim is located, the parties
the land tax under Exh. 14 was paid by applicant [private
herein seek a definitive ruling on the issue: What is actually the right of a locator of a
respondent] in 1947 . . . Applicant [private respondent] has also
mining claim located and perfected under the Philippine Bill of 1902 over the land
submitted Exh. "C", which indicates that all pre-war records of tax
where the claim is found? Does he have an absolute right of ownership thereof or
declarations and real property receipts of the municipality of Itogon
does he have the mere right to possess and claim the same? Whose right to the land
where the property is located were burned and destroyed during
should, therefore, prevail: the mining claimant's or that of an applicant for land
the last world war.
registration? Does the mere recording or location of a mining claim ipso facto and
irreversibly convert the land into mineral land, notwithstanding the fact the mining
The Bureau of Lands and Bureau of Forestry, represented by the
claimant failed to comply with the strict work requirement under the Philippine Bill of
Provincial Fiscal, oppose [sic] application. The Atok Big Wedge
1902?
Mining Company came in also as oppositor claiming that the land in
question is within its mineral claims — Sally, Evelyn and Ethel . . .
Petitioner Atok Big Wedge Mining Company appeals from the decision 1 of the Court of
Atok Big Wedge Mining Company submitted Exhibits 6, 7 and 8, all
Appeals2 which reversed the decision3 of the then Court of First Instance of Baguio
showing that the annual assessment work of these mineral claims
City4 in a land registration case.5 The court a quo  denied and correspondingly
were maintained from 1932 to 1967 for Sally and Evelyn and from
dismissed the application for registration of title filed by private respondent Tuktukan
1946 to 1967 for Ethel. It was likewise shown that these mineral
Saingan, finding no merit in Saingan's claim of adverse, open and continuous
claims were recorded in the mining recorder's office; Sally and
possession in concept of an owner of the tract of land applied for by him, which
Evelyn on Jan. 2, 1931 and Ethel on March 18, 1921 . . .6
happened to be claimed by petitioner as part of its mining duly recorded by the
Mining Recorder of Benguet. Respondent appellate court found petitioner to have
The respondent appellate court additionally found that the tract of land in question
abandoned its mining claim over the said tract of land and, on the other hand,
"according to the evidence, Exh. 2, covers portion of mineral claims, Sally, Evelyn and
adjudged private respondent to be the owner thereof by virtue of his having
Ethel, the first two located by one Reynolds in 1931 and the last, also by Reynolds in
possessed the same under a bona fide claim of ownership for at least thirty (30)
1921"7 but "Atok . . . has not even been shown how connected with locator
years prior to the filing of his land registration application in 1965.
Reynolds."8 Private respondent reiterates this fact in his Comment:
The court a quo  made the following findings of fact:
. . . (T)he mining claims have become vested rights and properties
of the locators, Messrs. H. I. Reynolds and E. J. Harrison.
Applicant {private respondent} seeks the registration of a parcel of
land with an area of 41,296 square meters situated in the barrio of
However, the locators, Reynolds and Harrison, or the PETITIONERS
Lucnab, Itogon, Benguet, which is shown in survey plan Psu-
herein, assuming that there is any relation between Atok Big
209851 . . .
Wedge Mining Co., and the locators. Reynolds and Harrison, have
never shown that their rights have been preserved or remain
The evidence for the applicant [private respondent] who was 70
vested.
years old at the time he testified shows that he acquired the land
from his father-in-law, Dongail, when he married his daughter; that
xxx xxx xxx
he was then 18 years old; that at the time of his acquisition, it was
planted with camotes, casava [sic], langka, gabi, coffee and
Furthermore, when the land in question was registered in the office
avocados; that he lived on the land since his marriage up to the
of the Mining Recorder in 1921, and 1931, respectively, the mineral
present; that he has been paying the taxes during the Japanese
claims covering the land in question namely: Sally, Evelyn and Ethel
occupation and even before it; that he was never disturbed in his
were in the name of the Locators E.J. Harrison and H. I. Reynolds.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
No evidence was ever presented as to how Petitioner herein
obtained ownership over said claims during the hearing of this case
in the Lower Court up to this time. It was not even shown how
Petitioner herein, Atok Big Wedge Mining Co., is connected or
related to locator Reynolds. . . 9
Significantly, nothing in the subsequent pleadings filed by petitioner rebuts, disputes
or proves otherwise, the aforecited issue raised by private respondent with regard to
its personality, interests and authority to oppose the application for registration filed
by private respondent respecting land to which petitioner claims rights but as to
which it is not the duly recorded mining locator.
The Director of Lands, thru the Office of the Solicitor General, opposed private
respondent's application on the ground that the applicant did not have title in fee
simple over the questioned land and that he had not exercised continuous, exclusive
and notorious possession and occupation over the said land for at least thirty (30)
years immediately preceding the filing of the application. However, the Solicitor
General no longer joined petitioner in this ultimate appeal, the Solicitor General later
conceding existence of private respondent's rights.
Petitioner's presentation of evidence proving registration of the mining claims of
petitioner in the Mining Recorder of Benguet dating back to 1931, at the lattest,
notably about sixteen (16) years before private respondent declared the land in
question for taxation purposes and thirty four (34) years before private respondent
filed the land registration proceedings in 1965, apparently inpressed the court a quo.
And so it ruled in favor of petitioner as oppositor in the land registration proceedings,
the court a quo ratiocinating in this wise:
. . . (T)he mining claims were recorded ahead of the time when the
applicant [private respondent] declared the land for taxation
purposes based on his documentary exhibits. So the evidence of
the applicant [private respondent] cannot prevail over the
documentary exhibits of the oppositor Atok Big Wedge Mining
Company. The government oppositors adopted the evidence of the
mining company.
Moreover, if applicant [private respondent] was already in
possession and occupation of the land in the concept of owner, as
claimed, it is strange that he did not oppose its survey when the
mining company surveyed the area preparatory to its recording in
the mining recorder's office. The conclusion is that he was not yet
there when the survey by the mining company was conducted or if
he was already there the nature of his occupation was not in the
concept of owner for otherwise he could have asserted it at the
time.
Session 5 Page |5
The foregoing facts show that the mining company had established
its rights long before applicant [private respondent] asserted
ownership over the land. The perfection of mining claims over the
mineral lands involved segregate [sic] them from the public domain
and the beneficial ownership thereof became vested in the
locator.10
The trial court having dismissed private respondent's application for registration on
the ground that petitioners had already required a vested right over the subject land,
private respondent appealed to the respondent court. The Director of Lands, thru the
Solicitor General, adopted as his own, the appellee's brief filed by petitioner.
The respondent appellate court, on its part, correctly considered inadequate,
however, the mere recording of petitioner's mining claims in the Mining Recorder of
Benguet and the corresponding, albeit religious, payment of annual assessment fees
therefor, to vest in petitioner ownership rights over the land in question. Truly, under
Executive Order No. 141 11, the payment of annual assessment fees is only proof of
compliance with the charges imposed by law and does not constitute proof of actual
assessment work on the mining land concerned. Respondent court ruled in this
connection:
. . . (I)t must conceded that the same having been located and
existing since 1921 and 1931, the rights of locator if
correspondingly preserved, remained vested, — but as this Court
also examines the evidence, what has been shown is that affidavits
of assessment work had been filed, yes, from 1932 in connection
with claim Sally and from 1933 as to Evelyn, and from 1936 as to
claim Ethel, but tsn. would not show that in truth and in fact, there
had been that assessment work on the claims, [ sic] witness Pelayo
of Atok admits that he had not gone over the area . . . in fact he
joined the company in 1962 only, [sic] in other words, all that Atok
has shown as to assessment work is the affidavit thereon, but as
Ex. Order 141 of 1 August, [sic] 1968 has said:
"(W)hat matters is [sic] maintaining and preserving possessory
rights to the claims is the continuous performance of the required
assessment work, not the filing of an affidavit which may be
disproved by findings of [ sic] the ground." and here, the very fact
that applicant has possessed continuously apparently without
protest from Atok . . . must disprove the truth that locator or Atok
had indeed done assessment work . . . 12
Private respondent, in support of respondent court's quoted findings, points out in his
pleading that:
 ENVIRONMENTAL LAW & NATURAL RESOURCES
. . . The APPLICANT [private respondent] constructed various
improvements on the land consisting of his 3 residential houses,
fruit trees, ricefields and other permanent improvements. . .
xxx xxx xxx
On the other hand, the PETITIONER Mining company has not
shown that it has introduced a single improvement ("assessment
work") on the property. It has only paid the minimum annual
assessment required by law of P200.00 a year. There was no
evidence, whatsoever, of its alleged "factual" possession of the
property. No assessment work was shown during the ocular
inspection ordered by the Honorable Trial Court neither during the
ocular inspection conducted by the Bureau of Forestry.
THIS ritual of paying the uniform sum of P200.00 a year for alleged
assessment work is not enough evidence that such assessment
work was actually made. It is precisely for this reason that
Executive Order 141 dated August 1, 1968 was issued by the
President of the Philippines. This order made is mandatory that it is
not enough to pay P200.00 a year but there must be actual
continuous assessment work done on the surface of the mineral
claims . . . [Emphasis supplied by private respondent.]13
Also, private respondent also additionally informs this court that:
. . . PETITIONER Atok Big Wedge Mining Company has, on October
12, 1978, converted its application on mineral claims in question
(SALLY, EVELYN and ETHEL) into mining lease only in compliance
with Presidential Decree 1214. PETITIONER mining company is
now a mere lessee of the mining claims. And as such lessee, it has
no right on the surface rights of such mineral claims. An official
certification to that effect by the Bureau of Mines & Geo-Sciences,
Regional Officer No. 1 of the City of Baguio is hereby attached as
Annex "A" and made integral part hereof. . . 14
an allegation which obviously clinches this case in his favor.
Respondent court having reversed the trial court's decision on the ground that private
respondent had, by sufficient evidence, shown his right to registration over the
contested parcel of land, petitioner elevated its cause to this court. The Director of
Lands, however, did not join in petitioner's appeal. Thus, in a Manifestation and
Motion, dated June 21, 1983, 15 the Director of Lands, thru the Solicitor General,
acknowledged that "the respondent Court's decision has become final with respect to
the Director of Lands."16
Session 5 Page |6
Petitioner, left to its own by the Director of Lands, cites the following grounds from
the grant of the instant petition:
I
THAT THE LAND IN QUESTION HAD LONG BEEN SEGREGATED
FROM THE PUBLIC DOMAIN AND OWNERSHIP THERETO HAD
LONG BECOME VESTED IN HEREIN PETITIONER WHEN ITS
MINING CLAIMS IN QUESTION WERE REGISTERED IN THE OFFICE
OF THE MINING RECORDER IN 1921 AND 1931 RESPECTIVELY.
II
THAT THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION IN FINDING THAT THE APPLICANT WAS IN
CONTINUOUS OPEN AND ADVERSE POSSESSION.17
We find these arguments to be devoid of merit.
The records bear out that private respondent has been in possession of
subject parcel of land in concept of owner for more than thirty (30) years.
The court a quo  made the following factual findings based on the testimony of
private respondent:
The evidence . . .shows that he [private respondent] acquired the
land from his father-in-law, Dongail, when he married his daughter;
that he was then 18 years old; that at the time of his acquisition, it
was planted with camotes, casava [ sic], langka, gabi, coffee and
avocados; that he lived on the land since his marriage up to the
present; that he has been paying the taxes during the Japanese
occupation and even before it; that he was never disturbed in his
possession. Supporting his oral testimony, applicant submitted tax
declarations . . . both dated March 20, 1948, the former for a rural
land and the latter for urban land and improvement therein.18
Substantiating the aforecited testimonial evidence of private respondent's actual,
adverse and continuous possession of the subject land for more than thirty (30) years
are the observations of the court commissioner during the ocular inspection of the
subject land on February 1, 1969, pertinent transcribed portions of which read as
follows:
Upon verification of the extent of the area applied for by the
applicant which tallies with the plan on record, we find the
following improvements;
 ENVIRONMENTAL LAW & NATURAL RESOURCES
The land applied for is almost 90% improved with numerous
irrigated rice terraces newly planted to palay at the time of the
ocular inspection and others planted to vegetables such as
potatoes, banana plants, flowering plants and fruit trees such as
mangoes, jackfruits, coffee plants, avocados and citrus — all fruit
bearing.
Most of the fruit trees such as the mango trees are about one half
(1/2) meter in diameter.
There are four houses owned by the applicant [private respondent]
and his children.
There is a creek traversing the middle portion of the land which
serve as irrigation for the numerous rice paddies.
Upon verification of the surrounding area which we did by hiking all
the way, there are no assessment tunnels or any sign of mining
activities.
xxx xxx xxx
There are earthen dikes and fences surrounding the property
applied for.
It also appears that the surrounding area of the land applied for is
also fully cultivated especially on the western portion, southern
portion and also on the northern portion.
On the northwestern ridge are numerous terraces planted to
various vegetables and on the edges of the property is a plantation
of tiger grass used for brooms.
On the eastern slope are also numerous terraces planted to
flowering plants and numerous banana plants.
There are only two (2) pine trees growing situated on the eastern
slope of the land in question.
On the northern portion are terraces and ricefields and mango tree
as well as banana plants.
At the northern slope of the land applied for is [ sic] fully cultivated
with the exception of whatever portions are planted to bananas
and tiger grass.
Session 5 Page |7
The terraces at the time of the ocular inspection is planted to
vegetables and flowering plants such as African dishes [sic].
On the northwestern portion of the land are numerous terraces
planted to seasonal vegetable crops. The rest are planted to
banana except the small steep portion planted to tiger grass to
prevent the land from eroding.
On the western portion is a big irrigation canal with plenty of water
which serve [sic] as a water supply to irrigate the ricefields which
are found around the property.
An estimate of around 90 to 120 big and small trees are scattered
all over the property. Around the houses are full of fruit trees.
xxx xxx xxx
The mining compound of Itogon is very far from this place and this
land is at the boundary of Baguio City and Itogon. That is why it is
more suitable for residential and agricultural purposes. Nowhere do
we find any mining work done, any cable or anything that would
show any mining operation in this area.
Around the yard of the houses of the applicant are numerous
coffee trees, jackfruits, pomelos, papaya, pineapples, banana
plants, guava trees and carrots.
The orchard is fully planted to coffee trees. The area is estimated
to be more than one hectare which is planted to coffee trees and
other
plants.19
Private respondent, it must be emphasized, offered in evidence in the land
registration proceedings before the court a quo, tax declarations, dated March 20,
1948, and tax payment receipts, dated February 8, 1949.
Significantly, petitioner did not present any evidence in rebuttal of private
respondent's aforestated claims of having acquired the subject land from his wife's
father and having lived on the land since his marriage at the age of eighteen (18).
Neither has petitioner taken exception to the aforecited observations of the court
commissioner during the ocular inspection of the subject land. There is nary a
showing in petitioner's numerous pleadings filed before us that there exists
substantial basis for us not to believe petitioner's claims, and this is understandable,
for petitioner largely anchored its cause on its alleged vested rights to its mining
claims under the mandate of the Philippine Bill of 1902 and our rulings in McDaniel
vs. Apacible and Cuisia20 and the catena of cases subsequent thereto.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Considering the aforestated evidence borned out by the records of the instant case,
their credibleness and the lack of adequate opposition thereto, we agree with
respondent Court of Appeals that "a reading of tsn. would rather persuade that
applicant [private respondent] had shown quite well that subject property had been
in (the) continuous and adverse possession, first, of his predecessor-in-interest,
Dongail and, after the death of the latter, (by respondent) himself, years before, that
is, long before the outbreak of the last war.21
Petitioner is deemed to have abandoned his mining claims under E.O. No.
141 and P.D. No. 1214.
All mineral lands, as part of the country's natural resources, belong to the Philippine
State. This concept of  jura regalia enshrined in past and present Philippine
constitutions, has not always been the prevailing principle in this jurisdiction,
however, the abundant resources within our coastal frontiers having in the past filled
not just one colonizer's booty haul. Indeed, there was a time in our history when the
mining laws prevailing in this jurisdiction were compromising, to say the least, of the
Filipino people's inherent rights to their natural wealth.
Before the cession of the Philippine Islands to the United States under the Treaty of
Paris, the prevailing mining law in the colony was the Royal Decree of May, 1867,
otherwise known as The Spanish Mining Law.
In the advent of American occupation, the Philippines was governed by means of
organic acts which were in the nature of charters serving as a Constitution of the
occupied territory from 1900 to 1935 22. Among the principal organic acts of the
Philippines was the Act of Congress of July 1, 1902 through which the United States
Congress assumed the administration of the Philippine islands.
The Philippine Bill of 1902 contained provisions for, among many other things, the
open and free exploration, occupation and purchase of mineral deposits and the land
where they may be found. It declared "all valuable mineral deposits in public lands in
the Philippine Islands, both surveyed and unsurveyed . . . 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 . . . 23
Any qualified person desiring to locate a mineral claim may enter upon the same and
locate a plot of ground measuring, where possible, but not exceeding, one thousand
feet in length by one thousand feet in breath, in as nearly as possible a rectangular
form.24 Under the Philippine bill of 1902, the holder of the mineral claim so located is
entitled to all the minerals which may lie within his claim, but he may not mine
outside the boundary lines of his claim. 25 the mine claim locator must have his claim
recorded in the mining recorder within thirty (30) days after the location thereof;
otherwise, he will be deemed to have abandoned the same. 26
One of the continuing requirements for the subsistence of the mining claim is
performance of not less than one hundred dollars' worth of labor or undertaking of
Session 5 Page |8
improvements of the same value every year. 27 This is a strict requisite, the locator's
failure to comply with which shall operate to open the claim or mine to relocation in
the same manner as if no location of the same had even been made. 28 Unequivocal is
the mandatory nature of the work or labor requirement on the mine that the
Philippine Bill specifically designates the time when the work or labor required to be
done annually on all unpatented mineral claims, shall commence. 29
Subsequently, among a few laws passed amending the Philippine Bill of 1902 was Act
No. 624 passed by the United States Philippine Commission and approved on
February 7, 1903. Said Act prescribed regulations to govern the location and the
manner of recording mining claims and the amount of work necessary to hold
possession thereof. Such regulations reinforced the annual work or labor requirement
of not less than one hundred dollars' worth as provided for in the Philippine Bill of
1902, in accordance with Section 36 thereof which limits the power of the United
States Philippine Commission to make regulations but "not in conflict with the
provision of this Act. [ i.e., the Philippine Bill of 1902], governing the location, manner
of recording, and amount of work necessary to hold possession of a mining
claim . . ."
On November 15, 1935, the Constitution of the Commonwealth took effect. The 1935
Constitution declared all natural resources of the Philippines, including mineral lands
and minerals, to be property belonging to the State. 30 However, as it turned out, not
really all of the Philippines' natural resources were considered part of the public
domain. Those natural resources, and for that matter, those mineral lands and
minerals with respect to which there already was "any existing right, grant, lease, or
concession at the time of the inauguration of the Government established under in
Constitution," were then considered outside the application of the  jura
regalia  doctrine or at least not unconditionally or totally within the contemplation of
said doctrine.
On November 7, 1936, the First National Assembly enacted Commonwealth Act No.
137, otherwise known as the Mining Act. In contradistinction with the Philippine Bill of
1902 which was patterned after the United States Federal Mining Acts which rejected
the regalian doctrine, the Mining Act expressly adopted the regalian doctrine
following the provisions of the 1935 Constitution. Since said Constitution necessarily
prohibits the alienation of mining lands, the Mining Act granted only lease rights to
mining claimants who are proscribed from purchasing the mining claim itself. These
provisions of the Mining Act, however, were expressly inapplicable to mining
claimants who had located and recorded their claims under the Philippine Bill of 1902.
The nationalism underlying the adoption of the regalian doctrine in the 1935
Constitution was further eroded by the amendment thereto which was adopted by
the First Congress on September 18, 1946 and approved by a majority at the
elections held on March 11, 1947. This amendment which came in the form of an
"Ordinance Appended to the Constitution" is what is known as the "Parity Rights"
amendment. It provided that, notwithstanding the adoption in the Constitution of the
regalian doctrine and the proscription against aliens participating in the natural
 ENVIRONMENTAL LAW & NATURAL RESOURCES
wealth of the nation, excepted therefrom were the citizens of the United States and
its business enterprises which would have the equal right in the disposition,
exploitation, development and utilization of our natural resources, among them, our
mining lands and minerals for the period from July 4, 1946 to July 3, 1974.
In the meantime, the provisions of the Philippine Bill of 1902 regarding mining claims,
insofar as the mining lands and mining claims acquired before the effectivity of the
1935 Constitution are concerned, continued to be in effect. Annual performance of
labor or undertaking of improvements on the mine remained an annual requirement,
non-compliance with which resulted in the mine becoming again open to relocation
but now subject to the lease provisions of the Mining Act. The intention for this
annual work requirement to be a strict prerequisite to maintenance of a claimant's
rights under the Philippine Bill of 1902 apparently not lost on subsequent legislators,
they took the same as an absolute prerequisite with grave consequences and
believed it necessary to expressly enact a law 31 waiving this requirement during the
period from January 1, 1954 as the circumstances then necessitated the same.
The Philippine Bill of 1902 clearly required the annual performance of work on the
mine or the undertaking of improvements thereon in order for the mine claim locator
to continue enjoying all the rights accruing to him as such under the said Bill. This
and nothing short of this was the requirement. The filing of affidavits of annual
assessment work, which procedure is not even provided for in the Philippine Bill of
1902, is required only for purposes of proving that there had actually been work or
improvements done. Such filing could not have been intended to replace the actual
work requirement, and nary is there a basis in law to support any conclusion to the
contrary, notwithstanding what was appearing to be the practice of mine claim
locators of annually filing affidavits of annual assessment but willfully not undertaking
actual work or tangile improvement on the mine site.
On August 1, 1968, then President Marcos issued Executive Order (E.O.) No. 141.
Whereas mining claim holders under the Philippine Bill of 1902 ". . . are of the
impression that they may hold on to their claims indefinitely by he mere filing of
affidavits of annual assessment work . . .," E.O. No. 141 precisely declared that "such
impression is not correct, for what matters in maintaining and preserving possessory
title to the claim is the continuous performance of the required assessment work, not
the filing of an affidavit which may be disproved by findings on the ground."
Consequently, E.O. No. 141 established the status of such unpatended mining claims
which have not complied with the annual work requirement, as having been
abandoned and open for relocation, their declarations of location being accordingly
cancelled.
On January 17, 1973, the 1973 Constitution came into force and effect. Unlike the
former Charter the 1973 Constitution did not expressly qualify the application of the
regalian doctrine as being subject to any right granted before the effectivity of the
1935 Constitution or the 1973 Constitution for the matter. It provided:
Sec. 8. All lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy,
Session 5 Page |9
fisheries, wildlife, and other natural resources of the Philippines
belong to the State. . .32
But the conditional application of the regalian doctrine under the 1973 Constitution
could be found in Presidential Decree (P.D.) No. 463, enacted on May 17, 1874,
which revised the Mining Act (C.A. No. 137). While the said decree declares that ". . .
all mineral deposits in public or private lands . . . belong to the State, inalienably and
imprescriptively . . .," it also recognizes whatever rights or reservations had already
been existing with respect to certain mining lands 33, apparently alluding to the rights
of mining claim holders under the Philippine Bill of 1902.
Under the Philippine Bill of 1902, the procedure was that a mining claim locator need
not apply for a patent soon after locating the mine. The patent may come later, and
the said locator, for as long as he complies with the annual actual work requirement,
enjoyed possessory rights with respect to such mining claim with or without a patent
therefor. It has already been stated that under E.O. No. 141, unpatented mining
claims shall be deemed abandoned upon a finding that the holders thereof had not
been actually performing any work or labor or undertaking any improvement at the
mine site notwithstanding their having religiously filed annual affidavits of
assessment.
Even under P.D. 463 which was enacted in 1974, the possessory rights of mining
claim holders under the Philippine Bill of 1902 remained effective for as long as said
holders complied with the annual actual work requirement. But on October 14, 1977,
P.D. No. 1214 required all the holders of unpatented mining claims to secure mining
lease contracts under P.D. No. 463. Faced with the grave consequence of forfeiture
of all their rights to their claims, holders of subsisting and valid patentable mining
claims located under the Philippine Bill of 1902 were to file mining lease applications
therefor within one (1) year from the effectivity of the said decree. 34 The filing of
such mining lease application was considered a waiver of the holders' rights to the
issuance of mining patents for their claims 35. Corollarily, non-filing of applications for
mining lease by the holders thereof within the one-year period would cause the
forfeiture of all their rights to their claims.36
Against the backdrop of the aforechronicle evolution of the pertinent mining laws,
past and present, in this jurisdiction, we now proceed to resolve the controlling issue
in this case: Whether or not the ownership of subject land had long been vested on
petitioner after it had allegedly located and recorded its mining claim in accordance
with the pertinent provisions of the Philippine Bill of 1902.
This issue is certainly not a novel one. It has been first ruled upon by this court in the
1922 case of McDaniel vs. Apacible and Cuisia37. There, applying American
precedents, we stated:
The moment the locator discovered a valuable mineral deposit on
the lands located, and perfected his location in accordance with
law, the power of the United States Government to deprive him of
 ENVIRONMENTAL LAW & NATURAL RESOURCES
the exclusive right to the possession and enjoyment of the located
claim was gone, the lands had become mineral lands and they
were exempted from lands that could be granted to any other
person. The reservations of public lands cannot be made so as to
include prior mineral perfected located locations; and of course, if a
valid mining location is made upon public lands afterward included
in a reservation, such inclusion or reservation does not affect the
validity of the former location. By such location and perfection, the
land located is segregated from the public domain even as against
the Government. . .38
We reiterated this ruling in the subsequent cases of Gold Creek Mining
vs. Rodriguez  (1938),39 Salacot Mining Company vs. Abadilla (1939), 40 Salacot Mining
Company vs. Rodriguez (1939),41 Bambao vs. Lednicky (1961),42 Comilang
vs. Buendia (1967),  Benguet
43
Consolidated, Inc. vs. Republic (1986),44 Republic
vs. Court of Appeals (1988)  and Atok-Big Wedge Mining Co., Inc. vs. Court of
45
Appeals (1991).46
Notwithstanding our ruling in the aforecited cases, however, there came about
thereafter a catena of cases where we declared that the rights of the holder of a
mining claim located under the Philippine Bill of 1902, are not absolute or are not
strictly of ownership. This declaration was a necessary premise in our affirmation of
the constitutionality of P.D. No. 1214 in the 1987 case of Santa Rosa Mining
Co., Inc. vs. Leido, Jr.47 where we stated:
Mere location does not mean absolute ownership over the affected
land or mining claim. It merely segregates the located land or area
from the public domain by barring other would-be locators from
locating the same and appropriating for themselves the minerals
found therein. To rule otherwise would imply that location is all that
is needed to acquire and maintain rigths over a located mining
claim. This, we cannot approve or sanction because it is contrary to
the intention of the lawmaker that the locator should faithfully and
consistently comply with the requirements for annual work and
improvements in the located mining claim.48
And our ruling there was upheld in tradition of stare decisis in the
subsequent cases of Director of Lands vs. Kalahi Investments, Inc.
(1989),49 Zambales Chromite Mining Company, Inc. vs. Leido Jr.
(1989),50 Poe Mining Association vs. Garcia (1991),51 United Paracale Mining
Company, Inc. vs. De La Rosa (1993),52 and Manuel vs. Intermediate
Appellate Court  (1995).53
While petitioner adamantly insists that there is only one construction of the provisions
of the Philippine Bill of 1902 as regards his mining claim rights, and this is that the
same are absolute and in the nature of ownership, private respondent posits the
ultimate question of which between the aforecited seemingly inconsistent rulings is
the correct interpretation of the Philippine Bill of 1902 in relation to E.O. No. 141 and
Session 5 P a g e | 10
P.D. 1214 insofar as the rights of mining claim holders under the said Bill are
concerned.
This is not the first time either that we are asked to, in all awareness of the
precedents, resolve these postulation of this court that are perceived to be
contradictory. In the 1994 case of United Paracale Mining Company vs. Court of
Appeals,54 posed before us by petitioner therein was the same question that herein
private respondent asks us to resolve in the ultimate. We noted in that case:
"The query of petitioner" "What is actually the right of a locator of
mining claim located and perfected under the Philippine Bill of
1902. Does he have an absolute right of ownership, or merely a
right to possess and claim?"
Petitioner contends that there are two (2) conflicting rulings made
by this Court on the same issue. In Director of Lands vs. Kalahi
Investments, Inc. (169 SCRA 683), a locator of mining claims
perfected under the Philippine Bill of 1902 has been held not to
have an absolute right of ownership over said claims but merely a
possessory right thereto. In Atok-Big Wedge Mining Company,
Inc. vs. Court of Appeals and Liwan Consi (193 SCRA 71), however,
a locator of mining claim perfected under the Philippine Bill of
1902, the Court has ruled, does have an absolute right of
ownership over his claim being thereby removed from the public
domain.55
In that case United Paracale Mining, it would have been premature for us to
rule on the query, not all indispensable parties therein having been joined.
That is not the situation in this present controversy, however, and so we
shall forthwith resolve the matter at hand once and for all.
The earlier chronicle of the evolution of the mining laws, past and present, in this
jurisdiction was not without a predetermined purpose. The detailing of the provisions
of those laws, especially of the Philippine Bill of 1902, was certainly deliberate. It is
undeniable at this point that the determination of the rights of a mining claim holder
under the said Bill is best undertaken on the basis of the very source of those rights,
that is, the Bill itself. And any alteration of change in the nature of those rights must
be conceded for as long as such is statutorily and constitutionally sanctioned, for
even vested rights may be taken away by the State in the exercise of its absolute
police power.
Under the Philippine Bill of 1902, the mining claim holder, upon locating and
recording of his claim, has the right to acquire for himself all mineral deposits found
within his claim to the exclusion of everyone, including the Government. Such rights
are necessarily possessory as they are essentially utilitarian and exploitative. Such
rights accruing to the mining claim locator are personal to him in the sense that no
conclusion as to the nature of the land may definitively be made based solely on the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
fact that a mining claim has been recorded as regards a particular land. However,
insofar as his rights are exclusive and no other person may undertake mining
activities on a recorded mining claim, unless the same has been abandoned or the
works thereon not done, the mining locator's rights also protected against adverse
mining claims of this persons. He also has the right to immediately or eventually
secure a patent on his mining claim and in the event that he postpones securing a
patent, his rights to exclusive possession and exploitation of his mining claim subsist
for as long as he complies with the continuing requirement of annually performing
work or undertaking improvements at the mine site. Insofar as the Philippine Bill of
1902 does not provide a specific time within which the mining claim holder must
secure a patent, his rights to possession and use of the mining land appear to be
unconditional, the option not at all to secure a patent being available to him in the
absence of a deadline or ultimatum therefor. The Philippine Bill of 1902, however, did
not foreclose a subsequent act on the part of the State to limit the time within which
the said patent must be secured under threat of forfeiture of rights provided for
under the Philippine Bill of 1902. Thus, in the sense that the rights of a mining claim
holder may in the future be curtailed by failure to obtain a patent, especially if we
recall that Section 36 of the said Bill itself foretold the subsequent promulgation of
regulations regarding mining claims, such rights cannot also be said to be truly
unconditional or absolute.
We also learn from our reading of our past and present mining laws in their proper
historical perspectives, that the process of recording mining claims could not have
been intended to be the operative act of classifying lands into mineral lands. The
recording of a mining claim only operates to reserve to the registrant exclusive rights
to undertake mining activities upon the land subject of the claim. The power to
classify lands into mineral lands into mineral lands could not have been intended
under the Philippine Bill of 1902 to be vested in just anyone who records a mining
claim. In fact, this strengthens our holding that the rights of a mining claimant are
corfined to possessing the land for purposes of extracting therefrom minerals in
exclusion of any or all other persons whose claims are subsequent to the original
mining locator. Thus, if no minerals are extracted therefrom, notwithstanding the
recording of the claim, the land is not mineral and registration thereof is not
precluded by such recorded claim. Thus, in the case at bench, the mining claimant,
who had failed to comply with the annual minimum labor requirement, could not, all
the more, be expected to have extracted minerals from the mining location. Utter
lack of proof of even its potential deposits on the part of the petitioner, thus, does
not surprise us at all.
Thus, it can be said (1) that the rights under the Philippine Bill of 1902 of a mining
claim holder over his claim has been made subject by the said Bill itself to the strict
requirement that he actually performs work or undertakes improvements on the mine
every year and does not merely file his affidavit of annual assessment, which
requirement was correctly identified and declared in E.O. No. 141; and (2) that the
same rights have been terminated by P.D. No. 1214, a police power enactment,
under which non-application for mining lease amounts to waiver of all rights under
the Philippine Bill of 1902 and application for mining lease amounts to waiver of the
right under said Bill to apply for patent. In the light of these substantial conditions
Session 5 P a g e | 11
upon the rights of a mining claim holder under the Philippine Bill of 1902, there
should remain no doubt now that such rights were not, in the first place, absolute or
in the nature of ownership, and neither were they intended to be so.
Applying the aforecited ruling to the facts of this case, we find that, not only has
petitioner failed to sufficiently show compliance with actual annual work requirement
on its mining claims but also that credible are the transcribed observations of the trial
commissioner that nowhere on the subject land could be found tangible works or
improvements of an extent that would have existed has petitioner really complied
with the annual work requirement from 1931 when it allegedly first located said
mining claims. In fact, no mining infrastructure or equipment of any sort can be
found on the area. Understandable thus is the action of the Director of Lands not to
further appeal from respondent court's decision, Director of Lands eventually
conceding the subject land to be registrable, considering petitioner's non-
performance of mining works thereon, private respondent's adverse possession of the
subject land more than thirty (30) years and its use thereof for as many years solely
for agricultural purposes.
Equally borne out by the records is the fact that petitioner has indeed applied for a
mining lease under P.D. No. 1214. For that reason, it has, in effect, waived its right
to secure a patent and it shall have been governed, if private respondent's claim of
adverse and open possession of the subject land for more than 30 years were not
established, by P.D. No. 463 in its activities respecting its mining lease.
WHEREFORE, the petition is HEREBY DISMISSED, with costs against petitioner.
SO ORDERED.
Padilla, Bellosillo, Vitug and Kapunan, JJ., concur.
Petition dismissed.
Notes.—The police power is not a panacea for all constitutional maladies. Neither
does its mere invocation conjure an instant and automatic justification for every act
of the government depriving a person of his life, liberty or property. (National
Development Company vs. Philippine Veterans Bank, 192 SCRA 257 [1990])
The State, in the exercise of its police power may not be precluded by the
constitutional restriction on non-impairment of contract from altering, modifying and
amending the mining leases or agreements granted under Presidential Decree No.
463. (Miners Association of the Philippines, Inc. vs. Factoran, Jr., 240 SCRA 100
[1995])
——o0o——
 ENVIRONMENTAL LAW & NATURAL RESOURCES
No. L-24757. October 25, 1967.
MARCOS B. COMILANG, petitioner-appellant, vs. HON.GENEROSO A.
BUENDIA, Judge of the City Court of Baguio; ABDON
DELENELA,GUILLERMO PEREZ and THE PROVINCIAL SHERIFF OF BAGUIO
AND BENGUET, Mountain Province, respondents-appellees.
Judgments; Doctrine of res judicata; Identity of interest of husband and wife.— The
husband and his wife have such an identity of interest in their property as is sufficient
to make them privy to one another. Hence, where the wife was the party in a former
case, and the husband is the party in another case, and both actions were instituted
for the protection of their common interest in their property, there is in the two cases
identity of parties.
Same; Identity of issues.—Where in both cases the main relief sought is the
annulment of writs of possession issued by a court directing the sheriff to evict
certain persons from the land, and the questions involved in both cases pertain to the
validity of those writs, there is identity of issues in the two cases.
Mining; Interest acquired in an execution sale of a mineral claim, nature of.— Interest
acquired in an execution sale of a mineral claim is more than a lien on the property,
more than an equitable estate; it is an inchoate legal title to the property.
Session 5 P a g e | 12
Same; Right to possess surface ground distinct from mineral rights.— The right to
possess or own the surface ground is separate and distinct from the mineral rights
over the same land. Hence, an application for lode patent cannot legally include the
surface ground sold to another in an execution sale, and a patent procured
thereunder pertains only to the mineral rights and does not include the surface
ground.
Same; Meaning and application of the doctrine of relation.— The “Doctrine of
Relation” known in American Law holds “that all parts and ceremonies necessary to
complete a conveyance should be taken together as one act, and operate from the
substantial part by relation.” This “substantial part” is recognized as the “original act”
which is to be preferred, and to this all subsequent acts are to have relation. Applying
the doctrine to the case at bar, it is seen that the original act that ripened into
Mineral Lode Patent No. V-24 was the location of the mineral claim and the recording
thereof in the Mining Recorder of Mt. Province in 1922. Vested right to the property
accrued to the locator before 1935, although patent was issued only on November 7,
1966. This patent cannot nullify the intermediate conveyance of that right in the
execution sale of 1958 to the appellees.
APPEAL from an order of the Court of First Instance of Baguio.
The facts are stated in the opinion of the Court.
     Bienvenido L. Garcia for petitioner-appellant.
     Daniel M. Zarate for respondents-appellees.
ANGELES, J.:
On appeal from an order of the Court of First Instance of Baguio City, in Civil Case
No. 1440, denying the petition of Marcos Comilang to annul the order of the
Municipal Court of Baguio City, in Civil Case No. 1433, dated August 11, 1964,
directing the sheriff of Mountain Province to place Abdon Delenela and Guillermo
Perez in possession of a parcel of land occupied by the petitioner.
The antecedents of the controversy which culminated in this appeal are as follows:
About the year 1908, Nicolas Comilang staked a mining claim known as the "Bua
Fraction Mineral Claim" over a parcel of land in Tuding, Benguet, Mountain Province,
with an area of 76,809 square meters, more or less. His exploration works in the
mining claim did not last for long, for he abandoned it, and stopped the exploration,
but he continued to live in the house he built on a portion of the land with his wife,
brothers and sisters.
In the year 1918, Macario Comilang also settled on a portion of the land with an area
of about one (1) hectare, for residential and agricultural purposes. After his death, his
daughter, Fabiana Comilang Perez remained to live in the house built by her father on
 ENVIRONMENTAL LAW & NATURAL RESOURCES
the land. Still later, other relatives of the old Nicolas Comilang settled and built their
own houses over other portions of the land, one of which houses was acquired by
Abdon Delenela who now resides on the land with the other Comilang heirs.
Surface rights over the area embraced in the original Bua Fraction Mineral Claim of
Nicolas Comilang soon became the subject of litigation in the Court of First Instance
of Baguio City (Civil Case No. 250 — Action to Quiet Title), instituted by the heirs of
Guillerma, Marcelina, Julian, Timoteo, Melecio and Macario, all surnamed Comilang,
against appellant herein Marcos Comilang who claimed to have bought the rights and
interest of Nicolas Comilang in the old mining claim. In a decision rendered in said
case No. 250, dated November 26, 1952, the court dismissed both claims of
ownership of the plaintiffs and the defendant and declared the area public land. The
court, however, recognized the possession of the parties over certain specified
portions of the area, among which was an area of about one and one-half (1-1/2)
hectares in possession of Marcos Comilang, which has been declared for taxation
purposes in his name. This decision was affirmed by the Court of Appeals in CA-G.R.
No. 11157-R on October 29, 1955.
In the same year, the 1-1/2 hectares of land occupied by Marcos Comilang, then
declared under Tax Declaration No. 4771 in his name, was levied upon and sold at
public auction by the sheriff of Mountain Province to satisfy a judgment for a sum of
money obtained by the spouses Jose Coloma and Eugenia Rumbaoa against Marcos
Comilang in the Court of First Instance of Baguio, in Civil Case No. 1433. The
judgment creditors were the purchasers at the auction sale, and a certificate of sale
was executed in their favor by the sheriff on June 1, 1957.
In the meantime, an application for lode patent covering the Bua Fraction Mineral
Claim was filed with the Bureau of Mines. Abdon Delenela and his co-heirs filed their
opposition to the application. Pending the controversy before the Bureau of Mines,
Delenela and his co-heirs instituted an action for determination of their rights on the
land in the Court of First Instance of Baguio City, docketed as Civil Case No. 735. The
parties submitted an amicable settlement recognizing co-ownership among
themselves of the Bua Mineral Claim. In a decision rendered in said Case No. 735,
dated March 3, 1958, the court awarded one-half in undivided share in the mineral
claim in favor of Marcos Comilang, and the other half also in undivided share in favor
of Abdon Delenela and co-heirs.
Later, in the exercise of their right as co-owners, Abdon Delenela and Guillermo
Perez, with the knowledge and conformity of Marcos Comilang, redeemed and bought
from the Coloma spouses, the latter's rights, title, interest and claim to the 1-1/2
hectares of land acquired under the certificate of sale thereof executed in the latter's
favor by the sheriff on June 1, 1957. This redemption sale took place on June 11,
1958.
On February 9, 1959, the Director of Mines recommended the issuance of a lode
patent over the Bua Mineral Claim in favor of Marcos Comilang, Delenela, and the
other claimants in the proportion of one-half (1/2) in undivided share in favor of
Session 5 P a g e | 13
Marcos Comilang, and the other one-half (1/2) also in undivided share in favor of
Delenela and the other heirs pursuant to the decision of March 3, 1958,
aforementioned, in Civil Case No. 735.
On August 12, 1959, upon motion of Abdon Delenela and Perez, who have thus
acquired and succeeded to the rights of the Coloma spouses on the 1-1/2 hectares,
the Municipal Court of Baguio City issued a writ of possession in their favor directing
the sheriff of Mountain Province to evict Marcos Comilang and his wife from the 1-1/2
hectares of land sold in the execution sale.
In a petition for certiorari  with preliminary injunction filed in the Court of First
Instance of Baguio City, docketed as Civil Case No. 897, Maxima Nieto de Comilang,
wife of Marcos Comilang, questioned the power of the Municipal Court to issue said
writ of possession on two grounds, namely: (1) that conjugal property had been
levied upon and sold in the execution sale, and her share therein is affected; and (2)
that there can be no severance of surface rights over a mineral claim located under
the Philippine Bill of 1902, and petitioner argued that the sheriff could not have
validly sold the surface rights in the execution sale of June 1, 1957. On February 23,
1961, the court rendered a decision in said case, holding that the writ of possession
issued by the respondent Municipal Judge was within his competence and jurisdiction.
On appeal to the Supreme Court, docketed as G. R. No. L-18897, a decision was
rendered on March 31, 1964, the dispositive portion of which is as follows:
For the foregoing considerations the judgment appealed from is hereby
affirmed insofar as it denies the petition of Maxima Nieto de Comilang to
exclude from the sale, or annul the sale on execution of the residential lot
formerly owned by her husband, of 1-1/2 hectares covered in the final
certificate of sale; but that part of the appealed decision holding that the
sale at public auction included the 1/2 undivided share of Marcos Comilang
to the Bua Mineral Claim, is hereby set aside and said mineral rights of
Marcos Comilang are hereby declared free from the execution or sale on
execution.
The decision having become final, Abdon Delenela and Guillermo Perez reiterated
their motion in the Municipal Court of Baguio City in Civil Case No. 1433, praying that
an alias writ of possession be issued to evict Marcos Comilang and his wife from the
1-1/2 hectares of land in question. On August 11, 1964, over the objection of Marcos
Comilang, the court issued the writ prayed for.
For a second time, a petition for certiorari  and mandamus with preliminary injunction
was instituted by Marcos Comilang in the Court of First Instance of Baguio City
seeking the annulment of the order granting the alias writ of possession in favor of
Delenela and Perez, and again the Court of First Instance of Baguio threw out the
petition in its order dated October 22, 1964. The court expressed its views in the
following rationale:
 ENVIRONMENTAL LAW & NATURAL RESOURCES
The one and one-half hectares of land referred to therein (S.C. decision) is
the same parcel of land and house above-described which was already sold
at public auction to the respondents, Guillermo Perez and Abdon Delenela.
The said judgment is res adjudicata  and the consequent execution, and the
writ of possession is but its necessary consequence.
All the authorities cited by the petitioner were no longer of any value
because they were necessarily passed upon and disposed of in the course of
finally deciding the case.
Wherefore, the petition for certiorari is hereby denied.
Marcos Comilang is now before Us on appeal from this last decision.
Appellant contends that the lower court erred in denying his petition on the ground
of res adjudicata, arguing that it was his wife Maxima Nieto de Comilang, and not be,
the party in the former case appealed to the Supreme Court in G. R. No. L-18897.
Therefore, it is claimed, one of the requisites of res adjudicata  is lacking. We find no
merit in the argument. As husband and wife and before the dissolution of their
marital union, their interest in the said property is one and the same. The fact that
the wife was the party in the former case while it is the husband who is the petitioner
in the instant case, when admittedly both actions were instituted for the protection of
their common interest therein, is no argument to the proposition that there is no
identity of parties in these cases. Such identity of interest is enough to hold that they
are privy to one another, having a common interest in the property. Neither is it
tenable to contend that the issue involved in the two cases are not identical. It
cannot be disputed that in both cases, the main relief sought is the annulment of
writs of possession issued by the Municipal Court of Baguio City directing the sheriff
concerned to evict the spouses Comilang from the land, and the questions involved in
both cases pertain to the legality or validity of those writs aforementioned. In the
decision in L-18897, this Court sustained the validity of the execution sale. There can
be no doubt, therefore, that the judgment in the former case is binding in the instant
proceeding.
It is argued further by the appellant that the final certificate of sale conveying the
land described in Tax Declaration No. 4771 to the purchasers in the execution sale is
not a valid disposition of a portion of the public domain, and specially in view of the
subsequent issuance of a mineral lode patent over the Bua Mineral Claim by the
Director of Mines (Patent issued on November 7, 1966) whereby full ownership not
only of the minerals therein but also of the surface ground have been conveyed to
the patentee thereof, and, therefore, the Municipal Court of Baguio City may no
longer eject them from the land.
We do not agree with the contention of the appellant.
Session 5 P a g e | 14
The Court has not overlooked the doctrines heavily relied upon by the appellant that
the moment the locator discovered a valuable mineral deposit on the land located,
and perfected his location in accordance with the provisions of the Philippine Bill of
1902, the power of the Government to deprive him of the exclusive right to
possession of the located claim was gone, the land had become mineral land and
they were excepted from the lands that could be granted to any other person
(McDaniel v. Apacible and Cuisia, 42 Phil. 749, 756); and that when a location of a
mining claim is perfected under said law, it has the effect of a grant by the United
States of the right of present possession, with the right to the exclusive enjoyment of
all the surface ground as well as of all the minerals within the lines of the claim (Gold
Creek Mining Corporation v. Rodriguez, 66 Phil. 259). We are also cognizant of the
rule invoked by the appellant that when circumstances have arisen subsequent to the
remanding of the record from the Supreme Court to the trial court, a stay of
execution may be allowed on grounds which are in their nature peculiarly equitable,
as for instance, to give defendant an opportunity to set off a claim against plaintiff
(Chua A. H. Lee v. Mapa, 51 Phil. 624); or when after judgment has been rendered
and it has become final, facts and circumstances transpire which rendered its
execution impossible and unjust, the interested party may ask the court to alter or
modify the judgment to harmonize the same with justice and the facts (De la Costa v.
Cleopas, 67 Phil. 686; Realiza v. Duarte, L-25027, L-20528 & L-20529, August 31,
1967); and this remains true, notwithstanding affirmance of the judgment by the
Supreme Court, which imparts no higher quality than to a final judgment unappealed
from, except that it cannot be questioned or reviewed (Chua A. H. Lee v.
Mapa, supra). However, these authorities, by no means, render the argument of
herein appellant unassailable . There are factual differences in the settings of the
case cited and the one at bar, the equities of which require the application of a
different rule.
To begin with, the 1-½ hectares portions of the Bua Fraction Mineral Claim described
in Tax Declaration No. 4771 in the name of herein appellant was levied upon and sold
at public auction to satisfy the money judgment against him in Civil Case No. 1433 of
the Municipal Court of Baguio City, and the corresponding certificate of sale was
issued in favor of the judgment creditors. Interest acquired under like certificates of
sale alone has been described as more than a lien on the property, more than an
equitable estate, an inchoate legal title to the property. (21 Am. Jur., section 264, p.
133). The validity of that sale was questioned when the Municipal Court ordered the
eviction of appellant from the land sold on execution, and the Supreme Court
declared in L-18897 that the sale was valid. The sale operated to divest appellant of
his rights to the land which vested in the purchasers at the auction sale. The parties
herein subsequently litigated their rights to the mineral claim in Civil Case No. 735 of
the Court of First Instance of Baguio City, and on the basis of their amicable
agreement (appellant was a party in the case), the court declared the Bua Mineral
Claim co-ownership property of the parties thereto "except the improvements
existing thereon" (p. 9, appellant's petition). There is no room for doubt, therefore,
that the right to possess or own the surface ground is separate and distinct from the
mineral rights over the same land. And when the application for lode patent to the
mineral claim was prosecuted in the Bureau of Mines, the said application could not
 ENVIRONMENTAL LAW & NATURAL RESOURCES
have legally included the surface ground sold to another in the execution sale.
Consequently, We have to declare that the patent procured thereunder, at least with
respect to the 1-½ hectares sold in execution pertains only to the mineral right and
does not include the surface ground of the land in question.
Viewed from another perspective, We have arrived at the same conclusion. In his
letter to the Secretary of Agriculture and Natural Resources, dated February 9, 1959,
recommending the approval of Mineral Lode Patent No. V-24, the Director of Mines
said that applicants Marcos Comilang, et al., had acquired vested rights on the Bua
Fraction Mineral Claim before the Constitution of the Philippines was approved on
November  15, 1935. Under the doctrines laid down in McDaniel v. Apacible, and in
Gold Creek Mining v. Rodriguez, supra, said vested rights include the ownership of
both the minerals and the surface ground; that such was the locator's right before as
well as after the issuance of the patent; and that such was vested property although
fee remains in the Government until patent issues. Such vested right of herein
appellant passed to the appellees under the sale on execution aforementioned of the
1-½ hectares portion of the mineral claim. The subsequent issuance of the Lode
Patent to the entire area of the Bua Mineral Claim did not militate against that
acquired rights, for Sec. 45 of the Philippine Bill of 1902 expressly provides that
nothing in said Act shall be deemed to impair any lien which may have attached in
any way whatever prior to the issuance of the patent. Moreover, it is significant to
note that the very Lode Patent No. V-24 aforementioned expressly declares on its
face that "the mining premises hereby conveyed shall be held subject to all vested
lights and accrued rights", the legal import of which is that the patentee Marcos
Comilang, shall hold the1½ hectares portion of the area embraced in the patent as
described in the Tax Declaration No. 4771, in trust for the appellees.
Apart and independent of the statute, there is a rule in American Law known as the
"Doctrine of Relation", to the effect "that all parts and ceremonies necessary to
complete a conveyance shall be taken together as one act, and operate from the
substantial part by relation." This "substantial part" is recognized as the "original act"
which is to be preferred, and to this all subsequent acts are to have relation.
This doctrine of relation  appears to have been often applied to the adjudication of
real actions by American courts.
The case of Landes v. Brant, 10 How. 348, U. S. 13 Law ed., 449, broadly asserts
this doctrine of relation. In that case, a Spanish claim of land was acquired by
Clamorgan under Dodier, the original claimant, by virtue of ten consecutive years
possession prior to December 20, 1903. Such claim was authorized by the Act of
Congress. Clamorgan was entitled to a patent by virtue of a certificate of confirmation
made by commissioners. His petition for such confirmation was filed in December,
1805. In 1808 judgment was recovered against Clamorgan, the claim was sold and
the sheriff's deed executed to McNair. It was held that the execution sale passed to
the purchaser all the title that could have passed from Clamorgan to McNair by a
quitclaim deed; that applying the doctrine of relation  and taking all the parts and
ceremonies necessary to complete the title together as one act, then the confirmation
of 1811 and the patent of 1845 must be taken to relate to the first act; that of filing
Session 5 P a g e | 15
the claim in 1805. On this assumption, intermediate conveyances made by the
confirmed or by the sheriff on his behalf, of a date after the first substantial act, are
covered by the legal title and pass that title to the alienee. And on this ground, the
deed made by the sheriff to McNair is valid. This doctrine has been applied in a great
number of decisions.
Applying the same rule to the case before Us, it is seen that the original act that
ripened into Mineral Lode Patent No. V-24 was the location of the mineral claim and
the recording thereof in the Mining Recorder of Mt. Province sometime in 1922.
Vested right to the property accrued to the locator before 1935, although patent was
issued only recently (November 7, 1966). This Patent cannot nullify the intermediate
conveyance of that right in the execution sale of 1958 to herein appellees.
Finally, the argument that the proceedings for the issuance of a writ of possession, as
has been resorted to by the appellees, is not the proper court procedure, the
appellant intimating that it should be by a proper action. The contention does not
deserve serious consideration. The corresponding rights of the parties to the property
in question had been ventilated in the various cases affecting it, and the decisions in
those cases have sustained the validity of the sale. It is now a matter of right on the
part of the appellees to be placed in possession of the land by clear mandate of Sec.
35, Rule 39 of the Rules of Court which requires that upon execution and delivery of
the final deed of sale in execution the possession of the property shall be given to the
purchaser or last redemptioner unless a third party is actually holding the property
adversely to the judgment debtor. As this Court said in Tan Soo Huat v. Ongwico, 63
Phil. 747:
There is no law in this jurisdiction whereby the purchaser at a sheriff's sale
of real property is obliged to bring a separate and independent suit for
possession after the one-year period for redemption has expired and after
he has obtained the sheriff's final certificate of sale. There is neither legal
ground nor reason of public policy precluding the court from ordering the
sheriff in this case to yield possession of the property purchased at public
auction where it appears that the judgment debtor is the one in possession
thereof and no rights of third persons are involved.
WHEREFORE, the decision appealed from is affirmed. Costs against appellants.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and
Fernando, JJ., concur.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
No. L-71412. August 15, 1986.*
BENGUET CONSOLIDATED, INC., (now Benguet Corporation), petitioners,
vs. REPUBLIC OF THE PHILIPPINES, respondent.
Constitutional Law; Mining; Eminent Domain; A land where location of mineral claim
has been perfected may be the subject of expropriation.— The petitioner’s arguments
have no merit. The filing of expropriation proceedings recognizes the fact that the
petitioner’s property is no longer part of the public domain. The power of eminent
domain refers to the power of government to take private property for public use. If
the mineral claims are public, there would be no need to expropriate them. The
mineral claims of the petitioner are not being transferred to another mining company
or to a public entity interested in the claims as such. The land where the mineral
claims were located is needed for the Philippine Military Academy, a public use
completely unrelated to mining. The fact that the location of a mining claim has been
perfected does not bar the Government’s exercise of its power of eminent domain.
Session 5 P a g e | 16
The right of eminent domain covers all forms of private property, tangible or
intangible, and includes rights which are attached to land.
Same; Same; Same; Estoppel; After party whose mineral land is being expropriated
has shifted its position to the issue only of just compensation, it cannot later claim
that its motion to dismiss (which operates as an answer in expropriation cases)
should have been resolved first before entry of condemnation order.— Under these
circumstances, the petitioner is estopped from questioning the proceedings of
condemnation followed by the court. We cannot condone the inconsistent positions of
the petitioner. (See Republic v. Court of Appeals, 133 SCRA 505). It is very clear from
the statements of the petitioner that it had already abandoned its earlier stand on the
propriety of expropriation and that its intent shifted to the just compensation to be
paid by the plaintiff for its condemned properties.
Same; Same; Same; Findings below on the “just compensation” to be awarded has
not been shown to be ridiculously low and hence will not be disturbed.— As stated
earlier, the appellate court based its findings on the Commissioners’ Report. The
petitioner now assails the approval of the commissioners’ report regarding the
P7,532.46 just compensation to be paid by the government for its four (4) mining
claims. While it is true that a court may reject a Commissioners’ Report on the ground
that the amount allowed is palpably inadequate (Republic v. Vda. de Castellvi, 58
SCRA 336, citing Manila Railroad Co. v. Caligsihan, 40 Phil 326) it is to be noted that
the petitioner herein has not supported its stand that the P7,532.48 just
compensation for its mining claims is by any standard ridiculously low and cannot be
considered just.
Same; Same; Same; Petitioner did not file any objection to the Commissioners’
appraisal of its property.— We are not inclined to reject these findings of facts of the
appellate court in the absence of any contrary evidence pointed to by the petitioner.
Moreover, it is to be noted that unlike the plaintiff and other defendants, the
petitioner did not file any opposition to the Commissioners’ Report in the lower court.
Same; Same; Same; Interest; Interest is due upon takeover of expropriated land by
the Government.—The appellate court, however, should have provided for the
payment of legal interest from the time the government took over the petitioner’s
mining claims until payment is made by the government. (See National Power
Corporation v. Court of Appeals, 129 SCRA 665).
PETITION to review the decision of the Intermediate Ap-pellate Court.
The facts are stated in the opinion of the Court.
     Jose P. O. Aliling for petitioner.
     Antonio C. Amor for respondent.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
GUTIERREZ, JR., J.:
This is a petition to review the decision of the Intermediate Appellate Court in an
expropriation case, insofar as the decision affects the petitioner.
On June 18, 1958, the Republic of the Philippines filed with the then Court of First
Instance of Benguet and Baguio a complaint for expropriation against ten (10)
defendants, among them Benguet Consolidated, Inc. The Republic stated that it
needed the property for the purpose of establishing and maintaining a permanent site
for the Philippine Military Academy, a training institution for officers in the Armed
Forces of the Philippines, under the direct authority and supervision of the
Department of National Defense. It also averred that it had occupied since May 6,
1950, the area covered by the mining claims of the defendants and had already
installed therein permanent buildings and other valuable improvements with no less
than P3,000,000.00 in the belief that the area was unoccupied portions of the public
domain, and that according to the Appraisal Committee constituted under
Administrative Order No. 144, dated October 10, 1955, by the President of the
Philippines, the reasonable and fair market value of the rights and interests of all the
defendants which win be affected by these eminent domain proceedings cannot
exceed the total sum of P532,371.40.
The locations of the petitioner's four mining claims with a total area of 25.1082
hectares were made on the following dates:
JEAN May 18, 1933 DOLORES FR May 15, 1933 NUGGET FR August
24, 1930 SMOKE May 11 & 12, 1933
The petitioner filed a motion to dismiss on the ground that, insofar as it is concerned,
the Republic did not need and has not occupied the areas covered by the above-
mentioned mining claims and neither have improvements been made on the said
areas and that the area covers ground which is rugged in terrain for which the
Philippine Military Academy could have no use. By way of separate and special
grounds for dismissal, Benguet Consolidated, Inc. alleged that the authority given by
the President of the Philippines for the expropriation proceedings refers to privately
owned mineral lands, mining interests, and other private interests of private
individuals and entities of private individuals in certain portions of the site surveyed
for and presently occupied by the Philippine Military Academy at Loakan, Baguio and
that the expropriation of Benguet Consolidated, Inc.'s mineral claims is in violation of
law.
On December 28, 1955, the trial court heard Benguet Consolidated Inc.'s motion to
dismiss. Valentin Camado was presented as witness and he testified that he
performed the annual assessment work for movant's mineral claims. Since the
possibility of an amicable settlement was raised, the representatives of both parties
agreed that pending any definite settlement, the hearing of the motion to dismiss
Session 5 P a g e | 17
would be held in abeyance. On this same day, the trial court issued an order, the
dispositive portion of which reads:
In view of the fact that the defendants are no longer challenging
plaintiff's right to condemn the property, subject of the instant
case, the plaintiff Republic of the Philippines is hereby declared to
have lawful right to take the property sought to be condemned, for
the public use described in the complaint, upon payment of just
compensation to be determined as of the date of the filing of the
complaint.
Benguet Consolidated, Inc. took exception to the order of condemnation by filing a
motion stating that at no time, had it manifested, either expressly or impliedly, that it
was no longer challenging the plaintiff's right to expropriate its former mineral claims.
In the same motion, Benguet Consolidated, Inc. moved for the setting of a date for
the continuation of the hearing of its motion to dismiss.
Acting on this motion, the trial court in its Order dated February 23, 1960, stated that
" ... to satisfy Benguet Consolidated, Inc., this Court makes it of record that, pending
negotiations between the Government and Benguet Consolidated, Inc. said
corporation has not waived its right to challenge plaintiff's right to condemn the
mineral claims in question."
In the course of the proceedings, a Board of Commissioners to assess and establish
the reasonable amount of compensation was formed. Appointed by the court as
members of the board of Commissioners were Engineer Ernesto C. Bengson and
Attorney-Engineer Rolando J. Gamboa representing the court and the army
respectively and Mining Engineer Francisco G. Joaquin, nominated by the defendants
to represent all of them.
Commissioner Joaquin resigned after attending eight (8) hearings leaving the two
other commissioners to conduct 56 more hearings.
On February 28, 1963, the Board of Commissioners submitted their report
recommending the payment of P43,703.37 to the ten (10) defendants as just
compensation for their expropriated properties.
The parties filed their objections to the Commissioners' report.
The trial court rejected the Commissioners' Report and made its own findings and
conclusions. On July 5, 1973, the trial court promulgated a decision awarding various
sums to the defendants.
Benguet Consolidated filed a motion to clarify the decision since the dispositive
portion of the decision computed the respective amounts to be paid by the Republic
to the defendants without, however, including the amount to be paid to Benguet
Consolidated for the expropriation of its four (4) mining claims. In other words, the
petitioner was excluded from the awards made by the trial court.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
After Benguet Consolidated filed two other motions (motion for new trial and/or
reconsideration; second motion for clarification) reiterating its objection to the
decision in not providing for just compensation for their expropriated properties, the
trial court issued an order fixing the "just compensation of the surface area of the
four (4) claims of Benguet Consolidated, Inc. in the amount of P128,051.82 with
interest at 6% per annum from May 6, 1950 until fully paid, plus attorney's fees in an
amount equal to 5 % of the sum fixed by this Court." A motion to reopen the case
praying for a new trial to allow it to present evidence as to the value of the properties
filed by Benguet Consolidated was denied by the trial court.
Among all parties, only the plaintiff and defendant Benguet Consolidated, Inc.
pursued their appeal before the then Court of Appeals.
On June 28, 1985, the Intermediate Appellate Courts promulgated a decision setting
aside the trial court's decision. The dispositive portion of the decision reads:
WHEREFORE, the appealed judgment is hereby reversed and set
aside, and another one is rendered (1) condemning the mineral
claims described in the complaint belonging to the defendants for
the public use therein stated; and (2) ordering the plaintiff to pay
the defendants as follows:
Demonstration Gold Mines, Ltd. 22.0037 Has. x P600.00
P13,202.22
Benguet Goldfields Mining Co. 50.6633 Has. x P300.00 15,198.99
Crown Mines, Inc. none Benguet Consolidated Mining Co. 25.1082
Has. x P300.00 7,532.46
Josephine McKenzie none Josephine Murphy 5.8432 Has. x P300.00
1,752.96
J.E.H. Stevenot 1.1151 Has. 334.53 x P300.00
Andres Trepp none Gregoria Beley 18.9407 Has. x P300.00
5,682.21
No costs.
The petitioner asserts that there is a need to review and reverse the appellate court's
decision because of the following reasons:
A.
THE CONDEMNATION OF PETITIONER'S MINERAL CLAIM IS
CONTRARY TO LAW AND APPLICABLE JURISPRUDENCE.
Session 5 P a g e | 18
B.
THE APPROVAL OF THE COMMISSIONER'S REPORT IS CONTRARY
TO LAW AND APPLICABLE JURISPRUDENCE.
The petitioner states that its mineral claims were located since 1933 at the latest. It
argues that by such location and perfection, the land is segregated from the public
domain even as against the government. Citing Gold Greek Mining Corporation v.
Rodriguez, et al  (66 Phil. 259), it states that when the location of a mining claim is
perfected, this has the effect of a grant of exclusive possession with right to the
enjoyment of the surface ground as well as of all the minerals within the lines of the
claim and that this right may not be infringed.
The petitioner's arguments have no merit. The filing of expropriation proceedings
recognizes the fact that the petitioner's property is no longer part of the public
domain. The power of eminent domain refers to the power of government to
take private property for public use. If the mineral claims are public, there would be
no need to expropriate them. The mineral claims of the petitioner are not being
transferred to another mining company or to a public entity interested in the claims
as such. The land where the mineral claims were located is needed for the Philippine
Military Academy, a public use completely unrelated to mining. The fact that the
location of a mining claim has been perfected does not bar the Government's exercise
of its power of eminent domain. The right of eminent domain covers all forms of
private property, tangible or intangible, and includes rights which are attached to
land.
The petitioner next raises a procedural point-whether or not in expropriation
proceedings an order of condemnation may be entered by the court before a motion
to dismiss is denied.
Citing the case of Nieto v. Ysip, etc., et al (97 Phil. 31), the petitioner claims that this
cannot be done.
We ruled in the Nieto case that:
A cursory reading of Sections 4, 5 and 6 of Rules 69 of the Rules of
Court discloses the steps to be followed, one after another, in
condemnation proceedings from the institution thereof. Thep is the
presentation by defendants of their objections and defenses to the
right of plaintiff to take the property for the use specified, which
objections and defenses shall be set forth in a single motion to
dismiss (Section 4). The second is the hearing on the motion and
the unfavorable resolution thereon by the court. That an adverse
resolution on the motion to dismiss, if objections and defenses are
presented, is required because the rule (Sec. 5) authorizes the
court to enter an order of condemnation only if the motion to
dismiss is overruled, or if no motion to dismiss had been presented.
The second step includes the order of condemnation, which may be
 ENVIRONMENTAL LAW & NATURAL RESOURCES
embodied in the resolution overruling the motion to dismiss. The
third is the appointment of commissioners to assess the just
compensation for the property (Sec. 6). That the above steps must
follow one another is evident from the provisions of the rules as
well as from the inter-relation between the steps and the
dependence of one upon the previous step. Thus no order of
condemnation may be entered if the motion to dismiss has not
been passed upon and overruled, and no assessment should be
undertaken unless and until an order of condemnation has already
been entered.
In the instant case the ruling on the motion to dismiss was deferred by the trial court
in view of a possible amicable settlement. Moreover, after the trial court entered an
order of condemnation over the objection of the petitioner, the court issued an order
to the effect that the trial court"... makes it of record that, pending negotiations
between the Government and Benguet Consolidated, Inc. said corporation has not
waived its right to challenge plaintiff's right to condemn the mineral claims in
question."
At the hearing conducted by the Board of Commissioners, the counsel for the
petitioner manifested that its motion to dismiss was still pending in court, and
requested that the hearing for the presentation of evidence for the petitioner be
cancelled. At this point, negotiations between the government and the petitioner
were still going on.
In its original decision, the lower court overlooked an award of just compensation for
the petitioner. This triggered off the filing of the following motions by the petitioner:
(1) motion for clarification praying that an order be issued clarifying the decision
insofar as the compensation to be paid to the petitioner is concerned; (2) motion for
new trial and/or reconsideration on the ground that the court did not award just
compensation for the properties of the petitioner; (3) motion to re-open case on the
ground that the issues insofar as the petitioner is concerned have not been joined
since its motion to dismiss has not been resolved; and (4) a second motion for
clarification praying therein:
WHEREFORE, it is respectfully prayed that a clarification of the
decision rendered on July 9th 1973 be made particularly with
respect to defendant Benguet Consolidated, Inc., so as to make a
specific award, as in the case of all the other defendants, for the
just and fair market value of the surface rights to its four
condemned mineral claims at the very least on the basis of the
same rate of P0.51 per square meter, or for the total amount of
P128,051.82; with interest thereon at 6% per annum from May 6,
1950 until fully paid; plus attorney's fees in an amount equal to 5%
of the sum fixed to be just and fair market value of the mineral
claims.
Session 5 P a g e | 19
The lower court denied the motion to re-open the case by stating in its Order:
xxx xxx xxx
When this Court issued the order declaring that plaintiff has a
lawful right to take the property sought to be condemned, it
impliedly overruled defendant's Motion to dismiss which in
expropriation cases takes the place of an answer (Sec. 3, Rule 67,
Rules of Court), and what defendant could have done at the time
would have been to present evidence on the fair market value of its
properties. Having slept on its rights, Benguet Consolidated, Inc.
can no longer have this case reopened for the presentation of its
evidence.
This order was not challenged by the petitioner. Instead, it filed its above-mentioned
second motion for clarification. It is to be noted that in its motion for new trial and/or
reconsideration, the petitioner stated:
Defendant Benguet Consolidated, Inc., does not dispute the right of
the government to exercise the power of eminent domain with
respect to its property. However, in so doing this court failed to
comply with the basic constitutional provision that said power can
only be exercised upon payment of just compensation...
Under these circumstances, the petitioner is estopped from questioning the
proceedings of condemnation followed by the court. We cannot condone the
inconsistent positions of the petitioner. (See Republic v. Court of Appeals, 133 SCRA
505). it is very clear from the statements of the petitioner that it had already
abandoned its earlier stand on the propriety of expropriation and that its intent
shifted to the just compensation to be paid by the plaintiff for its condemned
properties.
The second issue centers on the amount of just compensation which should be paid
by the respondent to the petitioner for the condemned properties.
The petitioner assails the appellate court's approval of the Commissioners' Report
which fixed the amount of P7,532.46 as just compensation for the mineral claims.
The petitioner contends that this amount is by any standard ridiculously low and
cannot be considered just and that in fact the commissioners' report was rejected by
the trial court.
The Commissioners' Report was submitted by Ernesto C. Bengson, chairman of the
board and Rolando J. Gamboa, Francisco Joaquin, representing the defendants
resigned after attending eight (8) hearings due to ill health. The defendants did not
ask for a replacement.
The conclusion of the Commissioners are the result of documentary evidence
presented by the parties, testimonies of several mining experts and executives of
 ENVIRONMENTAL LAW & NATURAL RESOURCES
mining companies including Mr. Ralph W. Crosby, the then vice-president of the
petitioner, and ocular inspections of the mining claims involved in this case. Among
those present during the ocular inspection were Mr. Joventino S. Perfecto and Mr.
Kevin A. Callow, the Chief Engineer of the Acupan Mines and the Exploration
Geologist of the Benguet Consolidated, Inc., respectively. Among those considered by
the commissioners in order to determine the just compensation to be paid to the
defendants were the ore reserves, base metal concentrates, and gypsums deposits of
the mining claims.
The P7,532.46 just compensation for the petitioner was based on the following
findings of the Board of Commissioners:
The Commissioners conducted an ocular inspection of the mining
claims involved in this case, on October 14, 1961, with prior notice
to all the parties. At this ocular inspection, Mr. Joventino S.
Perfecto and Mr. Kevin A. Callow, Chief Engineer of the Acupan
Mines and Exploration Geologist, respectively, of the Benguet
Consolidated, Inc., also took part. In the mining claims of Benguet
Consolidated, Inc., involved in this case, namely, Dolores, Nugget,
Jean and Smoke mining claims, there are some exploration tunnels
and trenches to explore the mineral character of these claims.
However, the exploration and/or development work on these claims
is not sufficient for making any estimate of the value of these
claims for mining purposes. The property has possibilities; but, with
the limited work done on these claims, no ore body has as yet been
found. Consequently, the value of these claims cannot be
determined at the present time.
xxx xxx xxx
With respect to the mining claims of Benguet Consolidated, Inc.,
which are considered apart from the other mining claims involved
in this case, the mineral value of these claims cannot possibly be
determined for the present, as these claims are not yet sufficiently
developed.
Upon the foregoing considerations, it would appear that authorities
that the defendants would be entitled to would be the value of the
surface rights of their mining claims.
xxx xxx xxx
According to the 'Schedule of Assessed Value of Mineral Lands
(Exhs. B and B-1), the assessed value of a patented lode claim
(producing or non-producing) or a non-patented producing claim is
P600.00 per hectare, and for a non- producing unpatented claim, it
is P300.00 per hectare.
Session 5 P a g e | 20
The petitioner's mining claims were classified as non-producing unpatented claims. It
was established that the area of the mineral claims belonging to the petitioner and
included in the Philippine Military Reservation was 25.1082 hectares. Hence, the
commissioners arrived at the total amount of P7,532.46 (25.1082 x P300.00) as just
compensation to be paid to the petitioner for its mining claims.
The Schedule of Assessment Value of Mineral Lands (Exhibits B, B-1) presented by
the government, is a "SCHEDULE of Assessed Values of mineral lands, furnished by
the Provincial Assessor of Mountain Province on June 30, 1955" issued by Onofre D.
Alabanza, ex-oficio Mining Recorder of the Office of the Mining Recorder, City of
Baguio, Bureau of Mines, Department of Agriculture and Natural Resources.
These findings negate the trial court's observation that the commissioners only took
into consideration the surface value of the mineral claims. In fact, the lower court
affirmed the commissioners' report to the effect that the petitioner herein is only
entitled to the surface value of the mineral claims when it said:
The Court regrets that it has no basis on which to evaluate the
value of the other claims the mineral reserves of which were not
included or taken into consideration in the above- mentioned
evaluations. The Court, however, realizes that these mineral claims
have values. In the absence of any evidence as to their positive,
possible and probable ore contents, said claims shall be evaluated
only on the basis of their surface areas.
"Other claims" include the petitioner's mining claims. Thus, the trial court computed
the amount to be paid to the petitioner as just compensation on the basis of the
surface value of its mining claims.
We find no reason to disturb the lower court's findings on this matter. The petitioner
has not advanced any reason for us to reject such findings.
As stated earlier, the appellate court based its findings on the Commissioners' Report.
The petitioner now assails the approval of the commissioners' report regarding the
P7,532.46 just compensation to be paid by the government for its four (4) mining
claims.
While it is true that a court may reject a Commissioners' Report on the ground that
the amount allowed is palpably inadequate (Republic v. Vda. de Castellvi, 58 SCRA
336, citing Manila Railroad Co. v. Caligsihan, 40 Phil. 326) it is to be noted that the
petitioner herein has not supported its stand that the P7,532.46 just compensation
for its mining claims is by any standard ridiculously low and cannot be considered
just.
On the other hand, the appellate court said:
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 21

The integrity and impartiality of the remaining Commissioners,
Engrs. Bengson and Gamboa, were not questioned by the
defendants. They are experienced mining engineers and members
of the bar. And the Commissioners did give value to the mineral
contents of the claims. Pages 168 to 206 of the Report will show
that the Board considered the ore reserves and the base metal
concentrates and gypsum deposits. The Board concluded that it
was not profitable to operate the claims, taking into account the
cost of production, rehabilitation and depletion, depreciation and
smelting and marketing expenses. Although Engineer Joaquin
resigned after eight hearings of the Board, the defendants did not
ask for a replacement. Anyway, the Court was ably represented by
Engineer Bengson. The Board held a total of 64 hearings. Besides
documentary evidence, and an ocular inspection of the mining
claims involved made with prior notice, twelve witnesses were
presented by the parties.
We are not inclined to reject these findings of facts of the appellate court in the
absence of any contrary evidence pointed to by the petitioner.
WHEREFORE, the decision of the Intermediate Appellate Court is MODIFIED in that
the government is directed to pay the petitioner the amount of SEVEN THOUSAND
FIVE HUNDRED THIRTY-TWO PESOS) and 46/100 (P7,532.46) plus 6% interest from
May 6, 1950 to July 29, 1974 and 12% thereafter until fully paid, and AFFIRMED in
all other respects.
SO ORDERED.
Feria, (Chairman), Fernan, Alampay and Paras, JJ., concur.
Decision affirmed with modification.
Notes.—Property rights must yield to the power of expropriation of the State. (J.M.
Tuason & Co. vs. Land Tenure Administration, 31 SCRA 413.)
Court’s have the power to inquire into the legality of the exercise of the right of
eminent domain and to determine whether there is genuine necessity therefor.
(Republic vs. La Orden de PP., Benedictinos de Filipinas, 1 SCRA 646.)

Moreover, it is to be noted that unlike the plaintiff and other defendants, the ——o0o——
petitioner did not file any opposition to the Commissioners' Report in the lower court.

The appellate court, however, should have provided for the payment of legal interest
from the time the government took over the petitioner's mining claims until payment
is made by the government. (See National Power Corporation v. Court of Appeals,
129 SCRA 665).

We ruled in Republic v. Juan (92 SCRA 26):

xxx xxx xxx

...[S]aid interest ... 'runs as a matter of law and follows as a matter

of course from the right of the landowner to be placed in as good a
position as money can accomplish, as of the date of the taking' (30
CJS 230). Stated otherwise: 'Where the payment of compensation
does not accompany the taking of property for public use but is
postponed to a later date, the owner of the property is ordinarily
entitled to the award of an additional sum which will compensate
for delay (cases cited) or which was in other words, produce the
full equivalent of the value of the property paid contemporaneously
with the taking' (29-A CJS 762). Under this view, the interest
awarded is deemed part of the just compensation required to be
paid to the owner (27 Am. Jur. 112). ...

The appellate court's decision is, therefore, modified in this respect.

 ENVIRONMENTAL LAW & NATURAL RESOURCES
G.R. No. 135190. April 3, 2002.*
SOUTHEAST MINDANAO GOLD MINING CORPORATION, petitioner, vs.
BALITE PORTAL MINING COOPERATIVE and others similarly situated; and
THE HONORABLE ANTONIO CERILLES, in his capacity as Secretary of the
Session 5 P a g e | 22
Department of Environment and Natural Resources (DENR), PROVINCIAL
MINING REGULATORY BOARD OF DAVAO (PMRB-Davao), respondents.
Natural Resources; Mineral Resources; Mines; Actions; Certiorari; Where the
petitioner can show no more than a mere apprehension that the State, through the
DENR, would directly take over the mines in dispute after the studies point to its
viability, a special civil action for certiorari, prohibition and mandamus is premature,
for until the DENR actually does so and petitioner’s fears turn into reality, no valid
objection can be entertained against a Memorandum Order directing the conduct of
studies on various options available to the government for solving conflicting mining
claims.—We agree with the Court of Appeals’ ruling that the challenged MO 97-03 did
not conclusively adopt “direct state utilization” as a policy in resolving the Diwalwal
dispute. The terms of the memorandum clearly indicate that what was directed
thereunder was merely a study of this option and nothing else. Contrary to
petitioner’s contention, it did not grant any management/operating or profit-sharing
agreement to small-scale miners or to any party, for that matter, but simply
instructed the DENR officials concerned to undertake studies to determine its
feasibility. x x x Consequently, the petition was premature. The said memorandum
order did not impose any obligation on the claimants or fix any legal relation
whatsoever between and among the parties to the dispute. At this stage, petitioner
can show no more than a mere apprehension that the State, through the DENR,
would directly take over the mines after studies point to its viability. But until the
DENR actually does so and petitioner’s fears turn into reality, no valid objection can
be entertained against MO 97-03 on grounds which are purely speculative and
anticipatory.
Same; Same; Same; Contract Clause; The exploration, development and utilization of
the country’s natural mineral resources are matters impressed with great public
interest; Like timber permits, mining exploration permits do not vest in the grantee
any permanent or irrevocable right within the purview of the non-impairment of
contract and due process clauses of the Constitution, 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.— Incidentally, it must likewise be pointed
out that under no circumstances may petitioner’s rights under EP No. 133 be
regarded as total and absolute. As correctly held by the Court of Appeals in its
challenged decision, EP No. 133 merely evidences a privilege granted by the State,
which may be amended, modified or rescinded when the national interest so requires.
This is necessarily so since the exploration, development and utilization of the
country’s natural mineral resources are matters impressed with great public interest.
Like timber permits, mining exploration permits do not vest in the grantee any
permanent or irrevocable right within the purview of the non-impairment of contract
and due process clauses of the Constitution, since the State, under its all-
 ENVIRONMENTAL LAW & NATURAL RESOURCES
encompassing police power, may alter, modify or amend the same, in accordance
with the demands of the general welfare.
Same; Same; Same; Obviously, the State may not be precluded from considering a
direct takeover of the mines, if it is the only plausible remedy in sight of the gnawing
complexities generated by the gold rush.— Thus, the State may pursue the
constitutional policy of full control and supervision of the exploration, development
and utilization of the country’s natural mineral resources, by either directly
undertaking the same or by entering into agreements with qualified entities. The
DENR Secretary acted within his authority when he ordered a study of the first
option, which may be undertaken consistently in accordance with the constitutional
policy enunciated above. Obviously, the State may not be precluded from considering
a direct takeover of the mines, if it is the only plausible remedy in sight to the
gnawing complexities generated by the gold rush. As implied earlier, the State need
be guided only by the demands of public interest in settling for this option, as well as
its material and logistic feasibility.
Same; Same; Same; Presumption of Regularity; In the absence of any concrete
evidence that the DENR Secretary violated the law or abused his discretion, he is
presumed to have regularly issued a department memorandum with a lawful intent
and pursuant to his official functions.— In this regard, petitioner’s imputation of bad
faith on the part of the DENR Secretary when the latter issued MO 97-03 is not well-
taken. The avowed rationale of the memorandum order is clearly and plainly stated in
its “whereas” clauses. In the absence of any concrete evidence that the DENR
Secretary violated the law or abused his discretion, as in this case, he is presumed to
have regularly issued the memorandum with a lawful intent and pursuant to his
official functions.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Quasha, Ancheta, Peña and Nolasco for petitioner.
     Rapista and Lu Law Offices for respondent BCPMC.
     Jesus T. Albacite for respondent PMRB.
YNARES-SANTIAGO, J.:
This is a petition for review of the March 19, 1998 decision of the Court of Appeals in
CA-G.R. SP No. 44693, dismissing the special civil action for certiorari,
prohibition  and mandamus,  and the resolution dated August 19, 1998 denying
petitioner's motion for reconsideration.
The instant case involves a rich tract of mineral land situated in the Agusan-Davao-
Surigao Forest Reserve known as the "Diwalwal Gold Rush Area." Located at Mt.
Session 5 P a g e | 23
Diwata in the municipalities of Monkayo and Cateel in Davao Del Norte, the land has
been embroiled in controversy since the mid-80's due to the scramble over gold
deposits found within its bowels.
From 1985 to 1991, thousands of people flocked to Diwalwal to stake their respective
claims. Peace and order deteriorated rapidly, with hundreds of people perishing in
mine accidents, man-made or otherwise, brought about by unregulated mining
activities. The multifarious problems spawned by the gold rush assumed gargantuan
proportions, such that finding a "win-win" solution became a veritable needle in a
haystack.
On March 10, 1988, Marcopper Mining Corporation (Marcopper) was granted
Exploration Permit No. 133 (EP No. 133) over 4,491 hectares of land, which included
the hotly-contested Diwalwal area. 1 Marcopper's acquisition of mining rights over
Diwalwal under its EP No. 133 was subsequently challenged before this Court
in "Apex Mining Co., Inc., et al. v. Hon. Cancio C. Garcia, et al.," 2 where Marcopper's
claim was sustained over that of another mining firm, Apex Mining Corporation
(Apex). The Court found that Apex did not comply with the procedural requisites for
acquiring mining rights within forest reserves.
Not long thereafter, Congress enacted on June 27, 1991 Republic Act No. 7076, or
the People's Small-Scale Mining Act. The law established a People's Small-Scale
Mining Program to be implemented by the Secretary of the DENR 3 and created the
Provincial Mining Regulatory Board (PMRB) under the DENR Secretary's direct
supervision and control.4 The statute also authorized the PMRB to declare and set
aside small-scale mining areas subject to review by the DENR Secretary 5 and award
mining contracts to small-scale miners under certain conditions.6
On December 21, 1991, DENR Secretary Fulgencio S. Factoran issued Department
Administrative Order (DAO) No. 66, declaring 729 hectares of the Diwalwal area as
non-forest land open to small-scale mining.7 The issuance was made pursuant to the
powers vested in the DENR Secretary by Proclamation No. 369, which established the
Agusan-Davao-Surigao Forest Reserve.
Subsequently, a petition for the cancellation of EP No. 133 and the admission of a
Mineral Production Sharing Arrangement (MPSA) proposal over Diwalwal was filed
before the DENR Regional Executive Director, docketed as RED Mines Case No. 8-8-
94 entitled, "Rosendo Villaflor, et al. v. Marcopper Mining Corporation."
On February 16, 1994, while the RED Mines case was pending, Marcopper assigned
its EP No. 133 to petitioner Southeast Mindanao Gold Mining Corporation
(SEM),8 which in turn applied for an integrated MPSA over the land covered by the
permit.
In due time, the Mines and Geosciences Bureau Regional Office No. XI in Davao City
(MGB-XI) accepted and registered the integrated MPSA application of petitioner. After
publication of the application, the following filed their oppositions:
 ENVIRONMENTAL LAW & NATURAL RESOURCES
a) MAC Case No. 004(XI) - JB Management Mining Corporation;
b) MAC Case No. 005(XI) - Davao United Miners Cooperative;
c) MAC Case No. 006(XI) - Balite Integrated Small Scale Miner's
Cooperative;
d) MAC Case No. 007(XI) - Monkayo Integrated Small Scale Miner's
Association, Inc.;
e) MAC Case No. 008(XI) - Paper Industries Corporation of the Philippines;
f) MAC Case No. 009(XI) - Rosendo Villaflor, et al.;
g) MAC Case No. 010(XI) - Antonio Dacudao;
h) MAC Case No. 011(XI) - Atty. Jose T. Amacio;
i) MAC Case No. 012(XI) - Puting-Bato Gold Miners Cooperative;
j) MAC Case No. 016(XI) - Balite Communal Portal Mining Cooperative; and
k) MAC Case No. 97-01(XI) - Romeo Altamera, et al.
In the meantime, on March 3, 1995 ,  Republic Act No. 7942, the Philippine Mining Act,
was enacted. Pursuant to this statute, the above-enumerated MAC cases were
referred to a Regional Panel of Arbitrators (RPA) tasked to resolve disputes involving
conflicting mining rights. The RPA subsequently took cognizance of the RED Mines
case, which was consolidated with the MAC cases.
On April 1, 1997, Provincial Mining Regulatory Board of Davao passed Resolution No.
26, Series of 1997, authorizing the issuance of ore transport permits (OTPs) to small-
scale miners operating in the Diwalwal mines.
Thus, on May 30, 1997, petitioner filed a complaint for damages before the Regional
Trial Court of Makati City, Branch 61, against the DENR Secretary and PMRB-Davao.
SEM alleged that the illegal issuance of the OTPs allowed the extraction and hauling
of P60,000.00 worth of gold ore per truckload from SEM's mining claim.
Meanwhile, on June 13, 1997, the RPA resolved the Consolidated Mines cases and
decreed in an Omnibus Resolution as follows:
VIEWED IN THE LIGHT OF THE FOREGOING, the validity of Exploration
Permit No. 133 is hereby reiterated and all the adverse claims against
MPSAA No. 128 are DISMISSED.9
Session 5 P a g e | 24
On June 24, 1997, the DENR Secretary issued Memorandum Order No. 97-03 10 which
provided, among others, that:
1. The DENR shall study thoroughly and exhaustively the option of direct
state utilization of the mineral resources in the Diwalwal Gold-Rush
Area.  Such study shall include,  but shall not be limited to, studying
and weighing the feasibility of entering into management agreements or
operating agreements,  or both, with the appropriate government
instrumentalities or private entities, or both, in carrying out the declared
policy of rationalizing the mining operations in the Diwalwal Gold Rush Area;
such agreements shall include provisions for profit-sharing  between the
state and the said parties, including profit-sharing arrangements with small-
scale miners,  as well as the payment of royalties to indigenous cultural
communities, among others. The Undersecretary for Field Operations, as
well as the Undersecretary for Legal and Legislative Affairs and Attached
Agencies, and the Director of the Mines and Geo-sciences Bureau are
hereby ordered to undertake such studies.  x x x11
On July 16, 1997, petitioner filed a special civil action for certiorari,
prohibition  and mandamus  before the Court of Appeals against PMRB-Davao, the
DENR Secretary and Balite Communal Portal Mining Cooperative (BCPMC), which
represented all the OTP grantees. It prayed for the nullification of the above-quoted
Memorandum Order No. 97-03 on the ground that the "direct state utilization"
espoused therein would effectively impair its vested rights under EP No. 133; that the
DENR Secretary unduly usurped and interfered with the jurisdiction of the RPA which
had dismissed all adverse claims against SEM in the Consolidated Mines cases; and
that the memorandum order arbitrarily imposed the unwarranted condition that
certain studies be conducted before mining and environmental laws are enforced by
the DENR.
Meanwhile, on January 6, 1998, the MAB rendered a decision in the Consolidated
Mines cases, setting aside the judgment of the RPA. 12 This MAB decision was then
elevated to this Court by way of a consolidated petition, docketed as G.R. Nos.
132475 and 132528.
On March 19, 1998, the Court of Appeals, through a division of five members voting
3-2,13 dismissed the petition in CA-G.R. SP No. 44693. It ruled that the DENR
Secretary did not abuse his discretion in issuing Memorandum Order No. 97-03 since
the same was merely a directive to conduct studies on the various options available
to the government for solving the Diwalwal conflict. The assailed memorandum did
not conclusively adopt "direct state utilization" as official government policy on the
matter, but was simply a manifestation of the DENR's intent to consider it as one of
its options, after determining its feasibility through studies. MO 97-03 was only the
initial step in the ladder of administrative process and did not, as yet, fix any
obligation, legal relationship or right. It was thus premature for petitioner to claim
that its "constitutionally-protected rights" under EP No. 133 have been encroached
upon, much less, violated by its issuance.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Additionally, the appellate court pointed out that petitioner's rights under EP No. 133
are not inviolable, sacrosanct or immutable. Being in the nature of a privilege granted
by the State, the permit can be revoked, amended or modified by the Chief Executive
when the national interest so requires. The Court of Appeals, however, declined to
rule on the validity of the OTPs, reasoning that said issue was within the exclusive
jurisdiction of the RPA.
Petitioner filed a motion for reconsideration of the above decision, which was denied
for lack of merit on August 19, 1998.14
Hence this petition, raising the following errors:
I. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR,
AND HAS DECIDED A QUESTION OF SUBSTANCE NOT THERETOFORE
DETERMINED BY THIS HONORABLE SUPREME COURT, OR HAS DECIDED IT
IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE
DECISIONS OF THIS HONORABLE COURT IN UPHOLDING THE
QUESTIONED ACTS OF RESPONDENT DENR SECRETARY WHICH ARE IN
VIOLATION OF MINING LAWS AND IN DEROGATION OF PETITIONER'S
VESTED RIGHTS OVER THE AREA COVERED BY ITS EP NO. 133;
II. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR
IN HOLDING THAT AN ACTION ON THE VALIDITY OF ORE TRANSPORT
PERMIT (OTP) IS VESTED IN THE REGIONAL PANEL OF ARBITRATORS.15
In a resolution dated September 11, 2000, the appealed Consolidated Mines cases,
docketed as G.R. Nos. 132475 and 132528, were referred to the Court of Appeals for
proper disposition pursuant to Rule 43 of the 1997 Rules of Civil Procedure. 16 These
cases, which were docketed as CA-G.R. SP Nos. 61215 and 61216, are still pending
before the Court of Appeals.
In the first assigned error, petitioner insists that the Court of Appeals erred when it
concluded that the assailed memorandum order did not adopt the "direct state
utilization scheme" in resolving the Diwalwal dispute. On the contrary, petitioner
submits, said memorandum order dictated  the said recourse and, in effect, granted
management or operating agreements as well as provided for profit sharing
arrangements to illegal small-scale miners.
According to petitioner, MO 97-03 was issued to preempt the resolution of the
Consolidated Mines cases. The "direct state utilization scheme" espoused in the
challenged memorandum is nothing but a legal shortcut, designed to divest petitioner
of its vested right to the gold rush area under its EP No. 133.
We are not persuaded.
Session 5 P a g e | 25
We agree with the Court of Appeals' ruling that the challenged MO 97-03 did not
conclusively adopt "direct state utilization" as a policy in resolving the Diwalwal
dispute. The terms of the memorandum clearly indicate that what was directed
thereunder was merely a study  of this option and nothing else. Contrary to
petitioner's contention, it did not grant any management/operating or profit-sharing
agreement to small-scale miners or to any party, for that matter, but simply
instructed the DENR officials concerned to undertake studies to determine its
feasibility. As the Court of Appeals extensively discussed in its decision:
x x x under the Memorandum Order, the State still had to study prudently
and exhaustively the various options available to it in rationalizing the
explosive and ever perilous situation in the area, the debilitating adverse
effects of mining in the community and at the same time, preserve and
enhance the safety of the mining operations and ensure revenues due to the
government from the development of the mineral resources and the
exploitation thereof. The government was still in earnest search of better
options that would be fair and just to all parties concerned, including,
notably, the Petitioner. The direct state utilization of the mineral resources in
the area was only one of the options of the State. Indeed, it is too plain to
see, x x x that before the State will settle on an option, x x x an extensive
and intensive study of all the facets of a direct state exploitation was
directed by the Public Respondent DENR Secretary. And even if direct state
exploitation was opted by the government, the DENR still had to promulgate
rules and regulations to implement the same x x x, in coordination with the
other concerned agencies of the government.17
Consequently, the petition was premature. The said memorandum order did not
impose any obligation on the claimants or fix any legal relation whatsoever between
and among the parties to the dispute. At this stage, petitioner can show no more
than a mere apprehension that the State, through the DENR, would directly take over
the mines after studies point to its viability. But until the DENR actually does so and
petitioner's fears turn into reality, no valid objection can be entertained against MO
97-03 on grounds which are purely speculative and anticipatory. 18
With respect to the alleged "vested rights" claimed by petitioner, it is well to note that
the same is invariably based on EP No. 133, whose validity is still being disputed in
the Consolidated Mines cases. A reading of the appealed MAB decision reveals that
the continued efficacy of EP No. 133 is one of the issues raised in said cases, with
respondents therein asserting that Marcopper cannot legally assign the permit which
purportedly had expired. In other words, whether or not petitioner actually has a
vested right over Diwalwal under EP No. 133 is still an indefinite and unsettled
matter. And until a positive pronouncement is made by the appellate court in the
Consolidated Mines cases, EP No. 133 cannot be deemed as a source of any
conclusive rights that can be impaired by the issuance of MO 97-03.
Similarly, there is no merit in petitioner's assertion that MO 97-03 sanctions violation
of mining laws by allowing illegal miners  to enter into mining agreements with the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
State. Again, whether or not respondent BCMC and the other mining entities it
represents are conducting illegal mining activities is a factual matter that has yet to
be finally determined in the Consolidated Mines cases. We cannot rightfully conclude
at this point that respondent BCMC and the other mining firms are illegitimate mining
operators. Otherwise, we would be preempting the resolution of the cases which are
still pending before the Court of Appeals.19
Petitioner's reliance on the Apex Mining  case to justify its rights under E.P. No. 133 is
misplaced. For one, the said case was litigated solely between Marcopper and Apex
Mining Corporation and cannot thus be deemed binding and conclusive on
respondent BCMC and the other mining entities presently involved. While petitioner
may be regarded as Marcopper's successor to EP No. 133 and therefore bound by the
judgment rendered in the Apex Mining  case, the same cannot be said of respondent
BCMC and the other oppositor mining firms, who were not impleaded as parties
therein.
Neither can the Apex Mining  case foreclose any question pertaining to the continuing
validity of EP No. 133 on grounds which arose after the judgment in said case was
promulgated. While it is true that the Apex Mining  case settled the issue of who
between Apex and Marcopper validly acquired mining rights over the disputed area
by availing of the proper procedural requisites mandated by law, it certainly did not
deal with the question raised by the oppositors in the Consolidated Mines
cases, i.e.  whether EP No. 133 had already expired and remained valid subsequent
to its transfer by Marcopper to petitioner.  Besides, as clarified in our decision in
the Apex Mining  case:
x x x is conclusive only between the parties with respect to the particular
issue herein raised and under the set of circumstances herein prevailing. In
no case should the decision be considered as a precedent to resolve or
settle claims of persons/entities not parties hereto. Neither is it intended to
unsettle rights of persons/entities which have been acquired or which may
have accrued upon reliance on laws passed by appropriate agencies. 20
Clearly then, the Apex Mining  case did not invest petitioner with any definite right to
the Diwalwal mines which it could now set up against respondent BCMC and the
other mining groups.
Incidentally, it must likewise be pointed out that under no circumstances may
petitioner's rights under EP No. 133 be regarded as total and absolute. As correctly
held by the Court of Appeals in its challenged decision, EP No. 133 merely evidences
a privilege granted by the State, which may be amended, modified or rescinded when
the national interest so requires. This is necessarily so since the exploration,
development and utilization of the country's natural mineral resources are matters
impressed with great public interest. Like timber permits, mining exploration permits
do not vest in the grantee any permanent or irrevocable right within the purview of
the non-impairment of contract and due process clauses of the Constitution, 21 since
the State, under its all-encompassing police power, may alter, modify or amend the
same, in accordance with the demands of the general welfare. 22
Session 5 P a g e | 26
Additionally, there can be no valid opposition raised against a mere study of an
alternative which the State, through the DENR, is authorized to undertake in the first
place. Worth noting is Article XII, Section 2, of the 1987 Constitution, which
specifically provides:
SEC. 2. All lands of the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by
the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development, and
utilization of natural resources shall be under the full control and supervision
of the State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or production-sharing agreements
with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may
be for a period not exceeding twenty-five years, renewable for not more
than twenty-five years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant. (Underscoring
ours)
Likewise, Section 4, Chapter II of the Philippine Mining Act of 1995 states:
SEC. 4. Ownership of Mineral Resources.  - Mineral Resources are owned by
the State and the exploration, development, utilization, and processing
thereof shall be under its full control and supervision. The State may directly
undertake such activities or it may enter into mineral agreements with
contractors. (Underscoring ours)
Thus, the State may pursue the constitutional policy of full control and supervision of
the exploration, development and utilization of the country's natural mineral
resources, by either directly undertaking the same or by entering into agreements
with qualified entities. The DENR Secretary acted within his authority when he
ordered a study of the first option, which may be undertaken consistently in
accordance with the constitutional policy enunciated above. Obviously, the State may
not be precluded from considering a direct takeover of the mines, if it is the only
plausible remedy in sight to the gnawing complexities generated by the gold rush. As
implied earlier, the State need be guided only by the demands of public interest in
settling for this option, as well as its material and logistic feasibility.
In this regard, petitioner's imputation of bad faith on the part of the DENR Secretary
when the latter issued MO 97-03 is not well-taken. The avowed rationale of the
memorandum order is clearly and plainly stated in its "whereas" clauses. 23 In the
absence of any concrete evidence that the DENR Secretary violated the law or
 ENVIRONMENTAL LAW & NATURAL RESOURCES
abused his discretion, as in this case, he is presumed to have regularly issued the
memorandum with a lawful intent and pursuant to his official functions.
Given these considerations, petitioner's first assigned error is baseless and premised
on tentative assumptions. Petitioner cannot claim any absolute right to the Diwalwal
mines pending resolution of the Consolidated Mines cases, much less ask us to
assume, at this point, that respondent BCMC and the other mining firms are illegal
miners. These factual issues are to be properly threshed out in CA G.R. SP Nos.
61215 and 61216, which have yet to be decided by the Court of Appeals. Any
objection raised against MO 97-03 is likewise premature at this point, inasmuch as it
merely ordered a study of an option which the State is authorized by law to
undertake.
We see no need to rule on the matter of the OTPs, considering that the grounds
invoked by petitioner for invalidating the same are inextricably linked to the issues
raised in the Consolidated Mines cases.
WHEREFORE, in view of the foregoing, the instant petition is DENIED. The decision
of the Court of Appeals in CA-G.R. SP No. 44693 is AFFIRMED.
SO ORDERED.
Davide, Jr., Puno, and Kapunan, JJ.,  concur.
Puno, J., On official leave.
Petition denied, judgment affirmed.
Notes.—Not only are existing laws read into contracts in order to fix obligations as
between parties, but the reservation of essential attributes of sovereign power is also
read into contracts as a basic postulate of the legal order. (Tolentino vs. Secretary of
Finance, 235 SCRA 630 [1994])
A later law which enlarges, abridges, or in any manner changes the intent of the
parties to the contract necessarily impairs the contract itself and cannot be given
retroactive effect without violating the constitutional prohibition against impairment of
contracts. (Ortigas & Co., Ltd. vs. Court of Appeals, 346 SCRA 748 [2000])
——o0o——
Session 5 P a g e | 27
G.R. Nos. 152613 & No. 152628. June 23, 2006.*
APEX MINING CO., INC., petitioner, vs. 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.
G.R. Nos. 152619-20. June 23, 2006.*
BALITE COMMUNAL PORTAL MINING COOPERATIVE, petitioner, vs.
SOUTHEAST MINDANAO GOLD 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.
G.R. Nos. 152870-71. June 23, 2006.*
THE MINES ADJUDICATION BOARD AND ITS MEMBERS, THE HON. VICTOR
O. RAMOS (Chairman), UNDERSECRETARY VIRGILIO MARCELO (Member)
and DIRECTOR HORACIO RAMOS (Member), petitioners, vs. SOUTHEAST
MINDANAO GOLD MINING CORPORATION, respondent.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Appeals; The established rule is that in the exercise of the Supreme Court’s power of
review, the Court not being a trier of facts, does not normally embark on a re-
examination of the evidence presented by the contending parties during the trial of
the case considering that the findings of facts of the Court of Appeals are conclusive
and binding on the Court; Exceptions.— The established rule is that in the exercise of
the Supreme Court’s power of review, the Court not being a trier of facts, does not
normally embark on a re-examination of the evidence presented by the contending
parties during the trial of the case considering that the findings of facts of the Court
of Appeals are conclusive and binding on the Court. This rule, however, admits of
exceptions as recognized by jurisprudence, to wit: (1) [w]hen the findings are
grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on misapprehension of facts; (5) when
the findings of facts are conflicting; (6) when in making its findings the Court of
Appeals went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the findings are contrary
to the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well
as in the petitioner’s main and reply briefs are not disputed by the respondent; (10)
when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion.
Natural Resources; Mines; Administrative Law; The power of administration over
mineral lands and minerals vested on the Director of Mines includes the power to
prescribe terms and conditions in granting exploration permits to qualified entities.—
Under Section 90 of Presidential Decree No. 463, the applicable statute during the
issuance of EP 133, the DENR Secretary, through Director of BMG, is 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 has 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. This power of administration includes 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.
Same; Same; Corporation Law; Agency; Elements; The mere fact that an entity may
be a 100% subsidiary corporation of another corporation does not necessarily mean
that the former is a duly authorized agent of the latter—for a contract of agency to
exist, it is essential that the principal consents that the other party, the agent, shall
act on its behalf, and the agent consents so as to act.— Condition number 6
Session 5 P a g e | 28
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. For a contract of agency to
exist, it is essential that the principal consents that the other party, the agent, shall
act on its behalf, and the agent consents so as to act. In the case of Yu Eng Cho v.
Pan American World Airways, Inc., 328 SCRA 717, 728 (2000), this Court had the
occasion to set forth the elements of agency, viz.: (1) consent, express or implied, of
the parties to establish the relationship; (2) the object is the execution of a juridical
act in relation to a third person; (3) the agent acts as a representative and not for
himself; (4) the agent acts within the scope of his authority. The existence of the
elements of agency is a factual matter that needs to be established or proven by
evidence. The burden of proving that agency is extant in a certain case rests in the
party who sets forth such allegation. This is based on the principle that he who
alleges a fact has the burden of proving it. It must likewise be emphasized that the
evidence to prove this fact must be clear, positive and convincing.
Same; Same; Same; Same; Assignment; Words and Phrases; Where an entity is not
an agent of a corporation who was earlier granted an Exploration Permit, the
assignment or transfer made by the latter in favor of the former is null and void for
directly contravening the terms and conditions of the grant of said Exploration
Permit; The concept of agency is distinct from assignment—in agency, the agent acts
not on his own but on behalf of his principal, while in assignment, there is total
transfer or relinquishment of right by the assignor to the assignee.— In the instant
Petitions, it is incumbent upon either MMC or SEM to prove that a contract of agency
actually exists between them so as to allow SEM to use and benefit from EP 133 as
the agent of MMC. SEM did not claim nor submit proof that it is the designated agent
of MMC to represent the latter in its business dealings or undertakings. SEM cannot,
therefore, be considered as an agent of MMC which can use EP 133 and benefit from
it. Since SEM is not an authorized agent of MMC, it goes without saying that the
assignment or transfer of the permit in favor of SEM is null and void as it directly
contravenes the terms and conditions of the grant of EP 133. Furthermore, the
concept of agency is distinct from assignment. In agency, the agent acts not on his
own behalf but on behalf of his principal. While in assignment, there is total transfer
or relinquishment of right by the assignor to the assignee. The assignee takes the
place of the assignor and is no longer bound to the latter.
Same; Same; Same; Same; Same; Exploration permits are strictly granted to entities
or individuals possessing the resources and capability to undertake mining
operations.—The condition stipulating that the permit is for the exclusive use of the
permittee or its duly authorized agent is not without any reason. Exploration permits
are strictly granted to entities or individuals possessing the resources and capability
to undertake mining operations. Without such a condition, non-qualified entities or
 ENVIRONMENTAL LAW & NATURAL RESOURCES
individuals could circumvent the strict requirements under the law by the simple
expediency acquiring the permit from the original permittee.
Same; Same; Same; Same; Same; The Court cannot lend recognition to the Court of
Appeals’ theory that a 100% subsidiary of another corporation is automatically an
agent of the latter—a corporation is an artificial being created by operation of law,
having the right of succession and the powers, attributes, and properties expressly
authorized by law or incident to its existence.— We cannot lend recognition to the
Court of Appeals’ theory that SEM, being a 100% subsidiary of MMC, is automatically
an agent of MMC. A corporation is an artificial being created by operation of law,
having the right of succession and the powers, attributes, and properties expressly
authorized by law or incident to its existence. It is an artificial being invested by law
with a personality separate and distinct from those of the persons composing it as
well as from that of any other legal entity to which it may be related. Resultantly,
absent any clear proof to the contrary, SEM is a separate and distinct entity from
MMC.
Same; Same; Same; Same; Same; Doctrine of Piercing the Veil of Corporate Fiction;
The doctrine of piercing the corporate veil cannot be used as a vehicle to commit
prohibited acts because these acts are the ones which the doctrine seeks to prevent
—the assignment of the Exploration Permit in favor of another corporation is utilized
to circumvent the condition of non-transferability.— The Court of Appeals pathetically
invokes the doctrine of piercing the corporate veil to legitimize the prohibited transfer
or assignment of EP 133. It stresses that SEM is just a business conduit of MMC,
hence, the distinct legal personalities of the two entities should not be recognized.
True, the corporate mask may be removed when the corporation is just an alter ego
or a mere conduit of a person or of another corporation. For reasons of public policy
and in the interest of justice, the corporate veil will justifiably be impaled only when it
becomes a shield for fraud, illegality or inequity committed against a third person.
However, this Court has made a caveat in the application of the doctrine of piercing
the corporate veil. Courts should be mindful of the milieu where it is to be applied.
Only in cases where the corporate fiction was misused to such an extent that
injustice, fraud or crime was committed against another, in disregard of its rights may
the veil be pierced and removed. Thus, a subsidiary corporation may be made to
answer for the liabilities and/or illegalities done by the parent corporation if the
former was organized for the purpose of evading obligations that the latter may have
entered into. In other words, this doctrine is in place in order to expose and hold
liable a corporation which commits illegal acts and use the corporate fiction to avoid
liability from the said acts. The doctrine of piercing the corporate veil cannot
therefore be used as a vehicle to commit prohibited acts because these acts are the
ones which the doctrine seeks to prevent. To our mind, the application of the
foregoing doctrine is unwarranted. The assignment of the permit in favor of SEM is
utilized to circumvent the condition of non-transferability of the exploration permit.
Session 5 P a g e | 29
To allow SEM to avail itself of this doctrine and to approve the validity of the
assignment is tantamount to sanctioning illegal act which is what the doctrine
precisely seeks to forestall.
Same; Same; Same; Same; Same; Absent prior approval of the Secretary of the
Department of Environment and Natural Resources, the assignment of an Exploration
Permit is without legal effect.— The records are bereft of any indication that the
assignment bears the imprimatur of the Secretary of the DENR. Presidential Decree
No. 463, which is the governing law when the assignment was executed, explicitly
requires that the transfer or assignment of mining rights, including the right to
explore a mining area, must be with the prior approval of the Secretary of DENR.
Quite conspicuously, SEM did not dispute the allegation that the Deed of Assignment
was made without the prior approval of the Secretary of DENR. Absent the prior
approval of the Secretary of DENR, the assignment of EP 133, was, therefore, without
legal effect for violating the mandatory provision of Presidential Decree No. 463.
Same; Same; Same; The DENR Secretary has no power to convert forest reserves
into non-forest reserves.— Against the backdrop of the applicable statutes which
govern the issuance of DAO No. 66, this Court is constrained to rule that said
administrative order was issued not in accordance with the laws. Inescapably, DAO
No. 66, declaring 729 hectares of the areas covered by the Agusan-Davao-Surigao
Forest Reserve as non-forest land open to small-scale mining operations, is null and
void as, verily, the DENR Secretary has no power to convert forest reserves into non-
forest reserves.
Same; Same; Upon the effectivity of the 1987 Constitution, the State assumed a
more dynamic role in the exploration, development and utilization of the natural
resources of the country.—Upon the effectivity of the 1987 Constitution, the State
assumed a more dynamic role in the exploration, development and utilization of the
natural resources of the country. With this policy, the State may pursue full control
and supervision of the exploration, development and utilization of the country’s
natural mineral resources. The options open to the State are through direct
undertaking or by entering into co-production, joint venture, or production-sharing
agreements, or by entering into agreement with foreign-owned corporations for
large-scale exploration, development and utilization.
Same; Same; Mining operations in the Diwalwal Mineral Reservation are now within
the full control of the State through the executive branch, and pursuant to Section 5
of Republic Act No. 7942, the State can either directly undertake the exploration,
development and utilization of the area or it can enter into agreements with qualified
entities.—Recognizing the importance of the country’s 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
 ENVIRONMENTAL LAW & NATURAL RESOURCES
interest so requires, to establish mineral reservations where mining operations shall
be undertaken directly by the State or through a contractor. To implement the intent
and provisions of Proclamation No. 297, the DENR Secretary issued DAO No. 2002-18
dated 12 August 2002 declaring an emergency situation in the Diwalwal Gold Rush
Area and ordering the stoppage of all mining operations therein. The issue on who
has priority right over the disputed area is deemed overtaken by the above
subsequent developments particularly with the issuance of Proclamation 297 and
DAO No. 2002-18, both being constitutionally-sanctioned acts of the Executive
Branch. Mining operations in the Diwalwal Mineral Reservation are now, therefore,
within the full control of the State through the executive branch. Pursuant to Section
5 of Republic Act No. 7942, the State can either directly undertake the exploration,
development and utilization of the area or it can enter into agreements with qualified
entities.
Same; Same; The State may not be precluded from considering a direct takeover of
the mines, if it is the only plausible remedy in sight to the gnawing complexities
generated by the gold rush.— It is now up to the Executive Department whether to
take the first option, i.e., to undertake directly the mining operations of the Diwalwal
Gold Rush Area. As already ruled, the State may not be precluded from considering a
direct takeover of the mines, if it is the only plausible remedy in sight to the gnawing
complexities generated by the gold rush. The State need be guided only by the
demands of public interest in settling on this option, as well as its material and
logistic feasibility. The State can also opt to award mining operations in the mineral
reservation to private entities including petitioners Apex and Balite, if it wishes. The
exercise of this prerogative lies with the Executive Department over which courts will
not interfere.
PETITIONS for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Amado L. Cantos for Davao United Miners Cooperative, et al.
     Jesus T. Albacite for Provincial Mining Regulatory Board of Davao.
     Martin T. Lu for Rosendo Villaflor, et al.
     Rodolfo C. Rapista for Balite Communal Portal Mining Cooperative.
     Clarence D. Guerrero and Cesar T. Jayme for Apex Mining Co., Inc.
     Kapunan, Imperial, Paraguiton & Bongolan for MISMA.
     Quasha, Ancheta, Peña & Nolasco Law Office for Southeast Mindanao Gold Mining
Corporation.
CHICO-NAZARIO, J.:
Session 5 P a g e | 30
On 27 February 1931, Governor General Dwight F. Davis issued Proclamation No.
369, establishing the Agusan-Davao-Surigao Forest Reserve consisting of
approximately 1,927,400 hectares. 1
The disputed area, a rich tract of mineral land, is inside the forest reserve located at
Monkayo, Davao del Norte, and Cateel, Davao Oriental, consisting of 4,941.6759
hectares.2 This mineral land is encompassed by Mt. Diwata, which is situated in the
municipalities of Monkayo and Cateel. It later became known as the "Diwalwal Gold
Rush Area." It has since the early 1980’s been stormed by conflicts brought about by
the numerous mining claimants scrambling for gold that lies beneath its bosom.
On 21 November 1983, Camilo Banad and his group, who claimed to have first
discovered traces of gold in Mount Diwata, filed a Declaration of Location (DOL) for
six mining claims in the area.
Camilo Banad and some other natives pooled their skills and resources and organized
the Balite Communal Portal Mining Cooperative (Balite). 3
On 12 December 1983, Apex Mining Corporation (Apex) entered into operating
agreements with Banad and his group.
From November 1983 to February 1984, several individual applications for mining
locations over mineral land covering certain parts of the Diwalwal gold rush area were
filed with the Bureau of Mines and Geo-Sciences (BMG).
On 2 February 1984, Marcopper Mining Corporation (MMC) filed 16 DOLs or mining
claims for areas adjacent to the area covered by the DOL of Banad and his group.
After realizing that the area encompassed by its mining claims is a forest reserve
within the coverage of Proclamation No. 369 issued by Governor General Davis, MMC
abandoned the same and instead applied for a prospecting permit with the Bureau of
Forest Development (BFD).
On 1 July 1985, BFD issued a Prospecting Permit to MMC covering an area of
4,941.6759 hectares traversing the municipalities of Monkayo and Cateel, an area
within the forest reserve under Proclamation No. 369. The permit embraced the areas
claimed by Apex and the other individual mining claimants.
On 11 November 1985, MMC filed Exploration Permit Application No. 84-40 with the
BMG. On 10 March 1986, the BMG issued to MCC Exploration Permit No. 133 (EP
133).
Discovering the existence of several mining claims and the proliferation of small-scale
miners in the area covered by EP 133, MMC thus filed on 11 April 1986 before the
BMG a Petition for the Cancellation of the Mining Claims of Apex and Small Scale
Mining Permit Nos. (x-1)-04 and (x-1)-05 which was docketed as MAC No. 1061. MMC
alleged that the areas covered by its EP 133 and the mining claims of Apex were
within an established and existing forest reservation (Agusan-Davao-Surigao Forest
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Reserve) under Proclamation No. 369 and that pursuant to Presidential Decree No.
463,4 acquisition of mining rights within a forest reserve is through the application for
a permit to prospect with the BFD and not through registration of a DOL with the
BMG.
On 23 September 1986, Apex filed a motion to dismiss MMC’s petition alleging that its
mining claims are not within any established or proclaimed forest reserve, and as
such, the acquisition of mining rights thereto must be undertaken via registration of
DOL with the BMG and not through the filing of application for permit to prospect
with the BFD.
On 9 December 1986, BMG dismissed MMC’s petition on the ground that the area
covered by the Apex mining claims and MMC’s permit to explore was not a forest
reservation. It further declared null and void MMC’s EP 133 and sustained the validity
of Apex mining claims over the disputed area.
MMC appealed the adverse order of BMG to the Department of Environment and
Natural Resources (DENR).
On 15 April 1987, after due hearing, the DENR reversed the 9 December 1996 order
of BMG and declared MMC’s EP 133 valid and subsisting.
Apex filed a Motion for Reconsideration with the DENR which was subsequently
denied. Apex then filed an appeal before the Office of the President. On 27 July 1989,
the Office of the President, through Assistant Executive Secretary for Legal Affairs,
Cancio C. Garcia,5 dismissed Apex’s appeal and affirmed the DENR ruling.
Apex filed a Petition for Certiorari before this Court. The Petition was docketed as
G.R. No. 92605 entitled, "Apex Mining Co., Inc. v. Garcia." 6 On 16 July 1991, this
Court rendered a Decision against Apex holding that the disputed area is a forest
reserve; hence, the proper procedure in acquiring mining rights therein is by initially
applying for a permit to prospect with the BFD and not through a registration of DOL
with the BMG.
On 27 December 1991, then DENR Secretary Fulgencio Factoran, Jr. issued
Department Administrative Order No. 66 (DAO No. 66) declaring 729 hectares of the
areas covered by the Agusan-Davao-Surigao Forest Reserve as non-forest lands and
open to small-scale mining purposes.
As DAO No. 66 declared a portion of the contested area open to small scale miners,
several mining entities filed applications for Mineral Production Sharing Agreement
(MPSA).
On 25 August 1993, Monkayo Integrated Small Scale Miners Association (MISSMA)
filed an MPSA application which was denied by the BMG on the grounds that the area
applied for is within the area covered by MMC EP 133 and that the MISSMA was not
qualified to apply for an MPSA under DAO No. 82,7 Series of 1990.
Session 5 P a g e | 31
On 5 January 1994, Rosendo Villaflor and his group filed before the BMG a Petition
for Cancellation of EP 133 and for the admission of their MPSA Application. The
Petition was docketed as RED Mines Case No. 8-8-94. Davao United Miners
Cooperative (DUMC) and Balite intervened and likewise sought the cancellation of EP
133.
On 16 February 1994, MMC assigned EP 133 to Southeast Mindanao Gold Mining
Corporation (SEM), a domestic corporation which is alleged to be a 100% -owned
subsidiary of MMC.
On 14 June 1994, Balite filed with the BMG an MPSA application within the contested
area that was later on rejected.
On 23 June 1994, SEM filed an MPSA application for the entire 4,941.6759 hectares
under EP 133, which was also denied by reason of the pendency of RED Mines Case
No. 8-8-94. On 1 September 1995, SEM filed another MPSA application.
On 20 October 1995, BMG accepted and registered SEM’s MPSA application and the
Deed of Assignment over EP 133 executed in its favor by MMC. SEM’s application was
designated MPSA Application No. 128 (MPSAA 128). After publication of SEM’s
application, the following filed before the BMG their adverse claims or oppositions:
a) MAC Case No. 004 (XI) – JB Management Mining Corporation;
b) MAC Case No. 005(XI) – Davao United Miners Cooperative;
c) MAC Case No. 006(XI) – Balite Integrated Small Scale Miner’s
Cooperative;
d) MAC Case No. 007(XI) – Monkayo Integrated Small Scale Miner’s
Association, Inc. (MISSMA);
e) MAC Case No. 008(XI) – Paper Industries Corporation of the Philippines;
f) MAC Case No. 009(XI) – Rosendo Villafor, et al.;
g) MAC Case No. 010(XI) – Antonio Dacudao;
h) MAC Case No. 011(XI) – Atty. Jose T. Amacio;
i) MAC Case No. 012(XI) – Puting-Bato Gold Miners Cooperative;
j) MAC Case No. 016(XI) – Balite Communal Portal Mining Cooperative;
k) MAC Case No. 97-01(XI) – Romeo Altamera, et al.8
 ENVIRONMENTAL LAW & NATURAL RESOURCES
To address the matter, the DENR constituted a Panel of Arbitrators (PA) to resolve
the following:
(a) The adverse claims on MPSAA No. 128; and
(b) The Petition to Cancel EP 133 filed by Rosendo Villaflor docketed as RED
Case No. 8-8-94.9
On 13 June 1997, the PA rendered a resolution in RED Mines Case No. 8-8-94. As to
the Petition for Cancellation of EP 133 issued to MMC, the PA relied on the ruling in
Apex Mining Co., Inc. v. Garcia, 10 and opined that EP 133 was valid and subsisting. It
also declared that the BMG Director, under Section 99 of the Consolidated Mines
Administrative Order implementing Presidential Decree No. 463, was authorized to
issue exploration permits and to renew the same without limit.
With respect to the adverse claims on SEM’s MPSAA No. 128, the PA ruled that
adverse claimants’ petitions were not filed in accordance with the existing rules and
regulations governing adverse claims because the adverse claimants failed to submit
the sketch plan containing the technical description of their respective claims, which
was a mandatory requirement for an adverse claim that would allow the PA to
determine if indeed there is an overlapping of the area occupied by them and the
area applied for by SEM. It added that the adverse claimants were not claim owners
but mere occupants conducting illegal mining activities at the contested area since
only MMC or its assignee SEM had valid mining claims over the area as enunciated in
Apex Mining Co., Inc. v. Garcia. 11 Also, it maintained that the adverse claimants were
not qualified as small-scale miners under DENR Department Administrative Order No.
34 (DAO No. 34),12 or the Implementing Rules and Regulation of Republic Act No.
7076 (otherwise known as the "People’s Small-Scale Mining Act of 1991"), as they
were not duly licensed by the DENR to engage in the extraction or removal of
minerals from the ground, and that they were large-scale miners. The decretal
portion of the PA resolution pronounces:
VIEWED IN THE LIGHT OF THE FOREGOING, the validity of Expoloration Permit No.
133 is hereby reiterated and all the adverse claims against MPSAA No. 128 are
DISMISSED.13
Undaunted by the PA ruling, the adverse claimants appealed to the Mines
Adjudication Board (MAB). In a Decision dated 6 January 1998, the MAB considered
erroneous the dismissal by the PA of the adverse claims filed against MMC and SEM
over a mere technicality of failure to submit a sketch plan. It argued that the rules of
procedure are not meant to defeat substantial justice as the former are merely
secondary in importance to the latter. Dealing with the question on EP 133’s validity,
the MAB opined that said issue was not crucial and was irrelevant in adjudicating the
appealed case because EP 133 has long expired due to its non-renewal and that the
holder of the same, MMC, was no longer a claimant of the Agusan-Davao-Surigao
Forest Reserve having relinquished its right to SEM. After it brushed aside the issue of
the validity of EP 133 for being irrelevant, the MAB proceeded to treat SEM’s MPSA
Session 5 P a g e | 32
application over the disputed area as an entirely new and distinct application. It
approved the MPSA application, excluding the area segregated by DAO No. 66, which
declared 729 hectares within the Diwalwal area as non-forest lands open for small-
scale mining. The MAB resolved:
WHEREFORE, PREMISES CONSIDERED, the decision of the Panel of Arbitrators dated
13 June 1997 is hereby VACATED and a new one entered in the records of the case
as follows:
1. SEM’s MPSA application is hereby given due course subject to the full and
strict compliance of the provisions of the Mining Act and its Implementing
Rules and Regulations;
2. The area covered by DAO 66, series of 1991, actually occupied and
actively mined by the small-scale miners on or before August 1, 1987 as
determined by the Provincial Mining Regulatory Board (PMRB), is hereby
excluded from the area applied for by SEM;
3. A moratorium on all mining and mining-related activities, is hereby
imposed until such time that all necessary procedures, licenses, permits, and
other requisites as provided for by RA 7076, the Mining Act and its
Implementing Rules and Regulations and all other pertinent laws, rules and
regulations are complied with, and the appropriate environmental protection
measures and safeguards have been effectively put in place;
4. Consistent with the spirit of RA 7076, the Board encourages SEM and all
small-scale miners to continue to negotiate in good faith and arrive at an
agreement beneficial to all. In the event of SEM’s strict and full compliance
with all the requirements of the Mining Act and its Implementing Rules and
Regulations, and the concurrence of the small-scale miners actually
occupying and actively mining the area, SEM may apply for the inclusion of
portions of the areas segregated under paragraph 2 hereof, to its MPSA
application. In this light, subject to the preceding paragraph, the contract
between JB [JB Management Mining Corporation] and SEM is hereby
recognized.14
Dissatisfied, the Villaflor group and Balite appealed the decision to this Court. SEM,
aggrieved by the exclusion of 729 hectares from its MPSA application, likewise
appealed. Apex filed a Motion for Leave to Admit Petition for Intervention predicated
on its right to stake its claim over the Diwalwal gold rush which was granted by the
Court. These cases, however, were remanded to the Court of Appeals for proper
disposition pursuant to Rule 43 of the 1997 Rules of Civil Procedure. The Court of
Appeals consolidated the remanded cases as CA-G.R. SP No. 61215 and No. 61216.
In the assailed Decision15 dated 13 March 2002, the Court of Appeals affirmed in toto
the decision of the PA and declared null and void the MAB decision.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
The Court of Appeals, banking on the premise that the SEM is the agent of MMC by
virtue of its assignment of EP 133 in favor of SEM and the purported fact that SEM is
a 100% subsidiary of MMC, ruled that the transfer of EP 133 was valid. It argued that
since SEM is an agent of MMC, the assignment of EP 133 did not violate the condition
therein prohibiting its transfer except to MMC’s duly designated agent. Thus, despite
the non-renewal of EP 133 on 6 July 1994, the Court of Appeals deemed it relevant to
declare EP 133 as valid since MMC’s mining rights were validly transferred to SEM
prior to its expiration.
The Court of Appeals also ruled that MMC’s right to explore under EP 133 is a
property right which the 1987 Constitution protects and which cannot be divested
without the holder’s consent. It stressed that MMC’s failure to proceed with the
extraction and utilization of minerals did not diminish its vested right to explore
because its failure was not attributable to it.
Reading Proclamation No. 369, Section 11 of Commonwealth Act 137, and Sections 6,
7, and 8 of Presidential Decree No. 463, the Court of Appeals concluded that the
issuance of DAO No. 66 was done by the DENR Secretary beyond his power for it is
the President who has the sole power to withdraw from the forest reserve established
under Proclamation No. 369 as non-forest land for mining purposes. Accordingly, the
segregation of 729 hectares of mining areas from the coverage of EP 133 by the MAB
was unfounded.
The Court of Appeals also faulted the DENR Secretary in implementing DAO No. 66
when he awarded the 729 hectares segregated from the coverage area of EP 133 to
other corporations who were not qualified as small-scale miners under Republic Act
No. 7076.
As to the petitions of Villaflor and company, the Court of Appeals argued that their
failure to submit the sketch plan to the PA, which is a jurisdictional requirement, was
fatal to their appeal. It likewise stated the Villaflor and company’s mining claims,
which were based on their alleged rights under DAO No. 66, cannot stand as DAO
No. 66 was null and void. The dispositive portion of the Decision decreed:
WHEREFORE, premises considered, the Petition of Southeast Mindanao Gold Mining
Corporation is GRANTED while the Petition of Rosendo Villaflor, et al., is DENIED for
lack of merit. The Decision of the Panel of Arbitrators dated 13 June 1997 is
AFFIRMED in toto and the assailed MAB Decision is hereby SET ASIDE and declared
as NULL and VOID.16
Hence, the instant Petitions for Review on Certiorari under Rule 45 of the Rules of
Court filed by Apex, Balite and MAB.
During the pendency of these Petitions, President Gloria Macapagal-Arroyo issued
Proclamation No. 297 dated 25 November 2002. This proclamation excluded an area
of 8,100 hectares located in Monkayo, Compostela Valley, and proclaimed the same
as mineral reservation and as environmentally critical area. Subsequently, DENR
Session 5 P a g e | 33
Administrative Order No. 2002-18 was issued declaring an emergency situation in the
Diwalwal gold rush area and ordering the stoppage of all mining operations therein.
Thereafter, Executive Order No. 217 dated 17 June 2003 was issued by the President
creating the National Task Force Diwalwal which is tasked to address the situation in
the Diwalwal Gold Rush Area.
In G.R. No. 152613 and No. 152628, Apex raises the following issues:
I
WHETHER OR NOT SOUTHEAST MINDANAO GOLD MINING’S [SEM] E.P. 133 IS NULL
AND VOID DUE TO THE FAILURE OF MARCOPPER TO COMPLY WITH THE TERMS
AND CONDITIONS PRESCRIBED IN EP 133.
II
WHETHER OR NOT APEX HAS A SUPERIOR AND PREFERENTIAL RIGHT TO STAKE
IT’S CLAIM OVER THE ENTIRE 4,941 HECTARES AGAINST SEM AND THE OTHER
CLAIMANTS PURSUANT TO THE TIME-HONORED PRINCIPLE IN MINING LAW THAT
"PRIORITY IN TIME IS PRIORITY IN RIGHT."17
In G.R. No. 152619-20, Balite anchors its petition on the following grounds:
I
WHETHER OR NOT THE MPSA OF SEM WHICH WAS FILED NINE (9) DAYS LATE
(JUNE 23, 1994) FROM THE FILING OF THE MPSA OF BALITE WHICH WAS FILED ON
JUNE 14, 1994 HAS A PREFERENTIAL RIGHT OVER THAT OF BALITE.
II
WHETHER OR NOT THE DISMISSAL BY THE PANEL OF ARBITRATORS OF THE
ADVERSE CLAIM OF BALITE ON THE GROUND THAT BALITE FAILED TO SUBMIT THE
REQUIRED SKETCH PLAN DESPITE THE FACT THAT BALITE, HAD IN FACT
SUBMITTED ON TIME WAS A VALID DISMISSAL OF BALITE’S ADVERSE CLAIM.
III
WHETHER OR NOT THE ACTUAL OCCUPATION AND SMALL-MINING OPERATIONS OF
BALITE PURSUANT TO DAO 66 IN THE 729 HECTARES WHICH WAS PART OF THE
4,941.6759 HECTARES COVERED BY ITS MPSA WHICH WAS REJECTED BY THE
BUREAU OF MINES AND GEOSCIENCES WAS ILLEGAL.18
In G.R. No. 152870-71, the MAB submits two issues, to wit:
I
WHETHER OR NOT EP NO. 133 IS STILL VALID AND SUBSISTING.
II
WHETHER OR NOT THE SUBSEQUENT ACTS OF THE GOVERNMENT SUCH AS THE
ISSUANCE OF DAO NO. 66, PROCLAMATION NO. 297, AND EXECUTIVE ORDER 217
CAN OUTWEIGH EP NO. 133 AS WELL AS OTHER ADVERSE CLAIMS OVER THE
DIWALWAL GOLD RUSH AREA.19
 ENVIRONMENTAL LAW & NATURAL RESOURCES
The common issues raised by petitioners may be summarized as follows:
I. Whether or not the Court of Appeals erred in upholding the validity and
continuous existence of EP 133 as well as its transfer to SEM;
II. Whether or not the Court of Appeals erred in declaring that the DENR
Secretary has no authority to issue DAO No. 66; and
III. Whether or not the subsequent acts of the executive department such
as the issuance of Proclamation No. 297, and DAO No. 2002-18 can
outweigh Apex and Balite’s claims over the Diwalwal Gold Rush Area.
On the first issue, Apex takes exception to the Court of Appeals’ ruling upholding the
validity of MMC’s EP 133 and its subsequent transfer to SEM asserting that MMC
failed to comply with the terms and conditions in its exploration permit, thus, MMC
and its successor-in-interest SEM lost their rights in the Diwalwal Gold Rush Area.
Apex pointed out that MMC violated four conditions in its permit. First, MMC failed to
comply with the mandatory work program, to complete exploration work, and to
declare a mining feasibility. Second, it reneged on its duty to submit an
Environmental Compliance Certificate. Third, it failed to comply with the reportorial
requirements. Fourth, it violated the terms of EP 133 when it assigned said permit to
SEM despite the explicit proscription against its transfer.
Apex likewise emphasizes that MMC failed to file its MPSA application required under
DAO No. 8220 which caused its exploration permit to lapse because DAO No. 82
mandates holders of exploration permits to file a Letter of Intent and a MPSA
application not later than 17 July 1991. It said that because EP 133 expired prior to
its assignment to SEM, SEM’s MPSA application should have been evaluated on its
own merit.
As regards the Court of Appeals recognition of SEM’s vested right over the disputed
area, Apex bewails the same to be lacking in statutory bases. According to Apex,
Presidential Decree No. 463 and Republic Act No. 7942 impose upon the claimant the
obligation of actually undertaking exploration work within the reserved lands in order
to acquire priority right over the area. MMC, Apex claims, failed to conduct the
necessary exploration work, thus, MMC and its successor-in-interest SEM lost any
right over the area.
In its Memorandum, Balite maintains that EP 133 of MMC, predecessor-in-interest of
SEM, is an expired and void permit which cannot be made the basis of SEM’s MPSA
application.
Similarly, the MAB underscores that SEM did not acquire any right from MMC by
virtue of the transfer of EP 133 because the transfer directly violates the express
condition of the exploration permit stating that "it shall be for the exclusive use and
benefit of the permittee or his duly authorized agents." It added that while MMC is
Session 5 P a g e | 34
the permittee, SEM cannot be considered as MMC’s duly designated agent as there is
no proof on record authorizing SEM to represent MMC in its business dealings or
undertakings, and neither did SEM pursue its interest in the permit as an agent of
MMC. According to the MAB, the assignment by MMC of EP 133 in favor of SEM did
not make the latter the duly authorized agent of MMC since the concept of an agent
under EP 133 is not equivalent to the concept of assignee. It finds fault in the
assignment of EP 133 which lacked the approval of the DENR Secretary in
contravention of Section 25 of Republic Act No. 7942 21 requiring his approval for a
valid assignment or transfer of exploration permit to be valid.
SEM, on the other hand, counters that the errors raised by petitioners Apex, Balite
and the MAB relate to factual and evidentiary matters which this Court cannot inquire
into in an appeal by certiorari.
The established rule is that in the exercise of the Supreme Court’s power of review,
the Court not being a trier of facts, does not normally embark on a re-examination of
the evidence presented by the contending parties during the trial of the case
considering that the findings of facts of the Court of Appeals are conclusive and
binding on the Court.22 This rule, however, admits of exceptions as recognized by
jurisprudence, to wit:
(1) [w]hen the findings are grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on misapprehension of facts; (5) when the findings of facts are conflicting; (6)
when in making its findings the Court of Appeals went beyond the issues of the case,
or its findings are contrary to the admissions of both the appellant and the appellee;
(7) when the findings are contrary to the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when
the facts set forth in the petition as well as in the petitioner’s main and reply briefs
are not disputed by the respondent; (10) when the findings of fact are premised on
the supposed absence of evidence and contradicted by the evidence on record; and
(11) when the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties, which, if properly considered, would justify a different
conclusion.23
Also, in the case of Manila Electric Company v. Benamira, 24 the Court in a Petition for
Review on Certiorari, deemed it proper to look deeper into the factual circumstances
of the case since the Court of Appeal’s findings are at odds to those of the National
Labor Relations Commission (NLRC). Just like in the foregoing case, it is this Court’s
considered view that a re-evaluation of the attendant facts surrounding the present
case is appropriate considering that the findings of the MAB are in conflict with that
of the Court of Appeals.
I
At the threshold, it is an undisputed fact that MMC assigned to SEM all its rights
under EP 133 pursuant to a Deed of Assignment dated 16 February 1994.25
 ENVIRONMENTAL LAW & NATURAL RESOURCES
EP 133 is subject to the following terms and conditions  :
26
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; and
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.
Under Section 9027 of Presidential Decree No. 463, the applicable statute during the
issuance of EP 133, the DENR Secretary, through Director of BMG, is 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 has 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. 28 This power of administration includes 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.
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. For a
contract of agency to exist, it is essential that the principal consents that the other
Session 5 P a g e | 35
party, the agent, shall act on its behalf, and the agent consents so as to act. 29 In the
case of Yu Eng Cho v. Pan American World Airways, Inc., 30 this Court had the
occasion to set forth the elements of agency, viz:
(1) consent, express or implied, of the parties to establish the relationship;
(2) the object is the execution of a juridical act in relation to a third person;
(3) the agent acts as a representative and not for himself;
(4) the agent acts within the scope of his authority.
The existence of the elements of agency is a factual matter that needs to be
established or proven by evidence. The burden of proving that agency is extant in a
certain case rests in the party who sets forth such allegation. This is based on the
principle that he who alleges a fact has the burden of proving it. 31 It must likewise be
emphasized that the evidence to prove this fact must be clear, positive and
convincing.32
In the instant Petitions, it is incumbent upon either MMC or SEM to prove that a
contract of agency actually exists between them so as to allow SEM to use and
benefit from EP 133 as the agent of MMC. SEM did not claim nor submit proof that it
is the designated agent of MMC to represent the latter in its business dealings or
undertakings. SEM cannot, therefore, be considered as an agent of MMC which can
use EP 133 and benefit from it. Since SEM is not an authorized agent of MMC, it goes
without saying that the assignment or transfer of the permit in favor of SEM is null
and void as it directly contravenes the terms and conditions of the grant of EP 133.
Furthermore, the concept of agency is distinct from assignment. In agency, the agent
acts not on his own behalf but on behalf of his principal. 33 While in assignment, there
is total transfer or relinquishment of right by the assignor to the assignee. 34 The
assignee takes the place of the assignor and is no longer bound to the latter. The
deed of assignment clearly stipulates:
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.35
Bearing in mind the just articulated distinctions and the language of the Deed of
Assignment, it is readily obvious that the assignment by MMC of EP 133 in favor of
SEM did not make the latter the former’s agent. Such assignment involved actual
transfer of all rights and obligations MMC have under the permit in favor of SEM,
thus, making SEM the permittee. It is not a mere grant of authority to SEM, as an
agent of MMC, to use the permit. It is a total abdication of MMC’s rights over the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
permit. Hence, the assignment in question did not make SEM the authorized agent of
MMC to make use and benefit from EP 133.
The condition stipulating that the permit is for the exclusive use of the permittee or
its duly authorized agent is not without any reason. Exploration permits are strictly
granted to entities or individuals possessing the resources and capability to undertake
mining operations. Without such a condition, non-qualified entities or individuals
could circumvent the strict requirements under the law by the simple expediency
acquiring the permit from the original permittee.
We cannot lend recognition to the Court of Appeals’ theory that SEM, being a 100%
subsidiary of MMC, is automatically an agent of MMC.
A corporation is an artificial being created by operation of law, having the right of
succession and the powers, attributes, and properties expressly authorized by law or
incident to its existence.36 It is an artificial being invested by law with a personality
separate and distinct from those of the persons composing it as well as from that of
any other legal entity to which it may be related. 37 Resultantly, absent any clear proof
to the contrary, SEM is a separate and distinct entity from MMC.
The Court of Appeals pathetically invokes the doctrine of piercing the corporate veil
to legitimize the prohibited transfer or assignment of EP 133. It stresses that SEM is
just a business conduit of MMC, hence, the distinct legal personalities of the two
entities should not be recognized. True, the corporate mask may be removed when
the corporation is just an alter ego or a mere conduit of a person or of another
corporation.38 For reasons of public policy and in the interest of justice, the corporate
veil will justifiably be impaled only when it becomes a shield for fraud, illegality or
inequity committed against a third person. 39 However, this Court has made a caveat
in the application of the doctrine of piercing the corporate veil. Courts should be
mindful of the milieu where it is to be applied. Only in cases where the corporate
fiction was misused to such an extent that injustice, fraud or crime was committed
against another, in disregard of its rights may the veil be pierced and removed. Thus,
a subsidiary corporation may be made to answer for the liabilities and/or illegalities
done by the parent corporation if the former was organized for the purpose of
evading obligations that the latter may have entered into. In other words, this
doctrine is in place in order to expose and hold liable a corporation which commits
illegal acts and use the corporate fiction to avoid liability from the said acts. The
doctrine of piercing the corporate veil cannot therefore be used as a vehicle to
commit prohibited acts because these acts are the ones which the doctrine seeks to
prevent.
To our mind, the application of the foregoing doctrine is unwarranted. The
assignment of the permit in favor of SEM is utilized to circumvent the condition of
non-transferability of the exploration permit. To allow SEM to avail itself of this
doctrine and to approve the validity of the assignment is tantamount to sanctioning
illegal act which is what the doctrine precisely seeks to forestall.
Session 5 P a g e | 36
Quite apart from the above, a cursory consideration of the mining law pertinent to
the case, will, indeed, demonstrate the infraction committed by MMC in its
assignment of EP 133 to SEM.
Presidential Decree No. 463, enacted on 17 May 1974, otherwise known as the
Mineral Resources Development Decree, which governed the old system of
exploration, development, and utilization of mineral resources through "license,
concession or lease" prescribed:
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.)
The same provision is reflected in Republic Act No. 7942, otherwise known as the
Philippine Mining Act of 1995, which is the new law governing the exploration,
development and utilization of the natural resources, which provides:
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.
The records are bereft of any indication that the assignment bears the imprimatur of
the Secretary of the DENR. Presidential Decree No. 463, which is the governing law
when the assignment was executed, explicitly requires that the transfer or
assignment of mining rights, including the right to explore a mining area, must be
with the prior approval of the Secretary of DENR. Quite conspicuously, SEM did not
dispute the allegation that the Deed of Assignment was made without the prior
approval of the Secretary of DENR. Absent the prior approval of the Secretary of
DENR, the assignment of EP 133, was, therefore, without legal effect for violating the
mandatory provision of Presidential Decree No. 463.
An added significant omission proved fatal to MMC/SEM’s cause. While it is true that
the case of Apex Mining Co., Inc. v. Garcia 40 settled the issue of which between Apex
and MMC validly acquired mining rights over the disputed area, such rights, though,
had been extinguished by subsequent events. Records indicate that on 6 July 1993,
EP 133 was extended for 12 months or until 6 July 1994. 41 MMC never renewed its
permit prior and after its expiration. Thus, EP 133 expired by non-renewal.
With the expiration of EP 133 on 6 July 1994, MMC lost any right to the Diwalwal
Gold Rush Area. SEM, on the other hand, has not acquired any right to the said area
because the transfer of EP 133 in its favor is invalid. Hence, both MMC and SEM have
 ENVIRONMENTAL LAW & NATURAL RESOURCES
not acquired any vested right over the 4,941.6759 hectares which used to be covered
by EP 133.
II
The Court of Appeals theorizes that DAO No. 66 was issued beyond the power of the
DENR Secretary since the power to withdraw lands from forest reserves and to
declare the same as an area open for mining operation resides in the President.
Under Proclamation No. 369 dated 27 February 1931, the power to convert forest
reserves as non-forest reserves is vested with the DENR Secretary. Proclamation No.
369 partly states:
From this reserve shall be considered automatically excluded all areas which had
already been certified and which in the future may be proclaimed as classified and
certified lands and approved by the Secretary of Agriculture and Natural Resources. 42
However, a subsequent law, Commonwealth Act No. 137, otherwise known as "The
Mining Act" which was approved on 7 November 1936 provides:
Sec. 14. Lands within reservations for purposes other than mining, which, after such
reservation is made, are found to be more valuable for their mineral contents than for
the purpose for which the reservation was made, may be withdrawn from such
reservations by the President with the concurrence of the National Assembly, and
thereupon such lands shall revert to the public domain and be subject to disposition
under the provisions of this Act.
Unlike Proclamation No. 369, Commonwealth Act No. 137 vests solely in the
President, with the concurrence of the National Assembly, the power to withdraw
forest reserves found to be more valuable for their mineral contents than for the
purpose for which the reservation was made and convert the same into non-forest
reserves. A similar provision can also be found in Presidential Decree No. 463 dated
17 May 1974, with the modifications that (1) the declaration by the President no
longer requires the concurrence of the National Assembly and (2) the DENR Secretary
merely exercises the power to recommend to the President which forest reservations
are to be withdrawn from the coverage thereof. Section 8 of Presidential Decree No.
463 reads:
SEC. 8. Exploration and Exploitation of Reserved Lands. – When lands within
reservations, which have been established for purposes other than mining, are found
to be more valuable for their mineral contents, they may, upon recommendation of
the Secretary be withdrawn from such reservation by the President and established
as a mineral reservation.
Against the backdrop of the applicable statutes which govern the issuance of DAO
No. 66, this Court is constrained to rule that said administrative order was issued not
in accordance with the laws. Inescapably, DAO No. 66, declaring 729 hectares of the
areas covered by the Agusan-Davao-Surigao Forest Reserve as non-forest land open
Session 5 P a g e | 37
to small-scale mining operations, is null and void as, verily, the DENR Secretary has
no power to convert forest reserves into non-forest reserves.
III
It is the contention of Apex that its right over the Diwalwal gold rush area is superior
to that of MMC or that of SEM because it was the first one to occupy and take
possession of the area and the first to record its mining claims over the area.
For its part, Balite argues that with the issuance of DAO No. 66, its occupation in the
contested area, particularly in the 729 hectares small-scale mining area, has entitled
it to file its MPSA. Balite claims that its MPSA application should have been given
preference over that of SEM because it was filed ahead.
The MAB, on the other hand, insists that the issue on who has superior right over the
disputed area has become moot and academic by the supervening events. By virtue
of Proclamation No. 297 dated 25 November 2002, the disputed area was declared a
mineral reservation.
Proclamation No. 297 excluded an area of 8,100 hectares located in Monkayo,
Compostela Valley, and proclaimed the same as mineral reservation and as
environmentally critical area, viz:
WHEREAS, by virtue of Proclamation No. 369, series of 1931, certain tracts of public
land situated in the then provinces of Davao, Agusan and Surigao, with an area of
approximately 1,927,400 hectares, were withdrawn from settlement and disposition,
excluding, however, those portions which had been certified and/or shall be classified
and certified as non-forest lands;
WHEREAS, gold deposits have been found within the area covered by Proclamation
No. 369, in the Municipality of Monkayo, Compostela Valley Province, and
unregulated small to medium-scale mining operations have, since 1983, been
undertaken therein, causing in the process serious environmental, health, and peace
and order problems in the area;
WHEREAS, it is in the national interest to prevent the further degradation of the
environment and to resolve the health and peace and order problems spawned by
the unregulated mining operations in the said area;
WHEREAS, these problems may be effectively addressed by rationalizing mining
operations in the area through the establishment of a mineral reservation;
WHEREAS, after giving due notice, the Director of Mines and Geoxciences conducted
public hearings on September 6, 9 and 11, 2002 to allow the concerned sectors and
communities to air their views regarding the establishment of a mineral reservation in
the place in question;
WHEREAS, pursuant to the Philippine Mining Act of 1995 (RA 7942), the President
may, upon the recommendation of the Director of Mines and Geosciences, through
 ENVIRONMENTAL LAW & NATURAL RESOURCES
the Secretary of Environment and Natural Resources, and when the national interest
so requires, establish mineral reservations where mining operations shall be
undertaken by the Department directly or thru a contractor;
WHEREAS, as a measure to attain and maintain a rational and orderly balance
between socio-economic growth and environmental protection, the President may,
pursuant to Presidential Decree No. 1586, as amended, proclaim and declare certain
areas in the country as environmentally critical;
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines,
upon recommendation of the Secretary of the Department of Environment and
Natural Resources (DENR), and by virtue of the powers vested in me by law, do
hereby exclude certain parcel of land located in Monkayo, Compostela Valley, and
proclaim the same as mineral reservation and as environmentally critical area, with
metes and bound as defined by the following geographical coordinates;
xxxx
with an area of Eight Thousand One Hundred (8,100) hectares, more or less. Mining
operations in the area may be undertaken either by the DENR directly, subject to
payment of just compensation that may be due to legitimate and existing claimants,
or thru a qualified contractor, subject to existing rights, if any.
The DENR shall formulate and issue the appropriate guidelines, including the
establishment of an environmental and social fund, to implement the intent and
provisions of this Proclamation.
Upon the effectivity of the 1987 Constitution, the State assumed a more dynamic role
in the exploration, development and utilization of the natural resources of the
country.43 With this policy, the State may pursue full control and supervision of the
exploration, development and utilization of the country’s natural mineral resources.
The options open to the State are through direct undertaking or by entering into co-
production, joint venture, or production-sharing agreements, or by entering into
agreement with foreign-owned corporations for large-scale exploration, development
and utilization.44 Thus, Article XII, Section 2, of the 1987 Constitution, specifically
states:
SEC. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated. The exploration,
development, and utilization of natural resources shall be under the full control and
supervision of the State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of whose
capital is owned by such citizens. Such agreements may be for a period not
exceeding twenty-five years, renewable for not more than twenty-five years, and
under such terms and conditions as may be provided by law. x x x
Session 5 P a g e | 38
xxxx
The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic
growth and general welfare of the country. x x x (Underscoring supplied.)
Recognizing the importance of the country’s 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.
To implement the intent and provisions of Proclamation No. 297, the DENR Secretary
issued DAO No. 2002-18 dated 12 August 2002 declaring an emergency situation in
the Diwalwal Gold Rush Area and ordering the stoppage of all mining operations
therein.
The issue on who has priority right over the disputed area is deemed overtaken by
the above subsequent developments particularly with the issuance of Proclamation
297 and DAO No. 2002-18, both being constitutionally-sanctioned acts of the
Executive Branch. Mining operations in the Diwalwal Mineral Reservation are now,
therefore, within the full control of the State through the executive branch. Pursuant
to Section 5 of Republic Act No. 7942, the State can either directly undertake the
exploration, development and utilization of the area or it can enter into agreements
with qualified entities, 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 .
It is now up to the Executive Department whether to take the first option, i.e., to
undertake directly the mining operations of the Diwalwal Gold Rush Area. As already
ruled, the State may not be precluded from considering a direct takeover of the
mines, if it is the only plausible remedy in sight to the gnawing complexities
generated by the gold rush. The State need be guided only by the demands of public
interest in settling on this option, as well as its material and logistic feasibility. 45 The
State can also opt to award mining operations in the mineral reservation to private
entities including petitioners Apex and Balite, if it wishes. The exercise of this
prerogative lies with the Executive Department over which courts will not interfere.
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 39

WHEREFORE, premises considered, the Petitions of Apex, Balite and the MAB are
PARTIALLY GRANTED, thus:

1. We hereby REVERSE and SET ASIDE the Decision of the Court of Appeals,
dated 13 March 2002, and hereby declare that EP 133 of MMC has EXPIRED
on 7 July 1994 and that its subsequent transfer to SEM on 16 February 1994
is VOID.

2. We AFFIRM the finding of the Court of Appeals in the same Decision

declaring DAO No. 66 illegal for having been issued in excess of the DENR
Secretary’s authority.

Consequently, the State, should it so desire, may now award mining operations in the
disputed area to any qualified entity it may determine. No costs.

SO ORDERED.

 Panganiban (C.J., Chairperson), Ynares-Santiago, Austria-Martinez and Callejo, Sr.,

JJ., concur.

Petitions partially granted.

Notes.—A deed of sale for a piece of land in favor of an alien is null and void for
being contrary to law. (Ong Ching Po vs. Court of Appeals, 239 SCRA 341 [1994])

Before the cession of the Philippine Islands to the United States, the prevailing mining
law in the colony was the Royal Decree of May, 1867, otherwise known as The
Spanish Mining Law. (Atok Big-Wedge Mining Company vs. Intermediate Appellate
Court, 261 SCRA 528 [1996])
——o0o——
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.
Administrative Law; The power of administrative officials to promulgate rules and
regulations in the implementation of a statute is necessarily limited only to carrying
into effect what is provided in the legislative enactment.— We reiterate the principle
that the power of administrative officials to promulgate rules and regulations in the
implementation of a statute is necessarily limited only to carrying into effect what is
provided in the legislative enactment. The principle was enunciated as early as 1908
in the case of United States v. Barrias. The scope of the exercise of such rule-making
power was clearly expressed in the case of United States v. Tupasi Molina, decided in
1914, thus: “Of course, the regulations adopted under legislative authority by a
particular department must be in harmony with the provisions of the law, and for the
sole purpose of carrying into effect its general provisions. By such regulations, of
course, the law itself cannot be extended. So long, however, as the regulations relate
solely to carrying into effect the provision of the law, they are valid.”
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Constitutional Law; Natural Resources; Mines; Statutes; 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 by virtue of
Article XII, Section 2 of the 1987 Constitution and its implementing law, Executive
Order No. 279.—Petitioner’s insistence on the application of Presidential Decree No.
463, as amended, as the governing law on the acceptance and approval of
declarations of location and all other kinds of applications for the exploration,
development, and utilization of mineral resources pursuant to Executive Order No.
211, is erroneous. Presidential Decree No. 463, as amended, pertains to the old
system of exploration, development and utilization of natural resources through
“license, concession or lease” which, however, has been disallowed by Article XII,
Section 2 of the 1987 Constitution. By virtue of the said constitutional mandate and
its implementing law, Executive Order No. 279 which superseded Executive Order No.
211, the provisions dealing on “license, concession, or lease” of mineral resources
under Presidential Decree No. 463, as amended, and other existing mining laws are
deemed repealed and, therefore, ceased to operate as the governing law. In other
words, in all other areas of administration and management of mineral lands, the
provisions of Presidential Decree No. 463, as amended, and other existing mining
laws, still govern.
Same; Same; Same; Upon the effectivity of the 1987 Constitution, the State assumed
a more dynamic role in the exploration, development and utilization of the natural
resources of the country.—Upon the effectivity of the 1987 Constitution on February
2, 1987, the State assumed a more dynamic role in the exploration, development and
utilization of the natural resources of the country. Article XII, Section 2 of the said
Charter explicitly ordains that the exploration, development and utilization of natural
resources shall be under the full control and supervision of the State. Consonant
therewith, the exploration, development and utilization of natural resources may be
undertaken by means of direct act of the State, or it may opt to enter into
coproduction, joint venture, or production-sharing agreements, or it 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.
Same; Same; Same; Non-Impairment Clause; Article XII, Section 2 of the 1987
Constitution does not apply retroactively to “license, concession or lease” granted by
the government under the 1973 Constitution or before the effectivity of the 1987
Constitution.—To begin with, we dispel the impression created by petitioner’s
argument that the questioned administrative orders unduly pre-terminate existing
mining leases in general. A distinction which spells a real difference must be drawn.
Session 5 P a g e | 40
Article XII, Section 2 of the 1987 Constitution does not apply retroactively to “license,
concession or lease” granted by the government under the 1973 Constitution or
before the effectivity of the 1987 Constitution on February 2, 1987. The intent to
apply prospectively said constitutional provision was stressed during the deliberations
in the Constitutional Commission.
Same; Same; Same; Same; Pursuant to the reservation clause of Executive Order No.
211, mining leases or agreements granted after the effectivity of the 1987
Constitution 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.— lt is clear
from the aforestated provision that 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.
Same; Same; Same; Same; Executive Order No. 279 issued on July 25, 1987 by
President Aquino in the exercise of her legislative power has the force and effect of a
statute or law passed by Congress.— Clearly, Executive Order No. 279 issued on July
25, 1987 by President Corazon C. Aquino in the exercise of her legislative power has
the force and effect of a statute or law passed by Congress. As such, it validly
modified or altered the privileges granted, as well as the terms and conditions of
mining leases and agreements under Executive Order No. 211 after the effectivity of
the 1987 Constitution by 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.’
Same; Same; Same; Same; Police Power; Regardless of the reservation clause in
E.O. 211. mining leases or agreements granted by the State are subject to alterations
through a reasonable exercise of the police power of the State.— Well-settled is the
rule, however, that regardless of the reservation clause, mining leases or agreements
 ENVIRONMENTAL LAW & NATURAL RESOURCES
granted by the State, such as those granted pursuant to Executive Order No. 211
referred to in this petition, are subject to alterations through a reasonable exercise of
the police power of the State. In the 1950 case of Ongsiako v. Gamboa, where the
constitutionality of Republic Act No. 34 changing the 50–50 sharecropping system in
existing agricultural tenancy contracts to 55–45 in favor of tenants was challenged,
the Court, upholding the constitutionality of the law, emphasized the superiority of
the police power of the State over the sanctity of the contract.
Same; Same; Same; Same; Same; The State, in the exercise of its police power, may
not be precluded by the constitutional restriction on non-impairment of contract from
altering, modifying and amending the mining leases or agreements granted under
Presidential Decree No. 463, as amended, pursuant to Executive Order No. 211.— The
economic policy on the exploration, development and utilization of the country’s
natural resources under Article XII, Section 2 of the 1987 Constitution could not be
any clearer. As enunciated in Article XII, Section 1 of the 1987 Constitution, the
exploration, development and utilization of natural resources under the new system
mandated in Section 2, is geared towards a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all, especially the
underprivileged. The exploration, development and utilization of the country’s natural
resources are matters vital to the public interest and the general welfare of the
people. The recognition of the importance of the country’s natural resources was
expressed as early as the 1934 Constitutional Convention. Accordingly, the State, in
the exercise of its police power in this regard, may not be precluded by the
constitutional restriction on non-impairment of contract from altering, modifying and
amending the mining leases or agreements granted under Presidential Decree No.
463, as amended, pursuant to Executive Order No. 211. Police power, being co-
extensive with the necessities of the case and the demands of public interest, extends
to all the vital public needs. The passage of Executive Order No. 279 which
superseded Executive Order No. 211 provided legal basis for the DENR Secretary to
carry into effect the mandate of Article XII, Section 2 of the 1987 Constitution.
Same; Same; Same; Same; Same; The provision in Article 9 of Administrative Order
No. 57 that “all such leases or agreements shall be converted into production sharing
agreements” 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, as the use of the term “production
sharing agreement” implies negotiation between the Government and the applicants,
if they are so minded.—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.
Session 5 P a g e | 41
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 petition. A mineral production-sharing agreement (MPSA)
requires a meeting of the minds of the parties after negotiations arrived at in good
faith and in accordance with the procedure laid down in the subsequent
Administrative Order No. 82.
PETITION for certiorari to review the orders of the then Secretary of the Department
of Environment and Natural Resources.
The facts are stated in the opinion of the Court.
     Quintin R. Aseron, Jr. and Felipe T. Lopez for petitioner.
     Fred Henry V. Marallag for intervenor.
ROMERO, J.:
The instant petition seeks a ruling from this Court on the validity of two
Administrative Orders issued by the Secretary of the Department of Environment and
Natural Resources to carry out the provisions of certain Executive Orders
promulgated by the President in the lawful exercise of legislative powers.
Herein controversy was precipitated by the change introduced by Article XII, Section
2 of the 1987 Constitution on the system of exploration, development and utilization
of the country's natural resources. No longer is the utilization of inalienable lands of
public domain through "license, concession or lease" under the 1935 and 1973
Constitutions1 allowed under the 1987 Constitution.
The adoption of the concept of jura regalia2 that all natural resources are owned by
the State embodied in the 1935, 1973 and 1987 Constitutions, as well as the
recognition of the importance of the country's natural resources, not only for national
economic development, but also for its security and national defense, 3 ushered in the
adoption of the constitutional policy of "full control and supervision by the State" in
the exploration, development and utilization of the country's natural resources. The
options open to the State are through direct undertaking or by entering into co-
production, joint venture; or production-sharing agreements, or by entering into
agreement with foreign-owned corporations for large-scale exploration, development
and utilization.
Article XII, Section 2 of the 1987 Constitution provides:
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Sec. 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural
resources shall be under the full control and supervision of the
State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or product-sharing
agreements with Filipino citizens, or corporations or associations at
least sixty per centum of whose capital is owned by such citizens.
Such agreements may be for a period not exceeding twenty-five
years, renewable for not more than twenty-five years, and under
such terms and conditions as may be provided by law . In cases of
water rights for irrigation, water supply, fisheries, or industrial uses
other than the development of water power, beneficial use may be
the measure and limit of the grant.
xxx xxx xxx
The President may enter into agreements with foreign-owned
corporations involving either technical or financial assistance for
large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms
and conditions provided by law, based on real contributions to the
economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of
local scientific and technical resources .
The President shall notify the Congress of every contract entered
into in accordance with this provision, within thirty days from its
execution. (Emphasis supplied)
Pursuant to the mandate of the above-quoted provision, legislative acts 4 were
successively issued by the President in the exercise of her legislative
power.5
To implement said legislative acts, the Secretary of the Department of Environment
and Natural Resources (DENR) in turn promulgated Administrative Order Nos. 57 and
82, the validity and constitutionality of which are being challenged in this petition.
On July 10, 1987, President Corazon C. Aquino, in the exercise of her then legislative
powers under Article II, Section 1 of the Provisional Constitution and Article XIII,
Section 6 of the 1987 Constitution, promulgated Executive Order No. 211 prescribing
the interim procedures in the processing and approval of applications for the
exploration, development and utilization of minerals pursuant to the 1987
Session 5 P a g e | 42
Constitution in order to ensure the continuity of mining operations and activities and
to hasten the development of mineral resources. The pertinent provisions read as
follows:
Sec. 1. Existing mining permits, licenses, leases and other mining
grants issued by the Department of Environment and Natural
Resources and Bureau of Mines and Geo-Sciences, including
existing operating agreements and mining service contracts, shall
continue and remain in full force and effect, subject to the same
terms and conditions as originally granted and/or approved.
Sec. 2. Applications for the exploration, development and utilization
of mineral resources, including renewal applications for approval of
operating agreements and mining service contracts, shall be
accepted and processed and may be approved; concomitantly
thereto, declarations of locations and all other kinds of mining
applications shall be accepted and registered by the Bureau of
Mines and Geo-Sciences.
Sec. 3. The processing, evaluation and approval of all mining
applications, declarations of locations, operating agreements and
service contracts as provided for in Section 2 above, shall be
governed by Presidential Decree No. 463, as amended, other
existing mining laws and their implementing rules and
regulations: Provided, however, that the privileges granted, as well
as the terms and conditions thereof shall be subject to any and all
modifications or alterations which Congress may adopt pursuant to
Section 2, Article XII of the 1987 Constitution.
On July 25, 1987, President Aquino likewise promulgated 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
pertinent provisions relevant to this petition are as follows:
Sec. 1. The Secretary of the Department of Environment and
Natural Resources (hereinafter referred to as "the Secretary") is
hereby authorized 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 citizens, or
corporation or association at least sixty percent (60%) of whose
capital is owned by Filipino citizens. Such joint venture, co-
production, or production-sharing agreements may be for a period
not exceeding twenty-five years, renewable for not more than
 ENVIRONMENTAL LAW & NATURAL RESOURCES
twenty-five years, and shall include the minimum terms and
conditions prescribed in Section 2 hereof. In the execution of a
joint venture, co-production or production agreements, the
contracting parties, including the Government, may consolidate two
or more contiguous or geologically — related mining claims or
leases and consider them as one contract area for purposes of
determining the subject of the joint venture, co-production, or
production-sharing agreement.
xxx xxx xxx
Sec. 6. The Secretary shall promulgate such supplementary rules
and regulations as may be necessary to effectively implement the
provisions of this Executive Order.
Sec. 7. All provisions of Presidential Decree No. 463, as amended,
other existing mining laws, and their implementing rules and
regulations, or parts thereof, which are not inconsistent with the
provisions of this Executive Order, shall continue in force and
effect.
Pursuant to Section 6 of Executive Order No. 279, the DENR Secretary issued on June
23, 1989 DENR Administrative Order No. 57, series of 1989, captioned "Guidelines of
Mineral Production Sharing Agreement under Executive Order No. 279." 6 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.
On November 20, 1980, the Secretary of the DENR Administrative Order No. 82,
series of 1990, laying down the "Procedural Guidelines on the Award of Mineral
Production Sharing Agreement (MPSA) through Negotiation."7
Section 3 of the aforementioned DENR Administrative Order No. 82 enumerates the
persons or entities required to submit Letter of Intent (LOIs) and Mineral Production
Sharing Agreement (MPSAs) within two (2) years from the effectivity of DENR
Administrative Order No. 57 or until July 17, 1991. Failure to do so within the
prescribed period shall cause the abandonment of mining, quarry and sand and
gravel claims. Section 3 of DENR Administrative Order No. 82 provides:
Sec. 3. Submission of Letter of Intent (LOIs) and MPSAs). The
following shall submit their LOIs and MPSAs within two (2) years
from the effectivity of DENR A.O. 57 or until July 17, 1991.
Session 5 P a g e | 43
i. Declaration of Location (DOL) holders, mining lease applicants,
exploration permitees, quarry applicants and other mining
applicants whose mining/quarry applications have not been
perfected prior to the effectivity of DENR Administrative Order No.
57.
ii. All holders of DOL acquired after the effectivity of DENR A.O. No.
57.
iii. Holders of mining leases or similar agreements which were
granted after (the) effectivity of 1987 Constitution.
Failure to submit letters of intent and MPSA applications/proposals
within the prescribed period shall cause the abandonment of
mining, quarry and sand and gravel claims.
The issuance and the impeding implementation by the DENR of Administrative Order
Nos. 57 and 82 after their respective effectivity dates compelled the Miners
Association of the Philippines, Inc. 8 to file the instant petition assailing their validity
and constitutionality before this Court.
In this petition for certiorari, petitioner Miners Association of the Philippines, Inc.
mainly contends that respondent Secretary of DENR issued both Administrative Order
Nos. 57 and 82 in excess of his rule-making power under Section 6 of Executive
Order No. 279. On the assumption that the questioned 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 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.
On July 2, 1991, the Court, acting on petitioner's urgent ex-parte petition for issuance
of a restraining order/preliminary injunction, issued a Temporary Restraining Order,
upon posting of a P500,000.00 bond, enjoining the enforcement and implementation
of DENR Administrative Order Nos. 57 and 82, as amended, Series of 1989 and 1990,
respectively.9
On November 13, 1991, Continental Marble Corporation, 10 thru its President, Felipe
A. David, sought to intervene 11 in this case alleging that because of the temporary
order issued by the Court , the DENR, Regional Office No. 3 in San Fernando,
Pampanga refused to renew its Mines Temporary Permit after it expired on July 31,
1991. Claiming that its rights and interests are prejudicially affected by the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
implementation of DENR Administrative Order Nos. 57 and 82, it joined petitioner
herein in seeking to annul Administrative Order Nos. 57 and 82 and prayed that the
DENR, Regional Office No. 3 be ordered to issue a Mines Temporary Permit in its
favor to enable it to operate during the pendency of the suit.
Public respondents were acquired to comment on the Continental Marble
Corporation's petition for intervention in the resolution of November 28, 1991. 12
Now to the main petition. If its argued that Administrative Order Nos. 57 and 82 have
the effect of repealing or abrogating existing mining laws 13 which are not
inconsistent with the provisions of Executive Order No. 279. Invoking Section 7 of
said Executive Order No. 279, 14 petitioner maintains that respondent DENR Secretary
cannot provide guidelines such as Administrative Order Nos. 57 and 82 which are
inconsistent with the provisions of Executive Order No. 279 because both Executive
Order Nos. 211 and 279 merely reiterated the acceptance and registration of
declarations of location and all other kinds of mining applications by the Bureau of
Mines and Geo-Sciences under the provisions of Presidential Decree No. 463, as
amended, until Congress opts to modify or alter the same.
In other words, petitioner would have us rule that DENR Administrative Order Nos. 57
and 82 issued by the DENR Secretary in the exercise of his rule-making power are
tainted with invalidity inasmuch as both contravene or subvert the provisions of
Executive Order Nos. 211 and 279 or embrace matters not covered, nor intended to
be covered, by the aforesaid laws.
We disagree.
We reiterate the principle that the power of administrative officials to promulgate
rules and regulations in the implementation of a statute is necessarily limited only to
carrying into effect what is provided in the legislative enactment. The principle was
enunciated as early as 1908 in the case of United States v. Barrias. 15 The scope of
the exercise of such rule-making power was clearly expressed in the case of United
States v. Tupasi Molina, 16 decided in 1914, thus: "Of course, the regulations adopted
under legislative authority by a particular department must be in harmony with the
provisions of the law, and for the sole purpose of carrying into effect its general
provisions. By such regulations, of course, the law itself cannot be extended. So long,
however, as the regulations relate solely to carrying into effect its general provisions.
By such regulations, of course, the law itself cannot be extended. So long, however,
as the regulations relate solely to carrying into effect the provision of the law, they
are valid."
Recently, the case of People v. Maceren 17 gave a brief delienation of the scope of
said power of administrative officials:
Administrative regulations adopted under legislative authority by a
particular department must be in harmony with the provisions of
the law, and should be for the sole purpose of carrying into effect
Session 5 P a g e | 44
its general provision. By such regulations, of course, the law itself
cannot be extended (U.S. v. Tupasi Molina, supra). An
administrative agency cannot amend an act of Congress (Santos vs.
Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of the Board of
Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs.
General Auditing Office, L-28952, December 29, 1971, 42 SCRA
660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350).
The rule-making power must be confined to details for regulating
the mode or proceeding to carry into effect the law as it has been
enacted. The power cannot be extended to amending or expanding
the statutory requirements or to embrace matters not covered by
the statute. Rules that subvert the statute cannot be sanctioned
(University of Santo Tomas v. Board of Tax Appeals, 93 Phil. 376,
382, citing 12 C.J. 845-46. As to invalid regulations, see Collector of
Internal Revenue v. Villaflor, 69 Phil. 319; Wise & Co. v. Meer, 78
Phil. 655, 676; Del Mar v. Phil. Veterans Administration, L-27299,
June 27, 1973, 51 SCRA 340, 349).
xxx xxx xxx
. . . The rule or regulation should be within the scope of the
statutory authority granted by the legislature to the administrative
agency (Davis, Administrative Law, p. 194, 197, cited in Victorias
Milling Co., Inc. v. Social Security Commission, 114 Phil. 555, 558).
In case of discrepancy between the basic law and a rule or
regulation issued to implement said law, the basic prevails because
said rule or regulations cannot go beyond the terms and provisions
of the basic law (People v. Lim, 108 Phil. 1091).
Considering that administrative rules draw life from the statute which they seek to
implement, it is obvious that the spring cannot rise higher than its source. We now
examine petitioner's argument that DENR Administrative Order Nos. 57 and 82
contravene Executive Order Nos. 211 and 279 as both operate to repeal or abrogate
Presidential Decree No. 463, as amended, and other mining laws allegedly
acknowledged as the principal law under Executive Order Nos. 211 and 279.
Petitioner's insistence on the application of Presidential Decree No. 463, as amended,
as the governing law on the acceptance and approval of declarations of location and
all other kinds of applications for the exploration, development, and utilization of
mineral resources pursuant to Executive Order No. 211, is erroneous. Presidential
Decree No. 463, as amended, pertains to the old system of exploration, development
and utilization of natural resources through "license, concession or lease" which,
however, has been disallowed by Article XII, Section 2 of the 1987 Constitution. By
virtue of the said constitutional mandate and its implementing law, Executive Order
No. 279 which superseded Executive Order No. 211, the provisions dealing on
 ENVIRONMENTAL LAW & NATURAL RESOURCES
"license, concession or lease" of mineral resources under Presidential Decree No. 463,
as amended, and other existing mining laws are deemed repealed and, therefore,
ceased to operate as the governing law. In other words, in all other areas of
administration and management of mineral lands, the provisions of Presidential
Decree No. 463, as amended, and other existing mining laws, still govern. Section 7
of Executive Order No. 279 provides, thus:
Sec. 7. All provisions of Presidential Decree No. 463, as amended,
other existing mining laws, and their implementing rules and
regulations, or parts thereof, which are not inconsistent with the
provisions of this Executive Order, shall continue in force and
effect.
Specifically, the provisions of Presidential Decree No. 463, as amended, on lease of
mining claims under Chapter VIII, quarry permits on privately-owned lands of quarry
license on public lands under Chapter XIII and other related provisions on lease,
license and permits are not only inconsistent with the raison d'etre for which
Executive Order No. 279 was passed, but contravene the express mandate of Article
XII, Section 2 of the 1987 Constitution. It force and effectivity is thus foreclosed.
Upon the effectivity of the 1987 Constitution on February 2, 1987, 18 the State
assumed a more dynamic role in the exploration, development and utilization of the
natural resources of the country. Article XII, Section 2 of the said Charter explicitly
ordains that the exploration, development and utilization of natural resources shall be
under the full control and supervision of the State. Consonant therewith, the
exploration, development and utilization of natural resources may be undertaken by
means of direct act of the State, or it may opt to enter into co-production, joint
venture, or production-sharing agreements, or it 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.
Given these considerations, there is no clear showing that respondent DENR
Secretary has transcended the bounds demarcated by Executive Order No. 279 for
the exercise of his rule-making power tantamount to a grave abuse of discretion.
Section 6 of Executive Order No. 279 specifically authorizes said official to promulgate
such supplementary rules and regulations as may be necessary to effectively
implement the provisions thereof. Moreover, the subject sought to be governed and
regulated by the questioned orders is germane to the objects and purposes of
Executive Order No. 279 specifically issued to carry out the mandate of Article XII,
Section 2 of the 1987 Constitution.
Petitioner likewise maintains that Administrative Order No. 57, in relation to
Administrative Order No. 82, impairs vested rights as to violate the non-impairment of
contract doctrine guaranteed under Article III, Section 10 of the 1987 Constitution
because Article 9 of Administrative Order No. 57 unduly pre-terminates and
Session 5 P a g e | 45
automatically converts mining leases and other mining agreements into production-
sharing agreements within one (1) year from effectivity of said guideline, while
Section 3 of Administrative Order No. 82, declares that failure to submit Letters of
Intent (LOIs) and MPSAs within two (2) years from the effectivity of Administrative
Order No. 57 or until July 17, 1991 shall cause the abandonment of mining, quarry,
and sand gravel permits.
In Support of the above contention, it is argued by petitioner 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
pre-terminate existing mining lease agreements.
To begin with, we dispel the impression created by petitioner's argument that the
questioned administrative orders unduly pre-terminate existing mining leases in
general. A distinction which spells a real difference must be drawn. Article XII,
Section 2 of the 1987 Constitution does not apply retroactively to "license, concession
or lease" granted by the government under the 1973 Constitution or before the
effectivity of the 1987 Constitution on February 2, 1987. The intent to apply
prospectively said constitutional provision was stressed during the deliberations in the
Constitutional Commission, 19 thus:
MR. DAVIDE: Under the proposal, I notice that except for the
[inalienable] lands of the public domain, all other natural resources
cannot be alienated and in respect to [alienable] lands of the public
domain, private corporations with the required ownership by
Filipino citizens can only lease the same. Necessarily, insofar as
other natural resources are concerned, it would only be the State
which can exploit, develop, explore and utilize the same. However,
the State may enter into a joint venture, co-production or
production-sharing. Is that not correct?
MR. VILLEGAS: Yes.
MR. DAVIDE: Consequently, henceforth upon, the approval of this
Constitution, no timber or forest concession, permits or
authorization can be exclusively granted to any citizen of the
Philippines nor to any corporation qualified to acquire lands of the
public domain?
MR. VILLEGAS: Would Commissioner Monsod like to comment on
that? I think his answer is "yes."
 ENVIRONMENTAL LAW & NATURAL RESOURCES
MR. DAVIDE: So, what will happen now license or concessions
earlier granted by the Philippine government to private corporations
or to Filipino citizens? Would they be deemed repealed?
MR. VILLEGAS: This is not applied retroactively. They will be
respected.
MR. DAVIDE: In effect, they will be deemed repealed?
MR. VILLEGAS: No. (Emphasis supplied)
During the transition period or after the effectivity of the 1987 Constitution on
February 2, 1987 until the first Congress under said Constitution was convened on
July 27, 1987, two (2) successive laws, Executive Order Nos. 211 and 279, were
promulgated to govern the processing and approval of applications for the
exploration, development and utilization of minerals. To carry out the purposes of
said laws, the questioned Administrative Order Nos. 57 and 82, now being assailed,
were issued by the DENR Secretary.
Article 9 of Administrative Order No. 57 provides:
ARTICLE 9
TRANSITORY PROVISION
9.1. 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 subject to these
guidelines. All such leases or agreements shall be converted into
production sharing agreement within one (1) year from the
effectivity of these guidelines. However, any minimum firm which
has established mining rights under Presidential Decree 463 or
other laws may avail of the provisions of EO 279 by following the
procedures set down in this document.
It is clear from the aforestated provision that 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
Session 5 P a g e | 46
Article III, Section 10 of the 1987 Constitution 20 do not apply to the aforesaid 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.
Clearly, Executive Order No. 279 issued on July 25, 1987 by President Corazon C.
Aquino in the exercise of her legislative power has the force and effect of a statute or
law passed by Congress. As such, it validly modified or altered the privileges granted,
as well as the terms and conditions of mining leases and agreements under Executive
Order No. 211 after the effectivity of the 1987 Constitution by 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.
Well -settled is the rule, however, that regardless of the reservation clause, mining
leases or agreements granted by the State, such as those granted pursuant to
Executive Order No. 211 referred to this petition, are subject to alterations through a
reasonable exercise of the police power of the State. In the 1950 case of Ongsiako v.
Gamboa, 21 where the constitutionality of Republic Act No. 34 changing the 50-50
sharecropping system in existing agricultural tenancy contracts to 55-45 in favor of
tenants was challenged, the Court, upholding the constitutionality of the law,
emphasized the superiority of the police power of the State over the sanctity of this
contract:
The prohibition contained in constitutional provisions against: impairing the obligation
of contracts is not an absolute one and it is not to be read with literal exactness like a
mathematical formula. Such provisions are restricted to contracts which respect
property, or some object or value, and confer rights which may be asserted in a court
of justice, and have no application to statute relating to public subjects within the
domain of the general legislative powers of the State, and involving the public rights
and public welfare of the entire community affected by it. They do not prevent a
proper exercise by the State of its police powers. By enacting regulations reasonably
necessary to secure the health, safety, morals, comfort, or general welfare of the
community, even the contracts may thereby be affected; for such matter cannot be
placed by contract beyond the power of the State shall regulates and control them. 22
In Ramas v. CAR and Ramos 23 where the constitutionality of Section 14 of Republic
Act No. 1199 authorizing the tenants to charge from share to leasehold tenancy was
challenged on the ground that it impairs the obligation of contracts, the Court ruled
that obligations of contracts must yield to a proper exercise of the police power when
such power is exercised to preserve the security of the State and the means adopted
are reasonably adapted to the accomplishment of that end and are, therefore, not
arbitrary or oppressive.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
The economic policy on the exploration, development and utilization of the country's
natural resources under Article XII, Section 2 of the 1987 Constitution could not be
any clearer. As enunciated in Article XII, Section 1 of the 1987 Constitution, the
exploration, development and utilization of natural resources under the new system
mandated in Section 2, is geared towards a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all, especially the
underprivileged.
The exploration, development and utilization of the country's natural resources are
matters vital to the public interest and the general welfare of the people. The
recognition of the importance of the country's natural resources was expressed as
early as the 1984 Constitutional Convention. In connection therewith, the 1986 U.P.
Constitution Project observed: "The 1984 Constitutional Convention recognized the
importance of our natural resources not only for its security and national defense.
Our natural resources which constitute the exclusive heritage of the Filipino nation,
should be preserved for those under the sovereign authority of that nation and for
their prosperity. This will ensure the country's survival as a viable and sovereign
republic."
Accordingly, the State, in the exercise of its police power in this regard, may not be
precluded by the constitutional restriction on non-impairment of contract from
altering, modifying and amending the mining leases or agreements granted under
Presidential Decree No. 463, as amended, pursuant to Executive Order No. 211.
Police Power, being co-extensive with the necessities of the case and the demands of
public interest; extends to all the vital public needs. The passage of Executive Order
No. 279 which superseded Executive Order No. 211 provided legal basis for the DENR
Secretary to carry into effect the mandate of Article XII, Section 2 of the 1987
Constitution.
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 possibility 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" if they are so
minded. Negotiation negates compulsion or automatic conversion as suggested by
petitioner in the instant petition. A mineral production-sharing agreement (MPSA)
requires a meeting of the minds of the parties after negotiations arrived at in good
faith and in accordance with the procedure laid down in the subsequent
Administrative Order No. 82.
Session 5 P a g e | 47
We, therefore, rule that 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, their economic growth
and welfare. The validity and constitutionality of Administrative Order Nos. 57 and 82
must be sustained, and their force and effect upheld.
We now, proceed to the petition-in-intervention. Under Section 2, Rule 12 of the
Revised Rules of Court, an intervention in a case is proper when the intervenor has a
"legal interest in the matter in litigation, or in the success of either of the parties, or
an interest against both, or when he is so situated as to be adversely affected by a
distribution or other disposition of property in the custody of the court or of an officer
thereof. "Continental Marble Corporation has not sufficiently shown that it falls under
any of the categories mentioned above. The refusal of the DENR, Regional Office No.
3, San Fernando, Pampanga to renew its Mines Temporary Permit does not justify
such an intervention by Continental Marble Corporation for the purpose of obtaining a
directive from this Court for the issuance of said permit. Whether or not Continental
Marble matter best addressed to the appropriate government body but certainly, not
through this Court. Intervention is hereby DENIED.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining
Order issued on July 2, 1991 is hereby LIFTED.
SO ORDERED.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Bellosillo, Melo,
Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.
Petition dismissed.
Note.—Rules of procedure are as a matter of course construed liberally in
proceedings before administrative bodies. (Realty Exchange Venture Corporation vs.
Sendino, 233 SCRA 665 [1994])
——o0o——
[No. 17597. February 7, 1922]
E. W. McDaniel, petitioner, vs. Honorable Galicano Apacible, Secretary of
Agriculture and Natural Resources of the Philippine Islands, and Juan
Cuisia, respondents.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Constitutional Law; Perfected Mining Claims; Law Depriving a Citizen of a Vested
Right Without a Hearing, Constitutionality of.—Held: Under the facts stated in the
decision, that a perfected valid appropriation of public mineral Lands operates as a
withdrawal of the tract from the body of the public domain, and so long as such
appropriation remains valid and subsisting, the land covered thereby is deemed
private property. A mining claim perfected under the" law is property in the highest
sense, which may be sold and conveyed and will pass by descent. It has the effect of
a grant of the right to present and exclusive possession of the lands located. A valid
and subsisting location of mineral land, made and kept up in accordance with the
provisions of the statutes, has the effect of a grant of the present and exclusive
possession of the lands located. The discovery of minerals in the ground by one who
has a valid mineral location, perfects his claim and his location, not only against third
persons but also against the Government.
ORIGINAL ACTION in the Supreme Court.   Prohibition.
The facts are stated in the opinion of the court.
Ross & Lawrence for petitioner.
Acting Attorney-General Tuason for respondents.
Johnson, J.:
This is an original action commenced in the Supreme Court for the writ of prohibition.
Its purpose is to prohibit the respondent Honorable Galicano Apacible, as Secretary of
Agriculture and Natural Resources, from granting a lease of a parcel of petroleum
land located in the municipality of San Narciso, of the Province of Tayabas, Philippine
Islands, which parcel of land is particularly described in paragraph 6 of the petition.
To the petition the respondent Galicano Apacible demurred. The respondent Juan
Cuisia neither demurred nor answered.
The facts upon which the petition is based are admitted and may be stated as
follows:
1. That on or about the 7th day of June, 1916, the petitioner entered upon
and located, in accordance with the provisions of Act of Congress of July 1,
1902, as well as the provisions of Act No. 624 of the Philippine Commission,
three petroleum placer mineral claims, each of an area of 64 hectares, on an
unoccupied public land in the municipality of San Narciso, Province of
Tayabas, Philippine Islands;
2. That on or about the 15th day of July, 1916, the plaintiff recorded in the
office of the mining recorder in the municipality of Lucena, Province of
Tayabas, Philippine Islands, notices of location of the aforesaid three placer
claims under the names of "Maglihi No. 1," "Maglihi No. 2," and "Maglihi No.
3;"
Session 5 P a g e | 48
3. That the plaintiff, at all times since the 7th day of June, 1916, has
remained in open and continuous possession of said three mineral placer
claims;
4. That plaintiff, in the year 1917 and in each year thereafter, performed not
less than two hundred pesos (P200) worth of labor on each of the said three
mineral claims;
5. That in the year 1918 plaintiff drilled five wells on the said three mineral
claims, and by means of such wells in the said year (1918) made discoveries
of petroleum on each of the said three claims;
6. That on or about the 18th day of June, 1921, the respondent Juan Cuisia
made application to the respondent Galicano Apacible, as Secretary of
Agriculture and Natural Resources, under the provisions of Act No. 2932 of
the Philippine Legislature, for a lease of a parcel of petroleum land in the
municipality of San Narciso, Province of Tayabas, Philippine Islands, which
said parcel of land included within its boundaries the three said mineral
claims "Maglihi No. 1," "Maglihi No. 2," and "Maglihi No. 3," which said three
mineral placer claims had therefore been located as above indicated and
held by the plaintiff as above described;
7. That upon the filing of the said application for lease, as described in the
paragraph immediately preceding, by the said Juan Cuisia, the petitioner
herein protested in writing to the respondent Galicano Apacible against the
inclusion in the said lease of the said three mineral claims "Maglihi No. 1,"
"Maglihi No. 2," and "Maglihi No. 3," located and held by him as above
recited;
8. That the respondent Galicano Apacible, as Secretary of Agriculture and
Natural Resources, did on or about the 9th day of March, 1921, deny
petitioner's said protest; and
9. That the plaintiff is informed and believed, and upon that information and
belief averred, that the respondent Galicano Apacible, as Secretary of
Agriculture and Natural Resources, under and by virtue of the supposed
authority of Act No. 2932, is about to grant the application for the said lease
of the respondent Juan Cuisia, and to place him (Juan Cuisia) in possession
of the said three mineral claims located and held by the petitioner.
Upon the foregoing facts the petitioner contends that said Act No. 2932, in so far as it
purports to declare open to lease, lands containing petroleum oil on which mineral
claims have been validly located  and held, and upon which discoveries of
petroleum  oil have been made, is void and unconstitutional, in that it deprives the
petitioner of his property without due process of law and without compensation , and
that the defendant Galicano Apacible, as Secretary of Agriculture and Natural
Resources, is without jurisdiction to lease to the respondent Juan Cuisia the following
 ENVIRONMENTAL LAW & NATURAL RESOURCES
mineral claims "Maglihi No. 1," "Maglihi No. 2," and "Maglihi No. 3," and prays that
the writ of prohibition be issued out of this court, directing and prohibiting the
respondent Galicano Apacible to desist from issuing the lease of the mineral placer
claims herein mentioned.
The respondent Galicano Apacible, as Secretary of Agriculture and Natural Resources,
in support of his demurrer, contends: ( a) That the acts complained of are in
conformity with the authority given by Act No. 2932; ( b) that the petitioner has no
vested right in the three mineral claims; and ( c) that the demurrer puts squarely in
issue the constitutionality of Act No. 2932.
Act No. 2932 was approved on the 31st day of August, 1920. Section 1 provides that
"all public lands  containing petroleum or other mineral oils and gas, on which no
patent, at the date this Act takes effect, has been issued, are hereby withdrawn from
sale and are declared to be free and open to exploration, location and lease ," etc.
Said section further provides, "that parties having heretofore filed claims for any
lands containing said minerals, shall be given preference to lease their respective
claims, provided they file a petition to that effect within six months from the date of
the approval of this Act."
Section 2 provides that "all such lands (public lands) may be leased by the Secretary
of Agriculture and Natural Resources in the manner and subject to the rules
prescribed by the Council of State."
It will be noted from the provisions of said Act No. 2932 that "all public lands
containing petroleum, etc., on which no patent, at the date this Act takes effect
(August 31, 1920), has been issued, are hereby withdrawn from sale and are
declared to be free and open to exploration, location, and lease ," with a preference,
however, in favor of those who had therefore filed claims for such lands. It will be
further noted, from the provisions of said Act, that "all public lands containing
petroleum, etc., are hereby withdrawn from sale and are declared to be free and
open to exploration, location and lease," without any preference to any claim or right
which citizens of the Philippine Islands or the United States had therefore acquired in
any public lands, and that the only right left to them is one of "preference," and that
even the preference was limited for a period of six months from the 31st day of
August, 1920.
The petitioner contends, that, having located and held, and having discovered
petroleum oil upon the said claims prior to the 31st day of August, 1920, he
had acquired a property right in his three claims ; and that said Act No. 2932 had
deprived him of that right without due process of law , in contravention of paragraph
1 of section 3 of Act of Congress of August 29, 1916, and that said Act was therefore
unconstitutional and void. In support of the contention the petitioner cites many
authorities.
Mr. Lindlay, one of the highest authorities on Mining Law, has discussed extensively
the question now before us. (Lindlay on Mines, vol. I, sections 322, 539.)
Session 5 P a g e | 49
The general rule is that a perfected, valid appropriation of public mineral
lands operates  as a withdrawal  of the tract from the body of the public domain, and
so long as such appropriation remains valid and subsisting, the land covered thereby
is deemed private property. A mining claim perfected under the law is property in the
highest sense, which may be sold and conveyed and will pass by descent. It has the
effect of a grant (patent) by the United States of the right of present and exclusive
possession of the lands located. And even though the locator may obtain a patent to
such lands, his patent adds but little to his security. (18 Ruling Case Law, p. 1152 and
cases cited.)
The owner of a perfected valid appropriation of public mineral lands is entitled to the
exclusive possession and enjoyment against everyone, including the Government
itself. Where there is a valid and perfected location of a mining claim, the area
becomes segregated from the public domain and the property of the locator.
It was said by the Supreme Court of the State of Oregon, "The Government itself
cannot abridge the rights of the miner to a perfected valid location of public mineral
land. The Government may not destroy the locator's right by withdrawing the land
from entry or placing it in a state of reservation ." (Belk vs. Meagher, 104 U.S., 279;
Sullivan vs. Iron Silver Mining Co., 143 U.S., 431.)
A valid and subsisting location of mineral land, made and kept up in accordance with
the provisions of the statutes of the United States, has the effect of a grant by the
United States of the present and exclusive possession of the lands located, and this
exclusive right of possession and enjoyment continues during the entire life of the
location. There is no provision for, no suggestion of, a prior termination thereof.
(Gwillim vs. Donnellan, 115 U.S., 45; Clipper Mining Co. vs. Eli Mining and Land Co.,
194 U.S., 220.)
There is no pretense in the present case that the petitioner has not complied with all
the requirements of the law in making the location of the mineral placer claims in
question, or that the claims in question were ever abandoned or forfeited by him . The
respondents may claim, however, that inasmuch as a patent has not been issued to
the petitioner, he has acquired no property right in said mineral claims. But the
Supreme Court of the United States, in the cases of Union Oil Co. vs. Smith (249
U.S., 337), and St. Louis Mining and Milling Co. vs. Montana Mining Co. (171 U.S.,
650), held that even without a patent, the possessory right of a locator after
discovery of minerals upon the claim is a property right in the fullest sense,
unaffected by the fact that the paramount title to the land is in the United States.
There is no conflict in the rulings of the Court upon that question. With one voice
they affirm that when the right to a patent exists, the full equitable title has passed to
the purchaser or to the locator with all the benefits, immunities, and burdens of
ownership, and that no third party can acquire from the Government any interest as
against him. (Manuel vs. Wulff, 152 U.S., 504, and cases cited.)
Even without a patent, the possessory right of a qualified locator after discovery of
minerals upon the claim is a property right in the fullest sense, unaffected by the fact
that the paramount title to the land is in the Government, and it is capable of transfer
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 50

by conveyance, inheritance, or devise. (Union Oil Co. vs. Smith, 249 U.S., 337;
Forbes vs. Jarcey, 94 U.S., 762; Belk vs. Meagher, 104 U.S., 279; Del Monte Mining
Co. vs. Last Chance Mining Co., 171 U.S., 55; Elver vs. Wood, 208 U.S., 226, 232.)

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

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

The moment the locator discovered a valuable mineral deposit on the lands located,
and perfected his location in accordance with law, the power of the United States
Government to deprive him of the exclusive right to the possession and enjoyment of
the located claim was gone, the lands had become mineral lands and they were
exempted from lands that could be granted to any other person. The reservations of
public lands cannot be made so as to include prior mineral perfected locations; and,
of course, if a valid mining location is made upon public lands afterward included in a
reservation, such inclusion or reservation does not affect the validity of the former
location. By such location and perfection, the land located is segregated from the
public domain even as against the Government. (Union Oil Co. vs. Smith, 249 U.S.,
337; Van Ness vs. Rooney, 160 Cal., 131; 27 Cyc., 546.)

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

Araullo, C.J., Street, Malcolm, Avanceña, Villamor, Ostrand, Johns and Romualdez,
JJ., concur.

G.R. No. 49143. August 21, 1989.*

 ENVIRONMENTAL LAW & NATURAL RESOURCES
ZAMBALES CHROMITE MINING COMPANY, INC., petitioner, vs. HON.
MINISTER OF NATURAL RESOURCES JOSE J. LEIDO, JR. and DIRECTOR OF
MINES JUANITO C. FERNANDEZ, respondents. PHILEX MINING
CORPORATION and REGALIAN MINING EXPLORATION CORPORATION,
intervenors.
Public Land Law; Mines and Mining; Contention that a perfected and valid
appropriation of public mineral lands operates as a withdrawal of the tract of land
from the public domain and is deemed to be already private property is without basis
in fact and in law.—Their contention that a perfected and valid appropriation of public
mineral lands operates as a withdrawal of the tract of land from the public domain
and is deemed to be already private property, is without basis in fact and in law.
Same; Same; Same; The right of a locator of a mining claim is merely a possessory
right since it can be lost through abandonment or forfeiture.— This issue has been
resolved in a recent decision of this Court in Sta. Rosa Mining Co., Inc. v. Leido, Jr.
(156 SCRA 1 [1987]) where it was held that while rulings in McDaniel v. Apacible (42
Phil. 749 [1922]) and Gold Creek Mining Corp. v. Rodriguez (66 Phil. 259 [1938])
cited by the petitioner, true enough, recognize the right of a locator of a mining claim
as a property right; such right is not absolute. It is merely a possessory right more so
if petitioner’s claims are still unpatented. It can be lost through abandonment or
forfeiture or they may be revoked on valid legal grounds.
Same; Same; Same; Same; There is no showing that in the case at bar, petitioner
has complied with all the terms and conditions prescribed by law prior to November
15, 1935.—In the case at bar, there is no showing that petitioner has complied with
all the terms and conditions prescribed by law prior to November 15, 1935; that there
should be not only a valid and subsisting location of the mineral land but that there
should be, thereafter, continuous compliance with all the requirements of law such as
the performance of annual assessment works and payment of real estate taxes. In
fact, petitioner filed its application only in 1977 for a patent, or 43 years after it
allegedly located and registered the mining claims.
Constitutional Law; PD No. 1214 is constitutional.— As to the issue of constitutionality,
the Court categorically stated that P.D. No. 1214 is constitutional.
Same; Same; PD 1214 is in accord with Section 8, Article XIV of the 1973
Constitution and Section 2, Article XII of the 1987 Constitution.— P.D. No. 1214 is in
accord with Section 8, Article XIV of the 1973 Constitution and presently in Section 2,
Article XII of the 1987 Constitution where the same constitutional mandate is
restated.
Session 5 P a g e | 51
PETITION for certiorari and prohibition with preliminary injunction to review the
decision of the Secretary of Natural Resources and the Director of Mines.
The facts are stated in the opinion of the Court.
PARAS, J.:
This is a petition for certiorari and prohibition with preliminary injunction seeking to
enjoin the Minister (now Secretary) of Natural Resources and the Director of Mines
from enforcing Presidential Decree No. 1214 dated October 14,1977 requiring all
locators under the Act of Congress of July 1, 1902, as amended, to apply for mining
lease contracts under the provision of Presidential Decree No. 463 better known as
the Mineral Development Resources Decree of 1974 and to declare Presidential
Decree No. 1214 unconstitutional since its enforcement would deprive petitioners of
its property without due process and without just compensation.
Petitioner Zambales Chromite Mining Company, Inc. is a mining corporation duly
organized and existing under and by virtue of the laws of the Philippines.
Petitioner claims that it is the owner and holder of sixty (60) mineral claims which it
acquired through purchase in good faith and for value 43 years ago. Said claims
situated at the Municipality of Sta. Cruz, Zambales, were located and registered in
1934 under the Act of U.S. Congress of July 1, 1902 (known as the Philippine Bill of
1902). (Petition, p. 2; Rollo, p. 3); that from 1934 to 1977 it has to its credit a total
investment of over Pl,222,640.00 for the mining exploration, development and
operation of its said sixty mining claims (Petition, p. 3; Rollo, p. 4); that on June 14,
1977 it actually and duly flied its application for patent for each claim of said sixty
(60) mineral claims (Petition, p. 4; Rollo, p. 5); that respondent Director of Mines
issued an order dated July 13,1977 approving the application of petitioner for
availment of rights on said claims under Presidential Decree No. 463 (Petition, p. 5;
Rollo, p. 6); that the aforesaid sixty (60) lode mineral claims are already private
property of petitioner, following the doctrinal rule laid down in McDaniel v. Apacible
and Cuisia (42 Phil. 749; 753-754) and Gold Creek Mining Corporation v. Rodriguez,
et al. (66 Phil. 259) which had already been segregated from the public domain to
which petitioner is entitled to the exclusive possession and enjoyment against
everyone; that the issuance of Presidential Decree No. 1214 on October 14, 1977
which declared open to lease subsisting and valid patentable mining claims, lode or
placer, located under the provisions of the Act of U.S. Congress of July 1, 1902, as
amended, already segregated from the public domain and owned and held by it for
over 43 years and requiring it without fail and against their will to file a mining lease
application with the Mines Regional Office concerned within a period of one year from
October 14, 1977 is a deprivation of petitioner's rights to the ownership of said claims
without due process of law nor or just compensation and therefore, unconstitutional.
The Court in its resolution dated November 3,1978, gave due course to the petition
and required respondents to comment (Rollo, p. 33). lâwphî1.ñèt  The Solicitor
 ENVIRONMENTAL LAW & NATURAL RESOURCES
General as counsel for public respondent, flied his comment on March 26,1979 (Rollo,
pp. 58-71-A).
On May 10, 1979, petitioner filed a reply (Rollo, p. 83) to the comment in compliance
with the resolution of April 10, 1979. But on May 9, 1979, Baguio Gold Mining
Company, Philex Mining and Regalian Mining Corporation filed with the Court two
separate motions for leave to intervene (Rollo, p. 120).
On February 10, 1981, Baguio Gold Mining Company, Philex Mining Company and
Regalian Mining Corporation filed with the court a Joint Petition for Intervention
(Rollo, p. 171) raising the same issues brought up by petitioner Zambales Chromite
Mining Company regarding the constitutionality of P.D. No. 1214 based on the
doctrinal mandates of the ruling cases of McDaniel v. Apacible, 42 Phil. 749 [1922]
and Gold Creek Mining Corporation v. Rodriguez , 66 Phil. 259 (1939); Salazar Mining
Co. v. Rodriguez, et al.,  67 Phil. 97, insofar as it invests  inter alia, private ownership
in patentable mining claims to have survived to date due to a faithful compliance with
the various requirements of applicable mining laws to include the land surface of said
mining claims. Petitioners’ memorandum was adopted by intervenors as to the factual
and legal showing of the unconstitutionality of Presidential Decree No. 1214 (Rollo,
pp. 455-456).
The Solicitor General as counsel for public respondent submitted his memorandum on
February 12, 1982 (Rollo, pp. 468499) while petitioner filed its reply to said
memorandum on April 3, 1982 (Rollo, pp. 505-560).
Counsel for petitioner on August 20, 1982 filed a motion to refer this case to the
Court En Bane for action and decision (Rollo, p. 536) and on September 8,1982, the
Court resolved to issue a temporary restraining order, effective as of said date and
continuing until otherwise ordered by the Court (Rollo, p. 562).
On February 11, 1988 the Court acting on the motion for intervention filed by counsel
for intervenor Francisco N. Calinisan dated January 6,1988, and considering that this
case has long been submitted for decision, resolved to deny the aforesaid motion for
having been filed late (Reno, p. 597).
The principal issue raised by the petitioner and by the erstwhile intervenors, is:
whether or not under the provision of P.D. No. 1214 there was deprivation of
property without due process of law and just compensation which makes said decree
unconstitutional.
Their contention that a perfected and valid appropriation of public mineral lands
operates as a withdrawal of the tract of land from the public domain and is deemed
to be already private property, is without basis in fact and in law (Comment, Rollo, p.
61)
This issue has been resolved in a recent decision of this Court in Sta. Rosa Mining
Co., Inc. vs. Leido Jr.  (156 SCRA 1 [1987]) where it was held that while rulings
Session 5 P a g e | 52
in McDaniel v. Apacible (42 Phil. 749 [1922]). and Gold Creek Mining Corp. v.
Rodriguez (66 Phil. 259 [1938]) cited by the petitioner, true enough, recognize the
right of a locator of a mining claim as a property right; such right is not absolute. It is
merely a possessory right more so if petitioner's claims are still unpatented. It can be
lost through abandonment or forfeiture or they may be revoked on valid legal
grounds.
In the case at bar, there is no showing that petitioner has complied with all the terms
and conditions prescribed by law prior to November 1, 1935; that there should be not
only a valid and subsisting location of the mineral land but that there should be,
thereafter, continuous compliance with all the requirements of law such as the
performance of annual assessment works and payment of real estate taxes. In fact,
petitioner filed its application only in 1977 for a patent, or 43 years after it allegedly
located and registered the mining claims (Rollo, p. 63).
As to the issue of constitutionality, the Court categorically stated that P.D. No. 1214 is
constitutional. The Court ruled:
...It is a valid exercise of the sovereign power of the State, as
owner, over lands of the public domain, of which petitioner's
mining claims still form a part, and over the patrimony of the
nation, of which mineral deposits are a valuable asset. It may be
underscored, in this connection, that the Decree does not cover all
mining claims located under the Phil. Bill of 1902, but only those
claims over which their locators had failed to obtain a patent. And
even then, such locators may still avail of the renewable twenty-
five year (25) lease prescribed by Pres. Decree No. 463, the Mineral
Development Resources Decree of 1974.
Mere location does not mean absolute ownership over the affected
land or the mining claim. It merely segregates the located land or
area from the public domain by barring other would be locators
from locating the same and appropriate for themselves the
minerals found therein. To rule otherwise would imply that location
is all that is needed to acquire and maintain rights over a located
mining claim. This, we cannot approve or sanction because it is
contrary to the intention of the lawmaker that the locator should
faithfully and consistently comply with the requirements for annual
work and improvements in the located mining claim. (Santa Rosa
Mining Co., Inc. vs. Leido Jr., supra, pp. 8-9)
P.D. No. 1214 is in accord with Section 8, Article XIV of the 1973 Constitution and
presently in Section 2, Article XII of the 1987 Constitution where the same
constitutional mandate is restated.
On June 2, 1988, the Court granted a motion filed by counsel for petitioner dated
May 20,1988 to admit a manifestation and motion wherein petitioner prayed that the
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 53

"Court allow the petitioner to change the original prayer in its petition dated October
10, 1978 with a new prayer directing public respondents to dispose of petitioner's
application on its own merit unaffected and without regard to the provision of P.D.
1214 . . ." (p. 631, Rollo)

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

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

SO ORDERED

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Gancayco,

Padilla, Bidin, Sarmiento, Cortes, Griñ;o-Aquino, Medialdea and Regalado, JJ., concur.

Petition denied.

Notes.—Mere possession of public land for more than 30 years does not automatically
divest it of its public character. (Marcopper Mining Corporation vs. Garcia, 143 SCRA
178.)

A mining corporation cannot obtain a free patent to a public land. (Marcopper Mining
Corporation vs. Garcia, 143 SCRA 178.)

——o0o——
 ENVIRONMENTAL LAW & NATURAL RESOURCES
G.R. No. 85904. August 21, 1990.*
TEODORO MEDRANA, petitioner, vs. OFFICE OF THE PRESIDENT and
SUPREME AGGREGATES CORPORATION, respondents.
Administrative Law; Grave abuse of discretion of the Office of the President or that it
acted without or in excess of jurisdiction must be shown in an appeal from or review
of its decision.—We consider below petitioner's contentions seriatim. We note,
preliminarily, that under Section 5 of P.D. No. 309, from a decision of the Secretary of
Natural Resources in cases involving conflicting mining claims, an appeal may be
taken within five (5) days to the President "whose decision shall be final and
executory". Clearly, therefore, further appeal from or review of the decision of the
Office of the President is not available to petitioner. To succeed, petitioner must show
that the Office of the President committed a grave abuse of discretion, or acted
without or in excess of its jurisdiction, in rendering the decision he assails.
Same; Mining Law; Presidential Decree No. 463 as amended by Presidential Decree
No. 1385; Mining claim or lease contemplated is the failure to carry out actual work
on a mining claim or lease.—Careful reading of the above-quoted Section 27 shows
that abandonment of a mining claim or lease results from failure to comply with the
annual work obligations on the area covered by a mining claim or lease for two (2)
consecutive years. The precipitating event of the lapse of a mining claim or lease
contemplated in Section 27 is the failure to carry out actual work on a mining claim or
lease, and not simply the failure to submit in a timely manner the Affidavit of Annual
Work Obligations. That Affidavit constitutes simply proof of compliance with the
annual work obligations. Execution and submission of an Affidavit of Annual Work
Obligations creates a presumption that the work obligation was indeed carried out.
This presumption is by no means a conclusive one, but is, on the contrary, merely a
prima facie one since Section 27 expressly prescribes that "if it is found upon field
verification that no such work was actually done on the mining claims, the claim
owner/ lessee shall likewise lose his rights thereto notwithstanding submission of the
aforesaid documents". It follows that, conversely, failure to submit the Affidavit of
Annual Work Obligations raises the presumption that no work was actually done, but
that this presumption too can be overturned by affirmative proof—e.g., by "field
verification"—that the required annual work obligations had in fact been carried out
on the mining claim or leased area. To hold that the mere failure to submit the
Affidavits resulted in automatic abandonment of MLC No. V-754 notwithstanding the
actual performance of work obligations, would not only run counter to the express
language of Section 27, but would also be to exalt form over substance.
Session 5 P a g e | 54
Same; Same; Requirements of abandonment lacking.—Thus, abandonment may be
said to result where there is concurrence of two (2) elements: the first being the
intent to abandon a right or claim and the second being the external act by which
that intention is expressed and carried into effect. There must, moreover, be an
actual, as distinguished from a merely projected, relinquishment of a claim or right;
otherwise the right or claim is not vacated or waived so as to be susceptible of being
appropriated by the next owner. These two (2) requirements are clearly lacking in the
case at bar. The Director of Mines and public respondent Office of the President had
found that, in point of fact, private respondent Supreme Aggregates had performed
its annual work obligations. Supreme Aggregates could not therefore be said to have
intended to abandon its mining claim or lease, notwithstanding the fact that it had
failed to submit the normal documentary proof of performance of annual work
obligations—that is, the Affidavit of Annual Work Obligations. We agree, therefore,
with the conclusion of the Office of the President that in the instant case, there was
no abandonment, whether automatic or voluntary, of MLC No. V-754.
Same; Same; Same; Preferential right of petitioner, ineffective to dissolve pre-
existing or subsisting right of private respondent.— It is true that under Section 67 of
P.D. No. 463, petitioner Medrana, as registered owner of the superficies of the land
here involved, had a "preferential right to exploit the quarry resources found therein",
That right, however, was simply a preferential right, and that right was ineffective to
dissolve the pre-existing or subsisting right of private respondent Supreme
Aggregates. The order of 27 February 1979 of the Director of Mines, denying
Supreme Aggregates' Application to Avail of Rights and Privileges, did not have, nor
did it purport to have, the effect of cancelling or declaring the automatic
abandonment of MLC No. V-754; as noted above, there simply was no legal basis for
so cancelling or declaring it as abandoned. It follows that the 27 February 1979 order
did not produce the effect of opening up the areas leased in MLC No. V-754 to
location or new acquisition of rights by petitioner Medrana, or by any other person for
that matter. It follows, furthermore, that petitioner's QPTs Nos. 85, 86 and 87 were
not validly issued to begin with and that the express cancellation of the QTPs decreed
in the Director of Mines' decision of 13 March 1981, which formally rectified his error
by reinstating Supreme Aggregates' Application, was not even necessary being mere
confirmatory of the juridical situation.
Same; Same; Same; Presidential Decree No. 309, applies only to cases involving
conflicting mining claims.—We agree with the Office of the President that Section 5 of
P.D. No. 309 has no application to the case at bar. As its title clearly indicates, P.D.
No. 309 applies only to cases involving conflicting mining claims, that is to say, to
orders or decisions issued in adversarial or litigated proceedings involving mining
claims with conflicting or overlapping boundaries.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
SPECIAL CIVIL ACTION for certiorari to review the decision of the Office of the
President.
The facts are stated in the resolution of the Court.
     Abelardo Albis, Jr. for petitioner
     Benigno Ignacio for Supreme Aggregates Corporation.
RESOLUTION
FELICIANO, J.:
In this Special Civil Action for Certiorari, petitioner Teodoro Medrana asks us to set
aside the decision of the Office of the President dated 20 September 1988 in O.P.
Case No. 2143. In that decision, the Hon. Magdangal B. Elma, Deputy Executive
Secretary, acting "by authority of the President, set aside a decision of the then
Minister of Natural Resources dated 7 May 1982 and reinstated a decision of the
Director of Mines dated 13 March 1981.
This controversy, which began in 1979, relates to Mining Lease Contract ("MLC") No.
V-754 which the then Secretary of Agriculture and Natural Resources issued to
private respondent Supreme Aggregates Corporation ("Supreme Aggregates") on 30
June 1969. This Mining Lease Contract has a lifetime of twenty-five (25) years and
covers twenty-two (22) mining claims for volcanic cinder, etc., situated in Calamba,
Laguna Province and Sto. Tomas, Batangas Province.
On 17 May 1974, P.D. No. 463 known as "The Mineral Resources Development
Decree of 1974" was promulgated. Sections 100 and 101 of P.D. No. 463 provided as
follows:
Sec. 100. Old Valid Mining Rights May Come Under This Decree. —
Holders of valid and subsisting mining locations and other rights
under other laws, irrespective of the areas covered , may avail of
the rights and privileges granted under this Decree by making the
necessary application therefor and approval thereof by the
Director  within a period of two (2) years from the date of approval
of this Decree.
Sec. 101. Recognition and Survey of Old Subsisting Mining Claims .
All mining grants, patents, locations, leases and permits subsisting
at the time of the approval of this Decree shall be recognized
if registered pursuant to Section 100 thereof-Provided , That
Spanish Royal Grants and unpatented mining claims located and
registered under the Act of the United States Congress of July 1,
1902, as amended, otherwise known as the 'Philippine Bill' shall be
surveyed within one (1) year from the approval of this
Decree: Provided, further, That no such mining rights shall be
recognized if there is failure to comply with the fundamental
Session 5 P a g e | 55
requirements of the respective grants And provided, finally, That
such grants, patents, locations, leases or permits as may be
recognized by the Director after proper investigation shall comply
with the applicable provisions of this Decree, more particularly with
the annual work obligations, submittal of reports, fiscal provisions
and other obligations. (Emphasis supplied)
On 14 May 1976, within the period prescribed in Section 100 above, Supreme
Aggregates filed with the Bureau of Mines an Application to Avail of Rights and
Privileges under P.D. No. 463 which application was required by Sections 100 and
101, above, from all claim owners and lessees desirous of maintaining their pre-
existing rights under the regime inaugurated by that decree.
On 27 February 1979, the Director of the Bureau of Mines issued an order denying
Supreme Aggregates' Application on the ground that Supreme Aggregates had failed
to submit Affidavits of Annual Work Obligations.
On 15 June 1979, the Director of Mines issued Quarry Temporary Permits ("QTPs")
Nos. 85, 86 and 87 to petitioner Teodoro Medrana. These permits covered areas
within the territory leased to Supreme Aggregates under MLC No. V-754.
Fourteen days later, on 29 June 1979, Supreme Aggregates filed a petition with the
Director of Mines praying for reinstatement of its rejected Application to Avail of
Rights and Privileges and for cancellation of Medrana's QTPs Nos. 85, 86 and 87.
Medrana filed an answer to this petition.
After investigation, the Director of Mines rendered a decision dated 13 March 1981
ordering the reinstatement of Supreme Aggregates' Application to Avail of Rights and
Privileges and the cancellation of Medrana's QTPs Nos. 85, 86 and 87 since these
covered areas within Supreme Aggregates' valid and subsisting MLC No. V-754.
On appeal by Medrana, the Ministry of Natural Resources reinstated Medrana's QTPs
Nos. 85, 86 and 87, and declared that Supreme Aggregates' MLC No. V-754 had
lapsed. In so deciding, former Minister of Natural Resources Teodoro Q. Peña
reasoned that the order of the Bureau of Mines which had rejected Supreme
Aggregates' Application to Avail of Rights and Privileges had already become final
when Supreme Aggregates filed its petition for reinstatement of its Application on 29
June 1979, that is, one hundred and twenty (120) days after its receipt of the Bureau
of Mines order of denial. Former Minister Pena further held that the failure of
Supreme Aggregates to file an Application to Avail of Rights and Privileges under P.D.
No. 463 caused its Mining Lease Contract to lapse and opened the leased area to
relocation. 1
Supreme Aggregates then filed an appeal with the Office of the President. The Office
of the President, as already noted, in a decision dated 20 September 1988, reversed
the decision of the Minister of Natural Resources and in essence held that the failure
to submit Affidavits of Annual Work Obligations for two (2) consecutive years did not,
by itself and standing alone, result in the automatic cancellation of MLC No. V-754.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
In the instant Petition for Certiorari, petitioner Medrana submits that the Office of the
President acted with grave abuse of discretion, amounting to lack of jurisdiction, in
reinstating Supreme Aggregates' MLC No. V-754 and cancelling petitioner's QTPs for
the following reasons:
1. Private respondent Supreme Aggregates had abandoned its Mining Lease Contract
by failing to comply with the mandatory requirements of Section 27 of P.D. No. 463.
2. The Bureau of Mines had declared the quarry covered by MLC No. V-754 as open
for relocation of claims by virtue of the cancellation of that MLC. Moreover, petitioner
Medrana, being registered owner of much of the land covered by MLC No. V-754,
claims a preferential right to exploit the said quarry under Section 67 of P.D. No. 463.
3. Even before the issuance of QTPs Nos. 85, 86 and 87 to petitioner, the order of
the Director of Mines denying Supreme Aggregates' Application had already become
final and executory five (5) days from receipt of that order by private respondent
Supreme Aggregates.
We consider below petitioner's contentions seriatim. We note, preliminarily, that
under Section 5 of P.D. No. 309, from a decision of the Secretary of Natural
Resources in cases involving conflicting mining claims, an appeal may be taken within
five (5) days to the President "whose decision shall be final and executory". Clearly,
therefore, further appeal from or review of the decision of the Office of the President
is not available to petitioner. To succeed, petitioner must show that the Office of the
President committed a grave abuse of discretion, or acted without or in excess of its
jurisdiction, in rendering the decision he assails.
1. In the form it existed at the relevant time i.e., February 1979-Section 27 of P.D.
No.
463, as amended by P.D. No. 1385, read as follows:
Sec. 27. Proof of Annual Work Obligations. — The claim owner/
lessee shall submit proof of compliance with the annual work
obligations by filing an affidavit therefor and the statement of
expenditures and technical report in the prescribed form in support
thereof with the Mines Regional Officer within sixty (60) days from
the end of the year in which the work obligation is
required: Provided, That failure of the claim owner to comply
therewith  for two (2) consecutive years shall constitute automatic
abandonment of the mining claims: Provided, Further, That, if it is
found upon field verification that no such work was actually done
on the mining claims, the claim owner/lessee shall likewise lose all
his rights thereto notwithstanding submission of the aforesaid
documents. (Emphasis supplied)
Session 5 P a g e | 56
Careful reading of the above-quoted Section 27 shows that abandonment of a mining
claim or lease results from failure to comply with the annual work obligations  on the
area covered by a mining claim or lease for two (2) consecutive years. The
precipitating event of the lapse of a mining claim or lease contemplated in Section 27
is the failure to carry out actual work on a mining claim or lease , and not simply
the failure to submit in a timely manner the Affidavit of annual Work Obligations.
That Affidavit constitutes simply proof of compliance with the annual work
obligations. 2 Execution and submission of an Affidavit of Annual Work Obligations
creates a presumption that the work obligation was indeed carried out. This
presumption is by no means a conclusive one, but is, on the contrary, merely a  prima
facie one since Section 27 expressly prescribes that "if it is found upon field
verification that no such work was actually done on the mining claims,  the claim
owner/lessee shall likewise lose his rights thereto  notwithstanding submission of the
aforesaid documents". It follows that, conversely, failure to submit the Affidavit of
Annual Work Obligations raises the presumption that no work was actually done, but
that this presumption too can be overturned by affirmative proof — e.g. by "field
verification — that the required annual work obligations had in fact been carried out
on the mining claim or leased area. To hold that the mere failure to submit the
Affidavits resulted in automatic abandonment of MLC No. V-754 notwithstanding the
actual performance of work obligations, would not only run counter to the express
language of Section 27, but would also be to exalt form over substance.
In Teodoro v. Macaraeg , 3 the Court elaborated on the notion of abandonment in the
following, quite definite, terms:
The word "abandon", in its ordinary sense, means to forsake
entirely; to forsake or renounce utterly. The dictionaries trace this
word to the root Idea of "putting under a ban." The emphasis is on
the finality and the publicity with which some thing or body is thus
put in the control of another, and hence the meaning of giving up
absolutely, with intent never again to resume or claim one's rights
or interests. in other words the act of abandonment
constitutes actual, absolute and irrevocable desertion of one's right
or property. In the case at bar, Macaraeg merely intended to
vacate his leasehold possession on the condition that a certain
Claus be taken as his successor. Hence, his act did not constitute
desertion of his leasehold as it was a mere intended surrender of
the same. And as correctly espoused by the counsel for the
respondent court, it is 'only through the actual surrender of the
land that tenancy relation terminates; no amount of intention to
surrender severs the relationship'. Furthermore, the said act of
Macaraeg was not an absolute renunciation of his leasehold
possession, as it was in fact clearly conditional. 4 (Emphasis
supplied)
Thus, abandonment may be said to result where there is concurrence of two (2)
elements: the first being the intent to abandon a right or claim and the second being
 ENVIRONMENTAL LAW & NATURAL RESOURCES
the external act by which that intention is expressed and carried into effect. There
must, moreover, be an actual, as distinguished from a merely projected,
relinquishment of a claim or right; otherwise the right or claim is not vacated or
waived so as to be susceptible of being appropriated by the next owner. These two
(2) requirements are clearly lacking in the case at bar. The Director of Mines and
public respondent Office of the President had found that, in point of fact, private
respondent Supreme Aggregates had performed its annual work obligations. Supreme
Aggregates could not therefore be said to have intended to abandon its mining claim
or lease, notwithstanding the fact that it had failed to submit the normal
documentary proof of performance of annual work obligations that is, the Affidavit of
Annual Work Obligations. We agree, therefore, with the conclusion of the Office of
the President that in the instant case, there was no abandonment, whether automatic
or voluntary, of MLC No. V-754.
2. It is true that under Section 67 of P.D. No. 463, petitioner Medrana, as registered
owner of the superficies  of the land here involved, had a "preferential right to exploit
the quarry resources found therein". That right, however, was simply
a preferential right, and that right was ineffective to dissolve the pre-existing or
subsisting right of private respondent Supreme Aggregates. The order of 27 February
1979 of the Director of Mines, denying Supreme Aggregates' Application to Avail of
Rights and Privileges, did not have, nor did it purport to have, the effect of cancelling
or declaring the automatic abandonment of MLC No. V-754; as noted above, there
simply was no legal basis for so cancelling or declaring it as abandoned. It follows
that the 27 February 1979 order did not produce the effect of opening up the areas
leased in MLC No. V-754 to location or new acquisition of lights by petitioner
Medrana, or by any other person for that matter. 5 It follows, furthermore, that
petitioner's QTPs Nos. 85, 86 and 87 were not validly issued to begin with and that
the express cancellation of the QTPs decreed in the Director of Mines' decision of 13
March 1981, which formally rectified his error by reinstating Supreme Aggregates'
Application, was not even necessary being mere confirmatory of the juridical
situation.
3. We turn to the question of whether or not Supreme Aggregates' petition dated 29
June 1979 for reinstatement of its rejected Application to Avail of Rights and
Privileges and for cancellation of Medrana's QTPs Nos. 85, 86 and 87, had been filed
seasonably. It is claimed by petitioner Medrana that that order of the Director of
Mines had ipso facto  cancelled Supreme Aggregates' MLC No. V-754 and that in any
case, that order of the Director of Mines had already become final and executory by
the time Supreme Aggregates filed its petition for reinstatement of its Application to
Avail of Rights and Privileges.
We have already pointed out above that the denial order of the Director of Mines
did not have the effect of ipso facto cancelling MLC No. V-754. It remains only
therefore to determine whether, as petitioner contends and as the former Minister of
Natural Resources held, the rejection order of the Director of Mines became final and
executory upon expiration of five (5) days from receipt thereof by Supreme
Aggregates, under Section 5 of P.D. No. 309. Section 5 of P.D. No. 309, entitled
Session 5 P a g e | 57
Establishing Rules and Procedures for the Speedy Disposition or
Settlement of Conflicting Mining Claims", provides as follows:
Sec. 5. Any party not satisfied with the decision or order of the
Director of Mines may, within five (5) days from receipt thereof,
appeal to the Secretary of Agriculture and Natural Resources who
shall render his decision within five (5) days from receipt of the
appeal or submission of the report of the Department panel of
investigators, as the case may be. From the decision of the
Secretary, an appeal may be taken within five (5) days to the
President whose decision shall be final and executory.
We agree with the Office of the President that Section 5 of P.D. No. 309 has no
application to the case at bar. As its title clearly indicates, P.D. No. 309 applies only
to cases involving conflicting mining claims, that is to say, to orders or decisions
issued in adversarial or litigated proceedings involving mining claims with conflicting
or overlapping boundaries. Section 3 of P.D. No. 309 makes this clear —
Sec. 3 . ...
For the purpose of expediting the exploration and exploitation of
our mineral resources, the proceedings above-described will be so
conducted so that the case so heard by the Director of Mines
and/or through the Panel of Investigators shall be a final
adjudication of rights over mining claim or claims subject to
litigations and conflicts.  including the exploration and exploitation
thereof.
xxx xxx xxx
(Emphasis supplied)
Section 5 of P.D. No. 309 quoted above and the five (5) days reglementary period
can scarcely be made to apply to situations where there are no opposing or
contending parties, as in the case of private respondent Supreme Aggregates'
Application to Avail of Rights and Privileges with the Bureau of Mines. It must also be
recalled that when the Director of Mines on 27 February 1979 denied Supreme
Aggregates' Application to Avail of Rights and Privileges, there were as yet no
conflicting claims asserted in respect  of Supreme Aggregates' leased area. Petitioner
Medrana's QTPs were issued only three (3) months after the Director of Mines had
initially denied Supreme Aggregates' application.
We conclude that petitioner has entirely failed to show that Deputy Executive
Secretary Magdangal Elma had committed any error in rendering the decision of the
Office of the President dated 20 September 1988. But even if petitioner had
succeeded in showing that the Office of the President had indeed misconstrued some
 ENVIRONMENTAL LAW & NATURAL RESOURCES
provision of P.D. No. 463 as amended, or of the Rules and Regulations implementing
P.D. No. 463, or of P.D. No. 309, such error would still be merely an error of law or
an error of judgment and certainly not a grave abuse of discretion or an act without
or in excess of jurisdiction correctible by certiorari.
WHEREFORE, the Petition for certiorari must be, as it is hereby, DISMISSED for lack
of merit and the Decision dated 20 September 1988 of the Office of the President
AFFIRMED in toto. Costs against petitioner.
SO ORDERED.
Fernan, C.J., (Chairman), Gutierrez, Jr., Bidin and Cortes, JJ., concur.
G.R. No. 92605. July 16, 1991.*
APEX MINING CO., INC., MT. DIWATA EXPLORATION AND MINING
CORPORATION, CAMILO BANAD, PRUDENCIO SUAREZ, AURORA SUAREZ,
RODOLFO BOLO, LEONILA VILLAFLOR, MAURICIA AMACIO, ANITA
BITAGAN, APOLINARIO CANETE, ORLANDO CASTILLO, PAUL GALICIA, and
ROSARY V. GALICIA, petitioners, vs. HONORABLE CANCIO C. GARCIA
ASSISTANT EXECUTIVE SECRETARY, OFFICE OF THE PRESIDENT, HON.
FULGENCIO S. FACTORAN, JR., SECRETARY OF ENVIRONMENT AND
NATURAL RESOURCES, and MARCOPPER MINING CORPORATION,
respondents.
Administrative Agencies; Decisions of administrative agencies on matters within their
executive jurisdiction can only be set aside on proof of gross abuse of discretion,
fraud or error of law.—Finally, invariable is the rule that in reviewing administrative
decisions of the Executive Branch of the government, the findings of fact made
therein must be respected, as long as they are supported by substantial evidence,
even if not overwhelming or preponderant. It is not for the reviewing court to weigh
the conflicting evidence, determine the credibility of the witnesses, or otherwise
substitute its own judgment for that of the administrative agency on the sufficiency of
the evidence. The administrative decision in matters within the executive jurisdiction
can only be set aside on proof of gross abuse of discretion, fraud or error of law
(Assistant Executive Secretary for Legal Affairs of the Office of the President v. Court
of Appeals, 169 SCRA 27 [1989]).
PETITION for certiorari to review the decision of the Office of the President.
The facts are stated in the opinion of the Court.
     Martin T. Lu for petitioner-intervenor.
     Gozon, Fernandez, Defensor & Parel for Marcopper Mining Corp.
PARAS, J.:
Session 5 P a g e | 58
This is a petition for certiorari  with prayer for the issuance of a wit of preliminary
injunction and/or restraining order seeking to nullify and set aside the July 27, 1989
decision of the Office of the President * in O.P. Case No. 3728 dismissing the appeal
of Apex Mining Co., Inc. and affirming the April 15, 1987 decision and January 14,
1988 order of the Department of Environment and Natural Resources (DENR),
respectively, declaring that the respective mining claims of Apex Mining Co., Inc., et
al., as well as Small Scale Mining Permits Nos. (X-1) 04 (X-1), 05, are null and void
and/or inoperative and the Permit to Explore No. 133 of Marcopper Mining
Corporation as valid and subsisting; and denying the motion for reconsideration.
The controversy in this case involves conflicting mining claims between herein
petitioners Apex Mining Co., Inc., et al. (Apex for short) and private respondent
Marcopper Mining Corporation (MARCOPPER for short). The disputed area is inside a
timberland area located at Moncayo, Davao del Norte and Cateel, Davao Oriental,
consisting of 4,941.0 hectares (Rollo, p. 64).
MARCOPPER was one of the first mining claimants in the disputed area, having
registered its 16 claims on January 19 and 20, 1984 through the filing of declarations
of location pursuant to Presidential Decree No. 463, otherwise known as the Mineral
Resources Development Decree. MARCOPPER, allegedly, after registering its mining
claim, learned from the central office of the Bureau of Forest Development (BFD) that
the disputed area is within an existing forest reservation known as the "Agusan-
Davao-Surigao Forest Reserve" established by Proclamation No. 369 on February 27,
1931 by then Governor General Dwight F. Davis, and realizing the invalidity of its
mining claims for having availed of a wrong procedure, abandoned its 16 mining
claims and applied for a prospecting permit instead with the BFD on April 11, 1984.
The area covered by its application consisted of 4,941.0 hectares overlapping its
abandoned mining claims. On July 1, 1985, the BFD issued to it a Permit to Prospect
No. 755-123185. Discovering strong evidence of mineral deposits in the area, it
applied for a permit to explore with the then Bureau of Mines and Geo-Sciences
(BMGS). On March 10, 1986, it was issued Permit to Explore No. 133. However, upon
verification from the records of the BMGS, Davao City Mineral District Office, it found
that the area covered by its Permit to Explore No. 133 is also the subject of several
claims/declarations of APEX. Thus, on August 11, 1986, MARCOPPER filed with the
BMGS a "Petition for Cancellation of Mining Claims and/or Small Scale Mining Permits"
against APEX, alleging, among others and in substance, that the area covered by its
Permit to Explore No. 133 and the declarations of locations/mining claims belonging
to APEX are within an established and existing forest reservation (Agusan-Davao-
Surigao Forest Reserve) under Proclamation No. 369, dated February 27, 1931, that
the said mining claims/declarations of location of APEX are invalid for being violative
of Presidential Decree No. 463 and its implementing rules and regulations since the
acquisition of mining rights within a forest reserve is through the filing of application
for a permit to prospect with the BFD and not through registration of declarations of
location with the BMGS (Rollo, p. 65; O.P. Decision, p. 2).
On September 23, 1986, APEX filed a Motion to Dismiss Marcopper's petition,
alleging, in substance, that their mining claims are not within any established or
 ENVIRONMENTAL LAW & NATURAL RESOURCES
proclaimed forest reserve, and as such, the acquisition of mining lights thereto must
be undertaken through the registration of declaration of location with the BMGS and
not through the filing of an application for permit to prospect with the BFD; and that
the permit to prospect and permit to explore issued to MARCOPPER are inoperative
and of no legal force and effect (Ibid., pp. 587-588).
On December 9, 1986, after COPPER filed its reply, the BMGS issued an order, the
dispositive portion of which reads:
VIEWED IN THE LIGHT OF THE FOREGOING, the motion to dismiss should
be, as hereby it is GRANTED. Accordingly, the Permit to Explore No. 133 of
the MMC is hereby declared null and void. (Rollo, P. 110).
MARCOPPER appealed the said order, and the DENR after due hearing, rendered the
appealed decision on April 15, 1987, the dispositive portion of which reads:
WHEREFORE, the Order dated 9 December 1986 of the Director, Bureau of
Mines and Geo-Sciences, is hereby REVERSED or SET ASIDE. Accordingly
Permit to Explore No. 133 of appellant Marcopper Mining Corporation is
hereby declared valid and subsisting. The respective mining claims of
appellees Apex Mining Corporation, et al., as well as Small Scale Mining
Permit Nos. (X-1), 04 and (X-1), 05, are hereby declared null and void
and/or inoperative. The Director, Bureau of Mines and Geo-Sciences, is
hereby directed to cancel the registered mining claims and to revoke Small
Scale Mining Permit Nos. (X-1) 04 (X-1), 05 of Apex Mining Co., et al. ( Ibid.,
p. 100).
The motion for reconsideration of said decision having been denied by the DENR on
January 4, 1988, APEX appealed the case to the Office of the President ( Ibid., p.
591), which on July 27, 1989, through the Assistant Executive Secretary for Legal
Affairs, Cancio C. Garcia, rendered a decision, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, the instant appeal is hereby dismissed for
lack of merit and the appealed DENR decision and order, dated April 15,
1987 and January 4, 1988, respectively, are hereby AFFIRMED, The stay-
order issued by this Office on February 11, 1988 is accordingly LIFTED.
Further the Petition to Intervene As Party filed by Minfed dated May 21,
1988, is hereby DENIED. (Ibid., pp. 74-75; O.P. Decision, pp. 11-12)
APEX filed a motion for reconsideration, but the same was denied on November 16,
1989. Hence, this petition.
This Court, after the parties had submitted the required pleadings, in its resolution of
August 7, 1990 (Ibid., p. 637), resolved to give due course to the petition.
The instant petition is devoid of merit.
Session 5 P a g e | 59
The main issue in this case is whether or not the disputed area is within an
established and existing forest reservation.
The answer is in the affirmative.
The thrust of the petitioners' argument is that the subject area is not situated within
a forest reserve and that Proclamation No. 369 did not establish a forest reservation.
The said proclamation merely withdrew from settlement or disposition certain tracts
of land described therein situated in the Province of Davao, Agusan and Surigao. It
did so on the basis of Section 8 of Act No. 2874, otherwise known as "the Public Land
Act" which was promulgated on November 29, 1919 ( Rollo, pp. 654657).
Proclamation No. 369 could not have, as a matter of law, established a forest reserve
for the simple reason that it was issued not on the basis of Chapter XII, Title V of Act
No. 2874 nor on the basis of Section 1826 of Act 2711 (the Revised Administrative
Code which took effect on June 15, 1939), but on the basis of Section 8 of Act 2874
which empowers the Governor-General only to reclassify lands of the public domain.
In confirmation, Proclamation No. 369 does not even use the word "reserve" or
"forest reserve" (Ibid., p. 24; Petition, p. 17).
Section 8 of Act No. 2874, the former Public Land Act, the basis of Proclamation No.
369, provides —
Section 8. Only those lands shall be declared open to disposition or
concession which have been officially delimited and classified and, when
practicable, surveyed, and which have not been reserved for public or quasi-
public uses, nor appropriated by the Governor, nor in any manner become
private property, not those on which a private right authorized and
recognized by this Act or any other valid law may be claimed, or which,
having been reserved or appropriated, have ceased to do so. However, the
Governor-General may, for reasons of public interest, declare lands of the
public domain open to disposition before the same have had their
boundaries established or been surveyed, or may, for the same reasons,
suspend their concession or disposition by proclamation duly published or by
Act of Legislature. (Rollo, pp. 745-746).
From the above-quoted provision, the Governor-General was specifically empowered
not only to declare lands of public domain open to disposition but also to suspend
their concession or disposition. Accordingly, withdrawal of a certain area to establish
a forest reserve is, without question, within the power of the Governor-General. The
then Governor-General Dwight F. Davis, in issuing Proclamation No. 369, withdrew
from settlement or disposition the tracts of land described therein to establish a
forest reserve. The intention can be gleaned from the last paragraph of Proclamation
No. 369, which reads:
From this reserve shall be considered automatically excluded all areas which
had already been certified and which in the future may be proclaimed as
classified and certified by the Director of Forestry as non-forest lands and
 ENVIRONMENTAL LAW & NATURAL RESOURCES
approved by the Secretary of Agriculture and Natural Resources. ( Rollo, P.
768).
Moreover, then President Carlos P. Garcia confirmed that Proclamation No. 369 did
establish a forest reserve when he issued on May 8, 1959 Proclamation No. 583
entitled "Excluding From the Operation of Proclamation No. 369, Dated February 27,
1931, Which Established The Agusan-Davao-Surigao Forest Reserve , Certain Parcels
of Land Embraced Therein, And Declaring the Same Open to Disposition Under the
Provisions of the Mining Act." (Emphasis supplied). This proclamation was concurred
in by the Congress of the Philippines on May 21, 1959 through Concurrent Resolution
No. 17 entitled "Concurrent Resolution Concurring in Proclamation Numbered Five
Hundred Eighty-Three of the President of the Philippines, Dated May Eight, Nineteen
Hundred Fifty Nine, Excluding From the Operation of Proclamation Numbered Three
Hundred Sixty-Nine, which Established the Agusan-Davao-Surigao Forest Reserve ,
Certain Parcels of Land Embraced Therein, and Declaring the Same Open to
Disposition Under the Provisions of the Mining Act." (Emphasis supplied).
In this connection, it should be stated that the findings of government agencies with
respect to the construction of statutes the implementation of which has been reposed
in them, are controlling on the Court (Greenhills Mining Company v. Office of the
President, 163 SCRA 350 [1988]).
The disputed areas, being clearly within a forest reserve, are not open to mining
location. Sections 8 and 13 of P.D. No. 463, as amended by P.D. No. 1385, provide:
Sec. 8. Prospecting, Exploration and Exploitation of Minerals in Reserved
Lands.1âwphi1 Prospecting, exploration and exploitation of minerals in
reserved lands other than mineral reservations may be undertaken by the
proper Government agencies. In the event that said agencies Cannot
undertake the prospecting, exploration and exploitation of mineral in
reserved lands, qualified persons may be permitted to undertake such
prospecting, exploration and exploitation in accordance with the rules and
regulations promulgated by the Secretary. The right to exploit the minerals
found therein shag 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 prospecting, exploration
and exploitation of said area shall be given priority.
Notwithstanding the provisions of the preceding paragraph, a special permit
may be issued by the Director to the exploration permittee to extract,
remove and dispose of minerals in limited quantities as verified by the
Bureau of Mines.
Sec. 13. Areas Closed to Mining Location. No prospecting and exploration
shall be allowed:
Session 5 P a g e | 60
a) In military, or other Government reservations except when
authorized by the proper Government agency concerned;
x x x           x x x          x x x
Pursuant to P.D. No. 463, as amended, one can acquire mining rights within forest
reserves by initially applying for a permit to prospect with the Bureau of Forest and
Development (BFD) and subsequently for a permit to explore with the Bureau of
Mines and Geo-Sciences (BMGS). Such procedural requisites were complied with and
undertaken by MARCOPPER after it had ascertained that its mining claims were found
to be within the Agusan-Davao-Surigao Forest Reserve. On the other hand, the
mining claims and SSMPs of APEX being located within said forest reserve, are in
violation of the law and therefore result in a failure to validly acquire mining rights.
Finally, invariable is the rule that in reviewing administrative decisions of the
Executive Branch of the government, the findings of fact made therein must be
respected, as long as they are supported by substantial evidence, even if not
overwhelming or preponderant. It is not for the reviewing court to weigh the
conflicting evidence, determine the credibility of the witnesses, or otherwise
substitute its own judgment for that of the administrative agency on the sufficiency of
the evidence. The administrative decision in matters within the executive jurisdiction
can only be set aside on proof of gross abuse of discretion, fraud or error of law
(Assistant Executive Secretary for Legal Affairs of the Office of the President v. Court
of Appeals, 169 SCRA 27 [1989]).
PREMISES CONSIDERED, the appealed decision of the Office of the President is
AFFIRMED and the petition for certiorari  is DISMISSED.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin,
Sarmiento, Griño-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.
Gancayco, J., is on leave.
Decision affirmed. Petition dismissed.
Note.—Interpretation of officers of laws entrusted to their administration, entitled to
great respect. (Sierra Madre Trust vs. Secretary of Agriculture and Natural Resources,
121 SCRA 384.)
——o0o——
 ENVIRONMENTAL LAW & NATURAL RESOURCES
G.R. No. 129820. November 30, 2006.*
PNOC-ENERGY DEVELOPMENT CORPORATION (PNOC-EDC), petitioner, vs.
EMILIANO G. VENERACION, JR., respondent.
Administrative Law; Appeals; Appeals from judgments and final orders of quasi-
judicial bodies are required to be brought to the Court of Appeals, under the
requirements and conditions set forth in Rule 43 of the Rules of Civil Procedure.—
With the enactment of Republic Act No. 7902, this Court issued Circular No. 1-95
dated 16 May 1995 governing appeals from all quasi-judicial bodies to the Court of
Appeals by petition for review, regardless of the nature of the question raised. Said
circular was incorporated in Rule 43 of the Rules of Civil Procedure. In addition, this
Court held in a line of cases that appeals from judgments and final orders of quasi-
judicial bodies are required to be brought to the Court of Appeals, under the
requirements and conditions set forth in Rule 43 of the Rules of Civil Procedure.
Nevertheless, this Court has taken into account the fact that these cases were
promulgated after the petitioner filed this appeal on 4 August 1997, and decided to
take cognizance of the present case.
Same; Same; Natural Resources; Mines; By providing a five-day period within which
to file an appeal on the decisions of the Director of Mines and Geo-Sciences,
Presidential Decree No. 463 unquestionably repealed Section 61 of Commonwealth
Act No. 137.— When Presidential Decree No. 463 was enacted in 1974, Section 50 of
the law had clearly intended to repeal the corresponding provision found in Section
61 of Commonwealth Act No. 137, and to shorten the 30-day period within which to
file an appeal from the Decision of the Director of Mines and Geo-Sciences to five
days. Section 61 of Commonwealth Act No. 137, as amended, provides that: SEC. 61.
—Conflicts and disputes arising out of mining locations shall be submitted to the
Director of Mines for decision: Provided, That the decision or order of the Director of
Mines may be appealed to the Secretary of Agriculture and Natural Resources within
thirty days from receipt of such decision or order. In case any one of the parties
Session 5 P a g e | 61
should disagree from the decision or order of the Secretary of Agriculture and Natural
Resources, the matter may be taken to the Court of Appeals or the Supreme Court,
as the case may be, within thirty days from the receipt of such decision or order,
otherwise the said decision or order shall be final and binding upon the parties
concerned. x x x. Section 50 of Presidential Decree No. 463 reads: Sec. 50. Appeals.
—Any party not satisfied with the decision or order of the Director, may, within five
(5) days from receipt thereof, appeal to the Minister [now Secretary]. Decisions of
the Minister [now Secretary] are likewise appealable within five (5) days from receipt
thereof by the affected party to the President whose decision shall be final and
executory. Petitioner’s insistence that the 30-day reglementary period provided by
Section 61 of Commonwealth Act No. 137, as amended, applies, cannot be sustained
by this Court. By providing a five-day period within which to file an appeal on the
decisions of the Director of Mines and Geo-Sciences, Presidential Decree No. 463
unquestionably repealed Section 61 of Commonwealth Act No. 137.
Same; Same; Same; Same; Rules of procedure must be faithfully followed except
only when for persuasive reasons, they may be relaxed to relieve a litigant of an
injustice not commensurate with his failure to comply with the prescribed procedure.
—Petitioner invokes the judicial policy of allowing appeals, although filed late, when
the interest of justice so requires. Procedural law has its own rationale in the orderly
administration of justice, namely, to ensure the effective enforcement of substantive
rights by providing for a system that obviates arbitrariness, caprice, despotism, or
whimsicality in the settlement of disputes. Hence, rules of procedure must be
faithfully followed except only when for persuasive reasons, they may be relaxed to
relieve a litigant of an injustice not commensurate with his failure to comply with the
prescribed procedure. Concomitant to a liberal application of the rules of procedure
should be an effort on the part of the party invoking liberality to explain his failure to
abide by the rules. In the instant case, petitioner failed to state any compelling
reason for not filing its appeal within the mandated period. Instead, the records show
that after failing to comply with the period within which to file their motion for
reconsideration on time, they again failed to file their appeal before the Office of the
DENR Secretary within the time provided by law.
Natural Resources; Mines; As a general rule, prospecting and exploration of minerals
in a government reservation is prohibited under Section 13 of Presidential Decree No.
463.—As a general rule, prospecting and exploration of minerals in a government
reservation is prohibited under Section 13 of Presidential Decree No. 463. However,
the same rule provides an exception involving instances when the government
agency concerned allows it. Section13. Areas Closed to Mining Location.—No
prospecting and exploration shall be allowed: (a) In military, and other Government
reservations except when authorized by the proper Government agency concerned.
Section 8 of Presidential Decree No. 463 reiterates the rule and clarifies it further by
stating that prospecting, exploration and exploitation of minerals on reserved lands
other than mineral reservations may be undertaken by the proper government
 ENVIRONMENTAL LAW & NATURAL RESOURCES
agency. As an exception to this rule, qualified persons may undertake the said
prospecting, exploration and exploitation when the said agencies cannot undertake
them.
PETITION for review on certiorari of an order of the Mines Adjudication Board (MAB)
of the Department of Environment and Natural Resources (DENR).
The facts are stated in the opinion of the Court.
     Jesus S. Delfin for respondent.
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court,
seeking to set aside the Order, dated 21 May 1997 issued by the Mines Adjudication
Board (MAB) of the Department of Environmental and Natural Resources
(DENR),1 declaring that the respondent Emiliano Veneracion has a preferential right
over the contested Block 159.
This case involves the conflicting claims of the petitioner Philippine National Oil
Corporation-Energy Development Corporation and the respondent over the mining
rights over Block 159 of the Malangas Coal Reservation, Alicia, Zamboanga del Sur.
On 31 January 1989, respondent applied with the Mines and Geo-Sciences
Development Services, DENR, Region IX, Zamboanga City for a Declaration of
Location (DOL) over Block 159 of the Malangas Coal Reservation, situated at
Barangays Payongan and Kauswagan, Alicia, Zamboanga del Sur. On 18 May 1989,
the Office of the Regional Executive Director (RED) of the DENR informed the
respondent that his DOL cannot be registered since Block 159 was part of the
Malangas Coal Reservation, as provided under Proclamation No. 284, issued by the
President on 19 July 1938. 2 With the endorsement of the Office of Energy Affairs
(OEA) and the DENR Secretary, the respondent petitioned the Office of the President
for the withdrawal of Block 159 from the coal reservation and its conversion into a
mineral reservation.3
The petitioner applied for a mineral prospecting permit over Block 159 (and Blocks
120 and 160) with the OEA, which the latter granted on 4 September 1989. The
Malangas Coal Reservation was, at that time, under the administration of the
OEA.4 When it had initially applied for a mineral prospecting permit over lands within
the Malangas Coal Reservation, the OEA advised it to obtain the permission of the
Bureau of Mines and Geo-Sciences (BMGS).5
On 18 October 1991, petitioner submitted to the DENR an application/proposal for a
Mineral Production Sharing Agreement (MPSA) over Blocks 120, 159 and 160 of the
Malangas Coal Reservation.6
Session 5 P a g e | 62
On 21 February 1992, the Officer-In-Charge Regional Technical Director Dario R.
Miñoza of the Mines and Geo-Sciences Developmental Service (MGDS) advised the
petitioner to amend its application for MPSA by excluding Block 159 as the same is
covered by the application of the respondent. 7 Nevertheless, the petitioner did not
exclude Block 159 from its MPSA. Records also show that it had not applied for nor
was it able to obtain an Exploration Permit from the BMGS over Block 159.
On 13 April 1992, Presidential Proclamation No. 890 was issued, which effectively
excluded Block 159 from the operation of Proclamation No. 284, and declared Block
No. 159 as government mineral reservation open for disposition to qualified mining
applicants, pursuant to Executive Order No. 279.8
On 26 May 1992, petitioner’s application for MPSA covering Coal Block Nos. 120, 159
and 160 was accepted for filing.9 Respondent immediately filed, on 28 May 1992, a
protest to the petitioner’s inclusion of Block 159 in its application for MPSA before the
RED of the DENR Office in Zamboanga City.10
After the parties were heard, the RED, in an Order, dated 12 April 1993, ruled in
favor of the respondent and ordered the petitioner to amend its MPSA by excluding
therefrom Block 159.11 On 18 May 1993, petitioner filed a Motion for Reconsideration
of the Order dated 12 April 1993, 12 which the RED denied in an Order dated 5 July
1993.13
On 30 July 1993, petitioner filed an appeal with the DENR Secretary questioning the
Orders issued by the RED.14
While the case was pending, respondent applied for a MPSA. On 31 July 1992, he
paid the processing fee for a MPSA covering Block 159 and was able to comply with
all other requirements of the MPSA application.15
On 4 October 1994, the Office of the Secretary dismissed the appeal on the ground
that petitioner’s right to appeal had already prescribed.16 Section 50 of Presidential
Decree No. 463 provides therefore for a five-day reglementary period from the
receipt of the order or decision of the Director. 17 Petitioner received its copy of the
assailed Order dated 12 April 1993 on 7 May 1993, but filed its Motion for
Reconsideration only on 18 May 1993, or eleven days after its receipt thereof.
Thereafter, petitioner received a copy of the Order dated 5 July 1993 on 16 July
1993, but filed its appeal only on 30 July 1993 or nine days after the allowable period
to appeal.
On 25 October 1994, petitioner, through a letter addressed to the DENR Secretary,
sought the reconsideration of the Decision, dated 4 October 1994. 18 In a Resolution,
dated 21 December 1994, the then DENR Secretary Angel C. Alcala reversed the
Decision, dated 4 October 1994, and gave due course to the MPSA of the petitioner. 19
On 1 February 1995, respondent filed a Motion for Reconsideration of the Resolution,
dated 21 December 1994.20 The now DENR Secretary Victor O. Ramos issued an
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Order, dated 5 August 1996, reversing the Resolution, dated 21 December 1994 and
reinstating the Decision, dated 4 October 1994. It ruled that the Orders issued by the
RED have already become final and executory when the petitioner failed to file its
appeal five days after it had received the Orders. As a result, the DENR Secretary no
longer had the jurisdiction to issue the assailed Resolution, dated 21 December 1994.
It added that after looking into the merits of the case, the Orders of the RED were in
accordance with the evidence on record and the pertinent laws on the matter. 21
On 20 August 1996, petitioner filed a Motion for Reconsideration of the Order, dated
5 August 1996. On 21 May 1997, the MAB resolved the motion in favor of the
respondent and affirmed the assailed Order, dated 5 August 1996. 22 It took
cognizance of the appeal filed by petitioner, in accordance with Section 78 of
Republic Act No 7942, otherwise known as The Philippine Mining Act of 1995. 23 The
MAB ruled that the petitioner filed its appeal beyond the five-day prescriptive period
provided under Presidential Decree No. 463, which was then the governing law on
the matter.
The MAB also decreed that the respondent had preferential mining rights over Block
159. It ruled that the proper procedure with respect to the mining rights application
over Block 159 when it was still part of the Malangas Coal Reservation required the
following: (1) application for prospecting permit with the OEA or other office having
jurisdiction over said reservation; (2) application for exploration permit; (3)
application for exclusion of the land from such reservation; (4) Presidential
Declaration on exclusion as recommended by the Secretary; and (5) application for
Lease thereof with priority given to holder of exploration Permit.
The MAB noted that petitioner did not file for an exploration permit nor applied for
the exclusion of Block 159. Moreover, petitioner filed a MPSA on 18 October 1991, or
almost six (6) months prior to the issuance of Proclamation No. 890 excluding Block
159 from the Malangas Coal Reservation and allowing its disposition. Thus, the
application for a MPSA over Block 159, while it was still part of a government
reservation other than a mineral reservation, was erroneous and improper and could
not have been legally accepted. And, since the records show that only one MPSA was
filed after the issuance of Proclamation 890 – that of the respondent’s, the
preferential right over Block 159 was acquired by the respondent. The MAB,
nevertheless, pointed out that the said preferential right does not necessarily lead to
the granting of the respondent’s MPSA, but merely consists of the right to have his
application evaluated and the prohibition against accepting other mining applications
over Block 159 pending the processing of his MPSA.
Hence, this Petition for Review on Certiorari.
The correct mode of appeal would have been to file a petition for review under Rule
43, before the Court of Appeals. Petitioner’s reliance on Section 79 of the Philippine
Mining Act of 1995 is misplaced. 24 Republic Act No. 7902 expanded the appellate
jurisdiction of the Court of Appeals to include:
Session 5 P a g e | 63
Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders
or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities,
boards or commissions x x x except those falling within the appellate jurisdiction of
the Supreme Court in accordance with the Constitution, the Labor Code of the
Philippines under Presidential Decree No. 442, as amended, the provisions of this Act,
and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.
With the enactment of Republic Act No. 7902, this Court issued Circular No. 1-95
dated 16 May 1995 governing appeals from all quasi-judicial bodies to the Court of
Appeals by petition for review, regardless of the nature of the question raised. Said
circular was incorporated in Rule 43 of the Rules of Civil Procedure. 25 In addition, this
Court held in a line of cases that appeals from judgments and final orders of quasi-
judicial bodies are required to be brought to the Court of Appeals, under the
requirements and conditions set forth in Rule 43 of the Rules of Civil
Procedure.26 Nevertheless, this Court has taken into account the fact that these cases
were promulgated after the petitioner filed this appeal on 4 August 1997, and
decided to take cognizance of the present case.
There are two main issues that need to be resolved in this case: (1) whether or not
the petitioner has already lost its right to appeal the RED’s Order dated 12 April 1993;
and (2) whether or not the petitioner acquired a preferential right on mining rights
over Block 159.
This Court finds no merit in this Petition.
Petitioner alleges that Section 61 of Commonwealth Act No. 137 27 governs the
petitioner’s appeal of the Orders, dated 12 April 1993 and 5 July 1993, and not
Section 50 of Presidential Decree No. 463. He further adds that even if Presidential
Decree No. 463 was applicable in this case, his appeal should have been allowed on
grounds of substantial justice.
When Presidential Decree No. 463 was enacted in 1974, Section 50 of the law had
clearly intended to repeal the corresponding provision found in Section 61 of
Commonwealth Act No. 137, and to shorten the 30-day period within which to file an
appeal from the Decision of the Director of Mines and Geo-Sciences to five days.
Section 61 of Commonwealth Act No. 137, as amended, provides that:
SEC. 61. - Conflicts and disputes arising out of mining locations shall be submitted to
the Director of Mines for decision: Provided, That the decision or order of the Director
of Mines may be appealed to the Secretary of Agriculture and Natural Resources
within thirty days from receipt of such decision or order. In case any one of the
parties should disagree from the decision or order of the Secretary of Agriculture and
Natural Resources, the matter may be taken to the Court of Appeals or the Supreme
Court, as the case may be, within thirty days from the receipt of such decision or
order, otherwise the said decision or order shall be final and binding upon the parties
concerned. x x x.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Section 50 of Presidential Decree No. 463 reads:
Sec. 50. Appeals. - Any party not satisfied with the decision or order of the Director,
may, within five (5) days from receipt thereof, appeal to the Minister [now
Secretary]. Decisions of the Minister [now Secretary] are likewise appealable within
five (5) days from receipt thereof by the affected party to the President whose
decision shall be final and executory.
Petitioner’s insistence that the 30-day reglementary period provided by Section 61 of
Commonwealth Act No. 137, as amended, applies, cannot be sustained by this Court.
By providing a five-day period within which to file an appeal on the decisions of the
Director of Mines and Geo-Sciences, Presidential Decree No. 463 unquestionably
repealed Section 61 of Commonwealth Act No. 137.
In Pearson v. Intermediate Appellate Court, 28 this Court extensively discussed the
development of the law on the adjudication of mining claims, as seen in the
provisions of Commonwealth Act No. 137, Presidential Decree No. 463, until its
present state under Republic Act No. 7942. It was noted that there was a clear effort
to modernize the system of administration and disposition of mineral lands and that
the procedure of adjudicating mining claims had become increasingly administrative
in character.
[W]ith the issuance of Presidential Decree Nos. 99-A, 309, and 463, the procedure of
adjudicating conflicting mining claims has been made completely administrative in
character, with the President as the final appeal authority. Section 50 of P.D. 463,
providing for a modernized system of administration and disposition of mineral lands,
to promote and encourage the development and exploitation thereof, mandates on
the matter of "Protests, Adverse Claims and Appeals," the following procedure:
Appeals — Any party not satisfied with the decision or order of the Director may,
within five (5) days from receipt thereof appeal, to the Secretary. Decisions of the
Secretary are likewise appealable within five (5) days from receipt thereof by the
affected party to the President of the Philippines whose decision shall be final and
executory.
It should be noted that before its amendment, the Mining Law (C.A. No. 137)
required that after the filing of adverse claim with the Bureau of Mines, the adverse
claimant had to go to a court of competent jurisdiction for the settlement of the
claim. With the amendment seeking to expedite the resolution of mining conflicts, the
Director of Mines became the mandatory adjudicator of adverse claims, instead of the
Court of First instance. Thus, it cannot escape notice that under Section 61 of the
Mining Law, as amended by Republic Act Nos. 746 and 4388, appeals from the
decision of the Secretary of Agriculture and Natural Resources (then Minister of
Natural Resources) on conflicts and disputes arising out of mining locations may be
made to the Court of Appeals or the Supreme Court as the case may be. In contrast,
under the decrees issued at the onset of martial law, it has been expressly provided
that the decisions of the same Secretary in mining cases are appealable to the
Session 5 P a g e | 64
President of the Philippines under Section 50 of the Mineral Resources Development
Decree of 1974 (P.D. No. 463) and Section 7 of P.D. No. 1281 in relation to P.D. No.
309.
The trend at present is to make the adjudication of mining cases a purely
administrative matter. This does not mean that administrative bodies have complete
rein over mining disputes. The very terms of Section 73 of the Mining Law, as
amended by R.A. No. 4388, in requiring that the adverse claim must "state in full
detail the nature, boundaries and extent of the adverse claim" show that the conflicts
to be decided by reason of such adverse claim refer primarily to questions of fact.
The controversies to be submitted and resolved by the Director of Mines under the
sections referred only to the overlapping of claims and administrative matters
incidental thereto. Questions and controversies that are judicial, not administrative, in
nature can be resolved only by the regular courts in whom is vested the judicial
power to resolve and adjudicate such civil disputes and controversies between
litigants in accordance with the established norms of law and justice. Decisions of the
Supreme Court on mining disputes have recognized a distinction between (1) the
primary powers granted by pertinent provisions of law to the then Secretary of
Agriculture and Natural Resources (and the bureau directors) of an executive or
administrative nature, such as "granting of license, permits, lease and contracts, or
approving, rejecting, reinstating or cancelling applications, or deciding conflicting
applications," and (2) controversies or disagreements of civil or contractual nature
between litigants which are questions of a judicial nature that may be adjudicated
only by the courts of justice.
This distinction is carried on even under the present law. Findings of fact by the
Mines Adjudication Board, which exercises appellate jurisdiction over decisions or
orders of the panel of arbitrators, shall be conclusive and binding on the parties, and
its decision or order shall be final and executory. But resort to the appropriate court,
through a petition for review by certiorari, involving questions of law, may be made
within thirty days from the receipt of the order or decision of the Mines Adjudication
Board.
Nor can petitioner invoke the doctrine that rules of technicality must yield to the
broader interest of substantial justice. While every litigant must be given the amplest
opportunity for the proper and just determination of his cause, free from the
constraints of technicalities, the failure to perfect an appeal within the reglementary
period is not a mere technicality. It raises a jurisdictional problem as it deprives the
appellate court of jurisdiction over the appeal. The right to appeal is not part of due
process of law but is a mere statutory privilege to be exercised only in the manner
and in accordance with the provisions of the law. 29
Petitioner invokes the judicial policy of allowing appeals, although filed late, when the
interest of justice so requires. Procedural law has its own rationale in the orderly
administration of justice, namely, to ensure the effective enforcement of substantive
rights by providing for a system that obviates arbitrariness, caprice, despotism, or
whimsicality in the settlement of disputes. Hence, rules of procedure must be
faithfully followed except only when for persuasive reasons, they may be relaxed to
 ENVIRONMENTAL LAW & NATURAL RESOURCES
relieve a litigant of an injustice not commensurate with his failure to comply with the
prescribed procedure. Concomitant to a liberal application of the rules of procedure
should be an effort on the part of the party invoking liberality to explain his failure to
abide by the rules. 30 In the instant case, petitioner failed to state any compelling
reason for not filing its appeal within the mandated period. Instead, the records show
that after failing to comply with the period within which to file their motion for
reconsideration on time, they again failed to file their appeal before the Office of the
DENR Secretary within the time provided by law.
Even if petitioner had not lost its right to appeal, it cannot claim any mining rights
over Block 159 for failure to comply with the legal requirements. Petitioner applied for
an MPSA with the DENR on 18 October 1991, prior to the release of Block 159 from
the Malangas Coal Reservation under Proclamation No. 890 on 13 April 1992. Thus,
the provisions on the acquisition of mining rights within a government reservation
other than a mineral reservation under Presidential Decree No. 463 and the
Consolidated Mines Administrative Order (CMAO) should apply.
As a general rule, prospecting and exploration of minerals in a government
reservation is prohibited under Section 13 of Presidential Decree No. 463. However,
the same rule provides an exception involving instances when the government
agency concerned allows it.
Section 13. Areas Closed to Mining Location. – No prospecting and exploration shall
be allowed:
(a) In military, and other Government reservations except when authorized by the
proper Government agency concerned.
Section 8 of Presidential Decree No. 463 reiterates the rule and clarifies it further by
stating that prospecting, exploration and exploitation of minerals on reserved lands
other than mineral reservations may be undertaken by the proper government
agency. As an exception to this rule, qualified persons may undertake the said
prospecting, exploration and exploitation when the said agencies cannot undertake
them.
Section 8. Prospecting, Exploration and Exploitation of Minerals in Reserved Lands. –
Prospecting, exploration and exploitation of minerals in reserved lands other than
mineral reservations may be undertaken by the proper government agency. In the
event that the said agencies cannot undertake the prospecting, exploration and
exploitation of minerals in reserved lands, qualified persons may be permitted to
undertake such prospecting, exploration and exploitation in accordance with the rules
and regulations promulgated by the Secretary [Minister]. The right to exploit 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
[Minister]: Provided, That the party who undertook prospecting, exploration and
exploitation of said are shall be given priority.
Session 5 P a g e | 65
Notwithstanding the provisions of the preceding paragraph, a special permit may be
issued by the Director to the exploration permitee to extract, remove and dispose of
minerals in limited quantities as verified by the Bureau of Mines [Director of Mines
and Geo-Sciences].
Section 15 of the CMAO is more straightforward when it states that government
reserved lands are open for prospecting, subject to the rules and regulations provided
therein.
SEC. 15. Government Reserved Land. – Lands reserved by the Government for
purposes other than mining are open to prospecting. Any interested party may file an
application therefore with the head of the agency administering said land, subject
always to compliance with pertinent laws and rules and regulations covering such
reserved land. Such application shall be acted upon within thirty (30) days. In such
cases, the compensation due the surface owner shall accrue equally to the agency
administering the reserved land and the Bureau of Mines.
The law enumerates the following requirements: (1) a prospecting permit from the
agency that has jurisdiction over the area, in this case, the OEA; 31 (2) an exploration
permit from the BMGS; 32 (3) if the exploration reveals the presence of commercial
deposit, the permitee applies before the BMGS for the exclusion of the area from the
reservation;33 (4) granting by the president of the application to exclude the area
from the reservation;34 and (5) a mining agreement approved by the DENR Secretary.
In this case, petitioner complied with the first requirement and obtained a
prospecting permit from the OEA. 1âwphi1 In its correspondence with the petitioner,
the OEA, however, advised the petitioner on two separate occasions to obtain a
"prospecting permit" from the BMGS, although the OEA was probably referring to an
exploration permit.35 The petitioner did not apply for an exploration permit with the
BMGS, nor would the BMGS have granted petitioner an exploration permit because
when petitioner wrote to the BMGS informing the latter of its intention to enter into
an MPSA with the DENR over Block 159, the BMGS informed the petitioner that the
respondent’s claim over Block 159 had already preceded that of the petitioner. 36 The
advice given by the BMGS was justified since at that time, the respondent already
had a pending application for the exclusion of Block 159 from the Malangas Coal
Reservation. Thereafter, the petitioner filed his MPSA application, without complying
with the second, third and fourth requisites. Since it ignored the sound advice of the
OEA and the BMGS, the government agencies concerned, and stubbornly insisted on
its incorrect procedure, petitioner cannot complain now that its MPSA was revoked for
failure to comply with the legal requirements.
In contrast, the respondent applied for a DOL as early as 30 January 1989. The DENR
Regional Office refused to register the respondent’s DOL since Block 159 was still part
of the Malangas Coal Reservation and advised the respondent to apply for the
exclusion of the area from the reservation. The respondent followed this advice. The
BMGS then treated the respondent’s application for a DOL as an application for an
exploration permit and caused a verification report of the area applied for, as
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 66

provided under Section 99 of the CMAO. 37 Upon the application of the respondent, with the demands of the general welfare. (Southeast Mindanao Gold Mining
the OEA and thereafter the DENR Secretary endorsed the respondent’s application for Corporation vs. Balite Portal Mining Cooperative, 380 SCRA 145 [2002])
the exclusion of the area from the reservation. 38 This application was granted by the
President, through Proclamation No. 890, which provided that the mining rights to ——o0o——
Block 159 will be disposed of in accordance with Executive Order No. 279. On 30 July
1992, respondent filed his MPSA. 39 On 12 April 1993, the RED of Zamboanga City
ordered that the respondent’s MPSA be given due course. 40 Although the respondent’s
applications may not follow the strict letter of the law, there was substantial
compliance with the requirements of the law. Hence, the respondent was able to
acquire a preferential right on the mining claims over Block 159, as provided under
Section 101 of the CMAO.

Even if it were to be assumed that the respondent failed to comply with these
requirements, this would not be fatal to his cause since he filed his MPSA on 31 July
1992, after the issuance of Proclamation No. 890; therefore, the provisions on the
application of mining rights over government reservations would no longer apply to
him because Block 159 was already converted into a mineral reservation, wherein a
different set of rules would apply. The only effect of his failure to comply with the
requirements CMAO on government reservations is that he loses the preferential right
over the area involved. In this case, the respondent was the only applicant to the
mining rights over Block 159, apart from the petitioner who was not qualified for
failure to comply with the legal requirements. Proclamation No. 890 specifically
provides that Executive Order No. 279 should be applied. Records indicate that the
provisions of Executive Order No. 279 have been complied with. 41

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision
of the Mines Adjudication Board is hereby AFFIRMED. No costs.

SO ORDERED.

Panganiban (C.J., Chairman), Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ.,

concur.

Petition denied, assailed decision affirmed.

Notes.—With the issuance of Presidential Decree Nos. 99-A, 309, and 463, the
procedure for adjudicating conflicting mining claims has been made completely
administrative in character, with the President as the final appeal authority. (Pearson
vs. Intermediate Appellate Court, 295 SCRA 27 [1998])

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
 ENVIRONMENTAL LAW & NATURAL RESOURCES
G.R. No. 65021. November 21, 1991.*
BENGUET CORPORATION, petitioner, vs. HON. OSCAR L. LEVISTE, in his
capacity as Presiding Judge of the Regional Trial Court (National Capital
Judicial Region, Branch XCVII, Quezon City) and HELEN DIZON-REYES,
respondents.
Administrative Law; Jurisdiction over cases involving mining contracts.— Presidential
Decree No. 1281 which took effect on January 16. 1978 vests the Bureau of Mines
with jurisdictional supervision and control over all holders of mining claims or
applicants for and/or grantees of mining licenses, permits, leases and/or operators
thereof, including mining service contracts and service contractors insofar as their
mining activities are concerned. To effectively discharge its task as the Government’s
arm in the administration and disposition of mineral resources, Section 7 of P.D. No.
1281 confers upon the Bureau quasi-judicial powers as follows: “SEC. 7. In addition
to its regulatory and adjudicative functions over companies, partnerships or persons
engaged in mining exploration, development and exploitation, the Bureau of Mines
shall have original and exclusive jurisdiction to hear and decide cases involving: x x x
(c) cancellation and/or enforcement of mining contracts due to the refusal of the
Session 5 P a g e | 67
claim owner/operator to abide by the terms and conditions thereof.” Analyzing the
objectives of P.D. 1281, particularly said Section 7 thereof, the Court in Twin Peaks
Mining Association, the case relied upon by petitioner, noted that the trend is to make
the adjudication of mining cases a purely administrative matter. This observation was
reiterated in the more recent case of Atlas Consolidated Mining & Development Corp.
vs. Court of Appeals.
PETITION for certiorari and prohibition to review the orders of the Regional Trial
Court of Quezon City, Br. 97.
The facts are stated in the opinion of the Court.
     Sycip, Salazar, Feliciano & Hernandez for petitioner.
     Laurel Law Offices for private respondent.
FERNAN, C.J.;
At issue in this petition for certiorari and prohibition with preliminary injunction is the
jurisdiction of the regional trial court (RTC) to take cognizance of an action for
annulment of operations agreement entered into by and between two mining
companies.
The action under consideration was commenced by private respondent Helen Dizon-
Reyes against herein petitioner Benguet Corporation and Dizon Copper-Silver Mines,
Inc. 1 on June 20, 1980 before the Regional Trial Court of Quezon City. In her
complaint, docketed as Civil Case No. Q-30171, private respondent alleged that she is
the claim owner of 11 mining claims all located in the province of Zambales. On
January 15, 1967, she executed a Special Power of Attorney constituting her father,
Celestino M. Dizon, as her attorney-in-fact with full powers to "transfer, assign and
dispose of her 11 mining claims." 2
Soon thereafter on January 21, 1967, Celestino M. Dizon, acting as such attorney-in-
fact for private respondent and other claim owners, entered into an Agreement, 3
with Dizon Mine whereby the latter was granted the right to explore, develop, exploit
and operate the 57 mining claims owned by the claim owners including the 11 claims
of private respondent.
Seven (7) years later, on December 17, 1974, private respondent and the other claim
owners executed a Deed of Ratification of Assignment, 4 confirming the assignment,
transfer and conveyance unto Dizon Mines and its assigns and successors of the
rights to possess, occupy, explore, develop and operate all the aforesaid mining
claims.
On March 1, 1975, or almost three (3) months after the Deed of Ratification was
executed, private respondent revoked Special Power of Attorney of January 15, 1967,
stating that "while there is no question that I still have complete and full trust and
 ENVIRONMENTAL LAW & NATURAL RESOURCES
confidence in the judgment and wisdom of my father, it is not my wish to add any
more to his already many a mounting problems." 5 Notice of the revocation was
served on Dizon Mines on March 20, 1975 and on Benguet on August 26, 1975.
However, in spite of said notice, on September 6, 1975, Dizon Mines and Benguet
entered into an Operations Agreement 6 whereby the former transferred to the latter
the possession of the 57 mining claims for the purpose of exploring, developing and
operating them for production and marketing of marketable products under the terms
and conditions specified therein.
Claiming that the Operations Agreement lacked legal basis by reason of the
revocation of Celestino Dizon's special power of attorney; the obligation imposed by
the Agreement of January 21, 1967 on Dizon Mines to itself operate the mines after
raising the capital needed therefor, without authority to engage another corporation
for this purpose; and the inefficacy of the Deed of Ratification arising from the
physiological incapacity of Celestino Dizon to give his consent thereto, private
respondent prayed that the Operations Agreement be declared null and void and
inoperative insofar as it covers her eleven (11) lode mining claims. In the alternative,
private respondent prayed that should the validity of the Operations Agreement be
upheld, defendants therein be ordered to observe and comply with the sharing of
profits stipulated in the Agreement of January 21, 1967. She further prayed for the
award of attorney's fees and expenses of litigation as may be proved during the trial.
On August 12, 1980, Benguet filed a Motion to Dismiss on the following grounds: 1)
the court is without jurisdiction over the subject matter and nature of the action; 2)
the action is barred by prior judgment and laches; 3) the action to declare invalid the
Deed of Ratification has prescribed; and 4) the venue of the action was improperly
laid. Dizon Mines filed its own motion to dismiss.
After private respondent has filed her consolidated opposition to the motions to
dismiss and Benguet, its reply to said consolidated opposition, the trial court issued
an Order dated March 26, 1982, denying the motions to dismiss for lack merit. 7
Its motion for reconsideration having been likewise denied in an Order dated June
20, 1983, 8 petitioner Benguet is now before this Court, reiterating the four (4)
grounds stated in its motion to dismiss.
Invoking Section 7 (c) of Presidential Decree No. 1281 and the ruling in Twin Peaks
Mining Association vs. Navarro and Philex Mining Corp ., 9 petitioner contends that the
RTC has no jurisdiction over Civil Case No. 30171 as jurisdiction over actions to
cancel mining contracts is vested exclusively in the Bureau of Mines and Geo-
Sciences. It likewise adverts to the decision of the Secretary of Natural Resources
dated March 17, 1976 on the private respondent's opposition to the registration of
the subject Operations Agreement. It claims that that decision had become final upon
private respondent's failure to appeal to the Office of the President, constitutes res
judicata to the question of the validity of the Operations Agreement. Besides, by
failing to take seasonable action, private respondent is guilty of laches in that she has
led petitioner Benguet to believe that she was amenable to the decision of the
Session 5 P a g e | 68
Secretary of Natural Resources and to incur huge expenses in connection with the
development of the mining claims.
Moreover, petitioner maintains that the action to annul the Deed of Ratification upon
which private respondent thinks the validity of the Operations Agreement necessarily
depends, should have been brought within four (4) years from its execution on
December 12, 1974. Thus, the complaint filed on June 20, 1980 came too late.
Lastly, petitioner theorizes that since the action to annul the mining contract
necessarily involves the recovery of possession of the mining claims which are located
in Zambales, venue of the action should have been laid in Zambales.
Private respondent in her Comment, later adopted as her Memorandum, 10 confined
her discussion to the issues of jurisdiction and venue, because in her opinion, the
other grounds involve questions of facts entailing the presentation of evidence, which
is premature and improper in a petition for certiorari. 11
While admitting that the contract sought to be annulled is a mining contract, private
respondent nonetheless opines that the action for its annulment does not fall under
the jurisdiction of the Bureau of Mines. The reason given is that Section 7 (c) of P.D.
1281 contemplates a mining contract, valid and binding in all respects, but either the
claim owner or operator refuses to comply with its terms and conditions. In the case
at bar, the contract is null and void because of the mental incapacity of the late
Celestino Dizon to execute the Deed of Ratification on the validity of which the
validity of the Operations Agreement is in turn dependent. Thus, the principal issue in
this case is not whether or not the claim owner or operator refuses to comply with
the contract's terms and conditions, but rather the mental capacity of the attorney-in-
fact to execute a prior agreement upon which the Operations Agreement is based. It
is claimed that the Bureau of Mines and Geo-Sciences is not equipped to determine
the question of mental capacity.
Anent the issue of venue, private respondent contends that the case does not affect
title to or possession of real property, and therefore, is not a real action but an
action in personam, for which venue is laid in the residence of the plaintiff.
We grant the petition. Presidential Decree No. 1281 which took effect on January
16,1978 vests the Bureau of Mines with jurisdictional supervision and control over all
holders of mining claims or applicants for and/or grantees of mining licenses, permits,
leases and/or operators thereof, including mining service contracts and service
contractors insofar as their mining activities are concerned. 12 To effectively
discharge its task as the Government's arm in the administration and disposition of
mineral resources, Section 7 of P.D. No. 1281 confers upon the Bureau quasi-judicial
powers as follows:
Sec. 7. In addition to its regulatory and adjudicative functions over
companies, partnerships or persons engaged in mining exploration,
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 69

development and exploitation, the Bureau of Mines shall have original and Court of Quezon City, Branch XCVII, is ordered DISMISSED. This decision is
exclusive jurisdiction to hear and decide case involving: immediately executory. Costs against private respondent.

x x x           x x x          x x x SO ORDERED.

(c) cancellation and/or enforcement of mining contracts due to the refusal of Gutierrez, Jr., Bidin, Davide, Jr. and Romero, JJ., concur.
the claim owner/operator to abide by the terms and conditions thereof.
Petition granted. Orders set aside.
Analyzing the objectives of P.D. 1281, particularly said Section 7 thereof, the Court
in Twin Peaks Mining Association, 13 the case relied upon by petitioner, noted that Note.—Statutes conferring powers on administrative agencies must be liberally
the trend is to make the adjudication of mining cases a purely administrative matter. construed to enable them to discharge their duties in accordance with the legislative
This observation was reiterated in the more recent case of Atlas Consolidated Mining purpose. (Solid Homes, Inc. v. Payawal, 177 SCRA 72.)
& Development Corp. vs. Court of Appeals. 14
——o0o——
In the case at bar, it is not disputed that the subject agreement is a mining contract
and private respondent, in seeking a judicial declaration of its nullity, does not wish
to abide by its terms and conditions. These elements alone bring the action within the
ambit of Section 7 of P.D. 1281. Whatever the basis for the refusal to abide by the
contract's terms and conditions, the basic issue remains one of its cancellation, which
is precisely what P.D. No. 1281 places within the exclusive original jurisdiction for the
Bureau.

The reason underlying such refusal is indeed an irrelevant matter insofar as

jurisdictional competence is concerned, for to make jurisdiction dependent thereon
would not only be "ratifying two judicial bodies exercising jurisdiction over an
essentially the same subject matter—a situation analogous to split jurisdiction which
is obnoxious to the orderly administration of justice" 15 but also clearly ignoring the
object of P.D. 1281 to make the adjudication of mining cases a purely administrative
matter.
And if, perchance the law did intend to split jurisdiction, it could have done so by
providing exceptions to par. (c), Section 7 of P.D. No. 1281. Not having done so,
there can be no justification for restricting or limiting the Bureau's jurisdiction over
"actions for cancellation and/or enforcement of mining contracts due to the refusal of
the claim owner/operator to abide by the terms and conditions thereof."

In the light of our ruling that the jurisdiction over private respondent's action to annul
the Operations Agreement pertains to the Bureau of Mines and Geo-Sciences rather
than the regional trial court, the question of venue becomes immaterial.

Considering further that the other issues raised by petitioner, namely res

judicata, laches and prescription are factual matters which are not only improper in a
petition for certiorari but which, more importantly, petitioner failed to substantiate, no
ruling on these issues need be made.

WHEREFORE, the instant petition is GRANTED. The assailed orders of March 26, 1982
and June 20, 1983 are set aside and Civil Case No. Q-30171 of the Regional Trial
 ENVIRONMENTAL LAW & NATURAL RESOURCES
G.R. No. 161957. February 28, 2005.*
JORGE GONZALES and PANEL OF ARBITRATORS, petitioners, vs. CLIMAX
MINING LTD., CLIMAX-ARIMCO MIN-ING CORP., and AUSTRALASIAN
PHILIPPINES MINING INC., respondents.
Actions; Alternative Dispute Resolution; Arbitration; Forum Shopping; Pleadings and
Practice; There is no forum shopping where one is a petition for certiorari which
raises the issue of whether or not there was grave abuse of discretion while the other
is a Petition to Compel for Arbitration seeking the implementation of the arbitration
clause in the agreement between the parties.— Petitioner claims that respondents are
guilty of forum-shopping for failing to disclose before this Court that they had filed a
Petition to Compel for Arbitration before the RTC of Makati City. However, it cannot
be determined from petitioner’s mere allegations in the Petition that the Petition to
Compel for Arbitration instituted by respondent Climax-Arimco, involves related
causes of action and the grant of the same or substantially the same reliefs as those
involved in the instant case. Petitioner did not attach copies of the Petition to Compel
Session 5 P a g e | 70
for Arbitration or any order or resolution of the RTC of Makati City related to that
case. Furthermore, it can be gleaned from the nature of the two actions that the
issues in the case before the RTC of Makati City and in the petition for certiorari
before the Court of Appeals are different. A petition for certiorari raises the issue of
whether or not there was grave abuse of discretion, while the Petition to Compel for
Arbitration seeks the implementation of the arbitration clause in the agreement
between the parties.
Same; Same; Same; Same; Same; If the petitioner is a corporation, a board
resolution authorizing a corporate officer to execute the certification against forum
shopping is necessary—a certification not signed by a duly authorized person renders
the petition subject to dismissal.— Under Section 3, Rule 46 of the Rules of Court, a
petitioner is required to submit, together with the petition, a sworn certification of
non-forum shopping, and failure to comply with this requirement is sufficient ground
for dismissal of the petition. The requirement that petitioner should sign the
certificate of non-forum shopping applies even to corporations, the Rules of Court
making no distinction between natural and juridical persons. The signatory in the
case of the corporation should be “a duly authorized director or officer of the
corporation” who has knowledge of the matter being certified. If, as in this case, the
petitioner is a corporation, a board resolution authorizing a corporate officer to
execute the certification against forum shopping is necessary. A certification not
signed by a duly authorized person renders the petition subject to dismissal. On this
point, we have to agree with petitioner. There appears to be no subsequent
compliance with the requirement to attach a board resolution authorizing the signor
Marianne M. Manzanas to file the petition in behalf of respondent Climax. Respondent
also failed to refute this in its Comment. However, this latter issue becomes irrelevant
in the light of our decision to deny this petition for review for lack of jurisdiction by
the Panel of Arbitrators over the complaint filed by petitioner, as will be discussed
below.
Same; Same; Same; Mining Claims; Words and Phrases; A judicial question is a
question that is proper for determination by the courts, as opposed to a moot
question or one properly decided by the executive or legislative branch while a
mining dispute is a dispute involving (a) rights to mining areas, (b) mineral
agreements, FTAAs, or permits, and (c) surface owners, occupants and
claimholders/concessionaires.— A judicial question is a question that is proper for
determination by the courts, as opposed to a moot question or one properly decided
by the executive or legislative branch. A judicial question is raised when the
determination of the question involves the exercise of a judicial function; that is, the
question involves the determination of what the law is and what the legal rights of
the parties are with respect to the matter in controversy. On the other hand, a mining
dispute is a dispute involving (a) rights to mining areas, (b) mineral agreements,
FTAAs, or permits, and (c) surface owners, occupants and
claimholders/concessionaires. Under Republic Act No. 7942 (otherwise known as the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Philippine Mining Act of 1995), the Panel of Arbitrators has exclusive and original
jurisdiction to hear and decide these mining disputes. The Court of Appeals, in its
questioned decision, correctly stated that the Panel’s jurisdiction is limited only to
those mining disputes which raise questions of fact or matters requiring the
application of technological knowledge and experience.
Same; Same; Same; Same; The trend has been to make the adjudication of mining
cases a purely administrative matter.— In Pearson v. Intermediate Appellate Court,
this Court observed that the trend has been to make the adjudication of mining cases
a purely administrative matter. Decisions of the Supreme Court on mining disputes
have recognized a distinction between (1) the primary powers granted by pertinent
provisions of law to the then Secretary of Agriculture and Natural Resources (and the
bureau directors) of an executive or administrative nature, such as granting of
license, permits, lease and contracts, or approving, rejecting, reinstating or canceling
applications, or deciding conflicting applications, and (2) controversies or
disagreements of civil or contractual nature between litigants which are questions of
a judicial nature that may be adjudicated only by the courts of justice. This distinction
is carried on even in Rep. Act No. 7942.
Same; Same; Same; Same; Contracts; The resolution of the validity or voidness of
the contracts remains a legal or judicial question as it requires the exercise of judicial
function.—Whether the case involves void or voidable contracts is still a judicial
question. It may, in some instances, involve questions of fact especially with regard
to the determination of the circumstances of the execution of the contracts. But the
resolution of the validity or voidness of the contracts remains a legal or judicial
question as it requires the exercise of judicial function. It requires the ascertainment
of what laws are applicable to the dispute, the interpretation and application of those
laws, and the rendering of a judgment based thereon. Clearly, the dispute is not a
mining conflict. It is essentially judicial. The complaint was not merely for the
determination of rights under the mining contracts since the very validity of those
contracts is put in issue.
Same; Same; Same; Same; Same; The question of constitutionality is exclusively
within the jurisdiction of the courts to resolve as this would clearly involve the
exercise of judicial power and a Panel of Arbitrators does not have jurisdiction over
such an issue since it does not involve the application of technical knowledge and
expertise relating to mining.—The Complaint is also not what is contemplated by Rep.
Act No. 7942 when it says the dispute should involve FTAAs. The Complaint is not
exclusively within the jurisdiction of the Panel of Arbitrators just because, or for as
long as, the dispute involves an FTAA. The Complaint raised the issue of the
constitutionality of the FTAA, which is definitely a judicial question. The question of
constitutionality is exclusively within the jurisdiction of the courts to resolve as this
would clearly involve the exercise of judicial power. The Panel of Arbitrators does not
have jurisdiction over such an issue since it does not involve the application of
Session 5 P a g e | 71
technical knowledge and expertise relating to mining. This the Panel of Arbitrators
has even conceded in its Orders dated 18 October 2001 and 25 June 2002. At this
juncture, it is worthy of note that in a case, which was resolved only on 1 December
2004, this Court upheld the validity of the FTAA entered into by the Republic of the
Philippines and WMC (Philippines), Inc. and constitutionality of Rep. Act No. 7942 and
DENR Administrative Order 96-40. In fact, the Court took the case on an original
petition, recognizing “the exceptional character of the situation and the paramount
public interest involved, as well as the necessity for a ruling to put an end to the
uncertainties plaguing the mining industry and the affected communities as a result
of doubts case upon the constitutionality and validity of the Mining Act, the subject
FTAA and future FTAAs, and the need to avert a multiplicity of suits.”
Same; Same; Same; Same; Same; Arbitration before the Panel of Arbitrators is
proper only when there is a disagreement between the parties as to some provisions
of the contract between them, which needs the interpretation and the application of
that particular knowledge and expertise possessed by members of that Panel—it is
not proper when one of the parties repudiates the existence or validity of such
contract or agreement on the ground of fraud or oppression.— Arbitration before the
Panel of Arbitrators is proper only when there is a disagreement between the parties
as to some provisions of the contract between them, which needs the interpretation
and the application of that particular knowledge and expertise possessed by members
of that Panel. It is not proper when one of the parties repudiates the existence or
validity of such contract or agreement on the ground of fraud or oppression as in this
case. The validity of the contract cannot be subject of arbitration proceedings.
Allegations of fraud and duress in the execution of a contract are matters within the
jurisdiction of the ordinary courts of law. These questions are legal in nature and
require the application and interpretation of laws and jurisprudence which is
necessarily a judicial function.
Same; Same; Same; Same; The question of validity of the contract containing the
agreement to submit to arbitration will affect the applicability of the arbitration clause
itself—a party cannot rely on the contract and claim rights or obligations under it and
at the same time impugn its existence or validity. —We agree that the case should not
be brought under the ambit of the Arbitration Law, but for a different reason. The
question of validity of the contract containing the agreement to submit to arbitration
will affect the applicability of the arbitration clause itself. A party cannot rely on the
contract and claim rights or obligations under it and at the same time impugn its
existence or validity. Indeed, litigants are enjoined from taking inconsistent positions.
As previously discussed, the complaint should have been filed before the regular
courts as it involved issues which are judicial in nature.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 72

Accommodation Contract, the Assignment, Accession Agreement,  and

The facts are stated in the opinion of the Court. the Memorandum of Agreement. Petitioner Gonzales prayed for an unspecified
     Puno and Puno Law Offices for petitioner. amount of actual and exemplary damages plus attorney’s fees and for the issuance of
     Sycip, Salazar, Hernandez & Gatmaitan for respondents. a temporary restraining order and/or writ of preliminary injunction to restrain or
enjoin respondents from further implementing the questioned agreements. He sought
TINGA, J.: said releifs on the grounds of "FRAUD, OPPRESSION and/or VIOLATION of Section 2,
Article XII of the CONSTITUTION perpetrated by these foreign RESPONDENTS,
conspiring and confederating with one another and with each other…." 8
Petitioner Jorge Gonzales, as claim owner of mineral deposits located within the
Addendum Area of Influence in Didipio, in the provinces of Quirino and Nueva
On 21 February 2001, the Panel of Arbitrators dismissed the Complaint for lack of
Vizcaya, entered into a co-production, joint venture and/or production-sharing letter-
jurisdiction. Petitioner moved for reconsideration and this was granted on 18 October
agreement designated as the May 14, 1987 Letter of Intent with Geophilippines, Inc,
2001, the Panel believing that the case involved a dispute involving rights to mining
and Inmex Ltd. Under the agreement, petitioner, as claim owner, granted to
areas and a dispute involving surface owners, occupants and claim
Geophilippines, Inc. and Inmex Ltd. collectively, the exclusive right to explore and
owners/concessionaires. According to the Panel, although the issue raised in
survey the mining claims for a period of thirty-six (36) months within which the latter
the Complaint appeared to be purely civil in nature and should be within the
could decide to take an operating agreement on the mining claims and/or develop,
jurisdiction of the regular courts, a ruling on the validity of the assailed contracts
operate, mine and otherwise exploit the mining claims and market any and all
would result to the grant or denial of mining rights over the properties; therefore, the
minerals that may be derived therefrom.
question on the validity of the contract amounts to a mining conflict or dispute.
Hence, the Panel granted the Motion for Reconsideration with regard to the issues of
On 28 February 1989, the parties to the May 14, 1987 Letter of Intent renegotiated
nullity, termination, withdrawal or damages, but with regard to the constitutionality of
the same into the February 28, 1989 Agreement  whereby the exploration of the
the Addendum Agreement and FTAA, it held that it had no jurisdiction.9
mining claims was extended for another period of three years.
Respondents filed their motion for reconsideration but this was denied on 25 June
On 9 March 1991, petitioner Gonzales, Arimco Mining Corporation, Geophilippines
2002. The Panel of Arbitrators maintained that there was a mining dispute between
Inc., Inmex Ltd., and Aumex Philippines, Inc. signed a document designated as
the parties since the subject matter of the Complaint arose from contracts between
the Addendum to the May 14, 1987 Letter of Intent and February 28, 1989
the parties which involve the exploration and exploitation of minerals over the
Agreement with Express Adhesion Thereto  (hereafter, the Addendum
disputed area.10
Contract).1 Under the Addendum Contract, Arimco Mining Corporation would apply to
the Government of the Philippines for permission to mine the claims as the
Respondents assailed the orders of the Panel of Arbitrators via a petition for certiorari
Government’s contractor under a Financial and Technical Assistance
before the Court of Appeals.1ªvvphi1.nét
Agreement (FTAA). On 20 June 1994, Arimco Mining Corporation obtained the
FTAA2 and carried out work under the FTAA.
On 30 July 2003, the Court of Appeals granted the petition, declaring that the Panel
of Arbitrators did not have jurisdiction over the complaint filed by petitioner. 11 The
Respondents executed the Operating and Financial Accommodation
jurisdiction of the Panel of Arbitrators, said the Court of Appeals, is limited only to the
Contract3 (between Climax-Arimco Mining Corporation and Climax Mining Ltd., as first
resolution of mining disputes, defined as those which raise a question of fact or
parties, and Australasian Philippines Mining Inc., as second party) dated 23
matter requiring the technical knowledge and experience of mining authorities. It was
December 1996 and Assignment, Accession Agreement 4 (between Climax-Arimco
found that the complaint alleged fraud, oppression and violation of the Constitution,
Mining Corporation and Australasian Philippines Mining Inc.) dated 3 December 1996.
which called for the interpretation and application of laws, and did not involve any
Respondent Climax Mining Corporation (Climax) and respondent Australasian
mining dispute. The Court of Appeals also observed that there were no averments
Philippines Mining Inc. (APMI) entered into a Memorandum of Agreement 5 dated 1
relating to particular acts constituting fraud and oppression. It added that since
June 1991 whereby the former transferred its FTAA to the latter.
the Addendum Contract was executed in 1991, the action to annul it should have
been brought not later than 1995, as the prescriptive period for an action for
On 8 November 1999, petitioner Gonzales filed before the Panel of Arbitrators,
annulment is four years from the time of the discovery of the fraud. 12 When petitioner
Region II, Mines and Geosciences Bureau of the Department of Environment and
filed his complaint before the Panel in 1999, his action had already prescribed. Also,
Natural Resources, against respondents Climax-Arimco Mining Corporation (Climax-
the Court of Appeals noted that fraud and duress only make a contract voidable, 13 not
Arimco), Climax, and APMI,6 a Complaint7 seeking the declaration of nullity or
inexistent, hence the contract remains valid until annulled. The Court of Appeals was
termination of the Addendum Contract, the FTAA, the Operating and Financial
of the opinion that the petition should have been settled through arbitration under
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Republic Act No. 876 (The Arbitration Law) as stated in Clause 19.1 of the Addendum
Contract. The Court of Appeals therefore declared as invalid the orders dated 18
October 2001 and 25 June 2002 issued by the Panel of Arbitrators. On 28 January
2004, the Court of Appeals denied petitioner’s motion for reconsideration for lack of
merit.14
Petitioner filed on 22 March 2004 this Petition for Review on Certiorari Under Rule
45 assailing the decision and resolution of the Court of Appeals. Petitioner raises the
following issues:
A. PROCEDURAL GROUND
THE HONORABLE COURT OF APPEALS SHOULD HAVE SUMMARILY DISMISSED
RESPONDENTS’ PETITION A QUO FOR FAILURE TO COMPLY WITH PROCEDURAL
REQUIREMENTS.
I.
WHETHER THE HONORABLE COURT OF APPEALS DEPARTED FROM THE
RULES AND ESTABLISHED JURISPRUDENCE WHEN IT DID NOT DISMISS
THE PETITION A QUO DESPITE RESPONDENTS’ FAILURE TO COMPLY WITH
THE RULES ON DISCLOSURE IN THE "VERIFICATION AND CERTIFICATION"
PORTION OF THEIR PETITION A QUO.
II.
WHETHER THE HONORABLE COURT OF APPEALS DEPARTED FROM THE RULES AND
ESTABLISHED JURISPRUDENCE WHEN IT DID NOT DISMISS THE PETITION A
QUO FILED BY RESPONDENT CLIMAX DESPITE THE LACK OF THE REQUISITE
AUTHORITY TO FILE THE PETITION A QUO.
B. SUBSTANTIVE GROUND
THE HONORABLE COURT OF APPEALS ERRED IN GRANTING THE PETITION A QUO
FILED BY RESPONDENTS AND IN DENYING MOTION FOR RECONSIDERATION FILED
BY PETITIONER FOR UTTER LACK OF BASIS IN FACT AND IN LAW.
I.
WHETHER THE HONORABLE COURT OF APPEALS DEPARTED FROM THE
RULES AND ESTABLISHED JURISPRUDENCE WHEN IT HELD THAT
PETITIONER CEDED HIS CLAIMS OVER THE MINERAL DEPOSITS LOCATED
WITHIN THE ADDENDUM AREA OF INFLUENCE.
II.
WHETHER THE HONORABLE COURT OF APPEALS DEPARTED FROM THE
RULES AND ESTABLISHED JURISPRUDENCE WHEN IT HELD THAT THE
PANEL OF ARBITRATORS IS BEREFT OF JURISDICTION OVER THE SUBJECT
MATTER OF CASE NO. 058.
Session 5 P a g e | 73
III.
WHETHER THE HONORABLE COURT OF APPEALS DEPARTED FROM THE
RULES AND ESTABLISHED JURISPRUDENCE WHEN IT HELD THAT THE
COMPLAINT FILED BY THE PETITIONER FAILED TO ALLEGE ULTIMATE
FACTS OR PARTICULARS OF FRAUD.
IV.
WHETHER THE HONORABLE COURT OF APPEALS DEPARTED FROM THE
RULES AND ESTABLISHED JURISPRUDENCE WHEN IT HELD THAT
PETITIONER AND RESPONDENTS SHOULD SUBMIT TO ARBITRATION
UNDER R.A. 876.
V.
WHETHER THE HONORABLE COURT OF APPEALS DEPARTED FROM THE
RULES AND ESTABLISHED JURISPRUDENCE WHEN IT HELD THAT THE
ACTION TO DECLARE THE NULLITY OF THE ADDENDUM CONTRACT, FTAA,
OFAC AND AAAA ON THE GROUND OF FRAUD HAS PRESCRIBED.
The issues for resolution in this petition for review are:
(a) Whether there was forum-shopping on the part of respondents for their
failure to disclose to this Court their filing of a Petition to Compel for
Arbitration before the Regional Trial Court of Makati City, Branch 148, which
is currently pending.
(b) Whether counsel for respondent Climax had authority to file the petition
for certiorari before the Court of Appeals considering that the signor of the
petition for certiorari’s Verification and Certification of Non-forum Shopping
was not authorized to sign the same in behalf of respondent Climax.
(c) Whether the complaint filed by petitioner raises a mining dispute over
which the Panel of Arbitrators has jurisdiction, or a judicial question which
should properly be brought before the regular courts.
(d) Whether the dispute between the parties should be brought for
arbitration under Rep. Act No. 876.
Let us deal first with procedural matters.
Petitioner claims that respondents are guilty of forum-shopping for failing to disclose
before this Court that they had filed a Petition to Compel for Arbitration  before the
RTC of Makati City. However, it cannot be determined from petitioner’s mere
allegations in the Petition that the Petition to Compel for Arbitration  instituted by
respondent Climax-Arimco, involves related causes of action and the grant of the
same or substantially the same reliefs as those involved in the instant case. Petitioner
did not attach copies of the Petition to Compel for Arbitration  or any order or
resolution of the RTC of Makati City related to that case.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Furthermore, it can be gleaned from the nature of the two actions that the issues in
the case before the RTC of Makati City and in the petition for certiorari before the
Court of Appeals are different. A petition for certiorari raises the issue of whether or
not there was grave abuse of discretion, while the Petition to Compel for
Arbitration seeks the implementation of the arbitration clause in the agreement
between the parties.
Petitioner next alleges that there was no authority granted by respondent Climax to
the law firm of Sycip Salazar Hernandez & Gatmaitan to file the petition before the
Court of Appeals. There is allegedly no Secretary’s Certificate from respondent Climax
attached to the petition. The Verification and Certification only contains a statement
made by one Marianne M. Manzanas that she is "also the authorized representative of
[respondent Climax]" without presenting further proof of such authority. Hence, it is
argued that as to respondent Climax, the petition filed before the Court of Appeals is
an unauthorized act and the assailed orders of the Panel of Arbitrators have become
final.
Under Section 3, Rule 46 of the Rules of Court, a petitioner is required to submit,
together with the petition, a sworn certification of non-forum shopping, and failure to
comply with this requirement is sufficient ground for dismissal of the petition. The
requirement that petitioner should sign the certificate of non-forum shopping applies
even to corporations, the Rules of Court making no distinction between natural and
juridical persons. The signatory in the case of the corporation should be "a duly
authorized director or officer of the corporation" who has knowledge of the matter
being certified.15 If, as in this case, the petitioner is a corporation, a board resolution
authorizing a corporate officer to execute the certification against forum-shopping is
necessary. A certification not signed by a duly authorized person renders the petition
subject to dismissal.16
On this point, we have to agree with petitioner. l^vvphi1.net There appears to be no
subsequent compliance with the requirement to attach a board resolution authorizing
the signor Marianne M. Manzanas to file the petition in behalf of respondent Climax.
Respondent also failed to refute this in its Comment.17 However, this latter issue
becomes irrelevant in the light of our decision to deny this petition for review for lack
of jurisdiction by the Panel of Arbitrators over the complaint filed by petitioner, as will
be discussed below.
We now come to the meat of the case which revolves mainly around the question of
jurisdiction by the Panel of Arbitrators: Does the Panel of Arbitrators have jurisdiction
over the complaint for declaration of nullity and/or termination of the subject
contracts on the ground of fraud, oppression and violation of the Constitution? This
issue may be distilled into the more basic question of whether the Complaint raises a
mining dispute or a judicial question.
A judicial question is a question that is proper for determination by the courts, as
opposed to a moot question or one properly decided by the executive or legislative
branch.18 A judicial question is raised when the determination of the question involves
Session 5 P a g e | 74
the exercise of a judicial function; that is, the question involves the determination of
what the law is and what the legal rights of the parties are with respect to the matter
in controversy.19 
On the other hand, a mining dispute is a dispute involving (a) rights to mining areas,
(b) mineral agreements, FTAAs, or permits, and (c) surface owners, occupants and
claimholders/concessionaires. 20 Under Republic Act No. 7942 (otherwise known as the
Philippine Mining Act of 1995), the Panel of Arbitrators has exclusive and original
jurisdiction to hear and decide these mining disputes. 21 The Court of Appeals, in its
questioned decision, correctly stated that the Panel’s jurisdiction is limited only to
those mining disputes which raise questions of fact or matters requiring the
application of technological knowledge and experience. 22
In Pearson v. Intermediate Appellate Court,23 this Court observed that the trend has
been to make the adjudication of mining cases a purely administrative
matter.24 Decisions25 of the Supreme Court on mining disputes have recognized a
distinction between (1) the primary powers granted by pertinent provisions of law to
the then Secretary of Agriculture and Natural Resources (and the bureau directors) of
an executive or administrative nature, such as granting of license, permits, lease and
contracts, or approving, rejecting, reinstating or canceling applications, or deciding
conflicting applications, and (2) controversies or disagreements of civil or contractual
nature between litigants which are questions of a judicial nature that may be
adjudicated only by the courts of justice. This distinction is carried on even in Rep.
Act No. 7942.
The Complaint charged respondents with disregarding and ignoring the provisions of
the Addendum Contract, violating the purpose and spirit of the May 14, 1987 Letter
of Intent and February 28, 1989 Agreement , and acting in a fraudulent and
oppressive manner against petitioner and practicing fraud and deception against the
Government.26 Petitioner alleged in his Complaint that under the original agreements
(the May 14, 1987 Letter of Intent  and February 28, 1989 Agreement ) respondent
Climax-Arimco had committed to complete the Bankable Feasibility Study by 28
February 1992, but the same was not accomplished. Instead, respondent Climax-
Arimco, through false and insidious representations and machinations by alleging
technical and financial capacity, induced petitioner to enter into the Addendum
Contract and the FTAA in order to repeatedly extend the option period within which
to conduct the feasibility study. In essence, petitioner alleges that respondents,
conspiring and confederating with one another, misrepresented under the Addendum
Contract and FTAA that respondent Climax-Arimco possessed financial and technical
capacity to put the project into commercial production, when in truth it had no such
qualification whatsoever to do so. By so doing, respondents have allegedly caused
damage not only to petitioner but also to the Republic of the Philippines. 27
It is apparent that the Panel of Arbitrators is bereft of jurisdiction over
the Complaint filed by petitioner. The basic issue in petitioner’s Complaint is the
presence of fraud or misrepresentation allegedly attendant to the execution of
the Addendum Contract and the other contracts emanating from it, such that the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
contracts are rendered invalid and not binding upon the parties. It avers that
petitioner was misled by respondents into agreeing to the Addendum Contract. This
constitutes fraud which vitiated petitioner’s consent, and under Article 1390 of the
Civil Code, is one of the grounds for the annulment of a voidable contract. Voidable
or annullable contracts, before they are set aside, are existent, valid, and binding,
and are effective and obligatory between the parties. 28 They can be ratified.29
Petitioner insists that the Complaint is actually one for the declaration of nullity of
void contracts. He argues that respondents, by their lack of financial and technical
competence to carry out the mining project, do not qualify to enter into a co-
production, joint venture or production sharing agreement with the Government, in
circumvention of and in patent violation of the spirit and purpose of the Constitution,
particularly Section 2, Article XII thereof. Petitioner relies on the Civil Code for
support:30
Art. 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy;
....
(7) Those expressly prohibited or declared void by law.
....
Petitioner asserts that for circumventing and being in patent violation of the
Constitution, the Addendum Contract, the FTAA and the other contracts are void
contracts. As such, they do not produce any effect and cannot be ratified.
However, whether the case involves void or voidable contracts is still a judicial
question. It may, in some instances, involve questions of fact especially with regard
to the determination of the circumstances of the execution of the contracts. But the
resolution of the validity or voidness of the contracts remains a legal or judicial
question as it requires the exercise of judicial function. It requires the ascertainment
of what laws are applicable to the dispute, the interpretation and application of those
laws, and the rendering of a judgment based thereon. Clearly, the dispute is not a
mining conflict. It is essentially judicial. The complaint was not merely for the
determination of rights under the mining contracts since the very validity of those
contracts is put in issue.
The Complaint is not about a dispute involving rights to mining areas, nor is it a
dispute involving claimholders or concessionaires. The main question raised was the
validity of the Addendum Contract, the FTAA and the subsequent contracts. The
question as to the rights of petitioner or respondents to the mining area pursuant to
these contracts, as well as the question of whether or not petitioner had ceded his
mining claims in favor of respondents by way of execution of the questioned
Session 5 P a g e | 75
contracts, is merely corollary to the main issue, and may not be resolved without first
determining the main issue.
The Complaint is also not what is contemplated by Rep. Act No. 7942 when it says
the dispute should involve FTAAs. The Complaint is not exclusively within the
jurisdiction of the Panel of Arbitrators just because, or for as long as, the dispute
involves an FTAA. The Complaint raised the issue of the constitutionality of the FTAA,
which is definitely a judicial question. The question of constitutionality is exclusively
within the jurisdiction of the courts to resolve as this would clearly involve the
exercise of judicial power. The Panel of Arbitrators does not have jurisdiction over
such an issue since it does not involve the application of technical knowledge and
expertise relating to mining. This the Panel of Arbitrators has even conceded in its
Orders dated 18 October 2001 and 25 June 2002. At this juncture, it is worthy of
note that in a case, 31 which was resolved only on 1 December 2004, this Court upheld
the validity of the FTAA entered into by the Republic of the Philippines and WMC
(Philippines), Inc. and constitutionality of Rep. Act No. 7942 and DENR Administrative
Order 96-40.32 In fact, the Court took the case on an original petition, recognizing
"the exceptional character of the situation and the paramount public interest
involved, as well as the necessity for a ruling to put an end to the uncertainties
plaguing the mining industry and the affected communities as a result of doubts case
upon the constitutionality and validity of the Mining Act, the subject FTAA and future
FTAAs, and the need to avert a multiplicity of suits." 33
Arbitration before the Panel of Arbitrators is proper only when there is a
disagreement between the parties as to some provisions of the contract between
them, which needs the interpretation and the application of that particular knowledge
and expertise possessed by members of that Panel. It is not proper when one of the
parties repudiates the existence or validity of such contract or agreement on the
ground of fraud or oppression as in this case. The validity of the contract cannot be
subject of arbitration proceedings. Allegations of fraud and duress in the execution of
a contract are matters within the jurisdiction of the ordinary courts of law. These
questions are legal in nature and require the application and interpretation of laws
and jurisprudence which is necessarily a judicial function.
Petitioner also disagrees with the Court of Appeals’ ruling that the case should be
brought for arbitration under Rep. Act 876, pursuant to the arbitration clause in
the Addendum Contract which states that "[a]ll disputes arising out of or in
connection with the Contract, which cannot be settled amicably among the Parties,
shall finally be settled under R.A. 876." He points out that respondents Climax and
APMI are not parties to the Addendum Contract and are thus not bound by the
arbitration clause in said contract.
We agree that the case should not be brought under the ambit of the Arbitration
Law, but for a different reason. The question of validity of the contract containing the
agreement to submit to arbitration will affect the applicability of the arbitration clause
itself. A party cannot rely on the contract and claim rights or obligations under it and
at the same time impugn its existence or validity. Indeed, litigants are enjoined from
 ENVIRONMENTAL LAW & NATURAL RESOURCES
taking inconsistent positions. As previously discussed, the complaint should have
been filed before the regular courts as it involved issues which are judicial in nature.
WHEREFORE, in view of the foregoing, the Petition for Review on Certiorari Under
Rule 45 is DENIED. The Orders dated 18 October 2001 and 25 June 2002 of the
Panel of Arbitrators are SET ASIDE. Costs against petitioner Jorge Gonzales.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.
Petition denied.
Note.—The potentials of arbitration as one of the alternative dispute resolution
methods that are now rightfully vaunted as “the wave of the future” in international
relations, is recognized worldwide. (BF Corporation vs. Court of Appeals, 288 SCRA
267 [1998])
——o0o——
No. L-75962. June 30, 1988.*
GREENHILLS MINING COMPANY, petitioner, vs. OFFICE OF THE
PRESIDENT, MINISTER OF NATURAL RESOURCES, DIRECTOR OF THE
BUREAU OF MINES AND THE GEO-SCIENCES, AND GREEN VALLEY
COMPANY, respondents.
Session 5 P a g e | 76
Administrative Law; Courts; Judgments; Doctrine that administrative decisions are
entitled to great weight and respects and will not be interfered with by the courts in
the absence of fraud, collusion, arbitrariness, illegality, imposition or mistake.— The
established doctrine that where there is no showing of fraud, collusion, arbitrariness,
illegality, imposition or mistake on the part of the Office of the President or a
department head (such as the Secretary of Agriculture and Natural Resources in the
present case), in rendering their questioned decisions or of a total lack of substantial
evidence to support the same, such administrative decisions are entitled to great
weight and respect and will not be interfered with by the courts.
Same; Same; Same; Public Land; Cases reiied upon by the petitioner where the court
held that the appropriation ofa mineral land pursuant to a valid claim segregates it
from thepublic domain are not applicable in the case at bar; Reasons.— As a general
rule, the findings of government agencies with respect to the construction of statutes
the implementation of which has been reposed in them, are controlling on the Court.
The cases of McDaniel v. Apacible, Gold Creek Mining Corporation v. Rodriguez, and
Salacot Mining Company v. Abadilla, relied upon by the petitioner, and where we held
that the appropriation of a mineral land pursuant to a valid claim segregates it from
the public domain, are not in point. The petitioner assumes that the claims of other
claimants recorded in 1933 and 1934 were still valid when the Southern Zambales
Forest Reservation was established in 1956. According to the Office of the President,
however, the original claimowners had failed to perform annual development work on
the claims in violation of the provisions of Section 36 of the Philippine Bill of 1902. As
a consequence, the area became "open to relocation. . . as if no location of the same
had ever been made." Conversely, assuming that the government lost the property
when the petitioner, or the original claim owners staked their claims in 1933 and
1934, it reverted to the public dominion upon abandonment thereof. Accordingly,
when President Magsaysay established the Southern Zambales Forest Reserve in
1956, the areas covered by the said abandoned claims already formed part of the
public domain. The petitioner cannot, moreover, claim privity of title with the owners
of the prior locations. Such prior locations had been abandoned, or at most, forfeited,
and the petitioner's own location cannot be considered a continuation thereof.
PETITION to review the decision of the Office of the President.
The facts are stated in the opinion of the Court.
     Laurel Law Offtce for petitioner.
     Belo, Abiera and Associates and Eulogio R. Rodriguez for private respondent.
YAP, C.J.:
The instant petition seeks the review of (a) the decision dated July 8,1986 issued by
respondent Office of the President and signed by Deputy Executive Secretary
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Fulgencio S. Factoran, Jr., declaring all mining claims located and registered within
the Southern Zambales Forest Reserve as null and void and granting private
respondent Green Valley Company preferential right to possess, exploit, develop and
operate the area covered by its exploration permit, and (b) the order dated
September 10, 1986 denying petitioner's motion for reconsideration.
The facts are as follows:
The petition involves a conflict of Greenhills mining claims and the exploration permit
of Green Valley over an area within the Southern Zambales Forest Reserve and within
the same mineral land.
Mining claims of different claim owners were previously located and registered with
the office of the Mining Recorder at Iba, Zambales, in 1933 and 1934 under the
provisions of the Philippine Bill of 1902 . However, for failure to pursue their claims
and to perform annual assessment works, the claims were considered abandoned.
On January 18, 1956, then President Ramon Magsaysay issued Proclamation No. 245
establishing the Southern Zambales Forest Reserve (hereinafter called "Reservation"
for brevity) with an area of 37,000 hectares embracing the municipalities of San
Marcelino and Castillejos for soil protection, timber production, and other forest
purposes subject to existing private rights.
In 1970 and 1971, Greenhills relocated the previously abandoned mining claims of
the claim owners inside the reservation. It executed certificates or declaration of
location (DOL) covering 113 claims and registered them with the office of the Mining
Recorder. Lode Lease Applications (LLAs) on the 113 claims were later filed with the
Bureau of Mines. Boundary survey plans or returns for the 113 claims were submitted
and approved by the Mines Director on October 27, 1971, and together with lease
applications they were published in the Official Gazette and in newspapers of general
circulation.
On September 5, 1975, Greenhills filed with the Bureau of Forest Development (BFD
for brevity) an application for prospecting permit (Prospecting Permit No. 354-03079)
covering 1,296 hectares within the reservation, which was granted by the BFD
Director on January 5, 1978 to expire six months thereafter or on June 5, 1978.
On March 1, 1979 Green Valley applied with BFD for a prospecting permit over 4,800
hectares also within the reservation. BFD granted the permit (Prospecting Permit No.
349-03179) to expire on August 31, 1979. It was extended to January 31, 1980.
On July 19, 1979 Green Valley filed with the Bureau of Mines and Geo-Sciences
(BMGS for brevity) an application for exploration permit over the same area covered
by its prospecting permit, as well as additional areas covered by prospecting permits
issued to Concepcion Lomotan, Dolores Montilla and Asuncion Caguios.
Session 5 P a g e | 77
The application was referred to the BMGS Mineral Lands and Topographic Survey
Division (MLTSD) which upon verification submitted reports dated August 17, 1979
and October 4, 1979 with the finding that the areas applied for by Green Valley were
in conflict with the Greenhills group of claims.
In another report dated September 10, 1979, the Mineral Resources Administrative
Division also of the Bureau of Mines commented that Green Valley's exploration
permit may be given due course contending that all mining claims in areas within the
reserve are null and void pursuant to Section 28(a), Commonwealth Act No. 137. 1
On October 16 and November 29, 1979, respectively, Green Valley's exploration
permits (Exploration Permit Nos. 79 and 80) covering 5,208.96 hectares were
approved.
Aggrieved, Greenhills filed separate letter-protests with the BFD and BMGS asking for
the cancellation of Green Valley's prospecting and exploration permits.
In answer to Greenhills' protest, Green Valley countered that the protest had become
moot and academic and it has no factual and legal basis since the alleged prospecting
Permit No. 354-03079 of Greenhills Mining Co., which was the basis of its protest had
long expired and at the time Green Valley Co. applied for and was issued Prospecting
Permit No. 439-83179, the area was open for registration; that said prospecting
permit had been replaced by Exploration Permit Nos. 79 and 80 issued by the Bureau
of Mines and Geo-Sciences on October 16,1979 and November 29,1979, respectively;
that the Bureau of Forestry was no longer the proper forum; that the subject matter
of the protest concemed the validity of mining claims and should be filed with the
proper forum.
Supporting Greenhills' protest, Lepanto Consolidated Mining Co. which operates
Greenhills Mining claims in its letters dated May 4 and May 20, 1981 manifested that
the mining claims of Greenhills were excluded from Green Valley's prospecting permit
for the reasons that: (1) the areas covered by the mining claims of Greenhills were
previously covered by patentable mining claims duly located and registered by
different mining claimowners in 1933 and 1934 under the Philippine Bill of 1902; (2)
that pursuant to the ruling of the Supreme Court in McDaniel vs.
Apacible, 2 reservation of public lands cannot be made to include prior perfected
mining locations and therefore the areas covered by Greenhills mining claims should
be deemed segregated from the mass of the public domain which were open to
relocation and registration; (3) that Greenhills mining claims had been surveyed and
survey plans approved and the lease applications published in 1971 and 1973.
On June 5, 1981, the Director of the BFD issued an order directing amendment of
Green Valley's prospecting permit to exclude areas previously located and registered
patentable mining claims as appearing in a sketch plan issued by the BMGS.
In a letter dated June 9, 1981 to the BMGS Greenhills reiterated its request to
exclude from Green Valley's exploration permit area covered by its mining claims. On
 ENVIRONMENTAL LAW & NATURAL RESOURCES
June 11, 1981, the Director of the Bureau of Mines issued the following order, the
dispositive portion of which reads:
PREMISES CONSIDERED, Expolration Permit No. 79 issued in favor
of Green Valley Company on October 16, 1979 should be, as
hereby it is, AMENDED to exclude therefrom the area covered by
previously located and registered patentable mining claims as
appearing in the sketch plan, likewise made integral part of this
Order.
Against the BFD and the BMGS orders, Green Valley filed an appeal to the Ministry of
Natural Resources (MNR).
On July 23, 1981, the MNR held that since the cases involved the determination of
the mining rights of the parties concerned over the disputed area, the investigation
and resolution of these issues were within the original jurisdiction of the Bureau of
Mines and Geo-Sciences. Accordingly, it set aside the order of BFD dated June 5,
1981 and the order of BMGS dated June 11, 1981.
Unsatisfied, Green Valley filed an appeal with the Office of the President assailing
MNRs refusal to rule on the validity of the mining claims of Greenhills. It faults MNR
for remanding the case to the Bureau of Mines in deference to the latter's original
jurisdiction to resolve and decide the mining rights of the parties and to investigate
and determine if there was any conflict or overlapping over the parties' mining
claims/permit.
On July 6, 1986, the Office of the President rendered the decision in question, the
dispositive portion of which inter alia  read as follows:
PREMISES CONSIDERED, the order of the Minister of Natural
Resources dated July 23, 1981, is hereby affirmed.
Further, all mining claims within the Southern Zambales Forest
Reserve located and registered by the Greenhills Mining Company
in violation of section 28(c) of C.A. No. 137, as amended, are
hereby declared null and void. The Green Valley Company is given
the preferential right to possess, exploit, explore, develop and
operate the areas within the Southern Zambales Forest Reserve
covered by Exploration Permit No. 79 issued in its name on October
16, 1979.
A motion to reconsider the decision filed by Greenhills was denied on September 10,
1986. Hence, the present petition.
Petitioner alleges that: (a) mining claims located under the Philippine Bill of 1902
which were later on abandoned or forfeited by the original locators could be the
subject of relocation by another person; (b) the reservation of public lands such as
the Southern Zambales Forest Reserve established under Proclamation No. 245 dated
Session 5 P a g e | 78
January 18,1956, cannot be deemed to include areas previously covered by a valid
mining location; (c) the Bureau of Mines and Geo-Sciences, basing its plottings on
certified declaration of locations filed in 1933 and 1934, correctly ordered the
exclusion from the Exploration Permit No. 79 of respondent Green Valley the areas
covered by previously located and registered patentable mining claims; (d) Greenhills
has valid claims being the relocator of the 1933 and 1934 patentable mining claims;
(e) questions concerning the validity of petitioner Greenhills' mining claims are
already barred by statute; and (f) the "Exploration Agreement with assignable Option
to Purchase" executed by and between respondent Green Valley Company and Gold
Fields Asia Limited violates Section 9, Article XIV of the 1973 Constitution, since the
agreement is not a "service contract" within the contemplation of said constitutional
provision. Petitioner prays, among other things, that a preliminary injunction issue
enjoining respondent Director of the Bureau of Mines and Geo-Sciences from acting
on the application for renewal of the exploration permit of respondent Green Valley.
The Court, in its resolution dated November 12, 1986, issued a temporary restraining
order enjoining respondent Director of Bureau of Mines and Geo-Sciences from acting
on the application for the renewal of the exploration permit of respondent Green
Valley Company covering the areas involved.
The established doctrine that where there is no showing of fraud, collusion,
arbitrariness, illegality, imposition or mistake on the part of the Office of the President
or a department head (such as the Secretary of Agriculture and Natural Resources in
the present case), in rendering their questioned decisions or of a total lack of
substantial evidence to support the same, such administrative decisions are entitled
to great weight and respect and will not be interfered with by the courts. 3
In upholding Green Valley's prior right over the mining areas subject of conflicting
claims, the Office of the President rightly relied on the provisions of Section 28(a) of
Commonwealth Act No. 137 (now Section 13(a), Presidential Decree No. 463). Under
this provision, and under the regulations implementing it, it is required that the lessor
shall, first, secure a prospecting permit from the BFD and second, obtain an
exploration permit in case of discovery of minerals in the area or when there is strong
proof of mineralization. The records show that the petitioner's mining claims were
backed up by no prospecting permit.
On the other hand, Green Valley had fully complied with such requirements, for which
its claims should be declared superior.
As a general rule, the findings of government agencies with respect to the
construction of statutes the implementation of which has been reposed in them, are
controlling on the Court.
The cases of McDaniel v. Apacible, 4 Gold Creek Mining Corporation v.
Rodriguez, 5 and Salacot Mining Company v. Abadilla, 6 relied upon by the petitioner,
and where we held that the appropriation of a mineral land pursuant to a valid claim
segregates it from the public domain, are not in point. The petitioner assumes that
the claims of other claimants recorded in 1933 and 1934 were still valid when the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Southern Zambales Forest Reservation was established in 1956. According to the
office of the President, however, the original claimowners had failed to perform
annual development work on the claims in violation of the provisions of Section 36 of
the Philippine Bill of 1902. As a consequence, the area became "open to relocation ...
as if no location of the same had ever been made." 7 Conversely, assuming that the
government lost the property when the petitioner, or the original claimowners staked
their claims in 1933 and 1934, it reverted to the public dominion upon abandonment
thereof Accordingly, when President Magsaysay established the Southern Zambales
Forest Reserve in 1956, the areas covered by the said abandoned claims already
formed part of the public domain. The petitioner cannot, moreover, claim privity of
title with the owners of the prior locations. Such prior locations had been abandoned,
or at most, forfeited, and the petitioner's own location cannot be considered a
continuation thereof.
WHEREFORE, the petition is DISMISSED. The temporary restraining order issued on
November 12, 1986 is hereby lifted. No pronouncement as to costs.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.
Petition dismissed. Order lifted.
Note.—Courts will not determine a moot question in which no practical relief can be
granted. (Lomo vs. Mabelin, 146 SCRA473.)
——oOo——
G.R. No. 149927. March 30, 2004.*
REPUBLIC OF THE PHILIPPINES, represented by the Department of
Environment and Natural Resources (DENR) Under then Minister ERNESTO
R. MACEDA; and Former Government Officials CATALINO MACARAIG,
Session 5 P a g e | 79
FULGENCIO S. FACTORAN, ANGEL C. ALCALA, BEN MALAYANG, ROBERTO
PAGDANGANAN, MARIANO Z. VALERA and ROMULO SAN JUAN, petitioners,
vs. ROSEMOOR MINING AND DEVELOPMENT CORPORATION, PEDRO DEL
CONCHA, and ALEJANDRO and RUFO DE GUZMAN, respondents.
Constitutional Law; Mining; Presidential Decree (P.D.) No. 463; The Court in Miners
Association of the Philippines vs. Factoran, Jr. declared the provisions of P.D. 463 as
contrary to or violative of the express mandate of the 1987 Constitution.— With the
shift of constitutional policy toward “full control and supervision of the State” over
natural resources, the Court in Miners Association of the Philippines v. Factoran, Jr.
declared the provisions of P.D. 463 as contrary to or violative of the express mandate
of the 1987 Constitution. The said provisions dealt with the lease of mining claims;
quarry permits or licenses covering privately owned or public lands; and other related
provisions on lease, licenses and permits. RA 7942 or the Philippine Mining Act of
1995 embodies the new constitutional mandate. It has repealed or amended all laws,
executive orders, presidential decrees, rules and regulations—or parts thereof—that
are inconsistent with any of its provisions.
Same; Same; Licenses; Section 2 of Article XII of the 1987 Constitution does not
apply retroactively to a “license, concession or lease” granted by the government
under the 1973 Constitution or before the effectivity of the 1987 Constitution.— It is
relevant to state, however, that Section 2 of Article XII of the 1987 Constitution does
not apply retroactively to a “license, concession or lease” granted by the government
under the 1973 Constitution or before the effectivity of the 1987 Constitution on
February 2, 1987. As noted in Miners Association of the Philippines v. Factoran, Jr.,
the deliberations of the Constitutional Commission emphasized the intent to apply the
said constitutional provision prospectively.
Same; Same; Same; Section 3(p) of Republic Act (R.A.) 7942 defines an existing
mining/quarry right.—Section 3(p) of R.A. 7942 defines an existing mining/quarrying
right as “a valid and subsisting mining claim or permit or quarry permit or any mining
lease contract or agreement covering a mineralized area granted/issued under
pertinent mining laws.” Consequently, determining whether the license of
respondents falls under this definition would be relevant to fixing their entitlement to
the rights and/or preferences under RA 7942.
Same; Same; Same; EP No. 133 merely evidences a privilege granted by the State,
which may be amended, modified or rescinded when the national interest so
requires.—EP No. 133 merely evidences a privilege granted by the State, which may
be amended, modified or rescinded when the national interest so requires. This is
‘necessarily so since the exploration, development and utilization of the country’s
natural mineral resources are matters impressed with great public interest. Like
timber permits, mining exploration permits do not vest in the grantee any permanent
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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.”
Same; Same; Same; Timber licenses, permits and license agreements are not
deemed contracts within the purview of the due process of law clause.—“ 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, amended.]
Same; Same; Same; The exercise of such power through Proclamation No. 84 is
clearly in accord with jura regalia, which reserves to the State ownership of all
natural resources.—The exercise of such power through Proclamation No. 84 is
clearly in accord with jura regalia, which reserves to the State ownership of all natural
resources. This Regalian doctrine is an exercise of its sovereign power as owner of
lands of the public domain and of the patrimony of the nation, the mineral deposits of
which are a valuable asset.
Same; Same; Ex Post Facto Law; There are six recognized instances when a law is
considered as such.—There are six recognized instances when a law is considered as
such: 1) it criminalizes and punishes an action that was done before the passing of
the law and that was innocent when it was done; 2) it aggravates a crime or makes it
greater than it was when it was committed; 3) it changes the punishment and inflicts
one that is greater than that imposed by the law annexed to the crime when it was
committed; 4) it alters the legal rules of evidence and authorizes conviction upon a
less or different testimony than that required by the law at the time of the
commission of the offense; 5) it assumes the regulation of civil rights and remedies
only, but in effect imposes a penalty or a deprivation of a right as a consequence of
something that was considered lawful when it was done; and 6) it deprives a person
accused of a crime of some lawful protection to which he or she become entitled,
such as the protection of a former conviction or an acquittal or the proclamation of an
amnesty. Proclamation No. 84 does not fall under any of the enumerated categories;
hence, it is not an ex post facto law.
PETITION FOR REVIEW on certiorari of the decision and resolution of the Court of
Appeals.
Session 5 P a g e | 80
The facts are stated in the opinion of the Court.
     The Solicitor General for petitioners.
     Hector Reuben D. Feliciano for respondents.
PANGANIBAN, J.:
A mining license that contravenes a mandatory provision of the law under which it is
granted is void. Being a mere privilege, a license does not vest absolute rights in the
holder. Thus, without offending the due process and the non-impairment clauses of
the Constitution, it can be revoked by the State in the public interest.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to
nullify the May 29, 2001 Decision 2 and the September 6, 2001 Resolution 3 of the
Court of Appeals (CA) in CA-GR SP No. 46878. The CA disposed as follows:
"WHEREFORE, premises considered, the appealed Decision is hereby AFFIRMED in
toto."4
The questioned Resolution denied petitioners’ Motion for Reconsideration.
On the other hand, trial court’s Decision, which was affirmed by the CA, had disposed
as follows:
"WHEREFORE, judgment is hereby rendered as follows:
‘1. Declaring that the cancellation of License No. 33 was done without
jurisdiction and in gross violation of the Constitutional right of the petitioners
against deprivation of their property rights without due process of law and is
hereby set aside.
‘2. Declaring that the petitioners’ right to continue the exploitation of the
marble deposits in the area covered by License No. 33 is maintained for the
duration of the period of its life of twenty-five (25) years, less three (3)
years of continuous operation before License No. 33 was cancelled, unless
sooner terminated for violation of any of the conditions specified therein,
with due process.
‘3. Making the Writ of preliminary injunction and the Writ of Preliminary
Mandatory Injunction issued as permanent.
‘4. Ordering the cancellation of the bond filed by the Petitioners in the sum
of 1 Million.
‘5. Allowing the petitioners to present evidence in support of the damages
they claim to have suffered from, as a consequence of the summary
 ENVIRONMENTAL LAW & NATURAL RESOURCES
cancellation of License No. 33 pursuant to the agreement of the parties on
such dates as maybe set by the Court; and
‘6. Denying for lack of merit the motions for contempt, it appearing that
actuations of the respondents were not contumacious and intended to delay
the proceedings or undermine the integrity of the Court.
‘No pronouncement yet as to costs.’"5
The Facts
The CA narrated the facts as follows:
"The four (4) petitioners, namely, Dr. Lourdes S. Pascual, Dr. Pedro De la Concha,
Alejandro De La Concha, and Rufo De Guzman, after having been granted permission
to prospect for marble deposits in the mountains of Biak-na-Bato, San Miguel,
Bulacan, succeeded in discovering marble deposits of high quality and in commercial
quantities in Mount Mabio which forms part of the Biak-na-Bato mountain range.
"Having succeeded in discovering said marble deposits, and as a result of their
tedious efforts and substantial expenses, the petitioners applied with the Bureau of
Mines, now Mines and Geosciences Bureau, for the issuance of the corresponding
license to exploit said marble deposits.
xxxxxxxxx
"After compliance with numerous required conditions, License No. 33 was issued by
the Bureau of Mines in favor of the herein petitioners.
xxxxxxxxx
"Shortly after Respondent Ernesto R. Maceda was appointed Minister of the
Department of Energy and Natural Resources (DENR), petitioners’ License No. 33 was
cancelled by him through his letter to ROSEMOOR MINING AND DEVELOPMENT
CORPORATION dated September 6, 1986 for the reasons stated therein. Because of
the aforesaid cancellation, the original petition was filed and later substituted by the
petitioners’ AMENDED PETITION dated August 21, 1991 to assail the same.
"Also after due hearing, the prayer for injunctive relief was granted in the Order of
this Court dated February 28, 1992. Accordingly, the corresponding preliminary writs
were issued after the petitioners filed their injunction bond in the amount of ONE
MILLION PESOS (₱1,000,000.00).
xxxxxxxxx
"On September 27, 1996, the trial court rendered the herein questioned decision."6
Session 5 P a g e | 81
The trial court ruled that the privilege granted under respondents’ license had already
ripened into a property right, which was protected under the due process clause of
the Constitution. Such right was supposedly violated when the license was cancelled
without notice and hearing. The cancellation was said to be unjustified, because the
area that could be covered by the four separate applications of respondents was 400
hectares. Finally, according to the RTC, Proclamation No. 84, which confirmed the
cancellation of the license, was an ex post facto law; as such, it violated Section 3 of
Article XVIII of the 1987 Constitution.
On appeal to the Court of Appeals, herein petitioners asked whether PD 463 or the
Mineral Resources Development Decree of 1974 had been violated by the award of
the 330.3062 hectares to respondents in accordance with Proclamation No. 2204.
They also questioned the validity of the cancellation of respondents’ Quarry
License/Permit (QLP) No. 33.
Ruling of the Court of Appeals
Sustaining the trial court in toto, the CA held that the grant of the quarry license
covering 330.3062 hectares to respondents was authorized by law, because the
license was embraced by four (4) separate applications -- each for an area of 81
hectares. Moreover, it held that the limitation under Presidential Decree No. 463 --
that a quarry license should cover not more than 100 hectares in any given province
-- was supplanted by Republic Act No. 7942, 7 which increased the mining areas
allowed under PD 463.
It also ruled that the cancellation of respondents’ license without notice and hearing
was tantamount to a deprivation of property without due process of law. It added
that under the clause in the Constitution dealing with the non-impairment of
obligations and contracts, respondents’ license must be respected by the State.
Hence, this Petition.8
Issues
Petitioners submit the following issues for the Court’s consideration:
"(1) [W]hether or not QLP No. 33 was issued in blatant contravention of Section 69,
P.D. No. 463; and (2) whether or not Proclamation No. 84 issued by then President
Corazon Aquino is valid. The corollary issue is whether or not the Constitutional
prohibition against ex post facto law applies to Proclamation No. 84" 9
The Court’s Ruling
The Petition has merit.
First Issue:
Validity of License
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Respondents contend that the Petition has no legal basis, because PD 463 has
already been repealed.10 In effect, they ask for the dismissal of the Petition on the
ground of mootness.
PD 463, as amended, pertained to the old system of exploration, development and
utilization of natural resources through licenses, concessions or leases. 11 While these
arrangements were provided under the 1935 12 and the 197313 Constitutions, they
have been omitted by Section 2 of Article XII of the 1987 Constitution. 14
With the shift of constitutional policy toward "full control and supervision of the State"
over natural resources, the Court in Miners Association of the Philippines v. Factoran
Jr. 15 declared the provisions of PD 463 as contrary to or violative of the express
mandate of the 1987 Constitution. The said provisions dealt with the lease of mining
claims; quarry permits or licenses covering privately owned or public lands; and other
related provisions on lease, licenses and permits.
RA 7942 or the Philippine Mining Act of 1995 embodies the new constitutional
mandate. It has repealed or amended all laws, executive orders, presidential decrees,
rules and regulations -- or parts thereof -- that are inconsistent with any of its
provisions.16
It is relevant to state, however, that Section 2 of Article XII of the 1987 Constitution
does not apply retroactively to a "license, concession or lease" granted by the
government under the 1973 Constitution or before the effectivity of the 1987
Constitution on February 2, 1987.17 As noted in Miners Association of the Philippines
v. Factoran Jr., the deliberations of the Constitutional Commission 18 emphasized the
intent to apply the said constitutional provision prospectively.
While RA 7942 has expressly repealed provisions of mining laws that are inconsistent
with its own, it nonetheless respects previously issued valid and existing licenses, as
follows:
"SECTION 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: Provided, That a small scale-mining
cooperative covered by Republic Act No. 7076 shall be given preferential
right to apply for a small-scale mining agreement for a maximum aggregate
area of twenty-five percent (25%) of such mineral reservation, subject to
valid existing mining/quarrying rights as provided under Section 112 Chapter
XX hereof. All submerged lands within the contiguous zone and in the
exclusive economic zone of the Philippines are hereby declared to be mineral
reservations.
Session 5 P a g e | 82
"x x x x x x x x x
"SECTION 7. Periodic Review of Existing Mineral Reservations. — The
Secretary shall periodically review existing mineral reservations for the
purpose of determining whether their continued existence is consistent with
the national interest, and upon his recommendation, the President may, by
proclamation, alter or modify the boundaries thereof or revert the same to
the public domain without prejudice to prior existing rights."
"SECTION 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."
"SECTION 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;
(b) Near or under public or private buildings, cemeteries,
archeological and historic sites, bridges, highways, waterways,
railroads, reservoirs, dams or other infrastructure projects, public or
private works including plantations or valuable crops, except upon
written consent of the government agency or private entity
concerned;
(c) In areas covered by valid and existing mining rights;
(d) In areas expressly prohibited by law;
(e) In areas covered by small-scale miners as defined by law unless
with prior consent of the small-scale miners, in which case a royalty
payment upon the utilization of minerals shall be agreed upon by
the parties, said royalty forming a trust fund for the socioeconomic
development of the community concerned; and
(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 and in areas
expressly prohibited under the National Integrated Protected Areas
System (NIPAS) under Republic Act No. 7586, Department
Administrative Order No. 25, series of 1992 and other laws."
 ENVIRONMENTAL LAW & NATURAL RESOURCES
"SECTION 112. Non-impairment of Existing Mining/ Quarrying Rights. — All
valid and existing mining lease contracts, permits/licenses, leases pending
renewal, mineral production-sharing agreements granted under Executive
Order No. 279, at the date of effectivity of this Act, shall remain valid, shall
not be impaired, and shall be recognized by the Government: Provided, That
the provisions of Chapter XIV on government share in mineral production-
sharing agreement and of Chapter XVI on incentives of this Act shall
immediately govern and apply to a mining lessee or contractor unless the
mining lessee or contractor indicates his intention to the secretary, in
writing, not to avail of said provisions: Provided, further, That no renewal of
mining lease contracts shall be made after the expiration of its term:
Provided, finally, That such leases, production-sharing agreements, financial
or technical assistance agreements shall comply with the applicable
provisions of this Act and its implementing rules and regulations.
"SECTION 113. Recognition of Valid and Existing Mining Claims and
Lease/Quarry Application. — Holders of valid and existing mining claims,
lease/quarry applications shall be given preferential rights to enter into any
mode of mineral agreement with the government within two (2) years from
the promulgation of the rules and regulations implementing this Act."
(Underscoring supplied)
Section 3(p) of RA 7942 defines an existing mining/quarrying right as "a valid and
subsisting mining claim or permit or quarry permit or any mining lease contract or
agreement covering a mineralized area granted/issued under pertinent mining laws."
Consequently, determining whether the license of respondents falls under this
definition would be relevant to fixing their entitlement to the rights and/or
preferences under RA 7942. Hence, the present Petition has not been mooted.
Petitioners submit that the license clearly contravenes Section 69 of PD 463, because
it exceeds the maximum area that may be granted. This incipient violation, according
to them, renders the license void ab initio.
Respondents, on the other hand, argue that the license was validly granted, because
it was covered by four separate applications for areas of 81 hectares each.
The license in question, QLP No. 33, 19 is dated August 3, 1982, and it was issued in
the name of Rosemoor Mining Development Corporation. The terms of the license
allowed the corporation to extract and dispose of marbleized limestone from a
330.3062-hectare land in San Miguel, Bulacan. The license is, however, subject to the
terms and conditions of PD 463, the governing law at the time it was granted; as well
as to the rules and regulations promulgated thereunder. 20 By the same token,
Proclamation No. 2204 -- which awarded to Rosemoor the right of development,
exploitation, and utilization of the mineral site -- expressly cautioned that the grant
was subject to "existing policies, laws, rules and regulations." 21
The license was thus subject to Section 69 of PD 463, which reads:
Session 5 P a g e | 83
"Section 69. Maximum Area of Quarry License – Notwithstanding the
provisions of Section 14 hereof, a quarry license shall cover an area of not
more than one hundred (100) hectares in any one province and not more
than one thousand (1,000) hectares in the entire Philippines." (Italics
supplied)
The language of PD 463 is clear. It states in categorical and mandatory terms that a
quarry license, like that of respondents, should cover a maximum of 100 hectares in
any given province. This law neither provides any exception nor makes any reference
to the number of applications for a license. Section 69 of PD 463 must be taken to
mean exactly what it says. Where the law is clear, plain, and free from ambiguity, it
must be given its literal meaning and applied without attempted interpretation. 22
Moreover, the lower courts’ ruling is evidently inconsistent with the fact that QLP No.
33 was issued solely in the name of Rosemoor Mining and Development Corporation,
rather than in the names of the four individual stockholders who are respondents
herein. It likewise brushes aside a basic postulate that a corporation has a separate
personality from that of its stockholders. 23
The interpretation adopted by the lower courts is contrary to the purpose of Section
69 of PD 463. Such intent to limit, without qualification, the area of a quarry license
strictly to 100 hectares in any one province is shown by the opening proviso that
reads: "Notwithstanding the provisions of Section 14 hereof x x x." The mandatory
nature of the provision is also underscored by the use of the word shall. Hence, in the
application of the 100-hectare-per-province limit, no regard is given to the size or the
number of mining claims under Section 14, which we quote:
"SECTION 14. Size of Mining Claim. -- For purposes of registration of a
mining claim under this Decree, the Philippine territory and its shelf are
hereby divided into meridional blocks or quadrangles of one-half minute
(1/2) of latitude and longitude, each block or quadrangle containing area of
eighty-one (81) hectares, more or less.
"A mining claim shall cover one such block although a lesser area may be
allowed if warranted by attendant circumstances, such as geographical and
other justifiable considerations as may be determined by the Director:
Provided, That in no case shall the locator be allowed to register twice the
area allowed for lease under Section 43 hereof." (Italics supplied)
Clearly, the intent of the law would be brazenly circumvented by ruling that a license
may cover an area exceeding the maximum by the mere expediency of filing several
applications. Such ruling would indirectly permit an act that is directly prohibited by
the law.
Second Issue:
Validity of Proclamation No. 84
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Petitioners also argue that the license was validly declared a nullity and consequently
withdrawn or terminated. In a letter dated September 15, 1986, respondents were
informed by then Minister Ernesto M. Maceda that their license had illegally been
issued, because it violated Section 69 of PD 463; and that there was no more public
interest served by the continued existence or renewal of the license. The latter
reason, they added, was confirmed by the language of Proclamation No. 84.
According to this law, public interest would be served by reverting the parcel of land
that was excluded by Proclamation No. 2204 to the former status of that land as part
of the Biak-na-Bato national park.
They also contend that Section 74 of PD 463 would not apply, because Minister
Maceda’s letter did not cancel or revoke QLP No. 33, but merely declared the latter’s
nullity. They further argue that respondents waived notice and hearing in their
application for the license.
On the other hand, respondents submit that, as provided for in Section 74 of PD 463,
their right to due process was violated when their license was cancelled without
notice and hearing. They likewise contend that Proclamation No. 84 is not valid for
the following reasons: 1) it violates the clause on the non-impairment of contracts; 2)
it is an ex post facto law and/or a bill of attainder; and 3) it was issued by the
President after the effectivity of the 1987 Constitution.
This Court ruled on the nature of a natural resource exploration permit, which was
akin to the present respondents’ license, in Southeast Mindanao Gold Mining
Corporation v. Balite Portal Mining Cooperative,24 which held:
"x x x. As correctly held by the Court of Appeals in its challenged decision,
EP No. 133 merely evidences a privilege granted by the State, which may be
amended, modified or rescinded when the national interest so requires. This
is necessarily so since the exploration, development and utilization of the
country’s natural mineral resources are matters impressed with great public
interest. Like timber permits, mining exploration permits do not vest in the
grantee any permanent or irrevocable right within the purview of the non-
impairment of contract and due process clauses of the Constitution, 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." 25
This same ruling had been made earlier in Tan v. Director of Forestry 26 with regard to
a timber license, a pronouncement that was reiterated in Ysmael v. Deputy Executive
Secretary,27 the pertinent portion of which reads:
"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
Session 5 P a g e | 84
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]."28 (Italics supplied)
In line with the foregoing jurisprudence, respondents’ license may be revoked or
rescinded by executive action when the national interest so requires, because it is not
a contract, property or a property right protected by the due process clause of the
Constitution.29 Respondents themselves acknowledge this condition of the grant
under paragraph 7 of QLP No. 33, which we quote:
"7. This permit/license may be revoked or cancelled at any time by the
Director of Mines and Geo-Sciences when, in his opinion public interests so
require or, upon failure of the permittee/licensee to comply with the
provisions of Presidential Decree No. 463, as amended, and the rules and
regulations promulgated thereunder, as well as with the terms and
conditions specified herein; Provided, That if a permit/license is cancelled, or
otherwise terminated, the permittee/licensee shall be liable for all unpaid
rentals and royalties due up to the time of the termination or cancellation of
the permit/license[.]"30 (Italics supplied)
The determination of what is in the public interest is necessarily vested in the State
as owner of all mineral resources. That determination was based on policy
considerations formally enunciated in the letter dated September 15, 1986, issued by
then Minister Maceda and, subsequently, by the President through Proclamation No.
84. As to the exercise of prerogative by Maceda, suffice it to say that while the
cancellation or revocation of the license is vested in the director of mines and geo-
sciences, the latter is subject to the former’s control as the department head. We also
stress the clear prerogative of the Executive Department in the evaluation and the
consequent cancellation of licenses in the process of its formulation of policies with
regard to their utilization. Courts will not interfere with the exercise of that discretion
without any clear showing of grave abuse of discretion. 31
Moreover, granting that respondents’ license is valid, it can still be validly revoked by
the State in the exercise of police power. 32 The exercise of such power through
Proclamation No. 84 is clearly in accord with jura regalia, which reserves to the State
ownership of all natural resources. 33 This Regalian doctrine is an exercise of its
sovereign power as owner of lands of the public domain and of the patrimony of the
nation, the mineral deposits of which are a valuable asset. 34
Proclamation No. 84 cannot be stigmatized as a violation of the non-impairment
clause. As pointed out earlier, respondents’ license is not a contract to which the
protection accorded by the non-impairment clause may extend. 35 Even if the license
were, it is settled that provisions of existing laws and a reservation of police power
are deemed read into it, because it concerns a subject impressed with public
 ENVIRONMENTAL LAW & NATURAL RESOURCES
welfare.36 As it is, the non-impairment clause must yield to the police power of the
state.37
We cannot sustain the argument that Proclamation No. 84 is a bill of attainder; that
is, a "legislative act which inflicts punishment without judicial trial." 38 Its declaration
that QLP No. 33 is a patent nullity 39 is certainly not a declaration of guilt. Neither is
the cancellation of the license a punishment within the purview of the constitutional
proscription against bills of attainder.
Too, there is no merit in the argument that the proclamation is an ex post facto law.
There are six recognized instances when a law is considered as such: 1) it
criminalizes and punishes an action that was done before the passing of the law and
that was innocent when it was done; 2) it aggravates a crime or makes it greater
than it was when it was committed; 3) it changes the punishment and inflicts one
that is greater than that imposed by the law annexed to the crime when it was
committed; 4) it alters the legal rules of evidence and authorizes conviction upon a
less or different testimony than that required by the law at the time of the
commission of the offense; 5) it assumes the regulation of civil rights and remedies
only, but in effect imposes a penalty or a deprivation of a right as a consequence of
something that was considered lawful when it was done; and 6) it deprives a person
accused of a crime of some lawful protection to which he or she become entitled,
such as the protection of a former conviction or an acquittal or the proclamation of an
amnesty.40 Proclamation No. 84 does not fall under any of the enumerated
categories; hence, it is not an ex post facto law.
It is settled that an ex post facto law is limited in its scope only to matters criminal in
nature.41 Proclamation 84, which merely restored the area excluded from the Biak-na-
Bato national park by canceling respondents’ license, is clearly not penal in character.
Finally, it is stressed that at the time President Aquino issued Proclamation No. 84 on
March 9, 1987, she was still validly exercising legislative powers under the Provisional
Constitution of 1986.42 Section 1 of Article II of Proclamation No. 3, which
promulgated the Provisional Constitution, granted her legislative power "until a
legislature is elected and convened under a new Constitution." The grant of such
power is also explicitly recognized and provided for in Section 6 of Article XVII of the
1987 Constitution.43
WHEREFORE, this Petition is hereby GRANTED and the appealed Decision of the
Court of Appeals SET ASIDE. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
Petition granted, assailed decision set aside.
Note.—Republic Act No. 7659, which amended Article 258 of the Revised Penal Code,
which imposes a heavier penalty for the crime of murder cannot be given retroactive
Session 5 P a g e | 85
effect since this would violate the constitutional injunction against ex post facto law.
(People vs. Gadia, 365 SCRA 557 [2001])
——o0o——
G.R. No. 162331. November 20, 2006.*
LEPANTO CONSOLIDATED MINING CO., petitioner, vs. WMC RESOURCES
INT’L. PTY. LTD., WMC PHILIPPINES, INC. and SAGITTARIUS MINES, INC.,
respondents.
Statutes; Statutory Construction; Statutes are to be construed as having only a
prospective operation unless the contrary is expressly stated or necessarily implied
from the language used in the law; It must be borne in mind that a law is a rule
established to guide our actions without no binding effect until it is enacted,
wherefore, it has no application to past times but only to future time.— This posture
of petitioner would clearly contradict the established legal doctrine that statutes are
to be construed as having only a prospective operation unless the contrary is
expressly stated or necessarily implied from the language used in the law. As
reiterated in the case of Segovia v. Noel, 47 Phil. 543 (1925), a sound cannon of
statutory construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made manifest either by
the express terms of the statute or by necessary implication. Article 4 of the Civil
Code provides that: “Laws shall not have a retroactive effect unless therein otherwise
provided.” According to this provision of law, in order that a law may have retroactive
effect it is necessary that an express provision to this effect be made in the law,
otherwise nothing should be understood which is not embodied in the law.
Furthermore, it must be borne in mind that a law is a rule established to guide our
actions without no binding effect until it is enacted, wherefore, it has no application
to past times but only to future time, and that is why it is said that the law looks to
the future only and has no retroactive effect unless the legislator may have formally
given that effect to some legal provisions.
Same; Same; Philippine Mining Act of 1995 (R.A. No. 7942); There is an absence of
either an express declaration or an implication in the Philippine Mining Act of 1995
that its provisions must be made to apply retroactively.— In the case at bar, there is
an absence of either an express declaration or an implication in the Philippine Mining
Act of 1995 that the provisions of said law shall be made to apply retroactively,
therefore, any section of said law must be made to apply only prospectively, in view
of the rule that a statute ought not to receive a construction making it act
retroactively, unless the words used are so clear, strong, and imperative that no
other meaning can be annexed to them, or unless the intention of the legislature
cannot be otherwise satisfied.
Same; Contract Clauses; A law which changes the terms of a legal contract between
the parties, either in the time or mode of performance, or imposes new conditions, or
 ENVIRONMENTAL LAW & NATURAL RESOURCES
dispenses with those expressed, or authorizes for its satisfaction something different
from that provided in its terms, is law which impairs the obligation of a contract and
is therefore null and void.—It is engrained in jurisprudence that the constitutional
prohibition on the impairment of the obligation of contract does not prohibit every
change in existing laws, and to fall within the prohibition, the change must not only
impair the obligation of the existing contract, but the impairment must be substantial.
Substantial impairment as conceived in relation to impairment of contracts has been
explained in the case of Clemons v. Nolting, 42 Phil. 702 (1922), which stated that: a
law which changes the terms of a legal contract between parties, either in the time or
mode of performance, or imposes new conditions, or dispenses with those expressed,
or authorizes for its satisfaction something different from that provided in its terms, is
law which impairs the obligation of a contract and is therefore null and void. Section
40 of the Philippine Mining Act of 1995 requiring the approval of the President with
respect to assignment or transfer of FTAAs, if made applicable retroactively to the
Columbio FTAA, would be tantamount to an impairment of the obligations under said
contract as it would effectively restrict the right of the parties thereto to assign or
transfer their interests in the said FTAA.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Zaldy V. Trespeses for petitioner.
     Carag, Caballes, Jamora & Somera Law Offices for respondents WMC and WMCP.
Mario C.V. Jalandoni for respondent Sagittarius Mines, Inc.
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil
Procedure, assailing the Decision1 of the Court of Appeals in CA-G.R. SP No. 74161,
dated 21 November 2003, which dismissed herein petitioner’s Petition for Review of
the Decision2 of the Office of the President dated 23 July 2002 affirming in toto the
Order3 of the Secretary of the Department of Environment and Natural Resources
(DENR) dated 18 December 2001 approving the application for and the consequent
registration of FTAA No. 02-95-XI from WMC Philippines to Sagittarius Mines, Inc.
On 22 March 1995, the Philippine Government and WMC Philippines, the local wholly-
owned subsidiary of WMC Resources International Pty. Ltd. (WMC Resources)
executed a Financial and Technical Assistance Agreement, denominated as the
Columbio FTAA No. 02-95-XI (Columbio FTAA) for the purpose of large scale
exploration, development, and commercial exploration of possible mineral resources
in an initial contract area of 99,387 hectares located in the provinces of South
Cotabato, Sultan Kudarat, Davao del Sur, and North Cotabato in accordance with
Executive Order No. 279 and Department Administrative Order No. 63, Series of
1991.
Session 5 P a g e | 86
The Columbio FTAA is covered in part by 156 mining claims held under various
Mineral Production Sharing Agreements (MPSA) by Southcot Mining Corporation,
Tampakan Mining Corporation, and Sagittarius Mines, Inc. (collectively called the
Tampakan Companies), in accordance with the Tampakan Option Agreement entered
into by WMC Philippines and the Tampakan Companies on 25 April 1991, as amended
by Amendatory Agreement dated 15 July 1994, for purposes of exploration of the
mining claims in Tampakan, South Cotabato. The Option Agreement, among other
things, provides for the grant of the right of first refusal to the Tampakan Companies
in case WMC Philippines desires to dispose of its rights and interests in the mining
claims covering the area subject of the agreement.
WMC Resources subsequently divested itself of its rights and interests in the
Columbio FTAA, and on 12 July 2000 executed a Sale and Purchase Agreement with
petitioner Lepanto over its entire shareholdings in WMC Philippines, subject to the
exercise of the Tampakan Companies’ exercise of their right of first refusal to
purchase the subject shares. On 28 August 2000, petitioner sought the approval of
the 12 July 2000 Agreement from the DENR Secretary.
In an Agreement dated 6 October 2000, however, the Tampakan Companies sought
to exercise its right of first refusal. Thus, in a letter dated 13 October 2000, petitioner
assailed the Tampakan Companies’ exercise of its right of first refusal, alleging that
the Tampakan Companies failed to match the terms and conditions set forth in the 12
July 2000 Agreement.
Thereafter, petitioner filed a case4 for Injunction, Specific Performance, Annulment of
Contracts and Contractual Interference with the Regional Trial Court of Makati,
Branch 135, against WMC Resources, WMC Philippines, and the Tampakan
Companies. WMC Philippines and the Tampakan Companies moved for the dismissal
of said case. Said Motion to Dismiss having been denied, WMC Philippines challenged
the order dismissing the Motion on appeal 5 before the Court of Appeals which
subsequently ordered the dismissal of the case on the ground of forum shopping in
this wise:
Nevertheless, the Court finds that private respondent is guilty of forum-shopping.
There is forum-shopping whenever, as a result of an adverse opinion in one forum, a
party seeks a favorable opinion (other than by appeal or certiorari) in another. The
principle applies not only with respect to suits filed in courts but also in connection
with litigation commenced in the courts while an administrative processes and in
anticipation of an unfavorable administrative ruling and a favorable court ruling.
In this case, petitioners argue that private respondent is guilty of forum shopping for
having lodged the complaint before respondent Court pending action by the Secretary
of the DENR through the Mines and Geo-Sciences Bureau (MGB) on its approval of
the Sale and Purchase Agreement dated July 12, 2000. Private respondent on the
other hand, opposes the foregoing contention arguing that the MGB will be merely
exercising its administrative not quasi-judicial power.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
The action before respondent court was filed by private respondent to compel
petitioner WMC Resources to convey its equity in WMC Phils. and Hillcrest to the
former. Meanwhile, in the case before the MGB, private respondent sought the
approval of Sale and that the MGB’s authority over the case is purely administrative,
but further review shows that private respondent raised contentious issues which
need resolution by the MGB before it can recommend any approval to the Secretary
of the DENR. Particularly, in its letter dated October 13, 2000 to the Secretary of the
DENR, private respondent posed its objection to the approval of the Sales and
Purchase agreements between WMC Resources and the Tampakan Companies,
asserting that the latter failed to validly exercise its right of first refusal. Also, in its
letter to the Director of the MGB dated December 8, 2000, private respondent spelled
out in detail its reasons for objecting to the agreement between WMC Resources and
the Tampakan Companies, and in the same breath, argued for the approval of its
own contract. And because of the opposing claims posited by private respondent and
petitioners, the MGB was constrained to require the parties to submit their respective
comments. At the juncture, the MGB’s authority ceased to be administrative.
Evidently, the MGB has to review all these opposing contentions and resolve the
same. A resolution of the MGB on which contract to recommend or endorse to the
Secretary of the DENR for approval will necessarily include a declaration on the
validity of the different Sale and Purchase Agreements executed between the
disagreeing parties, as well as on the exercise of the Tampakan Companies exercise
of its right of first refusal and its qualification as a contractor under the FTAA. Even
the MGB is aware that the dispute revolves around these sales and purchase
agreements. Hence, it cannot be gainsaid that the MGB will be exercising its quasi-
judicial powers in resolving the conflict before it. Whether the MGB can validly
exercise such jurisdiction over the controversy is another issue but nonetheless
immaterial in determining whether private respondent is guilty of forum-shopping.
What is determinative is the filing of two (2) separate actions in different for a based
principally on the same cause on the supposition that one or the other court would
make a favorable disposition. Thus, it is not highly unlikely that respondent Court and
MGB will come up with conflicting pronouncements on the dispute, thereby creating a
quandary as to which one will prevail. Private respondent’s act undisputably
constitutes a clear case of forum-shopping, a ground for summary dismissal with
prejudice of the action. The respondent court committed grave abuse of discretion in
refusing to dismiss Civil Case No. 01-087 on ground of forum-shopping. 6
With the denial of petitioner’s Motion for Reconsideration, the case 7 was elevated to
this Court. In a Decision dated 24 September 2003, the Court affirmed the Decision
of the appellate court and dismissed the petition. In said Decision, the Court
elucidated that:
True, the questioned agreements of sale between petitioner and WMC on one hand
and between WMC and the Tampakan Companies on the other pertain to transfer of
shares of stock from one entity to another. But said shares of stock represent
ownership of mining rights or interest in mining agreements. Hence, the power of the
MGB to rule on the validity of the questioned agreements of sale, which was raised
by petitioner before the DENR, is inextricably linked to the very nature of such
Session 5 P a g e | 87
agreements over which the MGB has jurisdiction under the law. Unavoidably, there is
identity of reliefs that petitioner seeks from both the MGB and the RTC.
Forum shopping exists when both actions involve the same transactions, same
essential facts and circumstances and raise identical causes of actions, subject
matter, and issues. Such elements are evidently present in both the proceedings
before the MGB and before the trial court. The case instituted with the RTC was thus
correctly ordered dismissed by the appellate court on the ground of forum shopping.
Besides, not only did petitioner commit forum shopping but it also failed to exhaust
administrative remedies by opting to go ahead in seeking reliefs from the court even
while those same reliefs were appropriately awaiting resolution by the MGB. 8
In the interim, on 10 January 2001, contending that the 12 July Agreement between
petitioner and WMC Philippines had expired due to failure to meet the necessary
preconditions for its validity, WMC Resources and the Tampakan Companies executed
another Sale and Purchase Agreement, where Sagittarius Mines, Inc. was designated
assignee and corporate vehicle which would acquire the shareholdings and undertake
the Columbio FTAA activities. On 15 January 2001, Sagittarius Mines, Inc. increased
its authorized capitalization to ₱250 million. Subsequently, WMC Resources and
Sagittarius Mines, Inc. executed a Deed of Absolute Sale of Shares of Stocks on 23
January 2001.
After due consideration and evaluation of the financial and technical qualifications of
Sagittarius Mines, Inc., the DENR Secretary approved the transfer of the Columbio
FTAA from WMC Philippines to Sagittarius Mines, Inc. in the assailed Order. According
to said Order, pursuant to Section 66 of Department Administrative Order No. 96-40,
as amended, Sagittarius Mines, Inc. meets the qualification requirements as
Contractor-Transferee of FTAA No. 02-95-XI, and that the application for transfer of
said FTAA went thru the procedure and other requirements set forth under the law.
Aggrieved by the transfer of the Columbio FTAA in favor of Sagittarius Mines, Inc.,
petitioner filed a Petition for Review of the Order of the DENR Secretary with the
Office of the President. Petitioner assails the validity of the 18 December 2001 Order
on the ground that: 1) it violates the constitutional right of Lepanto to due process;
2) it preempts the resolution of very crucial legal issues pending with the regular
courts; and 3) it blatantly violates Section 40 of the Mining Act.
In a Decision dated 23 July 2002, the Office of the President dismissed the petition in
this wise:
At the outset, it bears emphasis that quite contrary to the argument of petitioner
Lepanto, the above Order of the DENR Secretary is not violative of the Mining Law.
Since the subject Columbio FTAA was granted in accordance with the pertinent
provisions of Executive Order No. 279 and Department Administrative Order No. 63
on 22 March 1995, or prior to the effectivity of the Philippine Mining Act of 1995,
especially as it highlights the non-impairment of existing mining and/or quarrying
rights, under Section 14.1 (b) thereof, only the consent of DENR Secretary is
 ENVIRONMENTAL LAW & NATURAL RESOURCES
required. To hold otherwise would be to unduly impose a burden on transferor WMC
and thereby restrict its freedom to dispose of or alienate this property right without
due process. Thus, under the Revised Implementing Rules and Regulations of the
Philippine Mining Act of 1995, Chapter XXX thereof expressly echoes the guaranty:
"Section 272. Non-Impairment of Existing Mining/Quarrying Rights. - All valid and
existing mining lease contracts, permits/licenses, leases pending renewal, Mineral
Production Sharing Agreements, FTAA granted under Executive Order No. 279, at the
date of the Act shall remain valid, shall not be impaired and shall be recognized by
the Government x x x.
x x x Provided, finally, That this provision is applicable only to all FTAA/MPSA
applications filed under Department Administrative Order No. 63 prior to the
effectivity of the act and these implementing rules and regulations."
As correctly stated by the MGB Director and affirmed by the DENR Secretary, Section
14.1 of the Columbio FTAA provides that the FTAA may be transferred provided that
the Secretary consents to the same. Pursuant to Section 112 of the Mining Act and
Section 272 of DAO No. 96-40, as amended, on non-impairment of existing mining
rights, the subject application for transfer of the Columbio FTAA to Sagittarius
requires only the approval of the DENR Secretary.
Moreover, there is no merit in petitioner Lepanto’s argument that the DENR Secretary
and consequently, this Office, has no jurisdiction over the subject matter in issue.
The assailed Order of the DENR Secretary was pursuant to the latter’s exercise of the
well-entrenched doctrine of primary jurisdiction of administrative agencies.
By virtue of the operation of the doctrine of primary jurisdiction, "courts cannot and
will not determine a controversy involving a question which is within the jurisdiction
of an administrative tribunal, especially where the question demands the exercise of
sound administrative discretion requiring the special knowledge, experience and
services of the tribunal to determine technical and intricate matters of fact and where
a uniformity of ruling is essential to comply with the purposes regulatory statute
administered." (Province of Zamboanga del Norte v. Court of Appeals , 342 SCRA 549
[2000]; Factoran v. Court of Appeals, 320 SCRA 530 [1999]; Brett v. Intermediate
Appellate Court, 191 SCRA 687 [1990];  Qualitrans Limousine Service, Inc. v. Royal
Class Limousine Service, 179 SCRA 569 [1989]). Thus, even though an action may be
lodged in court that is ostensibly for annulment or "rescission of what appears to be
an ordinary civil contract cognizable by a civil court," the doctrine of primary
jurisdiction still applies. (Industrial Enterprises, Inc. v. Court of Appeals,  184 SCRA
426 [1990]).
Section 4, Chapter 1, Title XIV, Book IV of the Administrative Code of 1987 specifies
the powers and functions of the DENR. Also, the Philippine Mining Act of 1995
provides that the DENR "shall be the primary government agency responsible for the
conservation, management, development, and proper use of the State’s mineral
resources including those in reservations, watershed areas, and lands of the public
Session 5 P a g e | 88
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." (Chapter II, Section 8). Since an FTAA is "a contract involving financial or
technical assistance for large-scale exploration, development and utilization of
mineral resources" (Ibid., Chapter 1, Section 3 [r]), any issue affecting the same is
indubitably within the primary jurisdiction of the DENR, as in fact, the government
enters into FTAA’s through the DENR (Ibid., Chapter VI, Section 33).
There is no dispute that the instant case involves and requires the special technical
knowledge and expertise of the DENR. In the determination by the DENR of a
"qualified person" pursuant to the Philippine Mining Act of 1995, such person must
possess the technical and financial capability to undertake mineral resources
development". (Chapter I, Section 3 [aq]) Obviously, this determination peculiarly lies
within the expertise of the DENR.
The validity of the successive transfers is not a civil issue, contrary to the allegation
of petitioner Lepanto, because validity of transfer depends on technical qualifications
of the transferee and compliance with the DENR requirements on qualifications, all of
which require administrative expertise. Notably, petitioner Lepanto is estopped
from assailing the primary jurisdiction of the DENR since petitioner
Lepanto itself anchored its Petition ( cf. pp. 4-5) on the contention that,
allegedly, "the Tampakan Companies failed to match the terms and
conditions of the July 12 Agreement with petitioner Lepanto in that they
did not possess the financial and technical qualifications under the Mining
Act and its Implementing Rules". Petitioner Lepanto’s objections therefore
go into the very qualifications of a transferee which is a technical issue.
This contention is a recognition by petitioner Lepanto itself of the fact that the crucial
and determinative issue in the instant case is grounded on the financial and technical
qualifications of a transferee, which issue, indisputably, is within the exclusive domain
and expertise of the DENR and not of the courts.
xxxx
Moreover, petitioner Lepanto, by its conduct, is again estopped from
assailing the DENR’s jurisdiction after actively participating in the
proceedings therein and seeking affirmative relief. A party who invoked the
jurisdiction [of] a tribunal and actively participated in the proceedings therein cannot
impugn such jurisdiction when faced with an adverse decision. ( cf. Briad Agro
Development Corporation v. dela Serna,  174 SCRA 524 [1989]).9 [Emphasis ours]
With the denial of its Motion for Reconsideration, petitioner lodged an appeal before
the Court of Appeals which was consequently dismissed by the appellate court in the
herein assailed Decision. According to the Court of Appeals:
Petitioner forcefully argues that the DENR Secretary had usurped the power of the
President of the Philippines to approve the transfer of FTAA, as under the provision of
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Section 40 of the Philippine Mining Act of 1995, any transfer or assignment of an
FTAA has to be approved not by the DENR Secretary but by the President.
The argument does not wash.
The issue hinges on the applicability of Section 40 of RA 7942 or the Philippine Mining
Act of 1995, which took force on 14 April 1995, on the transfer of FTAA from WMC to
the Tampakan Companies, particularly the Sagittarius Mines, Inc.
The said law provides:
"Sec. 40. Assignment/Transfer – A financial or technical assistance agreement may be
assigned or transferred, in whole or in part, to a qualified person subject to the prior
approval of the President: Provided, that the President shall notify Congress of every
financial or technical assistance agreement assigned or converted in accordance with
this provision within thirty (30) days from the date of approval."
However, the above provision does not apply to the Columbio FTAA which was
entered into by and between the Philippine Government and WMCP on 22 March
1995, or prior to the effectivity of RA No. 7942. Section 14.1 of the Columbio FTAA,
under which the Tampakan Companies claim their rights to first refusal, reads:
"14.1 Assignment
"The Contractor may assign, transfer, convey or otherwise dispose of all or any part
of its interest in the Agreement provided that such assignment, transfer, conveyance
or disposition does not infringe any Philippine law applicable to foreign ownership:
(a) to an Affiliate provided that it gives notice of such assignment to the
Secretary within 30 days after such assignment; or
(b) to any third party provided that the Secretary consents to the same,
which consent shall not be unreasonably withheld."
Section 10, Article III of the Philippine Constitution enjoins Congress from passing a
law impairing the obligation of contracts. It is axiomatic that a law that impairs an
obligation of contract also violates the due process clause. The obligation of an
existing contract is impaired when its terms and conditions are changed by law,
ordinance, or any issuance having the force of law, thereby weakening the position or
diminishing the rights of a party to the contract. The extent of the change is not
material. It is not a question of degree or manner or cause, but of encroaching in any
respect on its obligations or dispensing with any part of its force. Impairment has also
been predicated on laws which, without destroying contracts, derogate from
substantial contractual rights.
The condition of RA No. 7942 requiring the further approval of the President, if made
to apply retroactively to the Columbio FTAA, would impair the obligation of contracts
simply because it constitutes a restriction on the right of the contractor to assign or
Session 5 P a g e | 89
transfer its interest in an FTAA. In other words, it diminished the vested rights of the
contractor to assign or transfer its interests on mere approval of the DENR Secretary.
The restriction is therefore substantive, and not merely procedural, contrary to the
contention of petitioner.
xxxx
Likewise militating against the petitioner’s side is the doctrine that statutes are to be
construed as having only a prospective operation unless the purpose and intention of
the Legislature to give them a retrospective effect is expressly declared or is
necessarily implied from the language used. In case of doubt, the doubt must be
resolved against the retrospective effect. At any rate, even if RA No. 7942 be
accorded a retroactive effect, this does not ipso facto permit the application of the
requirement of securing a prior presidential consent to the transfer of FTAA, for, to
iterate, this would impair the obligation of contract. In such a case, the correct
application of RA No. 7942 is for the provisions to [be] made to apply on existing
FTAAs only if the same would not result in impairment of obligation of contracts.
This is as it should be. To hold otherwise would be to unduly impose a burden on
transferor WMC and thereby restrict its freedom to dispose of or alienate its property
right without due process. It constitutes impairment of obligation of contracts, which
the Fundamental Law enjoins, and contravenes the doctrine of prospective
application of laws.10
Hence, the instant Petition.
The pivotal issue to be resolved herein involves the propriety of the application to the
Columbio FTAA of Republic Act No. 7942 or the Philippine Mining Act of 1995,
particularly Section 40 thereof requiring the approval of the President of the
assignment or transfer of financial or technical assistance agreements. Petitioner
maintains that respondents failed to comprehend the express language of Section 40
of the Philippine Mining Act of 1995 requiring the approval of the President on the
transfer or assignment of a financial or technical assistance agreement.
To resolve this matter, it is imperative at this point to stress the fact that the
Columbio FTAA was entered into by the Philippine Government and WMC Philippines
on 22 March 1995, undoubtedly before the Philippine Mining Act of 1995 took effect
on 14 April 1995. Furthermore, it is undisputed that said FTAA was granted in
accordance with Executive Order No. 279 and Department Administrative Order No.
63, Series of 1991, which does not contain any similar condition on the transfer or
assignment of financial or technical assistance agreements. Thus, it would seem that
what petitioner would want this Court to espouse is the retroactive application of the
Philippine Mining Act of 1995 to the Columbio FTAA, a valid agreement concluded
prior to the naissance of said piece of legislation.
This posture of petitioner would clearly contradict the established legal doctrine that
statutes are to be construed as having only a prospective operation unless the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
contrary is expressly stated or necessarily implied from the language used in the law.
As reiterated in the case of Segovia v. Noel, 11 a sound cannon of statutory
construction is that a statute operates prospectively only and never retroactively,
unless the legislative intent to the contrary is made manifest either by the express
terms of the statute or by necessary implication.
Article 4 of the Civil Code provides that: "Laws shall not have a retroactive effect
unless therein otherwise provided." According to this provision of law, in order that a
law may have retroactive effect it is necessary that an express provision to this effect
be made in the law, otherwise nothing should be understood which is not embodied
in the law.12 Furthermore, it must be borne in mind that a law is a rule established to
guide our actions without no binding effect until it is enacted, wherefore, it has no
application to past times but only to future time, and that is why it is said that the
law looks to the future only and has no retroactive effect unless the legislator may
have formally given that effect to some legal provisions. 13
In the case at bar, there is an absence of either an express declaration or an
implication in the Philippine Mining Act of 1995 that the provisions of said law shall be
made to apply retroactively, therefore, any section of said law must be made to apply
only prospectively, in view of the rule that a statute ought not to receive a
construction making it act retroactively, unless the words used are so clear, strong,
and imperative that no other meaning can be annexed to them, or unless the
intention of the legislature cannot be otherwise satisfied.14
Be that as it may, assuming for the sake of argument that We are to apply the
Philippine Mining Act of 1995 retrospectively to the Columbio FTAA, the lack of
presidential approval will not be fatal as to render the transfer illegal, especially since,
as in the instant case, the alleged lack of presidential approval has been remedied
when petitioner appealed the matter to the Office of the President which approved
the Order of the DENR Secretary granting the application for transfer of the Columbio
FTAA to Sagittarius Mines, Inc. As expounded by the Court in the Resolution of the
Motion for Reconsideration in the La Bugal-B’Laan Tribal Association, Inc. v.
Ramos[15] case, involving the same FTAA subject of the instant case:
x x x Moreover, when the transferee of an FTAA is another foreign corporation, there
is a logical application of the requirement of prior approval by the President of the
Republic and notification to Congress in the event of assignment or transfer of an
FTAA. In this situation, such approval and notification are appropriate safeguards,
considering that the new contractor is the subject of a foreign government.
On the other hand, when the transferee of the FTAA happens to be a
Filipino corporation, the need for such safeguard is not critical; hence, the
lack of prior approval and notification may not be deemed fatal as to
render the transfer invalid. Besides, it is not as if approval by the President
is entirely absent in this instance. x x x That case involved the review of the
Decision of the Court of Appeals dated November 21, 2003 in CA G.R. SP No. 74161,
which affirmed the DENR Order dated December 31, 2001 and the Decision of the
Session 5 P a g e | 90
Office of the President dated July 23, 2002, both approving the assignment of
the WMCP FTAA to Sagittarius.16 (Emphasis ours.)
Furthermore, if petitioner was indeed of the mind that Section 40 of the Philippine
Mining Act of 1995 is applicable to the Columbio FTAA, thus necessitating the
approval of the President for the validity of its transfer or assignment, it would seem
contradictory that petitioner sought the approval of the DENR Secretary, and not that
of the President, of its 12 July 2000 Sale and Purchase Agreement with WMC
Resources. Hence, it may be glimpsed from the very act of petitioner that it
recognized that the provision of the Columbio FTAA regarding the consent of the
DENR Secretary with respect to the transfer of said FTAA must be upheld.
It is engrained in jurisprudence that the constitutional prohibition on the impairment
of the obligation of contract does not prohibit every change in existing laws, 17 and to
fall within the prohibition, the change must not only impair the obligation of the
existing contract, but the impairment must be substantial. 18 Substantial impairment as
conceived in relation to impairment of contracts has been explained in the case of
Clemons v. Nolting,19 which stated that: a law which changes the terms of a legal
contract between parties, either in the time or mode of performance, or imposes new
conditions, or dispenses with those expressed, or authorizes for its satisfaction
something different from that provided in its terms, is law which impairs the
obligation of a contract and is therefore null and void. Section 40 of the Philippine
Mining Act of 1995 requiring the approval of the President with respect to assignment
or transfer of FTAAs, if made applicable retroactively to the Columbio FTAA, would be
tantamount to an impairment of the obligations under said contract as it would
effectively restrict the right of the parties thereto to assign or transfer their interests
in the said FTAA.
By imposing a new condition apart from those already contained in the agreement,
before the parties to the Columbio FTAA may assign or transfer its rights and interest
in the said agreement, Section 40 of the Philippine Mining Act of 1995, if made to
apply to the Columbio FTAA, will effectively modify the terms of the original contract
and thus impair the obligations of the parties thereto and restrict the exercise of their
vested rights under the original agreement. Such modification to the Columbio FTAA,
particularly in the conditions imposed for its valid transfer is equivalent to an
impairment of said contract violative of the Constitution.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The
Decision of the Court of Appeals in CA G.R. SP No. 74161 dated 21 November 2003 is
hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.
Panganiban, (C.J., Chairperson), In the result.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Petition denied.
Notes.—The sole purpose of the impairment clause of the Constitution is to safeguard
the integrity of valid contractual agreements against unwarranted interference by the
State in the form of laws—private individuals’ intrusions on interest rates is governed
by statutory enactments like the Civil Code. (New Sampaguita Builders Construction,
Inc. vs. Philippine National Bank, 435 SCRA 565 [2004])
All contracts are “subject to the overriding demands, needs and interests of the
greater number as the State may determine in the legitimate exercise of its police
power.” (Philippine Ports Authority vs. Cipres Stevedoring & Arrastre, Inc., 463 SCRA
358 [2005])
——o0o——
Session 5 P a g e | 91
G.R. No. 157882. March 30, 2006.*
DIDIPIO EARTH-SAVERS’ MULTI-PURPOSE ASSOCIATION, INCORPORATED
(DESAMA), MANUEL BUTIC, CESAR MARIANO, LAURO ABANCE, BEN
TAYABAN, ANTONIO DINGCOG, TEDDY B. KIMAYONG, ALONZO ANANAYO,
ANTONIO MALAN-UYA, JOSE BAHAG, ANDRES INLAB, RUFINO LICYAYO,
ALFREDO CULHI, CATALILNA INABYUHAN, GUAY DUMMANG, GINA
PULIDO, EDWIN ANSIBEY, CORAZON SICUAN, LOPEZ DUMULAG, FREDDIE
AYDINON, VILMA JOSE, FLORENTINA MADDAWAT, LINDA DINGCOG,
ELMER SICUAN, GARY ANSIBEY, JIMMY MADDAWAT, JIMMY GUAY,
ALFREDO CUT-ING, ANGELINA UDAN, OSCAR INLAB, JUANITA CUT-ING,
ALBERT PINKIHAN, CECILIA TAYABAN, CRISTA BINWAK, PEDRO DUGAY,
SR., EDUARDO ANANAYO, ROBIN INLAB, JR., LORENZO PULIDO, TOMAS
BINWAG, EVELYN BUYA, JAIME DINGCOG, DINAOAN CUT-ING, PEDRO
DONATO, MYRNA GUAY, FLORA ANSIBEY, GRACE DINAMLING, EDUARDO
MENCIAS, ROSENDA JACOB, SIONITA DINGCOG, 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 PUNADWAN, 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.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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, vs. 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.
Constitutional Law; Justiciable Controversy, Defined; Words and Phrases; 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.— 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. 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.
Same; Judicial Power; Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally demandable and
enforceable; Requisites of.—The Constitution is quite explicit on this matter. 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.”
Same; Eminent Domain; “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.— Republic v. Vda. de Castellvi, 58
SCRA 336, 350 (1974), defines “taking” under the concept of eminent domain as
Session 5 P a g e | 92
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.
Same; Same; Eminent Domain and Police Power Distinguished.— 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. 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. Although both police power and the power of eminent domain have the
general welfare for their object, and recent trends show a mingling of the two with
the latter being used as an implement of the former, there are still traditional
distinctions between the two.
Same; Same; When a property interest is appropriated and applied to some public
purpose, there is compensable taking.—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. However, when a property interest is
appropriated and applied to some public purpose, there is compensable taking.
Same; Police Power; 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.
—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. Use of the property by the
owner was limited, but no aspect of the property is used by or for the public. 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.
Same; Eminent Domain; 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.
—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. In Ayala de Roxas v. City of Manila, 9 Phil. 215, 221
 ENVIRONMENTAL LAW & NATURAL RESOURCES
(1907), it was held that the imposition of burden over a private property through
easement was considered taking; hence, payment of just compensation is required.
Same; Same; Requisites of Taking in Eminent Domain.— In Republic v. Castellvi, 58
SCRA 336, 350-352 (1974), 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.
Same; Same; Mines and Mining; The holders of mining rights enter private lands for
purposes of conducting mining activities such as exploration, extraction and
processing of minerals.—The entry referred to in Section 76 is not just a simple right-
of-way which is ordinarily allowed under the provisions of the Civil Code. Here, the
holders of mining rights enter private lands for purposes of conducting mining
activities such as exploration, extraction and processing of minerals. Mining right
holders build mine infrastructure, dig mine shafts and connecting tunnels, prepare
tailing ponds, storage areas and vehicle depots, install their machinery, equipment
and sewer systems. On top of this, under Section 75, easement rights are accorded
to them where they may build warehouses, port facilities, electric transmission,
railroads and other infrastructures necessary for mining operations. All these will
definitely oust the owners or occupants of the affected areas the beneficial ownership
of their lands. Without a doubt, taking occurs once mining operations commence.
Statutory Construction; In order that one law may operate to repeal another law, the
two laws must be inconsistent—the former must be so repugnant as to be
irreconcilable with the latter act—repeals by implication are not favored, and will not
be decreed unless it is manifest that the legislature so intended.— 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. 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.
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
Session 5 P a g e | 93
earlier act is beyond peradventure removed. 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.
Constitutional Law; Eminent Domain; Mines and Mining; 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—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—mining
industry plays a pivotal role in the economic development of the country and is a vital
tool in the government’s thrust of accelerated recovery.— The taking to be valid must
be for public use. 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. 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. Mining industry plays a pivotal role in the
economic development of the country and is a vital tool in the government’s thrust of
accelerated recovery. 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 country’s mineral
resources are urgently needed for national development. Irrefragably, mining is an
industry which is of public benefit.
Same; Same; Same; There is 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.— 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.
Same; Same; Same; The determination of just compensation in eminent domain
cases is a judicial function.— The question on the judicial determination of just
compensation has been settled in the case of Export Processing Zone Authority v.
Dulay, 149 SCRA 305, 312 (1987), 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 court’s findings.
Same; Congress; The legislature, in enacting the mining act, is presumed to have
deliberated with full knowledge of all existing laws and jurisprudence on the subject.
—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
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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. 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.
Mines and Mining; Statutes; R.A. No. 7942 provides for the state’s control and
supervision over mining operations.— 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-B’Laan Tribal Association, Inc. v. Ramos, 445 SCRA 1, 132-
137 (2004), where the Court answered in the following manner: RA 7942 provides for
the state’s control and supervision over mining operations.
Same; Constitutional Law; 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.—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. The
1987 Constitution allows the continued use of service contracts with foreign
corporations as contractors who would invest in and operate and manage extractive
Session 5 P a g e | 94
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.
SPECIAL CIVIL ACTION in the Supreme Court. Prohibition and Mandamus.
The facts are stated in the opinion of the Court.
     Melizel F. Asuncion for petitioners.
     Francis Joseph G. Ballesteros collaborating counsel for petitioners.
     Roberto C. San Juan for respondent Climax-Arimco Mining Corporation.
     The Solicitor General for public respondents.
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.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Subsequently, AMC consolidated with Climax Mining Limited to form a single company
that now goes under the new name of Climax-Arimco Mining Corporation (CAMC), the
controlling 99% of stockholders of which are Australian nationals.
On 7 September 2001, counsels for petitioners filed a demand letter addressed to
then DENR Secretary Heherson Alvarez, for the cancellation of the CAMC FTAA for
the primary reason that Rep. Act No. 7942 and its Implementing Rules and
Regulations DAO 96-40 are unconstitutional. The Office of the Executive Secretary
was also furnished a copy of the said letter. There being no response to both letters,
another letter of the same content dated 17 June 2002 was sent to President Gloria
Macapagal Arroyo. This letter was indorsed to the DENR Secretary and eventually
referred to the Panel of Arbitrators of the Mines and Geosciences Bureau (MGB),
Regional Office No. 02, Tuguegarao, Cagayan, for further action.
On 12 November 2002, counsels for petitioners received a letter from the Panel of
Arbitrators of the MGB requiring the petitioners to comply with the Rules of the Panel
of Arbitrators before the letter may be acted upon.
Yet again, counsels for petitioners sent President Arroyo another demand letter dated
8 November 2002. Said letter was again forwarded to the DENR Secretary who
referred the same to the MGB, Quezon City.
In a letter dated 19 February 2003, the MGB rejected the demand of counsels for
petitioners for the cancellation of the CAMC FTAA.
Petitioners thus filed the present petition for prohibition and mandamus, with a
prayer for a temporary restraining order. They pray that the Court issue an order:
1. enjoining public respondents from acting on any application for FTAA;
2. declaring unconstitutional the Philippine Mining Act of 1995 and its
Implementing Rules and Regulations;
3. canceling the FTAA issued to CAMC.
In their memorandum petitioners pose the following issues:
I opposite legal claims, susceptible of judicial resolution as distinguished from a
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
Session 5 P a g e | 95
Whether or not the State, through Republic Act No. 7942 and the CAMC FTAA,
abdicated its primary responsibility to the full control and supervision over natural
resources.
IV
Whether or not the respondents’ interpretation of the role of wholly foreign and
foreign-owned corporations in their involvement in mining enterprises, violates
paragraph 4, section 2, Article XII of the Constitution.
V
WHETHER OR NOT THE 1987 CONSTITUTION PROHIBITS SERVICE CONTRACTS.1
Before going to the substantive issues, the procedural question raised by public
respondents shall first be dealt with. Public respondents are of the view that
petitioners’ eminent domain claim is not ripe for adjudication as they fail to allege
that CAMC has actually taken their properties nor do they allege that their property
rights have been endangered or are in danger on account of CAMC’s 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
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
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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. Aguirre12:
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 country’s 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.
Session 5 P a g e | 96
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.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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
mingling19 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
Session 5 P a g e | 97
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 Piatt24 where an ordinance divided the City of Manila into
industrial and residential areas.
A thorough scrutiny of the extant jurisprudence leads to a cogent deduction that
where a property interest is merely restricted because the continued use thereof
would be injurious to public welfare, or where property is destroyed because its
continued existence would be injurious to public interest, there is no compensable
taking.25 However, when a property interest is appropriated and applied to some
public purpose, there is compensable taking.26
According to noted constitutionalist, Fr. Joaquin Bernas, SJ, in the exercise of its
police power regulation, the state restricts the use of private property, but none of
the property interests in the bundle of rights which constitute ownership is
appropriated for use by or for the benefit of the public. 27 Use of the property by the
owner was limited, but no aspect of the property is used by or for the public. 28 The
deprivation of use can in fact be total and it will not constitute compensable taking if
nobody else acquires use of the property or any interest therein. 29
If, however, in the regulation of the use of the property, somebody else acquires the
use or interest thereof, such restriction constitutes compensable taking. Thus, in City
Government of Quezon City v. Ericta,30 it was argued by the local government that an
ordinance requiring private cemeteries to reserve 6% of their total areas for the
burial of paupers was a valid exercise of the police power under the general welfare
clause. This court did not agree in the contention, ruling that property taken under
the police power is sought to be destroyed and not, as in this case, to be devoted to
a public use. It further declared that the ordinance in question was actually a taking
of private property without just compensation of a certain area from a private
cemetery to benefit paupers who are charges of the local government. Being an
exercise of eminent domain without provision for the payment of just compensation,
the same was rendered invalid as it violated the principles governing eminent
domain.
In People v. Fajardo,31 the municipal mayor refused Fajardo permission to build a
house on his own land on the ground that the proposed structure would destroy the
view or beauty of the public plaza. The ordinance relied upon by the mayor prohibited
the construction of any building that would destroy the view of the plaza from the
highway. The court ruled that the municipal ordinance under the guise of police
power permanently divest owners of the beneficial use of their property for the
benefit of the public; hence, considered as a taking under the power of eminent
domain that could not be countenanced without payment of just compensation to the
affected owners. In this case, what the municipality wanted was to impose an
 ENVIRONMENTAL LAW & NATURAL RESOURCES
easement on the property in order to preserve the view or beauty of the public plaza,
which was a form of utilization of Fajardo’s 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, cannot 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 NPC’s
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
Session 5 P a g e | 98
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.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
The entry referred to in Section 76 is not just a simple right-of-way which is ordinarily
allowed under the provisions of the Civil Code. Here, the holders of mining rights
enter private lands for purposes of conducting mining activities such as exploration,
extraction and processing of minerals. Mining right holders build mine infrastructure,
dig mine shafts and connecting tunnels, prepare tailing ponds, storage areas and
vehicle depots, install their machinery, equipment and sewer systems. On top of this,
under Section 75, easement rights are accorded to them where they may build
warehouses, port facilities, electric transmission, railroads and other infrastructures
necessary for mining operations. All these will definitely oust the owners or occupants
of the affected areas the beneficial ownership of their lands. Without a doubt, taking
occurs once mining operations commence.
Section 76 of Rep. Act No. 7942 is a Taking Provision
Moreover, it would not be amiss to revisit the history of mining laws of this country
which would help us understand Section 76 of Rep. Act No. 7942.
This provision is first found in Section 27 of Commonwealth Act No. 137 which took
effect on 7 November 1936, viz:
Before entering private lands the prospector shall first apply in writing for written
permission of the private owner, claimant, or holder thereof, and in case of refusal by
such private owner, claimant, or holder to grant such permission, or in case of
disagreement as to the amount of compensation to be paid for such privilege of
prospecting therein, the amount of such compensation shall be fixed by agreement
among the prospector, the Director of the Bureau of Mines and the surface owner,
and in case of their failure to unanimously agree as to the amount of compensation,
all questions at issue shall be determined by the Court of First Instance.
Similarly, the pertinent provision of Presidential Decree No. 463, otherwise known as
"The Mineral Resources Development Decree of 1974," provides:
SECTION 12. Entry to Public and Private Lands. — A person who desires to conduct
prospecting or other mining operations within public lands covered by concessions or
rights other than mining shall first obtain the written permission of the government
official concerned before entering such lands. In the case of private lands, the written
permission of the owner or possessor of the land must be obtained before entering
such lands. In either case, if said permission is denied, the Director, at the request of
the interested person may intercede with the owner or possessor of the land. If the
intercession fails, the interested person may bring suit in the Court of First Instance
of the province where the land is situated. If the court finds the request justified, it
shall issue an order granting the permission after fixing the amount of compensation
and/or rental due the owner or possessor: Provided, That pending final adjudication
of such amount, the court shall upon recommendation of the Director permit the
interested person to enter, prospect and/or undertake other mining operations on the
disputed land upon posting by such interested person of a bond with the court which
the latter shall consider adequate to answer for any damage to the owner or
Session 5 P a g e | 99
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.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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 government’s 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 country’s 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 state’s discretion to decide when to take private
property is reduced contractually by Section 13.5 of the CAMC FTAA, which reads:
Session 5 P a g e | 100
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 CONTRACTOR’s 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 latter’s 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-B’Laan
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
contractor’s 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.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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 court’s 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 latter’s 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
Session 5 P a g e | 101
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 Appeals53:
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-B’Laan Tribal
Association, Inc. v. Ramos,54 where the Court answered in the following manner:
 ENVIRONMENTAL LAW & NATURAL RESOURCES
RA 7942 provides for the state’s 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 DENR’s power of over-all supervision and
periodic review for "the conservation, management, development and
proper use of the State’s 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."
Session 5 P a g e | 102
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
government’s control over mining enterprises:
o 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).
o 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).
o For violation of any of its terms and conditions, government may cancel an
FTAA. (Chapter XVII, RA 7942; Chapter XXIV, DAO 96-40).
o An FTAA contractor is obliged to open its books of accounts and records for
0inspection by the government (Section 56-m, DAO 96-40).
o 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).
o MGB is mandated to monitor the contractor’s 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).
o An FTAA cannot be transferred or assigned without prior approval by the
President (Section 40, RA 7942; Section 66, DAO 96-40).
o 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).
o 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)
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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)
o 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).
o 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
o 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).
o 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).
Session 5 P a g e | 103
o 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).
o 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 contractor’s 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.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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-
B’Laan Tribal Association, Inc. v. Ramos. 55 In discrediting such argument, the Court
ratiocinated:
Petitioners claim that the phrase "agreements x x x involving either technical or
financial assistance" simply means technical assistance or financial assistance
agreements, nothing more and nothing else. They insist that there is no ambiguity in
the phrase, and that a plain reading of paragraph 4 quoted above leads to the
inescapable conclusion that what a foreign-owned corporation may enter into with
the government is merely an agreement for either financial or technical
Session 5 P a g e | 104
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 country’s natural resources. They maintain that this Court’s
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
country’s 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.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
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
anyone’s 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
Session 5 P a g e | 105
developmental policies; and the fundamentally capitalist, free-enterprise philosophy
of our government. We cannot imagine such a radical shift being undertaken by our
government, to the great prejudice of the mining sector in particular and our
economy in general, merely on the basis of the omission of the terms service
contract from or the failure to carry them over to the new Constitution. There has to
be a much more definite and even unarguable basis for such a drastic reversal of
policies.
xxxx
The foregoing are mere fragments of the framers’ lengthy discussions of the provision
dealing with agreements x x x involving either technical or financial assistance,  which
ultimately became paragraph 4 of Section 2 of Article XII of the Constitution. Beyond
any doubt, the members of the ConCom were actually debating about the martial-
law-era service contracts for which they were crafting  appropriate safeguards.
In the voting that led to the approval of Article XII by the ConCom, the explanations
given by Commissioners Gascon, Garcia and Tadeo indicated that they had voted to
reject this provision on account of their objections to the "constitutionalization" of the
"service contract" concept.
Mr. Gascon said, "I felt that if we would constitutionalize any provision on service
contracts, this should always be with the concurrence of Congress and not guided
only by a general law to be promulgated by Congress."  Mr. Garcia
explained, "Service contracts are given constitutional legitimization in Sec. 3, even
when they have been proven to be inimical to the interests of the nation, providing,
as they do, the legal loophole for the exploitation of our natural resources for the
benefit of foreign interests."  Likewise, Mr. Tadeo cited inter alia the fact that service
contracts continued to subsist, enabling foreign interests to benefit from our natural
resources. It was hardly likely that these gentlemen would have objected so
strenuously, had the provision called for mere technical or financial
assistance and nothing more.
The deliberations of the ConCom and some commissioners’ explanation of their votes
leave no room for doubt that the service contract concept precisely underpinned the
commissioners’ understanding of the "agreements involving either technical or
financial assistance."
xxxx
From the foregoing, we are impelled to conclude that the phrase agreements
involving either technical or financial assistance,  referred to in paragraph 4, are in
fact service contracts. But unlike those of the 1973 variety, the new ones are
between foreign corporations acting as contractors on the one hand; and on the
other, the government as principal or "owner" of the works. In the new service
contracts, the foreign contractors provide capital, technology and technical know-
how, and managerial expertise in the creation and operation of large-scale
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 106

mining/extractive enterprises; and the government, through its agencies (DENR, mota presented; Fourfold requisites in deciding constitutional law issues. (Sanlakas
MGB), actively exercises control and supervision over the entire operation. vs. Executive Secretary, 421 SCRA 656 [2004])

xxxx ——o0o——

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.

Panganiban (C.J., Chairperson), Ynares-Santiago, Austria-Martinez and Callejo, Sr.,

JJ., concur.

Petition for prohibition and mandamus dismissed.

Notes.—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. (Robern Development Corporation vs.
Quitain, 315 SCRA 150 [1999])

G.R. No. 137174. July 10, 2000.*

The provisions of Republic Act No. 7942 (Philippine Mining Act of 1995) do not
REPUBLIC OF THE PHILIPPINES, represented by the POLLUTION
necessarily repeal Republic Act No. 3931 (Pollution Control Law), as amended by
ADJUDICATION BOARD (DENR), petitioner, vs. MARCOPPER MINING
Presidential Decree No. 984 and Executive Order No. 192—repeals of laws by
CORPORATION, respondent.
implication are not favored and courts must generally assume their congruent
application. (Republic vs. Marcopper Mining Corporation, 335 SCRA 386 [2000])
Ecology and Environment; Mines and Mining; Philippine Mining Act of 1995; Mine
Wastes and Tailings; Words and Phrases; The Philippine Mining Act of 1995 defines
Police power cannot be diminished by any contract. (Agan, Jr. vs. Philippine
“Mine wastes and tailings” as soil and rock materials from surface or underground
International Air Terminals Co., Inc., 420 SCRA 575 [2004])
mining and milling operations with no economic value to the generator of the same.
—The Philippine Mining Act of 1995 defines “Mine wastes and tailings” as soil and
The judicial power to declare a law or an executive order unconstitutional is limited to
rock materials from surface or underground mining and milling operations with no
actual cases and controversies to be exercised after full opportunity of argument by
economic value to the generator of the same.
the parties and limited further to the constitutional question raised or the very lis
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Same; Same; Same; Pollution Control Law; Statutes; Statutory Construction; The
provisions of RA 7942 (Philippine Mining Act of 1995) do not necessarily repeal RA
3931 (Pollution Control Law), as amended by P.D. 984 and E.O. 192—repeals of laws
by implication are not favored and that courts must generally assume their congruent
application.—From a careful reading of the foregoing provisions of law, we hold that
the provisions of RA 7942 do not necessarily repeal RA 3931, as amended by PD 984
and EO 192. RA 7942 does not contain any provision which categorically and
expressly repeals the provisions of the Pollution Control Law. Neither could there be
an implied repeal. It is well-settled that repeals of laws by implication are not favored
and that courts must generally assume their congruent application. Thus, it has been
held: “The two laws must be absolutely incompatible, and a clear finding thereof
must surface, before the inference of implied repeal may be drawn. The rule is
expressed in the maxim, interpretare et concordare leqibus est optimus interpretendi,
i.e., every statute must be so interpreted and brought into accord with other laws as
to form a uniform system of jurisprudence. The fundament is that the legislature
should be presumed to have known the existing laws on the subject and not to have
enacted conflicting statutes. Hence, all doubts must be resolved against any implied
repeal, and all efforts should be exerted in order to harmonize and give effect to all
laws on the subject.”
Same; Same; Same; Same; Pollution; Words and Phrases; Pollution refers to any
alteration of the physical, chemical and biological properties of any water, air and/or
land resources of the Philippines, or any discharge thereto of any liquid, gaseous or
solid wastes as will or is likely to create or to render such water, air and land
resources harmful, detrimental or injurious to public health, safety or welfare or
which will adversely affect their utilization for domestic, commercial, industrial,
agricultural, recreational or other legitimate purposes.— There is no irreconcilable
conflict between the two laws. Section 19 of EO 192 vested the PAB with the specific
power to adjudicate pollution cases in general. Sec. 2, par. (a) of PD 984 defines the
term “pollution” as referring to any alteration of the physical, chemical and biological
properties of any water, air and/or land resources of the Philippines, or any discharge
thereto of any liquid, gaseous or solid wastes as will or is likely to create or to render
such water, air and land resources harmful, detrimental or injurious to public health,
safety or welfare or which will adversely affect their utilization for domestic,
commercial, industrial, agricultural, recreational or other legitimate purposes.
Same; Same; Same; Same; Administrative Law; The authority of the mines director is
complementary to that of the Pollution Adjudication Board.— On the other hand, the
authority of the mines regional director is complementary to that of the PAB. Section
66 of RA 7942 gives the mines regional director exclusive jurisdiction over the safety
inspection of all installations, surface or underground in mining operations. Section 67
thereof vests upon the regional director power to issue orders requiring a contractor
Session 5 P a g e | 107
to remedy any practice connected with mining or quarrying operations which is not in
accordance with safety and anti-pollution laws and regulations; and to summarily
suspend mining or quarrying operations in case of imminent danger to life or
property. The law likewise requires every contractor to undertake an environmental
protection and enhancement program which shall be incorporated in the work
program which the contractor shall submit as an accompanying document to the
application for a mineral agreement or permit. In addition, an environmental
clearance certificate is required based on an environment impact assessment. The
law also requires contractors and permittees to rehabilitate the mined-out areas, and
set up a mine rehabilitation fund. Significantly, the law allows and encourages
people’s organizations and non-governmental organizations to participate in ensuring
that contractors/permittees shall observe all the requirements of environmental
protection.
Same; Same; Same; Same; Same; The power of the mines regional director does not
foreclose PAB’s authority to determine and act on complaints filed before it—while
the mines regional director has express administrative and regulatory powers over
mining operations and installations, it has no adjudicative powers over complaints for
violation of pollution control statutes and regulations.— From the foregoing, it readily
appears that the power of the mines regional director does not foreclose PAB’s
authority to determine and act on complaints filed before it. The power granted to
the mines regional director to issue orders requiring the contractor to remedy any
practice connected with mining or quarrying operations or to summarily suspend the
same in cases of violation of pollution laws is for purposes of effectively regulating
and monitoring activities within mining operations and installations pursuant to the
environmental protection and enhancement program undertaken by contractors and
permittees in procuring their mining permit. While the mines regional director has
express administrative and regulatory powers over mining operations and
installations, it has no adjudicative powers over complaints for violation of pollution
control statutes and regulations.
Same; Same; Same; Same; Same; Arbitration; Panel of Arbitrators; Mines
Adjudication Board; The provisions creating the Panel of Arbitrators for the
settlement of conflicts refers to disputes involving rights to mining areas, mineral
agreements or permits and those involving surface owners, occupants and claim-
holders/concessionaires—the scope of authority of the Panel of Arbitrators and the
Mines Adjudication Board conferred by R.A. 7942 clearly exclude adjudicative
responsibility over pollution cases.— Neither was such authority conferred upon the
Panel of Arbitrators and the Mines Adjudication Board which were created by the said
law. The provisions creating the Panel of Arbitrators for the settlement of conflicts
refer to disputes involving rights to mining areas, mineral agreements or permits and
those involving surface owners, occupants and claim-holders/concessionaires. The
scope of authority of the Panel of Arbitrators and the Mines Adjudication Board
 ENVIRONMENTAL LAW & NATURAL RESOURCES
conferred by RA 7942 clearly exclude adjudicative responsibility over pollution cases.
Nowhere is there vested any authority to adjudicate cases involving violations of
pollution laws and regulations in general.
Same; Same; The order of the Office of the President directing a mining company to
rehabilitate a particular bay at a specified cost per day “during the efficacy of the
restraining order” became functus officio when said company voluntarily stopped
dumping mine tailings into the bay.— We must sustain the appellate court on this
point on account of the testimony of Mr. Edel Genato. Further, we note that the
Office of the President never objected nor ruled on the manifestation dated July 9,
1991 filed by MMC that it would stop paying since it already ceased dumping mine
tailings into the bay. Still further, the order of the OP directing MMC to rehabilitate at
a cost of P30,000.00 a day “during the efficacy of the restraining order” had become
functus officio since MMC voluntarily stopped dumping mine tailings into the bay.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     The Solicitor General for petitioner.
     Siguion Reyna, Montecillo & Ongsiako for private respondent.
GONZAGA-REYES, J.:
In this petition for review on certiorari, petitioner REPUBLIC OF THE PHILIPPINES
through the Pollution Adjudication Board of the Department of Environment and
Natural Resources seeks to annul the Decision1 of the Court of Appeals2 in CA-G.R. SP
No. 44656 setting aside the Order 3 of the Pollution Adjudication Board 4 in DENR-PAB
Case No. 04-00597-96; as well as the Resolution 5 denying reconsideration of said
Decision.
The following antecedent facts are undisputed:
Respondent Marcopper Mining Corporation (MMC) was issued a temporary permit to
operate a tailings6 sea disposal system under TPO No. POW-85-454-EJ for the period
October 31, 1985 to October 21, 1986. Before it expired, MMC filed an application for
the renewal thereof with the National Pollution Control Commission (NPCC). On
September 20, 1986, MMC received a telegraphic order from the NPCC directing the
former to "(i)mmediately cease and desist from discharging mine tailings into
Calancan Bay." The directive was brought about through the efforts of certain
religious groups which had been protesting MMC’s tailings sea disposal system. MMC
requested the NPCC to refrain from implementing the aforesaid directive until its
adoption of an alternative tailings disposal system. The NPCC granted MMC’s request
and called a conference to discuss possible alternative disposal systems.
Consequently, an Environmental Technical Committee, composed of representatives
from the NPCC, the Bureau of Mines and Geo-Sciences, and MMC was created to
Session 5 P a g e | 108
study the feasibility of various tailings disposal systems that may be appropriate for
utilization by MMC and to submit its findings and recommendations thereon.
Meanwhile, after the expiration of MMC’s TPO No. POW-85-454-EJ on October 21,
1986, the NPCC issued to MMC a new temporary permit, TPO No. POW-86-454-EJ
dated November 11, 1986, to expire on February 10, 1987, with the condition that
"[t]he tailings disposal system shall be transferred to San Antonio Pond within two (2)
months from the date of this permit." MMC moved for the deletion of the condition
stating that it needed to develop and mine the ore deposits underneath the San
Antonio pond for it to continue its mining operations. In a letter-manifestation dated
February 5, 1987, MMC requested the NPCC for an extension of TPO No. POW-86-
454-EJ and the indefinite suspension of the condition in said permit until such time
that the NPCC shall have finally resolved the NPCC case entitled "Msgr. Rolly Oliverio,
et al. vs. Marcopper Mining Corporation."
In the meantime, the NPCC was abolished by Executive Order No. 192 7 dated June
10, 1987, and its powers and functions were integrated into the Environmental
Management Bureau and into the Pollution Adjudication Board (PAB). 8
On April 11, 1988, the Secretary of Environment and Natural Resources, in his
capacity as Chairman of the PAB, issued an Order directing MMC to "cease and desist
from discharging mine tailings into Calancan Bay." The order reads:
The Temporary Permit to Operate issued to Marcopper Mining Corporation expired on
February 10, 1987.
Section 96 of the National Pollution Control Commission (NPCC) Rules and
Regulations, which were adopted by the Board, provides that in no case can a permit
be valid for more than one (1) year.
Records show that Marcopper Mining Corporation has not filed any application for
renewal of the permit.
Marcopper Mining Corporation is hereby ordered to cease and desist from discharging
mine tailings into Calancan Bay immediately upon receipt of this Order.
SO ORDERED."9
Immediately thereafter, the DENR Undersecretary for Environment and Research
issued a telegraphic order dated April 15, 1988, enjoining immediate compliance by
MMC of the cease and desist order of April 11, 1988.
MMC appealed the above orders of April 11, 1988 and April 15, 1988 to the Office of
the President, docketed as O.P. Case No. 3802. In an Order dated May 2, 1988, the
Office of the President denied MMC’s requests for issuance of restraining orders
against the orders of the PAB. Consequently, MMC filed an "Urgent Ex-Parte Partial
Motion for Reconsideration" dated May 6, 1988, seeking the reconsideration of the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
above Order. In an Order dated May 13, 1988, the Office of the President granted the
above partial motion for reconsideration, thus:
"WHEREFORE, the instant "Urgent Ex-Parte Motion for Reconsideration" is hereby
GRANTED, and the Order of this Office, dated May 2, 1988, is hereby set aside
insofar as it denies respondent-appellant’s requests for issuance of restraining orders.
Accordingly, the Pollution Adjudication Board, its agents, deputies or representatives
are hereby enjoined from enforcing its cease and desist order of April 15, 1988
pending resolution by this Office of respondent-appellant’s appeal from said orders.
It is further directed that the status quo obtaining prior to the issuance of said cease
and desist order be maintained until further orders from this Office.
It is understood, however, that during the efficacy of this restraining order,
respondent-appellant shall immediately undertake, at a cost of not less than
P30,000.00 a day, the building of artificial reefs and planting of sea grass, mangroves
and vegetation on the causeway of Calancan Bay under the supervision of the
Pollution Adjudication Board and subject to such guidelines as the Board may impose.
SO ORDERED."10
In line with the directive from the Office of the President, the Calancan Bay
Rehabilitation Project (CBRP) was created, and MMC remitted the amount of
P30,000.00 a day, starting from May 13, 1988 to the Ecology Trust Fund (ETF)
thereof. However, on June 30, 1991, MMC stopped discharging its tailings in the Bay,
hence, it likewise ceased from making further deposits to the ETF.
From the issuance of the Order on May 13, 1988 until the cessation of the tailings
disposal on June 30, 1991, MMC made its contribution to the ETF in the total amount
of Thirty-Two Million Nine Hundred and Seventy-Five Thousand Pesos
(P32,975,000.00). Thereafter, MMC filed a Motion dated July 9, 1991 manifesting that
it would discontinue its contributions/deposits to the ETF since it had stopped
dumping tailings in the Bay. MMC prayed that the Order issued by the Office of the
President on May 13, 1988 be lifted.
On February 5, 1993, the Office of the President rendered a decision in O.P. Case No.
3802 dismissing the appeal; affirming the cease and desist Order issued by the PAB;
and lifting the TRO dated May 13, 1988. The Office of the President resolved the
appeal in this wise:
"This brings to the fore the primordial issue of whether or not the Secretary of
Environment and Natural Resources gravely erred in declaring the TPO No. POW-86-
454-EJ issued to respondent-appellant MMC expired on February 10, 1987, and in
ordering the latter to cease and desist from discharging mine tailings into Calancan
Bay.
Session 5 P a g e | 109
Respondent-appellant argues that the cease and desist orders were issued by the
PAB ex-parte, in violation of its procedural and substantive rights provided for under
Section 7 (a) of P.D. No. 984 requiring a public hearing before any order or decision
for the discontinuance of discharge of a sewage or industrial wastes into the water,
air or land could be issued by the PAB.
We are not persuaded.
Section 7(a) of P.D. No. 984, reads in part:
"Sec. 7(a) Public Hearing. – Public hearing shall be conducted by the Commissioner,
Deputy Commissioner or any senior official duly designated by the Commissioner
prior to issuance or promulgation of any order or decision by the Commissioner
requiring the discontinuance of discharge of sewage, industrial wastes and other
wastes into the water, air or land resources of the Philippines as provided in the
Decree: provided, that whenever the Commission finds a prima facie evidence that
the discharged sewage or wastes are of immediate threat to life, public health, safety
or welfare, or to animal or plant life, or exceeds the allowable standards set by the
Commission, the Commissioner may issue an ex-parte order directing the
discontinuance of the same or the temporary suspension or cessation of operation of
the establishment or person generating such sewage or wastes without the necessity
of a prior public hearing. x x x . (underscoring supplied).
Clearly then, it is self-indulgent nonsense to assume that the DENR Secretary, acting
as PAB Chairman, is absolutely without authority to issue an ex-parte order requiring
the discontinuance of discharge of sewage or other industrial wastes without public
hearing. As can be gleaned from the afroequoted proviso, this authority to issue
an ex-parte order suspending the discharge of industrial wastes is postulated upon
his finding of prima-facie evidence of an imminent "threat to life, public health, safety
or welfare, to animal or plant life or exceeds the allowable standards set by the
Commission."11
In a letter dated January 22, 1997 12 , Municipal Mayor Wilfredo A. Red of Sta. Cruz,
Marinduque informed the PAB that MMC stopped remitting the amount of 30,000.00
per day as of July 1, 1991 to the ETF of the CBRP. This letter-complaint of Mayor Red
was docketed as DENR-PAB Case No. 04-00597-96, for violation of P.D. 984 13 and its
implementing Rules and Regulations.
In an order dated April 23, 1997, the PAB ruled that the obligation of MMC to deposit
P30,000.00 per day to the ETF of the CBRP subsists, as provided for in the Order of
the Office of the President dated May 13, 1988, during the "efficacy of said order
restraining the PAB from enforcing its cease and desist order against MMC". Since the
Order was lifted only on February 5, 1993, the obligation of MMC to remit was
likewise extinguished only on said date and not earlier as contended by MMC from
the time it ceased dumping tailings into the Bay on July 1, 1991. We quote in part:
 ENVIRONMENTAL LAW & NATURAL RESOURCES
"The issue before this Board is whether Marcopper Mining Corporation is still obliged
to remit the amount of P30,000.00 to the CBRP. The answer by the Order from the
Office of the President dated 13 May 1988, which states that the obligation on the
part of Marcopper Mining to pay the amount of P30,000.00 per day for the
rehabilitation of Calancan Bay is binding only during the efficacy of the said Order.
The record further shows that on 05 February 1993, the Office of the President lifted
its Order dated 13 May 1988. This means that as of the date of the lifting, Marcopper
Mining Corporation no longer had any obligation to remit the amount of P30,000.00
to the CBRP. Thus, Marcopper’s obligation only runs from 13 May 1988 to 05
February 1993. Beyond the cut-off date of 05 February 1993, Marcopper is no longer
obligated to remit the amount of P30,000.00 per day to the CBRP.
It does not matter whether Marcopper was no longer dumping its tail minings into
the sea even before the cut-off date of 05 February 1993. The obligation of
Marcopper to pay the amount of P30,000.00 to the CBRP arises from the Office of the
President Order dated 13 May 1988, not from it dumping of mine tailings.
WHEREFORE, Marcopper Mining Corporation is hereby ordered to pay the CBRP the
amount of P30,000.00 per day, computed from the date Marcopper Mining
Corporation stopped paying on 01 July 1991, up to the formal lifting of the subject
Order from the Office of the President on 05 February 1993.
SO ORDERED."14
MMC assailed the aforequoted Order dated April 23, 1997 of the PAB as null and void
for having been issued without jurisdiction or with grave abuse of discretion in a
petition for Certiorari and Prohibition (with prayer for temporary restraining order and
preliminary injunction) before the Court of Appeals which was docketed as CA-G.R.
No. SP-44656. In a Resolution dated July 15, 1997, the Court of Appeals required the
PAB and its members to comment on said petition.
On November 19, 1997, the Office of the Solicitor General, on behalf of the PAB and
its members, filed with the Court of Appeals the required comment.
On September 15, 1997, for purposes of determining whether or not to grant MMC’s
prayer for a temporary restraining order and preliminary injunction, the Court of
Appeals conducted a hearing where counsel for the parties were heard on oral
arguments.
In a Resolution dated September 19, 1997, the Court of Appeals issued a writ of
preliminary injunction, conditioned upon the filing of a bond by MMC in the amount of
P500,000.00 enjoining the PAB and its members to cease and desist from enforcing
the assailed Order dated April 23, 1997, until it had made a full determination on the
merits of the case.
On January 7, 1998, the Court of Appeals promulgated a Decision in CA-G.R. SP No.
44656, the dispositive portion of which reads:
Session 5 P a g e | 110
"In view of the foregoing, the instant petition is hereby GRANTED and, accordingly,
the questioned Order of respondent Pollution Adjudication Board dated 23 April 1997
is hereby SET ASIDE. Respondents are ordered to REFRAIN and DESIST from
enforcing aforesaid Order. The injunctive bond filed by the petitioner in the amount
of Five Hundred Thousand (P500,000.00) is hereby RELEASED."
The motion for reconsideration of the above decision was denied in a Resolution
dated January 13, 1999 of the Court of Appeals.
Hence, the instant petition on the following grounds:
I
The Court of Appeals erred in ruling that Republic Act No. 7942 (otherwise known as
the Philippine Mining Act of 1995) repealed the provisions of Republic Act No. 3931,
as amended by Presidential Decree No. 984, (otherwise known as the National
Pollution Control Decree of 1976), with respect to the power and function of
petitioner Pollution Adjudication Board to issue, renew or deny permits for the
discharge of the mine tailings.
II
Respondent Marcopper Mining Corporation bound itself to pay the amount of
P30,000.00 a day for the duration of the period starting May 13, 1988 up to February
5, 1993.
III
Respondent Marcopper Mining Corporation was not deprived of due process of law
when petitioner Pollution Adjudication Board directed it to comply with its long-
existing P30,000.00 per day obligation under the Order of the Office of the President
dated May 13, 1988.15
In setting aside the Order of the PAB dated April 23, 1997, requiring MMC to pay its
arrears in deposits, the Court of Appeals ruled that the PAB exceeded its power and
authority in issuing the subject Order for the following reasons:
"The applicable and governing law in this petition is Republic Act No. 7942 otherwise
known as the Philippine Mining Act of 1995 ("Mining Act", approved on March 3,
1995).
Chapter XI of the Mining Act contains a series of provisions relating to safety and
environmental protection on mining and quarrying operations. More
specifically, Section 67 of the Mining Act  in essence, grants the mines regional
director the power to issue orders or to take appropriate measures to remedy any
practice connected with mining or quarrying operations which is not in accordance
with safety and anti-pollution laws and regulations.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
From a reading of that provision, it would appear therefore that prior to the passage
of the Mining Act, the Pollution Adjudication Board had jurisdiction to act on pollution-
related matters in the mining business. With the effectivity of the Mining Act and in
congruence with its Sec. 115 (i.e., Repealing and Amending Clause), the power to
impose measures against violations of environmental policies by mining operators is
now vested on the mines regional director. Be that as it may, we are constrained to
enunciate that the PAB had no authority to issue the challenged Order dated 23 April
1997. More so, respondent PAB as petitioner argued and We note, had remained
perplexingly silent on the matter for almost six (6) years from July 1991 when MMC
ceased to make its deposits up to April 1997 when respondent PAB precipitately
issued the Order requiring MMC to pay its arrears in deposits to the ETF. And PAB,
apparently oblivious to MMC’s economic quandary had issued said Order ex-
parte without hearing or notice.
xxx
As a general rule, the adjudication of pollution cases pertains to the Pollution
Adjudication Board (PAB), except in cases where the special law, expressly or
impliedly, provides for another forum, as in the instant petition.
Thus under Republic Act No. 7942 and its implementing rules and regulations, the
mines regional director, in consultation with the Environmental Management
Bureau (italics ours), is specifically mandated to carry out and make effective the
declared national policy that the State shall promote the rational exploration,
development, utilization and conservation of all mineral resources in public and
private lands within the territory and exclusive economic zone of the Republic of the
Philippines, through the combined efforts of government and the private sector in
order to enhance national growth and protect the rights of affected communities.
(Sec. 2, R.A. 7942).
Under this expansive authority, the Mines Regional Director, by virtue of this special
law, has the primary responsibility to protect the communities surrounding a mining
site from the deleterious effects of pollutants emanating from the dumping of tailing
wastes from the surrounding areas. Thus, in the exercise of its express powers under
this special law, the authority of the Mines Regional Director to impose appropriate
protective and/or preventive measures with respect to pollution cases within mining
operations is perforce, implied. Otherwise, the special law granting this authority may
well be relegated to a mere paper tiger – talking protection but allowing pollution.
It bears mention that the Pollution Adjudication Board has the power to issue an ex-
parte order when there is prima facie evidence of an establishment exceeding the
allowable standards set by the anti-pollution laws of the country. ( Pollution
Adjudication Board v. Court of Appeals, et al., 195 SCRA 112). However, with the
passage of R.A. 7942, insofar as the regulation, monitoring and enforcement of anti-
pollution laws are concerned with respect to mining establishments, the Mines
Regional Director has a broad grant of power and authority. Clearly, pollution-related
Session 5 P a g e | 111
issues in mining operations are addressed to the Mines Regional Director, not the
Pollution Adjudication Board.
This being the case, the questioned Order dated 23 April 1997 requiring MMC to pay
its arrears in deposits was beyond the power and authority of the Pollution
Adjudication Board to issue and as such, petitioner may seek appropriate injunctive
relief from the court. Thus, certiorari lies against public respondent PAB." 16
The Court of Appeals likewise ruled that the obligation of MMC to contribute to the
ETF of the CBRP ceased inasmuch as the latter discontinued dumping tailings into the
Bay and the actual funds in the ETF are sufficient to rehabilitate the Bay. It
ratiocinated thus:
"In the instant case, it is of record that petitioner MMC undertakes its obligation to
provide for the rehabilitation of the Bay waters. This obligation, through its monetary
contribution to the ETF, is however anchored on its continuing disposal of the mines
tailings waste into the Bay. Hence, since it ceased its mining operations in the
affected area as of July 1991 and had not been discharging any tailings wastes since
then, its consequent duty to rehabilitate the polluted waters, if any, no longer exists.
xxx
Be that as it may, this Court observes that out of the approximate sum of thirty-two
(32) million pesos contributed by the petitioner to the ETF there is admittedly an
existing estimated balance of fourteen (14) million pesos in the Fund. For its part,
petitioner does not renege on its obligation to rehabilitate and in fact undertakes to
continue the rehabilitation process until its completion within two (2) years time and
which would only cost six (6) million pesos. Thus, as petitioner convincingly argued
and which respondent unsatisfactorily rebuked, the existing fourteen (14) million
pesos in the ETF is more than enough to complete the rehabilitation project. (TSN,
Hearing dated 15 September 1997, at pp. 56 to 62, Rollo).
xxx. Without much ado, the Court concurs with the finding that to demand a daily
deposit of thirty thousand (P30, 000.00) pesos even if the root of the obligation, that
is, the dumping of tailings waste, had ceased to exist, is indubitably of a herculean
and onerous burden on the part of petitioner amounting to a deprivation of its
property and a denial of its right to due process." 17
Unsatisfied, the OSG argues that the Philippine Mining Act of 1995 did not amend or
repeal the provisions of Republic Act No. 3931, as amended by Presidential Decree
No. 984 (otherwise known as the National Pollution Control Decree of 1976); that the
Mines Regional Director has no power over areas outside mining installations and
over areas which are not part of the mining or quarrying operations such as Calancan
Bay; that the powers of the Mines Regional Director cannot be exercised to the
exclusion of other government agencies; that the jurisdiction of a Mines Regional
Director with respect to anti-pollution laws is limited to practices committed within
the confines of a mining or quarrying installation; that the dumping of mine tailings
 ENVIRONMENTAL LAW & NATURAL RESOURCES
into Calancan Bay occurred long before the effectivity of the Philippine Mining Act and
that MMC cannot hide under cover of this new law. The OSG further argues that the
portion of the Order of May 13, 1988, setting the period of time within which MMC
shall pay P30,000.00 per day, which is during the efficacy of the restraining order
was never questioned or appealed by MMC. Finally, the OSG argues that PAB did not
violate MMC’s right to due process by the issuance of the Order dated April 23, 1988
without notice and hearing as it was simply requiring MMC to comply with an
obligation in an Order which has long become final and executory.
In the context of the established facts, the issue that actually emerges is: Has the
PAB under RA 3931 as amended by PD 984 (National Pollution Control Decree of
1976) been divested of its authority to try and hear pollution cases connected with
mining operations by virtue of the subsequent enactment of RA 7942 (Philippine
Mining Act of 1995)? As mentioned earlier, the PAB took cognizance and ruled on the
letter-complaint (for violation of PD 984 and its implementing rules and regulations)
filed against MMC by Marinduque Mayor Wilfredo Red. In the subject Order dated
April 23, 1997, the PAB ruled that MMC should pay its arrears in deposits to the ETF
of the CBRP computed from the day it stopped dumping and paying on July 1, 1991
up to the lifting of the Order of the Office of the President dated May 13, 1988 on
February 5, 1993.
The answer is in the negative. We agree with the Solicitor General that the Court of
Appeals committed reversible error in ruling that the PAB had no authority to issue
the Order dated April 23, 1997.
Republic Act No. 3931 (An Act Creating The National Water And Air Pollution Control
Commission) was passed in June 18, 1964 to maintain reasonable standards of purity
for the waters and air of the country with their utilization for domestic, agricultural,
industrial and other legitimate purposes. Said law was revised in 1976 by Presidential
Decree No. 984 (Providing For The Revision Of Republic Act No. 3931, Commonly
Known As The Pollution Control Law, And For Other Purposes) to strengthen the
National Pollution Control Commission to best protect the people from the growing
menace of environmental pollution. Subsequently, Executive Order No. 192, s. 1987
(The Reorganization Act of the DENR) was passed. The internal structure,
organization and description of the functions of the new DENR, particularly the Mines
and Geosciences Bureau, reveals no provision pertaining to the resolution of cases
involving violations of the pollution laws. 18 The Mines and Geo-Sciences Bureau was
created under the said EO 192 to absorb the functions of the abolished Bureau of
Mines and Geo-Sciences, Mineral Reservations Development Board and the Gold
Mining Industry Development Board to, among others, recommend policies,
regulations and programs pertaining to mineral resources development; assist in the
monitoring and evaluation of the Bureau’s programs and projects; and to develop and
promulgate standards and operating procedures on mineral resources development.19
On the other hand, the PAB was created and granted under the same EO 192 broad
powers to adjudicate pollution cases in general. Thus,
Session 5 P a g e | 112
SEC. 19. Pollution Adjudication Board . – There is hereby created a Pollution
Adjudication Board under the Office of the Secretary. The Board shall be composed of
the Secretary as Chairman, two (2) Undersecretaries as may be designated by the
Secretary, the Director of Environmental management, and three (3) others to be
designated by the Secretary as members. The Board shall assume the powers and
functions of the Commission/Commissioners of the National Pollution Control
Commission with respect to the adjudication of pollution cases under Republic Act
3931 and Presidential Decree 984, particularly with respect to Section 6 letters e, f, g,
j, k, and p of P.D. 984. The Environmental Management Bureau shall serve as the
Secretariat of the Board. These powers and functions may be delegated to the
regional offices of the Department in accordance with rules and regulations to be
promulgated by the Board.20
Section 6 letters e, f, g, j, k, and p of PD 984 referred to above are quoted as follows:
SEC. 6. Powers and Functions. The Commission shall have the following powers and
functions:
(e) Issue orders or decision to compel compliance with the provisions of this
Decree and its implementing rules and regulations only after proper notice
and hearing.
(f) Make, alter or modify orders requiring the discontinuance of pollution
specifying the conditions and the time within which such discontinuance
must be accomplished.
(g) Issue, renew, or deny permits, under such conditions as it may
determine to be reasonable, for the prevention and abatement of pollution,
for the discharge of sewage, industrial waste, or for the installation or
operation of sewage works and industrial disposal system or parts thereof:
Provided, however, That the Commission, by rules and regulations, may
require subdivisions, condominium, hospitals, public buildings and other
similar human settlements to put up appropriate central sewerage system
and sewage treatment works, except that no permits shall be required to
any sewage works or changes to or extensions of existing works that
discharge only domestic or sanitary wastes from a singles residential
building provided with septic tanks or their equivalent. The Commission may
impose reasonable fees and charges for the issuance or renewal of all
permits required herein.
(h)
(i)
(j) Serve as arbitrator for the determination of reparations, or restitution of
the damages and losses resulting from pollution.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
(k) Deputize in writing or request assistance of appropriate government
agencies or instrumentalities for the purpose of enforcing this Decree and its
implementing rules and regulations and the orders and decisions of the
Commission.
(l)
(m)
(n)
(o)
(p) Exercise such powers and perform such other functions as may be
necessary to carry out its duties and responsibilities under this Decree.
Section 7(a) of P.D. No. 984 further provides in part:
"Sec. 7(a) Public Hearing. – Public hearing shall be conducted by the Commissioner,
Deputy Commissioner or any senior official duly designated by the Commissioner
prior to issuance or promulgation of any order or decision by the Commissioner
requiring the discontinuance of discharge of sewage, industrial wastes and other
wastes into the water, air or land resources of the Philippines as provided in the
Decree: provided, that whenever the Commission finds a prima facie evidence that
the discharged sewage or wastes are of immediate threat to life, public health, safety
or Welfare, or to animal or plant life, or exceeds the allowable standards set by the
Commission, the Commissioner may issue and ex-parte order directing the
discontinuance of the same or the temporary suspension or cessation of operation of
the establishment or person generating such sewage or wastes without the necessity
of a prior public hearing. x x x . (underscoring supplied).
The ruling of the Court of Appeals that the PAB has been divested of authority to act
on pollution-related matters in mining operations is anchored on the following
provisions of RA 7942 (Philippine Mining Act of 1995):
SEC. 67. Power to Issue Orders. – The mines regional director shall, in consultation
with the Environmental Management Bureau, forthwith or within such time as
specified in his order, require the contractor to remedy any practice connected with
mining or quarrying operations, which is not in accordance with safety and anti-
pollution laws and regulations. In case of imminent danger to life or property, the
mines regional director may summarily suspend the mining or quarrying operations
until the danger is removed, or appropriate measures are taken by the contractor or
permittee.
And
Session 5 P a g e | 113
SEC. 115. Repealing and Amending Clause. – All laws, executive orders, presidential
decrees, rules and regulations, or parts thereof which are inconsistent with any of the
provisions of this Act are hereby repealed or amended accordingly.
The other provisions in Chapter XI on Safety and Environmental Protection found in
RA 7942 promote the safe and sanitary upkeep of mining areas to achieve waste-free
and efficient mine development with particular concern for the physical and social
rehabilitation of areas and communities affected by mining activities 21 , without
however, arrogating unto the mines regional director any adjudicative responsibility.
From a careful reading of the foregoing provisions of law, we hold that the provisions
of RA 7942 do not necessarily repeal RA 3931, as amended by PD 984 and EO 192.
RA 7942 does not contain any provision which categorically and expressly repeals the
provisions of the Pollution Control Law. Neither could there be an implied repeal. It is
well-settled that repeals of laws by implication are not favored and that courts must
generally assume their congruent application. Thus, it has been held:
"The two laws must be absolutely incompatible, and a clear finding thereof must
surface, before the inference of implied repeal may be drawn. The rule is expressed
in the maxim, interpretare et concordare leqibus est optimus interpretendi , i.e., every
statute must be so interpreted and brought into accord with other laws aas to form a
uniform system of jurisprudence. The fundament is that the legislature should be
presumed to have known the existing laws on the subject and not have enacted
conflicting statutes. Hence, all doubts must be resolved against any implied repeal,
and all efforts should be exerted in order to harmonize and give effect to all laws on
the subject."22
There is no irreconcilable conflict between the two laws. Section 19 of EO 192 vested
the PAB with the specific power to adjudicate pollution cases in general. Sec. 2, par.
(a) of PD 984 defines the term "pollution" as referring to any alteration of the
physical, chemical and biological properties of any water, air and/or land resources of
the Philippines , or any discharge thereto of any liquid, gaseous or solid wastes as will
or is likely to create or to render such water, air and land resources harmful,
detrimental or injurious to public health, safety or welfare or which will adversely
affect their utilization for domestic, commercial, industrial, agricultural, recreational or
other legitimate purposes.
On the other hand, the authority of the mines regional director is complementary to
that of the PAB. Section 66 of RA 7942 gives the mines regional director exclusive
jurisdiction over the safety inspection of all installations, surface or underground in
mining operations. Section 67 thereof vests upon the regional director power to issue
orders requiring a contractor to remedy any practice connected with mining or
quarrying operations which is not in accordance with safety and anti-pollution laws
and regulations; and to summarily suspend mining or quarrying operations in case of
imminent danger to life or property. The law likewise requires every contractor to
undertake an environmental protection and enhancement program which shall be
incorporated in the work program which the contractor shall submit as an
 ENVIRONMENTAL LAW & NATURAL RESOURCES
accompanying document to the application for a mineral agreement or permit. In
addition, an environmental clearance certificate is required based on an environment
impact assessment. The law also requires contractors and permittees to rehabilitate
the mined-out areas, and set up a mine rehabilitation fund. Significantly, the law
allows and encourages people’s organizations and non-governmental organizations to
participate in ensuring that contractors/permittees shall observe all the requirements
of environmental protection.
From the foregoing, it readily appears that the power of the mines regional director
does not foreclose PAB’s authority to determine and act on complaints filed before it.
The power granted to the mines regional director to issue orders requiring the
contractor to remedy any practice connected with mining or quarrying operations or
to summarily suspend the same in cases of violation of pollution laws is for purposes
of effectively regulating and monitoring activities within mining operations and
installations pursuant to the environmental protection and enhancement program
undertaken by contractors and permittees in procuring their mining permit. While the
mines regional director has express administrative and regulatory powers over mining
operations and installations, it has no adjudicative powers over complaints for
violation of pollution control statutes and regulations.
True, in Laguna Lake Development Authority vs.  Court of Appeals,23 this Court held
that adjudication of pollution cases generally pertains to the Pollution Adjudication
Board (PAB) except where the special law provides for another forum. However,
contrary to the ruling of the Court of Appeals, RA 7942 does not provide for another
forum inasmuch as RA 7942 does not vest quasi-judicial powers in the Mines Regional
Director. The authority is vested and remains with the PAB.
Neither was such authority conferred upon the Panel of Arbitrators and the Mines
Adjudication Board which were created by the said law. The provisions creating the
Panel of Arbitrators for the settlement of conflicts refers to disputes involving rights
to mining areas, mineral agreements or permits and those involving surface owners,
occupants and claim-holders/concessionaires.24 The scope of authority of the Panel of
Arbitrators and the Mines Adjudication Board conferred by RA 7942 clearly exclude
adjudicative responsibility over pollution cases. Nowhere is there vested any authority
to adjudicate cases involving violations of pollution laws and regulations in general.
Thus, there is no genuine conflict between RA 7942 and RA 3931 as amended by PD
984 that precludes their co-existence. Moreover, it has to be conceded that there was
no intent on the part of the legislature to repeal the said law. There is nothing in the
sponsorship speech25 of the law’s proponent, Representative Renato Yap, and the
deliberations that followed thereafter, to indicate a legislative intent to repeal the
pollution law. Instead, it appears that the legislature intended to maximize the
exploration, development and utilization of the country’s mineral resources to
contribute to the achievement of national economic and social development with due
regard to the social and environmental cost implications relative thereto. The law
intends to increase the productivity of the country’s mineral resources while at the
same time assuring its sustainability through judicious use and systematic
Session 5 P a g e | 114
rehabilitation. Henceforth, the Department of Environment and Natural Resources as
the primary government agency responsible for the conservation, management,
development, and proper use of the State’s mineral resources, through its Secretary,
has the authority to enter into mineral agreements on behalf of the Government upon
the recommendation of the Director, and to promulgate such rules and regulations as
may be necessary to carry out the provisions of RA 7942. 26 The PAB and the Mines
Regional Director, with their complementary functions and through their combined
efforts, serve to accomplish the mandate of RA 3931 (National Pollution Control
Decree of 1976) as amended by PD 984 and EO 192 and that of RA 7942 (Philippine
Mining Act of 1995).
That matter settled, we now go to the issue of whether the appellate court erred in
ruling that there is no basis for further payments by MMC to the Ecology Trust Fund
of the Calancan Bay Rehabilitation Project considering that MMC "convincingly argued
and which respondent unsatisfactorily rebuked, the existing fourteen (14) million
pesos in the ETF is more than enough to complete the rehabilitation project." Indeed,
the records reveal that witness for PAB, Mr. Edel Genato, who is the Technical
Resource person of the PAB for the project admitted that the funds in the ETF
amounting to about Fourteen Million Pesos are more than sufficient to cover the costs
of rehabilitation. Hereunder are excerpts from the transcript of stenographic notes
taken during the hearing held on September 15, 1997:
ATTY. HERNANDEZ:27
I would like your Honor, if the court will allow, our witness from the EBRB Your Honor
would attest to that . . .
JUSTICE JACINTO: Is it not being taken from the 14 million?
ATTY. HERNANDEZ: Yes, Your Honor.
JUSTICE RASUL: What is his role?
ATTY. HERNANDEZ: He is our Technical Resource person Your Honor, of the project.
JUSTICE RASUL: In other words, he has participated in the . . (inaudible)?
ATTY. HERNANDEZ: Yes, Your Honor.
JUSTICE RASUL: Do you agree with him?
MR. EDEL GENATO: Yes, Your Honor, that the Calancan rehabilitation program is
being funded by Marcopper through the Ecology Trust Fund.
JUSTICE RASUL: Will the construction be finished in two years time?
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 115

MR. EDEL GENATO: Presently, under the Steering Committee of the Calancan Bay
Rehabilitation, there is another phase that is being proposed. Actually the two years
time will definitely cover the other phase of the . . (inaudible)
JUSTICE RASUL:
Never mind that. Will the amount be sufficient to the end of the construction?
MR. EDEL GENATO: Yes, Sir.
JUSTICE RASUL: Enough?
MR. EDEL GENATO: Yes, Sir.
ruled on the manifestation dated July 9, 1991 filed by MMC that it would stop paying
since it already ceased dumping mine tailings into the bay. Still further, the order of
the OP directing MMC to rehabilitate at a cost of P30,000.00 a day "during the
efficacy of the restraining order" had become functus officio  since MMC voluntarily
stopped dumping mine tailings into the bay.
To sum up, PAB has jurisdiction to act and rule on the letter-complaint of Mayor
Wilfredo Red of Marinduque for violation of PD 984 and its implementing rules and
regulations which jurisdiction was not lost upon the passage of RA 7942 (the
Philippine Mining Act of 1995). Nevertheless, MMC must be declared not to have
arrears in deposits as admittedly, the ETF already has more than sufficient funds to
undertake the rehabilitation of Calancan Bay.

JUSTICE RASUL: There is no more need for collecting the 30 thousand a day? . . . Do WHEREFORE, the petition is hereby partially GRANTED. The assailed Decision is
not . . . I will hold you for contempt . . . REVERSED insofar as the jurisdiction of the PAB to act on the complaint is concerned;
but AFFIRMED insofar as Marcopper Mining Corporation has no arrears in deposits
ATTY. HERNANDEZ: I’m sorry Your Honor. with the Ecology Trust Fund of the Calancan Bay Rehabilitation Project.

JUSTICE RASUL: Again. SO ORDERED.

MR. EDEL GENATO: Well Your Honor, I cannot comment on the amount Your Honor. Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

JUSTICE RASUL: You have already made your comment, but you received some Petition granted, judgment reversed partly and affirmed partly.
signal from your lawyer.
Notes.—It is difficult for a man, scavenging on the garbage dump or fishing in the
ATTY. HERNANDEZ: Your Honor . . . murky waters of the Pasig River and the Laguna Lake or making a clearing in the
forest, to understand why protecting birds, fish, and trees is more important than
MR. EDEL GENATO: No, no Your Honor. . .
protecting him and keeping his family alive. (Laguna Lake Development Authority vs.
Court of Appeals, 251 SCRA 42 [1995])
JUSTICE RASUL: My question is, do you agree with him that the 14 million fund will
be enough to sustain the construction up to the end?
Conservation and protection of forest resources is not really a new policy but a mere
MR. EDEL GENATO: Two years? reiteration of a constitutional policy which commands the State “to protect and
promote the right of the people to a balanced and healthful ecology in accord with
JUSTICE RASUL: Yes. the rhythm and harmony of nature.” (C & M Timber Corporation [CMTC] vs. Alcala,
273 SCRA 402 [1997])
MR. EDEL GENATO: Your Honor. . .
——o0o——
JUSTICE AMIN: Categorical answer.

JUSTICE RASUL: You just answer, is it enough, in your own honest way, on your
honor?

MR. EDEL GENATO: I think so Your Honor.28

We must sustain the appellate court on this point on account of the testimony of Mr.
Edel Genato. Further, we note that the Office of the President never objected nor
 ENVIRONMENTAL LAW & NATURAL RESOURCES
G.R. No. 43277. April 26, 1990.*
STANDARD MINERAL PRODUCTS, INC., petitioner, vs. THE HON. COURT OF
APPEALS, RUFINO DEEUNHONG, PAZ SUMULONG-TANJUATCO AND
EMIGDIO G. TANJUATCO, respondents, REPUBLIC OF THE PHILIPPINES,
intervenor.
Public Lands; Mining Act; Purpose of.— The purpose of the law is obvious, which is, to
prevent trespass on private property. The importance of the written permission of the
owner of private land is also apparent from the forms prescribed by the Bureau of
Mines for the declaration of location of a mining claim which require the locator to
state that the landowner has granted written permission for the prospecting and
location of the mining claim if the latter is located on private property.
Same; Same; Courts; Finding of fact that SMPI knew that the land in question is the
property of the landowners.—SMPI would have us believe that it did not have
knowledge of the private ownership of the land. Both the Trial Court and the
Appellate Court, however, found as a fact that SMPI knew that the land in question is
the property of the Landowners. That is a finding of fact, which we not only find
supported by substantial evidence but also conclusive upon us, the well-known
exceptions to the rule not obtaining in the case at bar.
Same; Same; Same; Jurisdiction; Estoppel; SMPI is estopped from impugning
jurisdiction of the trial court; Reason.— Of significance, too, is the fact that SMPI filed
its action with the Trial Court, actively participated in the hearings therein, but, it was
only after a judgment adverse to it was rendered that it raised the issue of
jurisdiction. It is now estopped, therefore, from impugning said jurisdiction (Tijam vs.
Sibonghanoy, G.R. No. L-21450, 15 April 1968, 23 SCRA 29; Royales vs. Intermediate
Appellate Court, G.R. No. L-65072, 31 January 1984, 127 SCRA 470; Philippine
National Bank vs. Intermediate Appellate Court, G.R. No. L-62831-32, 31 July 1986,
143 SCRA 299).
PETITION for certiorari to review the decision of the Court of Appeals. Pascual, J.
The facts are stated in the opinion of the Court.
     Bengzon, Zarraga, Narciso, Cudala, Pecson, Azcuna & Bengson for petitioner.
     Tanjuatco, Oreta, Tanjuatco, Berenguer & Sanvicente for private respondents.
MELENCIO-HERRERA, J.:
A Petition for Review on Certiorari of the Decision of Respondent Appellate Court in
CA-G.R. No. 44220-R, affirming the judgment of the former Court of First Instance of
Rizal denying surface rights for mining purposes to Petitioner.
Session 5 P a g e | 116
Petitioner-Appellant Standard Mineral Products, Inc. (SMPI, for short) claims that it is
the locator of placer mining claims "Celia IV" and "Celia VI" containing limestone in
Kaysipot, Antipolo, Rizal, which were duly registered in the Office of the Mining
Recorder of Rizal on 13 April 1959 (Exhibits "S" and "T") and 3 July 1959 (Exhibits "S-
3" and "T-3",). The aforementioned mining claims cover about fifteen (15) hectares
of the one hundred-twenty (120) hectares of land registered in the name of
Respondent-Appellee, Rufino Deeunhong, under TCT-NO. 92665 of the Register of
Deeds of Rizal. Although title is in the name of Deeunhong alone, it is a fact that he
and his co-Respondents, Paz Sumulong-Tanjuatco and her husband (the Tanjuatcos,
for short), are the co-owners in undivided equal shares of the said one hundred-
twenty (120) hectare property, as shown by an "Acknowledgment of Trust" executed
by Deeunhong (Exhibits "5" and "6"). Collectively, they shall hereinafter be referred
to as the Landowners.
After locating the claims, SMPI applied for a mining lease from the Bureau of Mines
on 8 May 1959. The Landowners opposed the application on the ground that SMPI
had entered their land and filed its mining lease application without their permission.
The Bureau of Mines held SMPI's application in abeyance pending submission of the
permission of the surface owners. No agreement having been reached by the parties,
on 20 December 1965, SMPI brought an action in the Court of First Instance of Rizal
against Respondents-Appellees praying that it be granted surface rights for mining
purposes over fifteen (15) hectares of the Landowner's property and a right-of-way
over a portion of five (5) hectares leading to and covered by the said mining claims.
The Landowners traversed the Complaint, by averring that SMPI is not entitled to the
relief demanded because the prospecting was accomplished without previously
securing the Landowner's written permission as surface owners as required by
Section 27 of the Mining Act (Commonwealth Act No. 137, as amended).
On 29 October 1968, the Trial Court, finding that the mineral claims were not located
in accordance with law dismissed the complaint and, on the counterclaim, sentenced
SMPI to pay to Deeunhong and the Tanjuatcos actual damages in the sum of
P50,000.00 each, attorney's fees of P5,000.00 and costs. The Appellate
Court 1 affirmed that Decision with the sole modification that temperate or moderate
damages (not actual damages) of P25,000.00 each were awarded instead.
In another Resolution dated 18 June 1976 2 the Appellate Court likewise denied, for
being devoid of legal interest, the Petition for Intervention filed on 23 March 1976 by
the Republic of the Philippines through the Solicitor General, claiming that it had filed
Civil Case No. 11410 with the then Court of First Instance of Rizal for the reversion to
the State of the same property subject of this case.
After SMPI elevated the case to this Court for review on Certiorari, the Republic
reiterated its Petition for Intervention, which we granted in the Resolution of 24
November 1976 (p. 215, Rollo).
 ENVIRONMENTAL LAW & NATURAL RESOURCES
On 3 July 1985, the Solicitor General manifested that the then Court of First Instance
of Rizal decided Civil Case No. 11410 adversely to the Republic, but that said decision
is the subject of an appeal in the then Intermediate Appellate Court.
"Considering that the appealed case was closely interrelated with the case at bar,
such that the final determination of the rights of the parties herein is dependent and
subject to the outcome of this appeal," the Court resolved, on 2 September 1985, to
hold this case in abeyance until the then Appellate Court shall have resolved the
appeal in Civil Case No. 11410, with the directive to the latter Court to decide the
appeal promptly.
On 29 February 1988, the parties were required to inform the Court of the status of
the appealed case and whether or not supervening events had transpired which have
rendered the case moot and academic.
In its Compliance of 29 March 1988, the Solicitor General manifested that he knew of
no such supervening event.
On 23 May 1988, having been informed that the appealed case had not yet been
resolved and since the case was not yet ripe for determination, the case was ordered
archived.
On 8 December 1989, the private respondents manifested that the Appellate Court
had promulgated a decision on 21 September 1989 affirming the dismissal of Civil
Case No. 11410 and declaring that the land in question cannot be reverted to the
State as it is essentially an agricultural and not a mineral land. This decision became
final on 12 October 1989. As the ownership of the land in question has been finally
settled, the controversy between the parties is now ripe for determination.
The focal issue for resolution is whether or not SMPI is entitled to surface rights and
a right of way to a 15-hectare portion of the Landowners' property covered by SMPI's
mining claims for mining purposes. A corollary issue raised is whether or not the Trial
Court and the Appellate Court had jurisdiction over the proceedings before them in
the light of Section 61 of the Mining Act.
We agree with the declaration of both lower Courts that SMPI is not entitled to said
surface rights as it failed to comply with the requisite of prior written permission by
the Landowners before entering the private land in question.
Section 27 of the Mining Act explicitly provides:
Section 27. 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
Session 5 P a g e | 117
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 of the province in which said lands are situated in an action
instituted for the purpose by the prospector, or his principal:  Provided,
however, that the prospector, or his principal upon depositing with the court
the sum considered jointly by him and the Director of the Bureau of Mines
and the court to be just compensation for the damages resulting from such
prospecting, shall be permitted to enter upon, and locate the said land
without such written permission pending final adjudication of the amount of
such compensation; and in such case the prospector, or his principal, shall
have a prior right as against the world, from the date of his application. The
court in its final judgment, besides determining the corresponding
compensation of the damages which may be caused by the prospecting,
shall make a pronouncement as to the value and the reasonable rental for
the occupation and utilization thereof for mining purposes in case the
prospector decides to locate and exploit the minerals found therein.
(Emphasis ours).
The purpose of the law is obvious, which is, to prevent trespass on private property.
The importance of the written permission of the owner of private land is also
apparent from the forms prescribed by the Bureau of Mines for the declaration of
location of a mining claim which require the locator to state that the landowner has
granted written permission for the prospecting and location of the mining claim if the
latter is located on private property.
The subsequent amendments requiring only mere notification to the owner of the
private land (Section 2, P.D. No. 512) are not discussed for being inapplicable during
the period pertinent to this controversy.
SMPI argues, however, that Section 27 is inapplicable as it never entered the land for
the purpose of "prospecting" but already for "locating" a mining claim inasmuch as
the limestone deposits were prominently exposed and spread visibly and recognizably
on the surface of the land such that "there was no need of "entering" the land." In
finding the same to be without merit, suffice it to state that "entering" has to be
precede "prospecting"; "prospecting" necessarily precedes "discovery"; and a valid
"discovery" is essential for the "location" of a mining claim. As expounded by the
Court of Appeals:
Section 26 of the Mining Act provides that prospecting shall be carried on "in
accordance with the provisions of this Act". As appellants prospecting was
done in violation of the law, it was an illegal act and the subsequent location
of the mining claims was also illegal and null and void. For the Mining Act
regards a valid discovery as that which gives the prospector the right to
locate a mining claim (Sections 29 and 30), and the validity of a location
depends upon Compliance with the law.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
It is clear, of course, that the validity of a location depends upon
compliance with the statutes. The law requires that the locator
shall act in good faith, and it will not countenance a trespass as the
basis of a mining right (36 Am. Jur. Sec. 77).
SMPI would have us believe that it did not have knowledge of the private ownership
of the land. Both the Trial Court and the Appellate Court, however, found as a fact
that SMPI knew that the land in question is the property of the Landowners. That is a
finding of fact, which we not only find supported by substantial evidence but also
conclusive upon us, the well-known exceptions to the rule not obtaining in the case at
bar.
SMPI's suggestion that the remedy provided in Section 67 of the Mining Act be
applied to it is also unacceptable. This Section itself provides:
Section 67. Any person authorized to locate a mining claim, having claimed
and located a piece of land for mining purposes who has complied the terms
of this Act,  may file with the Director of the Bureau of Mines an application
under oath for a mining lease thereon, showing such compliance. . . . In the
case of an application to lease a mining claim located on private lands, the
same shall be accompanied by a written authority of the owners of the
land: Provided, however, that in case of refusal of the owner of the land to
grant such written authority, the same shall be granted by the court  as soon
as the applicant deposits the amount fixed as the value of the land and as
compensation for any resulting damage or file a bond to be approved by the
court sufficient to insure the payment of the rental of the land as
determined in accordance with section twenty seven of this Act. Should
there have been no proceeding instituted by the applicant as provided for
under section twenty-seven of this Act, the court shall determine the value
of the land and the compensation for any resulting damage or its reasonable
rental for the purposes above mentioned and grant the written authority
required herein.
It is evident that the foregoing speaks of lease of a mining claim to which SMPI
would neither be entitled for failure to comply with the provisions of the Mining Act
and to accompany its application for lease with a written authority of the
Landowners. In fact, SMPI left the space provided for the same in its application
blank. For the same reasons, authority cannot be granted by the Court, nor can
rental be fixed, compliance with the terms of this Act being an indispensable
prerequisite.
We proceed to SMPI's averment that its constitutional and statutory rights to use and
exploit mineral resources discovered and located by it are being unduly curtailed.
Again, we find this submission untenable. No one can dispute that under the Regalian
doctrine, minerals found in one's land belong to the State and not to a private
landowner (Section 8, Article XIV, 1973 Constitution; Sections 3 and 4, Mining Act).
Nonetheless, a condition sine qua non is that the prospecting, exploration, discovery
Session 5 P a g e | 118
and location must be done in accordance with the law. As it is, SMPI's rights to use
and exploit the mineral resources discovered and located never matured because of
its omission to comply with a condition precedent. To allow SMPI its claim for surface
rights and right of way would be to countenance illegal trespass into private property.
SMPI would also deprive the lower Courts of jurisdiction over the controversy arguing
that exclusive jurisdiction to resolve it rests with the Director of Mines (now the
Bureau of Mines on Geo-Sciences pursuant to P.D. No. 128) invoking Section 61 of
the Mining Act, quoted hereinbelow:
Section 61. Conflicts and disputes arising out of mining locations shall be
submitted to the Director of Mines for decision; Provided, That the decision
or order of the Director of Mines may be appealed to the Secretary of
Agriculture and Natural Resources within thirty days from receipt of such
decision or order. In case any one of the parties should disagree with the
decision or order of the Secretary of Agriculture and Natural Resources, the
matter may be taken to the Court of Appeals or the Supreme Court, as the
case may be, within thirty days from the receipt of such decision or order,
otherwise the said decision or order shall be final and binding upon the
parties concerned. Findings of facts in the decision or order of the Director
of Mines when affirmed by the Secretary of Agriculture and Natural
Resources shall be final and conclusive, and the aggrieved party or parties
desiring to appeal from such decision or order shall file in the Supreme Court
a petition for review wherein only questions of law may be raised.
Said provision is inapplicable, however, as it refers to "conflicts and disputes arising
out of mining locations," which is not the subject matter in the case at bar. The basic
issue herein is SMPI's entitlement to surface rights and right of way. The dispute is
not a mining conflict. It is essentially judicial. In SMPI's own words. "The present case
is not for resolving a conflict, if any, between the "Celia" claims and the "Tanjuatco"
claims as this is for the Bureau of Mines to decide."
As the petitioner's adverse claim is not one grounded on overlapping of
claims nor is it a mining conflict arising out of mining locations (there being
only one involved) but one originating from the alleged fiduciary or
contractual relationship between the petitioner mining corporation and the
locator and his transferees, the adverse claim is not within the executive or
administrative authority of the mining director to resolve, but in the courts
(Philex Mining Corporation vs. Zaldivar, G.R. No. L-29669, 29 February 1972,
43 SCRA 479).
The suit below was not merely for a determination of the amount to be paid for
surface rights, as SMPI contends, inasmuch as the very validity of those surface
rights was likewise squarely put in issue.
Of significance, too, is the fact that SMPI filed its action with the Trial Court, actively
participated in the hearings therein, but, it was only after a judgment adverse to it
was rendered that it raised the issue of jurisdiction. It is now estopped, therefore,
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 119

from impugning said jurisdiction (Tijam vs. Sibonghanoy, G.R. No. L-21450, 15 April
1968, 23 SCRA 29; Royales vs. Intermediate Appellate Court, G.R. No. L-65072, 31
January 1984, 127 SCRA 470; Philippine National Bank vs. Intermediate Appellate
Court, G.R. No. L-62831-32, 31 July 1986, 143 SCRA 299).

In the exercise of our discretion, we are reducing the award of temperate damages to
P10,000. 00 for Deeunhong, and another P10,000.00 for the Tanjuatcos, which we
find reasonable under the circumstances.
WHEREFORE, with the sole modification as to the award of temperate damages,
which are hereby reduced as indicated, the judgment under review is hereby affirmed
in all other respects.

No costs.

SO ORDERED.

Paras, Padilla, Sarmiento and Regalado, JJ., concur.

Judgment affirmed with sole modification.

Note.—Bureau of Fisheries has no jurisdiction to dispose of swamplands or mangrove

lands while same classified as forest or timber land (Yngzon vs. Secretary of
Agriculture, 123 SCRA 441).

——o0o——
 ENVIRONMENTAL LAW & NATURAL RESOURCES
G.R. No. 179674. July 28, 2009.*
PYRO COPPER MINING CORPORATION, petitioner, vs. MINES
ADJUDICATION BOARD-DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES, MINES AND GEO-SCIENCES BUREAU DIRECTOR HORACIO C.
RAMOS, REGIONAL DIRECTOR SAMUEL T. PARAGAS, REGIONAL PANEL OF
ARBITRATORS ATTY. CLARO E. RAMOLETE, JR., ATTY. JOSEPH ESTRELLA
and ENGR. RENATO RIMANDO, and MONTAGUE RESOURCES PHILIPPINES
CORPORATION, respondents.
Pleadings and Practice; Verification; A certification not signed by a duly authorized
person renders the petition subject to dismissal.— The requirement that petitioner
should sign the Certification against Forum Shopping applies even to corporations,
the Rules of Court making no distinction between natural and juridical persons. A
corporation, however, exercises its powers through its board of directors and/or its
duly authorized officers and agents. Physical acts, like the signing of documents, can
be performed only by natural persons duly authorized for the purpose by corporate
by-laws or by a specific act of the board of directors. The signatory, therefore, in the
case of the corporation should be “a duly authorized director or officer of the
corporation” who has knowledge of the matter being certified. If the petitioner is a
corporation, a board resolution authorizing a corporate officer to execute the
Certification against Forum Shopping is necessary. A certification not signed by a duly
authorized person renders the petition subject to dismissal.
Same; Procedural Due Process; It is true that a litigation is not a game of
technicalities, and that the rules of procedure should not be strictly enforced at the
cost of substantial justice.—It is true that a litigation is not a game of technicalities,
and that the rules of procedure should not be strictly enforced at the cost of
substantial justice. However, it does not mean that the Rules of Court may be
ignored at will and at random, to the prejudice of the orderly presentation and
assessment of the issues and their just resolution. It must be emphasized that
procedural rules should not be belittled or dismissed simply because their non-
observance may have resulted in prejudice to a party’s substantial rights. Like all
rules, they are required to be followed except only for the most persuasive of
reasons.
Session 5 P a g e | 120
Civil Procedure; Pleadings and Practice; The date of the mailing of motions,
pleadings, or any other papers or payment or deposits, as shown by the post office
stamp on the envelope or the registry receipt, shall be considered as the date of their
filing, payment or deposit in court.—Considering that the Rules on Pleadings, Practice
and Procedure before the Panel of Arbitrators and MAB are bereft of any provision
regarding the computation of time and the manner of filing, the Court may refer to
Section 1, Rule 22 and Section 3, Rule 13 of the 1997 Revised Rules of Civil
Procedure, which state: Section 1. How to compute time.—In computing any period
of time prescribed or allowed by these Rules, or by order of the court, or by any
applicable statute, the day of the act or event from which the designated period of
time begins to run is to be excluded and the date of performance included. If the last
day of the period, as thus computed, falls on a Saturday, a Sunday, or a legal holiday
in the place where the court sits, the time shall not run until the next working day.
(Emphasis supplied.) Section 3. Manner of filing.—The filing of pleadings,
appearances, motions, notices, orders, judgments and all other papers shall be made
by presenting the original copies thereof, plainly indicated as such, personally to the
clerk of court or by sending them by registered mail. In the first case, the clerk of
court shall endorse on the pleading the date and hour of filing. In the second case,
the date of the mailing of motions, pleadings, or any other papers or payments or
deposits, as shown by the post office stamp on the envelope or the registry receipt,
shall be considered as the date of their filing, payment or deposit in court. The
envelope shall be attached to the record of the case.
Mines and Mining; No adverse claim, protest or opposition involving mining rights
shall be accepted for filing unless verified and accompanied by the prescribed docket
fee and proof of services to the respondent(s) either personally or by registered mail.
—Section 21 of DAO No. 96-40, fixing the 30-day reglementary period for filing any
adverse claim/protest/opposition to an application for exploration permit, must be
read in relation to Section 204 of DAO No. 96-40, which reads: Section 204.
Substantial Requirements for Adverse Claims, Protest and Oppositions.—No adverse
claim, protest or opposition involving mining rights shall be accepted for filing unless
verified and accompanied by the prescribed docket fee and proof of services to the
respondent(s), either personally or by registered mail: Provided, That the
requirement for the payment of docket fees shall not be imposed on pauper
litigants[;].
Civil Procedure; Pleadings and Practice; The verified protest/opposition of petitioner
constitutes an initiatory pleading before the Panel of Arbitrators, for which a
certification against forum shopping may be required.— Petitioner filed a Verified
Protest/Opposition before the Panel of Arbitrators to oppose the Application for
Exploration Permit filed by private respondent with the MGB. The Verified
Protest/Opposition of petitioner constitutes an initiatory pleading before the Panel of
Arbitrators, for which a certification against forum shopping may be required. Truly,
 ENVIRONMENTAL LAW & NATURAL RESOURCES
DAO No. 96-40 is bereft of any provision requiring that a certification against forum
shopping be attached to the adverse claim/protest/opposition. However, Section 4,
Rule 1 of the Rules on Pleading, Practice and Procedure before the Panel of
Arbitrators and the MAB allows the application of the pertinent provisions of the Rules
of Court by analogy or in a suppletory manner, in the interest of expeditious justice
and whenever practical and convenient; and, according to Section 5, Rule 7 of the
Revised Rules of Court: SEC. 5. Certification against forum shopping.—The plaintiff or
principal party shall certify under oath in the complaint or other initiatory pleading
asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced any action
or filed any claim involving the same issues in any court, tribunal or quasi-judicial
agency and, to the best of his knowledge, no such other action or claim is pending
therein; (b) if there is such other pending action or claim, a complete statement of
the present status thereof; and (c) if he should thereafter learn that the same or
similar action or claim has been filed or is pending, he shall report that fact within
five (5) days therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.
Mines and Mining; 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.— Sec. 77. Panel of Arbitrators.—x x x.
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.
Same; It is clear from the ruling of the Court in Olympic Mines and Celestial Nickel
Mining that the Panel of Arbitrators only has jurisdiction over adverse claims, conflicts
and oppositions relating to applications for the grant of mineral rights, but not over
cancellation of mineral rights already granted and existing.— It is clear from the ruling
of the Court in Olympic Mines, [587 SCRA 624 (2009)], and Celestial Nickel Mining,
[541 SCRA 166 (2007)] that the Panel of Arbitrators only has jurisdiction over adverse
claims, conflicts, and oppositions relating to applications for the grant of mineral
rights, but not over cancellation of mineral rights already granted and existing. As to
who has jurisdiction to cancel an existing exploration permit, Section 28 of DAO No.
96-40 explicitly provides: Section 28. Cancellation of an Exploration Permit.—The
Director/concerned Regional Director may cancel the Exploration Permit for failure of
the Permittee to comply with any of the requirements and for violation(s) of the
terms and conditions under which the Permit is issued. For renewed Exploration
Permits, the Secretary upon the recommendation of the Director shall cause the
cancellation of the same.
Session 5 P a g e | 121
PETITION for review on certiorari of the resolutions of the Court of Appeals.
The facts are stated in the opinion of the Court.
  Acsay, Pascual, Capellan & Associates Law Office for petitioner.
  Valenton & Valenton Law Offices for respondent Montague Resources Philippine
Corporation.
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari, under Rule 45 of the 1997
Revised Rules of Civil Procedure, seeking to reverse the Resolutions dated 23
February 20071 and 6 September 20072 of the Court of Appeals in CA-G.R. SP No.
97663. The appellate court, in its assailed Resolution dated 23 February 2007,
dismissed the Petition for Review, under Rule 43 of the 1997 Revised Rules of Civil
Procedure, of herein petitioner Pyro Copper Mining Corporation, for failure of
petitioner to attach pertinent and relevant documents thereto. 3 The appellate court,
in its other assailed Resolution dated 6 September 2007, denied the Motion for
Reconsideration of petitioner for lack of merit and for failure to show the authority of
Atty. Vicente R. Acsay (Atty. Acsay), one of the members of the Board of Directors of
petitioner, to sign the Verification and Certification against Forum Shopping
accompanying the Petition.
Petitioner additionally prays for the setting aside or reversal of the Decision 4 dated 28
December 2006 of the Department of Environment and Natural Resources (DENR)-
Mines Adjudication Board (MAB) in MAB Case No. 0147-06, which affirmed the Orders
dated 14 September 20055 and 27 December 20056 of the DENR-Panel of Arbitrators,
Region 1, San Fernando City, La Union (Panel of Arbitrators), in Case No. 2005-
00012-I, dismissing the Verified Protest/Opposition of petitioner to the Application for
Exploration Permit of private respondent Montague Resources Philippines
Corporation. Ultimately, petitioner seeks the denial of the mining claim and the
revocation/cancellation of the Exploration Permit, EXPA No. 21 dated 12 September
2003, of private respondent.
The factual antecedents of this case are as follows:
Petitioner is a corporation duly organized and existing under Philippine laws engaged
in the business of mining. On 31 March 2000, petitioner’s Application for Mineral
Production Sharing Agreement (MPSA), identified as APSA-SF-000089, with the Mines
and Geo-Sciences Bureau (MGB) of the DENR, Regional Office No. 1, San Fernando
City in La Union, for the exploration, development and commercial utilization of
certain pyrite ore and other mineral deposits in a 4,360.71-hectare land in Dasol,
Pangasinan, was approved and MPSA No. 153-2000-1 was issued in its favor.
Private respondent is also a corporation organized and existing under the laws of the
Philippines and engaged in the business of mining. On 12 September 2003, private
 ENVIRONMENTAL LAW & NATURAL RESOURCES
respondent filed an Application for Exploration Permit 7 with MGB covering the same
properties covered by and during the subsistence of APSA-SF-000089 and MPSA No.
153-2000-18 of petitioner. In turn, petitioner filed a Verified Protest/Opposition to the
Application for Exploration Permit of the private respondent. It was allegedly filed
with the Panel of Arbitrators 9 on 30 August 2005 and was received by the latter on 5
September 2005. The case was docketed as Case No. 2005-00012-I.
Prior, however, to petitioner’s filing of its Verified Protest/Opposition to the private
respondent’s Application for Exploration Permit, petitioner’s MPSA No. 153-2000-1
was cancelled per DENR Memorandum Order (DMO) No. 2005-03 10 issued by the
DENR Secretary Michael Defensor on 1 February 2005. Petitioner moved for the
reconsideration of DMO No. 2005-03, which the DENR Secretary denied in its
Decision11 dated 14 June 2005.12
On 1 September 2005,13 the MGB issued EP No. 05-001 to private respondent.
In an Order dated 14 September 2005, the Panel of Arbitrators dismissed motu
proprio the Verified Protest/Opposition of petitioner for the following reasons: (1) the
instant pleading was filed out of time; (2) in view of the issuance of EP No. 05-001 to
private respondent, the Verified Protest/Opposition of petitioner to the Application for
Exploration Permit of private respondent was rendered moot and academic; (3) the
Panel of Arbitrators had no authority/jurisdiction to cancel, deny and/or revoke EP
No. 05-001 of private respondent, the same being lodged with the MGB, the issuing
authority; and (4) petitioner failed to include a certification against forum
shopping.14 Petitioner moved for its reconsideration, but the Panel of Arbitrators
denied the same in its Order dated 27 December 2005.15
Petitioner elevated by appeal to the MAB the Orders dated 14 September 2005 and
27 December 2005 of the Panel of Arbitrators, docketed as MAB Case No. 0147-06.
Subsequently, in a Decision16 dated 28 December 2006 in MAB Case No. 0147-06, the
MAB dismissed the appeal of petitioner, on the following grounds: (a) the Verified
Protest/Opposition of petitioner to the Application for Exploration Permit of private
respondent was filed beyond the reglementary period; and (b) the Verified
Protest/Opposition of petitioner did not include a certification against forum
shopping.17
Petitioner filed with the Court of Appeals a Petition for Review under Rule 43 of the
1997 Revised Rules of Civil Procedure, which was docketed as CA-G.R. SP No. 97663.
In a Resolution dated 23 February 2007, the Court of Appeals dismissed the said
Petition, pursuant to Section 7, Rule 43, of the 1997 Revised Rules of Civil
Procedure,18 for failure of petitioner to attach thereto some pertinent and relevant
documents required under Section 6 of the same Rule.19
Petitioner filed a Motion for Reconsideration of the 23 February 2007 Resolution,
together with the required documents. Private respondent, however, in its
Session 5 P a g e | 122
Comment,20 still prayed for the dismissal of the Petition in CA-G.R. SP No. 97663 for
failure of petitioner to submit Atty. Acsay’s authority to sign the Verification and
Certification against Forum Shopping.
Petitioner was given an opportunity to submit Atty. Acsay’s written authority, but
failed to do so. Consequently, the Court of Appeals issued a Resolution dated 6
September 2007, denying for lack of merit the Petition in CA-G.R. SP No. 97663.
Hence, this Petition.
The petitioner raises the following issues for this Court’s Resolution:
I. WHETHER OR NOT THE [COURT OF APPEALS] DEPARTED FROM THE RULES AND
ESTABLISHED JURISPRUDENCE WHEN IT DISMISSED THE PETITION [A QUO]
DESPITE FAITHFUL COMPLIANCE WITH THE RULES ON DISCLOSURE AS
INCORPORATED IN THE VERIFICATION AND CERTIFICATION PORTION OF THE
MOTION FOR EXTENSION [OF] TIME AND PETITION A QUO.
II. WHETHER OR NOT THE [COURT OF APPEALS] DEPARTED FROM THE RULES AND
ESTABLISHED JURISPRUDENCE WHEN IT DISMISSED THE PETITION A
QUO DESPITE THE ATTACHMENT AND SUBMISSION OF THE REQUISITE AUTHORITY
TO MAKE AND SIGN VERIFICATIONS AND SUBSEQUENTLY REQUIRED PLEADINGS.
III. WHETHER OR NOT THE [COURT OF APPEALS] REFUSED TO ADJUDICATE THE
PETITION A QUO DESPITE THE ATTENDANCE OF A CLEARLY EXCEPTIONAL
CHARACTER AND PARAMOUNT PUBLIC INTEREST INVOLVED AS WELL AS THE
NECESSITY FOR A RULING TO PUT AN END TO UNSCRUPULOUS ISSUANCE OF
MINING CLAIMS.
IV. WHETHER OR NOT PUBLIC RESPONDENTS IN THE DENR COMMITTED SERIOUS
ERROR AND GRAVE ABUSE OF DISCRETION IN DECLARING THAT: (A) THE
VERIFIED PROTEST/OPPOSITION WAS FILED OUT OF TIME; (B) THE ISSUANCE OF
THE EXPLORATION PERMIT IN FAVOR OF [PRIVATE RESPONDENT] ON [1
SEPTEMBER 2005] AND THE UNILATERAL CANCELLATION OF THE MPSA BY THE
DENR-SECRETARY RENDERED THE VERIFIED PROTEST/OPPOSITION MOOT AND
ACADEMIC; (C) THE [PANEL OF ARBITRATORS] HAVE NO JURISDICTION TO
CANCEL, DENY AND/OR REVOKE THE EXPLORATION PERMIT OF [PRIVATE
RESPONDENT]; AND (D) THE VERIFIED PROTEST/OPPOSITION DOES NOT CONTAIN
A CERTIFICATION AGAINST FORUM SHOPPING.21
To resolve the foregoing issues, the Court must address the more specific issues
below:
I. Whether the subsequently attached Minutes of the Special Meeting dated
22 January 2007 of the Board of Directors of petitioner sufficiently granted
Atty. Acsay authority to sign the Verification and Certification against Forum
Shopping which accompanied the Petition in CA-G.R. SP No. 97663.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
II. Whether the Verified Protest/Opposition of petitioner to the Application
for Exploration Permit of private respondent was filed out of time.
III. Whether the Verified Protest/Opposition of petitioner filed before the
MAB needs to be accompanied by a Certification against Forum Shopping.
IV. Whether the issuance by the DENR Secretary of DMO No. 2005-03 on 1
February 2005 which cancelled MPSA No. 153-2000-1 of petitioner and the
issuance by MGB of EP No. 05-001 in favor of private respondent on 1
September 2005 rendered the Verified Protest/Opposition of petitioner moot
and academic.
V. Whether the Panel of Arbitrators has jurisdiction to cancel, deny and/or
revoke EP No. 05-001 issued by MGB to private respondent.
The Court finds no merit in the present Petition.
I applies even to corporations, the Rules of Court making no distinction between
Petitioner maintains that there are special circumstances and basic considerations in
support of Atty. Acsay’s authority to execute and sign the Verification and
Certification against Forum Shopping which accompanied its Petition in CA-G.R. SP
No. 97663. Firstly, Atty. Acsay is an incorporator, stockholder, member of the board
of directors, corporate secretary, and legal counsel of petitioner. Secondly, he was
the authorized representative of petitioner in the signing of MPSA No. 153-2000-1.
Therefore, Atty. Acsay is the best legally suitable person to make the required sworn
disclosures in the Verification and Certification against Forum Shopping in the Petition
of petitioner in CA-G.R. SP No. 97663.
Petitioner also contends that the Minutes of the Meeting held on 22 January 2007 by
the board of directors of petitioner, bestowing upon Atty. Acsay the authority to make
and sign the Verification for the Motion for Extension of Time to File Petition for
Review under Rule 43 of the 1997 Revised Rules of Civil Procedure, must be
construed in its entirety. According to the Minutes, Atty. Acsay was granted authority
by the board to sign even verifications, which may be required in subsequent
pleadings filed by petitioner. The reference in the Minutes to the Motion for Extension
of Time to File Petition for Review is not meant to be restrictive or qualifying, as to
exclude other pleadings.
With the foregoing, petitioner firmly argues that it has substantially complied with the
requirements for the execution of the Verification and Certification against Forum
Shopping, which accompanied its Petition in CA-G.R. SP No. 97663.
Section 6(d), Rule 4322 in relation to Section 2, Rule 42 23 of the 1997 Revised Rules of
Civil Procedure mandates that a petition for review shall contain a sworn certification
against forum shopping, in which the petitioner shall attest that he has not
commenced any other action involving the same issues in this Court, the Court of
Appeals or different divisions thereof, or any other tribunal or agency; if there is such
Session 5 P a g e | 123
other action or proceeding, he must state the status of the same; and if he should
thereafter learn that a similar action or proceeding has been filed or is pending before
this Court, the Court of Appeals, or different divisions thereof, or any other tribunal or
agency, he undertakes to promptly inform the aforesaid courts and other tribunal or
agency thereof within five days therefrom.24
For failure to comply with this mandate, Section 7, Rule 43 of the 1997 Revised Rules
of Civil Procedure provides:
SEC. 7. Effect of failure to comply with requirements. – The failure of the petitioner to
comply with any of the foregoing requirements regarding the payment of the docket
and other lawful fees, the deposit for costs, proof of service of the petition, and the
contents of and the documents which should accompany the petition shall be
sufficient ground for the dismissal thereof.
The requirement that petitioner should sign the Certification against Forum Shopping
natural and juridical persons.25 A corporation, however, exercises its powers through
its board of directors and/or its duly authorized officers and agents. Physical acts, like
the signing of documents, can be performed only by natural persons duly authorized
for the purpose by corporate by-laws or by a specific act of the board of
directors.26 The signatory, therefore, in the case of the corporation should be "a duly
authorized director or officer of the corporation" who has knowledge of the matter
being certified.27
If the petitioner is a corporation, a board resolution authorizing a corporate officer to
execute the Certification against Forum Shopping is necessary. A certification not
signed by a duly authorized person renders the petition subject to dismissal. 28
To recall, the Court of Appeals initially dismissed, in its Resolution dated 23 February
2007, the Petition for Review in CA-G.R. SP No. 97663, for failure of petitioner to
submit pertinent and relevant documents required under Section 6, Rule 43 of the
1997 Revised Rules of Civil Procedure. The petitioner filed a Motion for
Reconsideration, attaching thereto the required documents, except the proof of Atty.
Acsay’s authority to sign the Verification and Certification against Forum Shopping for
the Petition. Instead of immediately dismissing the Motion for Reconsideration of
petitioner, however, the Court of Appeals, in its Resolution dated 8 June 2007, gave
petitioner five days from receipt thereof to submit such proof. The petitioner then
submitted the Minutes of the Special Meeting held on 22 January 2007 by its board of
directors, adopting a Resolution to the following effect:
RESOLVED, that [Atty. Acsay], Director and Corporate Secretary of [herein petitioner]
be, as he hereby is, authorized to make and sign the verification of the pleading filed
by [petitioner] entitled "Motion for Extension of Time to File Petition for Review under
Rule 43 of the Rules of Court.29
 ENVIRONMENTAL LAW & NATURAL RESOURCES
It can be gleaned from the afore-quoted Resolution of the board of directors of
petitioner that the authority granted to Atty. Acsay was to make and sign the
pleading entitled "Motion for Extension of Time to File Petition for Review under Rule
43 of the Rules of Court," but not the Petition for Review itself. The wordings of the
board Resolution are so explicit that they cannot be interpreted otherwise. There is
nothing to justify the argument of petitioner that the authority to sign granted to
Atty. Acsay by the said board Resolution extended to all other pleadings subsequent
to the Motion for Extension.
Other than the Minutes of the Special Meeting held on 22 January 2007 by the board
of directors of petitioner, which the Court deemed unsatisfactory, no other proof of
Atty. Acsay’s purported authority to sign the Verification and Certification against
Forum Shopping for the Petition for Review in CA-G.R. SP No. 97663 was presented.
Absent proof of such authority, then the reasonable conclusion is that there is
actually none. Given that a certification not signed by a duly authorized person
renders the petition subject to dismissal,30 the Court of Appeals did not err in finally
dismissing in its Resolution dated 6 September 2007 the Petition of petitioner in CA-
G.R. SP No. 97663.
Although the Court has previously relaxed the rules on verification and certification
against forum shopping in some instances,31 it cannot do so here.
From the very beginning, petitioner failed to attach to its Petition for Review before
the Court of Appeals the relevant documents required by Section 6, Rule 43 of the
1997 Revised Rules of Procedure. Petitioner had two opportunities to comply with the
requisites, i.e., when it filed its Motion for Reconsideration of the 23 February 2007
Resolution of the Court of Appeals and when it submitted its compliance with the 8
June 2007 Resolution of the appellate court; yet, petitioner still failed to do so.
Petitioner never offered any satisfactory explanation for its stubborn non-compliance
with or disregard for the rules of procedure.
It is true that a litigation is not a game of technicalities, and that the rules of
procedure should not be strictly enforced at the cost of substantial justice. However,
it does not mean that the Rules of Court may be ignored at will and at random, to the
prejudice of the orderly presentation and assessment of the issues and their just
resolution. It must be emphasized that procedural rules should not be belittled or
dismissed simply because their non-observance may have resulted in prejudice to a
party’s substantial rights. Like all rules, they are required to be followed except only
for the most persuasive of reasons.32
II
Even assuming arguendo that Atty. Acsay did have the authority to sign the
Verification and Certification against Forum Shopping for the Petition for Review of
petitioner in CA-G.R. SP No. 97663, and the Court of Appeals erred in dismissing said
Petition, the Court still cannot grant the prayer of petitioner herein to reverse the
Session 5 P a g e | 124
actions undertaken by the DENR as regards the cancellation of its MPSA No. 153-
2000-1 and the issuance of EP No. 05-001 to private respondent.
Petitioner insists that it filed its Verified Protest/Opposition to the Application for
Exploration Permit of private respondent within the reglementary period. Based on
the records of MGB, the Notice of Application for Exploration Permit of private
respondent was actually posted from 14 July 2005 to 28 July 2005. Applying the 30-
day reglementary period, the last date on which to file any adverse claim, protest or
opposition to the said application was 27 August 2005, a Saturday. Since 29 August
2005, Monday, was declared a national holiday, the next business day was 30 August
2005, Tuesday. This very well explains why the Verified Protest/Opposition of
petitioner was filed on 30 August 2005. Petitioner further avows that it paid the
required legal fees through postal money order. The issuance of the official receipt
only after the filing, through registered mail, of its Verified Protest/Opposition, does
not erase the fact that the docket fees were paid to and received by the government.
Section 21 of DAO No. 96-40 mandates:
Section 21. Publication/Posting/Radio Announcement of an Exploration Permit
Application. - x x x 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 the Act and these implementing
rules and regulations. x x x.
Considering that the Rules on Pleadings, Practice and Procedure before the Panel of
Arbitrators and MAB are bereft of any provision regarding the computation of time
and the manner of filing, the Court may refer to Section 1, Rule 22 and Section 3,
Rule 13 of the 1997 Revised Rules of Civil Procedure, 33 which state:
Section 1. How to compute time. – In computing any period of time prescribed or
allowed by these Rules, or by order of the court, or by any applicable statute, the day
of the act or event from which the designated period of time begins to run is to be
excluded and the date of performance included. If the last day of the period, as thus
computed, falls on a Saturday, a Sunday, or a legal holiday in the place where the
court sits, the time shall not run until the next working day. (Emphasis supplied.)
Section 3. Manner of filing. - The filing of pleadings, appearances, motions, notices,
orders, judgments and all other papers shall be made by presenting the original
copies thereof, plainly indicated as such, personally to the clerk of court or by
sending them by registered mail. In the first case, the clerk of court shall endorse on
the pleading the date and hour of filing. In the second case, the date of the mailing
of motions, pleadings, or any other papers or payments or deposits, as shown by the
post office stamp on the envelope or the registry receipt, shall be considered as the
date of their filing, payment or deposit in court. The envelope shall be attached to the
record of the case. (Emphasis supplied.)
 ENVIRONMENTAL LAW & NATURAL RESOURCES
In the present case, notices of the Application for Exploration Permit of private
respondent were published in newspapers, 34 announced on the radio,35 and posted in
public places. The posting was done the latest, so we reckon the last possible date
petitioner could have validly filed its Verified Petition/Opposition with the Panel of
Arbitrators therefrom.
The notices of the Application for Exploration Permit of private respondent were
posted on the bulletin boards of the Office of the Municipal Mayor of Dasol,
Pangasinan on 16 to 31 March 2005; Office of the Municipal Mayor of Mabini,
Pangasinan on 16 to 31 March 2005; Office of the Pangasinan Provincial Environment
and Natural Resources on 17 March 2005 to 2 April 2005; Office of the DENR
Provincial Environment and Natural Resources-Pangasinan on 15 March 2005 to 6
April 2005; Office of the DENR Community Environment and Natural Resources-
Alaminos City on 17 March 2005 to 5 April 2005; Offices of the Punong Barangays of
Malimpin, San Pedro, Barlo, San Vicente, and Alilao on 16 to 31 March 2005; and
MGB on 14 to 28 July 2005.36
Since the notice of the Application for Exploration Permit of private respondent was
last posted on 28 July 2005, the 30-day reglementary period for filing any adverse
claim/protest/opposition thereto ended on 27 August 2005. As petitioner explained,
however, 27 August 2005 was a Saturday; and 29 August 2005, Monday, was
declared a national holiday,37 so the next working day was 30 August 2005, Tuesday.
Petitioner did send its Verified Protest/Opposition, through registered mail, on 30
August 2005, as evidenced by the Affidavit of Service 38 of even date and Registry
Receipts No. 10181; No. 10182; No. 10183; and No. 10184. 39 Nevertheless, the Court
still could not consider the Verified Protest/Opposition of petitioner as having been
filed within the reglementary period.
Section 21 of DAO No. 96-40, fixing the 30-day reglementary period for filing any
adverse claim/protest/opposition to an application for exploration permit, must be
read in relation to Section 204 of DAO No. 96-40, which reads:
Section 204. Substantial Requirements for Adverse Claims, Protest and Oppositions.
No adverse claim, protest or opposition involving mining rights shall be accepted for
filing unless verified and accompanied by the prescribed docket fee and proof of
services to the respondent(s), either personally or by registered mail: Provided, That
the requirement for the payment of docket fees shall not be imposed on pauper
litigants[;] (Emphasis supplied.)
and Section 7, Rule III of the Rules on Pleadings, Practice and Procedure before the
Panel of Arbitrators and MAB, which states that:
Section 7. Form and Contents of Adverse Claims, Protest or Opposition. No adverse
claim, petition, protest or opposition involving mining rights shall be accepted for
filing unless verified and accompanied by the prescribed docket fee and proof of
services to the respondent(s), either personally or by registered mail: Provided, That
the requirement for the payment of docket fees shall not be imposed on pauper
litigants. (Emphasis supplied.)
Session 5 P a g e | 125
Section 204 of DAO No. 96-40 and Section 7, Rule III of the Rules on Pleadings,
Practice and Procedure before the Panel of Arbitrators and MAB explicitly require that
the adverse claim/protest/opposition be accompanied by the payment of the
prescribed docket fee for the same to be accepted for filing.
Upon a careful examination of the records of this case, it appears that the docket fee
was paid only on 6 September 2005, as evidenced by Official Receipt (O.R.) No.
7478283 B.40 Although petitioner avers that it paid the docket fee through postal
money order – in which case, the date of mailing would be deemed the date of
payment – such averment is unsubstantiated. The Court finds no evidence to prove
that petitioner actually sent the purported postal money order for the payment of the
docket fee. Petitioner submits the following evidence to prove payment of the docket
fee: (a) a Prudential Bank Check in the amount of ₱5,020.00 dated 1 September
2005;41 (b) O.R. No. 7478283 B dated 6 September 2005 issued by MGB Region I,
San Fernando City; and (c) several registry return receipts. 42 But these pieces of
evidence do not establish at all that the docket fee was paid by postal money order;
or indicate the postal money order number and the date said postal money order was
sent. Without any evidence to prove otherwise, the Court presumes that the docket
fee was paid on the date the receipt for the same was issued, i.e., 6 September
2005.
Based on the foregoing, the Verified Protest/Opposition of petitioner to the
Application for Exploration Permit of respondent is deemed filed with the Panel of
Arbitrators only upon payment of the prescribed docket fee on 6 September 2005,
clearly beyond the reglementary period, which ended on 30 August 2005.
III
The Panel of Arbitrators denied the Verified Protest/Opposition of petitioner in Case
No. 2005-00012-I for another procedural lapse, the lack of a certification against
forum shopping.
Petitioner argues that a Verified Protest/Opposition does not require a certification
against forum shopping. According to it, Section 204 of DAO No. 96-40 identifies the
substantial requirements of a mining adverse claim/ protest/opposition, and a
certification against forum shopping is not among them; the Panel of Arbitrators has
no power and authority to impose additional requirements for the filing and service of
pleadings; the Panel of Arbitrators also does not have the authority to promulgate
rules and regulations involving the practice, pleadings, litigation and disposition of
cases before it, for the same only belongs to the MAB, pursuant to Section 207 of
DAO No. 96-40.
The arguments of petitioner have no merit.
Petitioner filed a Verified Protest/Opposition before the Panel of Arbitrators to oppose
the Application for Exploration Permit filed by private respondent with the MGB. The
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Verified Protest/Opposition of petitioner constitutes an initiatory pleading before the
Panel of Arbitrators, for which a certification against forum shopping may be
required. Truly, DAO No. 96-40 is bereft of any provision requiring that a certification
against forum shopping be attached to the adverse claim/protest/opposition.
However, Section 4, Rule 1 of the Rules on Pleading, Practice and Procedure before
the Panel of Arbitrators and the MAB allows the application of the pertinent provisions
of the Rules of Court by analogy or in a suppletory manner, in the interest of
expeditious justice and whenever practical and convenient; and, according to Section
5, Rule 7 of the Revised Rules of Court:
SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency and, to the best of his
knowledge, no such other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present status thereof; and (c)
if he should thereafter learn that the same or similar action or claim has been filed or
is pending, he shall report that fact within five (5) days therefrom to the court
wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-compliance with any of
the undertakings therein shall constitute indirect contempt of court, without prejudice
to the corresponding administrative and criminal actions. If the acts of the party or
his counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt, as
well as a cause for administrative sanctions.
Hence, the requirement by the Panel of Arbitrators and the MAB that a certification
against forum shopping be attached to initiatory pleadings filed before them, to
ascertain that no similar actions have been filed before other courts, tribunals, or
quasi-judicial bodies, is not arbitrary or baseless. The lack of such a certification is a
ground for the dismissal of the Verified Protest/Opposition of petitioner.
IV
The Panel of Arbitrators dismissed the Verified Protest/Opposition of petitioner for a
third reason: that the same has become moot and academic, given that the DENR
Secretary already issued DMO No. 2005-03 on 1 February 2005 canceling MPSA No.
153-2000-1 and MGB issued EP No. 05-001 to private respondent on 1 September
2005.
However, petitioner asserts that MPSA No. 153-2000-1 has not been finally cancelled
or revoked, considering the pendency of the legal remedies it availed itself of for
Session 5 P a g e | 126
DMO No. 2005-03. The issuance of DMO No. 2005-03 by the DENR Secretary, and of
EP No. 05-001 by MGB pursuant thereto, should not render the Verified
Protest/Opposition of petitioner moot and academic.
The position of petitioner is untenable.
It must be stressed that the cancellation of MPSA No. 153-2000-1 of petitioner by the
DENR Secretary in DMO No. 2005-03 is already the subject of separate proceedings.
The Court cannot touch upon it in the Petition at bar.
Also worth stressing is that petitioner filed a Verified Protest/Opposition to the
Application for Exploration Permit of private respondent. When the application was
approved and the exploration permit issued to private respondent, petitioner had
nothing more to protest/oppose. More importantly, with the issuance by MGB of EP
No. 05-001 to private respondent, the remedy of petitioner is to seek the cancellation
thereof, over which, as subsequently discussed herein, the Panel of Arbitrators would
have no jurisdiction. The Panel of Arbitrators cannot simply consider or convert the
Verified Protest/Opposition of petitioner to the Application for Exploration Permit of
private respondent as a petition for the cancellation of EP No. 05-001. Since the Panel
of Arbitrators can no longer grant petitioner any actual substantial relief by reason of
the foregoing circumstances, then the Verified Protest/Opposition of petitioner was
appropriately dismissed for being moot and academic.
V
Finally, petitioner posits that Section 77 of Republic Act No. 7942 and Sections 202 to
203 of its Implementing Rules vest the Panel of Arbitrators with the jurisdiction to
entertain and accept any claim, protest or opposition filed directly with its office. In
the discharge thereof, the office and function bestowed upon the Panel of Arbitrators
include the power and authority to deny clearances, exclude exploration permits, and
not to accept or entertain the same.
The Court disagrees.
Section 77 of Republic Act No. 7942 establishes the jurisdiction of the Panel of
Arbitrators, thus:
Sec. 77. Panel of Arbitrators. – x x x. 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
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 127

d. Disputes pending before the Bureau and the Department at the date of
the effectivity of this Act. (Emphasis supplied.)
In Olympic Mines and Development Corporation v. Platinum Group Metals
Corporation43 citing Celestial Nickel Mining Exploration Corporation v. Macroasia
Corporation,44 this Court made the following pronouncements as regards paragraphs
(a) and (b) of Section 77 of Republic Act No. 7942:
In Celestial Nickel Mining Exploration Corporation v. Macroasia Corporation, et
al., this Court speaking through Justice Velasco, specified the kind of disputes that fall
under Section 77(a) of the Mining Act:
According to Section 5 of DAO No. 96-40, "Director" means the Director of the MGB
Central Office, while "Regional Director" means the Regional Director of any MGB
Regional Office. As the authority to issue an Exploration Permit is vested in the MGB,
then the same necessarily includes the corollary power to revoke, withdraw or cancel
the same.45 Indisputably, the authority to deny, revoke, or cancel EP No. 05-001 of
private respondent is already lodged with the MGB, and not with the Panel of
Arbitrators.
WHEREFORE, premises considered, the instant Petition for Review on Certiorari of
petitioner Pyro Copper Mining Corporation is hereby DENIED. The Resolutions dated
23 February 2007 and 6 September 2007 of the Court of Appeals in CA-G.R. SP No.
97663 are hereby AFFIRMED. Costs against the petitioner.

The phrase "disputes involving rights to mining areas" refers to any adverse claim, SO ORDERED.
protest, or opposition to an application for a mineral agreement.
Ynares-Santiago (Chairperson), Velasco, Jr., Nachura and Peralta, JJ., concur.
xxxx
[T]he power of the POA to resolve any adverse claim, opposition, or protest relative
to mining rights under Section 77 (a) of RA 7942 is confined only to adverse claims,
conflicts, and oppositions relating to applications for the grant of mineral rights. x x x.
Clearly, POA’s jurisdiction over "disputes involving rights to mining areas"
has nothing to do with the cancellation of existing mineral
agreements. (Emphases supplied.)

xxxx

Parenthetically, the "permit" referred to in Section 77(b) of the Mining Act pertains to
exploration permit, quarry permit, and other mining permits recognized in Chapters
IV, VIII, and IX of the Mining Act. An operating agreement, not being among those
listed, cannot be considered as a "mineral permit" under Section 77 (b). (Emphases
supplied.)

It is clear from the ruling of the Court in Olympic Mines and Celestial Nickel Mining
that the Panel of Arbitrators only has jurisdiction over adverse claims, conflicts, and
oppositions relating to applications for the grant of mineral rights, but not over
cancellation of mineral rights already granted and existing.

As to who has jurisdiction to cancel an existing exploration permit, Section 28 of DAO

NO. 96-40 explicitly provides:

Section 28. Cancellation of an Exploration Permit. – The Director/concerned Regional

Director may cancel the Exploration Permit for failure of the Permittee to comply with
any of the requirements and for violation(s) of the terms and conditions under which
the Permit is issued. For renewed Exploration Permits, the Secretary upon the
recommendation of the Director shall cause the cancellation of the same.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
G.R. No. 46787. August 12, 1991.*
FLORO CEMENT CORPORATION, petitioner, vs. HON. BENJAMIN K.
GOROSPE, Judge, CFI of Misamis Oriental, Branch I, and the
MUNICIPALITY OF LUGAIT, respondents.
Local Government; Limitation on taxing power; Taxes on mines, mining operations,
and mineral products and by-products.—On the question of whether or not cement is
a mineral product, this Court has consistently held that it is not a mineral product but
rather a manufactured product (Commissioner of Internal Revenue vs. Cebu Portland
Cement Company, 156 SCRA 535 [1987]; Commissioner of Internal Revenue vs.
Philippine Pipes and Merchandising Corporation, 153 SCRA 113 [1987]; Commissioner
of Internal Revenue vs. Republic Cement Corporation, 149 SCRA 487 [1987]). While
cement is composed of 80% minerals, it is not merely an admixture or blending of
raw materials, as lime, silica, shale and others. It is the result of a definite process—
the crushing of minerals, grinding, mixing, calcining, adding of retarder or raw
gypsum. In short, before cement reaches its saleable form, the minerals had already
undergone a chemical change through manufacturing process (Commissioner of
Internal Revenue vs. Cebu Portland Cement Company, supra, reiterating the ruling in
Commissioner of Internal Revenue vs. Republic Cement Corporation, 124 SCRA 46
[1983]). It appears evident that the foregoing case overruled the case of Cebu
Portland Cement Company vs. Commissioner of Internal Revenue, 25 SCRA 789
[1969] which was cited by petitioner.
Same; Same; Same.—As held by the lower court, the exemption mentioned in Sec.
52 of P.D. No. 463 refers only to machineries, equipment, tools for production, etc.,
as provided in Sec. 53 of the same decree. The manufacture and the export of
Session 5 P a g e | 128
cement does not fall under the said provision for it is not a mineral product (CFI
Decision, Rollo, p. 62). It is not cement that is mined, only the mineral products
composing the finished product (Commissioner of Internal Revenue vs. Republic
Cement Corporation, supra).
Taxation; Exemptions.—On the exemption claimed by petitioner, this Court has laid
down the rule that as the power of taxation is a high prerogative of sovereignty, the
relinquishment is never presumed and any reduction or diminution thereof with
respect to its mode or its rate, must be strictly construed, and the same must be
coached in clear and unmistakable terms in order that it may be applied. More
specifically stated, the general rule is that any claim for exemption from the tax
statute should be strictly construed against the taxpayer (Luzon Stevedoring
Corporation vs. Court of Appeals, 163 SCRA 647 [1988]). He who claims an
exemption must be able to point out some provision of law creating the right; it
cannot be allowed to exist upon a mere vague implication or inference. It must be
shown indubitably to exist, for every presumption is against it, and a wellfounded
doubt is fatal to the claim (Manila Electric Company vs. Ver, 67 SCRA 351 [1975]).
PETITION for certiorari to review the decision of the then Court of First Instance of
Misamis Oriental, Br. I. Gorospe, J.
The facts are stated in the opinion of the Court.
     Scarlet V. Santos and Advocates Circle Lawyers for petitioner.
BIDIN, J.:
This is a petition for review on certiorari seeking to set aside and reverse the
decision* of the then Court of First Instance of Misamis Oriental in Civil Case No.
4867, entitled "Municipality of Lugait, Misamis Oriental, (represented) by
the Municipal Treasurer and Provincial Treasurer vs. Floro Cement Corporation ",
ordering defendant to pay unto plaintiff the amount of P161,875.00 as
manufacturer's and exporter's taxes plus surcharges for the period from January 1,
1974 to September 30, 1975 and that herein petitioner Floro Cement Corporation be
declared exempted from the coverage of Ordinances Nos. 5 and 10 of the
Municipality of Lugait and that the taxes and fees it has paid pursuant to said
ordinances be refunded.
The facts of the case, as summarized in the decision of the trial court, are as follows:
The municipality of Lugait, province of Misamis Oriental, represented jointly
in this action by its Municipal Treasurer and the Provincial Treasurer of the
said province, filed with this Court a verified complaint for collection of taxes
against the defendant Floro Cement Corporation, a domestic corporation
duly organized and existing under the laws of the Republic of the Philippines
with business establishment and office address at its compound in the
 ENVIRONMENTAL LAW & NATURAL RESOURCES
aforementioned municipality of Lugait. The taxes sought to be collected by
the plaintiff specifically refers to "manufacturers" and' exporter's "taxes for
the period from January 1, 1974 to September 30, 1975, inclusive, in the
total amount of P161,875.00 plus 25% thereof as surcharge. Plaintiff alleged
that the imposition and collection of these taxes" is based on its Municipal
Ordinance No. 5, otherwise known as the Municipal Revenue Code of 1974,
which was passed pursuant to Presidential Decree No. 231 dated June 28,
1973 and also Municipal Ordinance No. 10 passed on June 11, 1974
pursuant to Presidential Decree No. 426 dated March 30,1974, amending
Presidential Decree No. 231.
In its answer to the complaint, the defendant set up the defense that it is
not liable to pay manufacturer's and exporter's taxes alleging among others
that the plaintiffs power to levy and collect taxes, fees, rentals, royalties or
charges of any kind whatsoever on defendant has been limited or withdrawn
by Section 52 of Presidential Decree No. 463 which provides:
Sec. 52. Power to Levy Taxes on Mines, Mining Corporation and
Mineral Products.—Any law to the contrary notwithstanding, no
province, city, municipality, barrio or municipal district shall levy
and collect taxes, fees, rentals, royalties or charges of any kind
whatsoever on mines, mining claims, mineral products, or on any
operation, process or activity connected therewith.
Defendant also set up several special/affirmative defenses, namely: (1) that
plaintiff has no legal capacity to sue; (2) that the complaint states no cause;
(3) that plaintiff has absolutely no cause of action against defendant; (4)
that defendant was granted by the Secretary of Agriculture and Natural
Resources a Certificate of Qualification for Tax Exemption, CQTE No. 22,
dated July 7, 1960, entitling defendant to exemption for a period of five (5)
years from April 30,1969 to April 29, 1974 from payment of all taxes, except
income tax, and which Certificate was amended on November 5, 1974 CQTE
P.D. 463-22), entitling defendant to exemption from all taxes, duties and
fees except income tax, for five (5) years from the first date of actual
commercial production of saleable mineral products that is from May 17,
1974 to January 1, 1978; and (5) that Republic Act No. 3823, as
implemented by Mines Administrative Order No. V-25, and P.D. No. 463
which are the basis for the exemption granted to defendant are special laws
whereas, the municipal ordinance mentioned in the complaint which are
based on P.D. No. 231 and P.D No. 426, respectively, are general laws; and
that it is axiomatic that a special law can not be amended and/or repealed
by a general law unless there is an express intent to repeal or abrogate the
provisions of the special law.
After the issues were joined, the parties submitted a written stipulation of
facts under date of May 21, 1976 the pertinent portion of which is quoted in
full as follows:
Session 5 P a g e | 129
PLAINTIFF and DEFENDANT, by and through counsel, most
respectfully submit the following stipulation of facts:
1. That plaintiff is a political subdivision of the Republic of the
Philippines created pursuant to EXECUTIVE ORDER NO. 425,
entitled "CREATING THE MUNICIPALITY OF LUGAIT IN THE
PROVINCE OF MISAMIS ORIENTAL", a xerox copy of said executive
order is attached hereto marked ANNEX "A" and made an integral
part hereof;
2. That defendant is a corporation day organized and existing
under and by virtue of the laws of the Philippines; with plant and
office at Lugait, Misamis Oriental, and is engaged in the
manufacture and selling, including exporting, of cement, one of the
essential ingredients of which is limestone;
3. That defendant, as a mining operator of mineral land lands
situated at Lugait, Misamis Oriental, was granted by the Secretary
of Agriculture and Natural Resources a Certificate of Qualification
for Tax Exemption, CQTE No. 22, dated July 7, 1960, entitling
defendant to exemption for a period of five (5) years from April 30,
1969 to April 29, 1974, from the payment of all taxes, except
income tax, a xerox copy of which is attached marked ANNEX "A"
to defendant's answer and made an integral part hereof;
4. That the Certificate of Qualification for Tax Exemption mentioned
in the next preceding paragraph was amended on November 5,
1974, when the Honorable Secretary of Natural Resources, Mr. Jose
J. Leido Jr., upon recommendation of the Director of Mines,
granted to defendant a Certificate of Qualification for Tax
Exemption, CQTE P.D. 463-22, which entitled defendant to
exemption from all taxes, duties, and fees, except income tax, for
five (5) years from May 17, 1974 to January 1, 1978, a xerox copy
of which is attached marked ANNEX "B" to defendant's answer and
made an integral part hereof, and that a copy of the Certificate of
Qualification for Tax Exemption, CQTE P.D. 463-22 was furnished
the Municipal Treasurer of plaintiff on November 12, 1974, as
shown by a xerox copy of the letter of the Assistant Director of the
Bureau of Mines, Mr. Francisco A. Comsti, a copy of which is
attached hereto marked ANNEX "B" and made an integral part
hereof;
5. That the Certificate of Qualification for Tax Exemption mentioned
in the next preceding paragraph was issued pursuant to the
provisions of Sec. 52, P.D. No. 463, which reads as follows:
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Sec. 52. Power to Levy Taxes on Mines, Mining Operations
and Mineral Products.—Any law to the contrary
notwithstanding, no province, City, municipality, barrio or
municipal district shall levy and collect taxes, fees, rentals,
royalties or charges of any kind whatsoever on mines,
mining claims, mineral products, or on any operation,
process, or activity therewith.
6. That on or about July 3, 1974, plaintiff through its Municipal
Mayor, wired the Secretary of Finance, opposing the application of
defendant for the extension of its exemption from all forms of
taxation, including its application for extension of its exemption
from realty taxes, which opposition was not favorably acted upon
by the said Secretary of Finance, as evidenced by a xerox copy of
the letter of the Honorable Secretary of Finance, Mr. Cesar Virata,
attached hereto marked ANNEX "C" and made an integral part
hereof;
7. That plaintiff pursuant to P.D.No. 231 promulgated on June 28,
1973, passed Municipal Ordinance No. 5, otherwise known as
Municipal Revenue Code of 1974, effective January 1, 1974,
Section 3 of which is quoted in paragraph 2 of the complaint and
made integral part hereof by reference;
8. That plaintiff pursuant to P.D.No. 426 promulgated on March 30,
1974, Municipal Revenue Ordinance No. 10, effective fifteen (15)
days after its passage, of which Section 4, Title I is quoted in
paragraph 3 of the complaint and made integral part hereof by
reference;
9. That pursuant (to) Municipal Ordinances Nos. 5 and 10,
mentioned in paragraphs 7 and 8 hereof, respectively, plaintiff
demanded of defendant the payment of the manufacturer's and
exporter's taxes including surcharge for the period covering
January 1, 1974 to September 30, 1975, broken down as shown in
paragraph 5 of the complaint and made integral part hereof by
reference; but defendant refused because of the allegations found
in paragraphs 1, 2, 3, 4, 5 and 6 hereof.
WHEREFORE, it is most respectfully prayed that the foregoing
stipulation of facts be made the basis of the judgment of this
Honorable Court, after the parties hereto have submitted their
respective memoranda.
Cagayan de Oro City, May 21, 1976.
(CFI Decision, pp. 1-6; Rollo, pp. 54-59),
Session 5 P a g e | 130
As aforementioned, the trial court rendered its decision on November 29, 1976, the
dispositive portion of which reads, as follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering
defendant Floro Cement Corporation to pay unto plaintiff the amount of
P161,875.00 as manufacturer's and exporter's taxes and surcharges for the
period from January 1, 1974 to September 30, 1975, inclusive, and to pay
the costs.
SO ORDERED.
Hence, this appeal.
The petition was given due course by the First Division of this Court on January 6,
1978 and both parties were required to submit their simultaneous memoranda.
Respondent complied on February 17, 1978 while petitioner filed its memorandum on
March 9,1978.
The principal issue in this case is whether or not Ordinances Nos. 5 and 10 of Lugait,
Misamis Oriental apply to petitioner Floro Corporation notwithstanding the limitation
on the taxing power of local government as provided for in Sec. 52 of P.D. 231 and
Sec. 52 of P.D. 463.
Petitioner Floro Cement Corporation holds that since Ordinances Nos. 5 and 10 were
enacted pursuant to P.D. No. 231 and P.D. No. 426, respectively, said ordinances do
not apply to its business in view of the limitation on the taxing power of local
government provided in Sec. 5m of P.D. No. 231, which reads:
Sec. 5. Common Limitations on the Taxing Powers of Local Governments.
The exercise of taxing power of provinces, cities, municipalities and barrios
shall not extend to the imposition of the following:
x x x           x x x          x x x
(m) Taxes on mines, mining operations and mineral products and
their by-products when sold domestically by the operator.
Floro Cement Corporation likewise contends that cement is a mineral
product, relying on the case of Cebu Portland Cement Company vs.
Commissioner of Internal Revenue , G.R. No. L20563, October 29, 1968 (25
SCRA 789), and in the case of Philippine Pipes and Merchandising
Corporation vs. Commissioner of Internal Revenue , CTA Case No. 1858,
dated July 29, 1970 decided by the Court of Tax Appeals (Memorandum for
the Petitioner, Rollo, pp. 89-90).
Petitioner further contends that the partial exemption aforementioned was
rendered absolute by Sec. 52 of P.D. No. 463 promulgated on May 17, 1974,
 ENVIRONMENTAL LAW & NATURAL RESOURCES
which expressly prohibits the province, city municipality, barrio and
municipal district from levying and collecting taxes, fees, rentals, royalties or
charges of any kind whatsoever on mines, mining claims and mineral
products, any law to the contrary notwithstanding. Said prohibition includes
any operation, process or activity connected with its production. The
manufacture of cement is a process inherently connected with the mining
operation undertaken by petitioner Floro Cement Corporation ( Ibid., pp. 92-
93).
On other hand, while respondent municipality admits that petitioner Floro
Cement Corporation undertakes exploration, development and exploitation
of mineral products, the taxes sought to be collected were not imposed on
these activities in view of the mentioned prohibition under Sec. 52 of P.D.
No. 463. Said taxes were levied on the corporation's business of
manufacturing and exporting cement. The business of manufacturing and
exporting cement does not fall under exploration, development nor
exploitation of mineral resources as defined in Sec. 2 of P.D. No. 463,
hence, it is outside the scope of application of Sec. 52 of said decree
(Memorandum for Respondent, p. 10; Rollo, p. 85).
The municipality's power to levy taxes on manufacturers and exporters is
provided in Article 2, Sec. 19 of P.D. No. 231, as amended by P.D. No. 426
which provides that "The municipality may impose a tax on business except
those for which fixed taxes are provided for in this Code:
(a) On manufacturers, importers, or producers of any article of
commerce of whatever kind or nature, including brewers, distillers,
rectifiers, repackers, and compounders of liquors, distilled spirits
and/ or wines in accordance with the following schedule:
x x x           x x x          x x x
(a-1) On retailers, independent wholesalers and distributors in
accordance with the following schedule:
x x x           x x x          x x x
(Comment of the Respondent, Rollo, p. 72)
The petition is without merit.
On the question of whether or not cement is a mineral product, this Court has
consistently held that it is not a mineral product but rather a manufactured product
(Commissioner of Internal Revenue vs. Cebu Portland Cement Company, 156 SCRA
535 [1987]; Commissioner of Internal Revenue vs. Philippine Pipes and
Merchandising Corporation, 153 SCRA 113 [1987]; Commissioner of Internal Revenue
vs. Republic Cement Corporation, 149 SCRA 487 [1987]). while cement is composed
Session 5 P a g e | 131
of 80'7c minerals, it is not merely an admixture or blending of raw materials, as lime,
silica, shale and others. It is the result of a definite process-the crushing of minerals,
grinding, mixing, calcining adding of retarder or raw gypsum In short, before cement
reaches its saleable form, the minerals had already undergone a chemical change
through manufacturing process (Commissioner of Internal Revenue vs. Cebu Portland
Cement Company, supra, reiterating the ruling in Commissioner of Internal Revenue
vs. Republic Cement Corporation, 124 SCRA 46 [1983]). It appears evident that the
foregoing cases overruled the case of Cebu Portland Cement Company vs.
Commissioner of Internal Revenue, 25 SCRA 789 [1969] which was cited by
petitioner.
On the exemption claimed by petitioner, this Court has laid down the rule that as the
power of taxation is a high prerogative of sovereignty, the relinquishment is never
presumed and any reduction or diminution thereof with respect to its mode or its
rate, must be strictly construed, and the same must be coached in clear and
unmistakable terms in order that it may be applied. More specifically stated, the
general rule is that any claim for exemption from the tax statute should be strictly
construed against the taxpayer (Luzon Stevedoring Corporation vs. Court of Appeals,
163 SCRA 647 [1988]). He who claims an exemption must be able to point out some
provision of law creating the right; it cannot be allowed to exist upon a mere vague
implication or inference. It must be shown indubitably to exist, for every presumption
is against it, and a well-founded doubt is fatal to the claim (Manila Electric Company
vs. Ver, 67 SCRA 351 [1975]). The petitioner failed to meet this requirement.
As held by the lower court, the exemption mentioned in Sec. 52 of P.D. No. 463
refers only to machineries, equipment, tools for production, etc., as provided in Sec.
53 of the same decree. The manufacture and the export of cement does not fall
under the said provision for it is not a mineral product (CFI Decision, Rollo, p. 62). It
is not cement that is mined only the mineral products composing the finished product
(Commissioner of Internal Revenue vs. Republic Cement Corporation, supra).1âwphi1
Furthermore, by the parties' own stipulation of facts submitted before the court a
quo, it is admitted that Floro Cement Corporation is engaged in the manufacturing
and selling, including exporting of cement (CFI Decision, Rollo, p. 57). As such, and
since the taxes sought to be collected were levied on these activities pursuant to Sec.
19 of P.D. No. 231, Ordinances Nos. 5 and 10, which were enacted pursuant to P.D.
No. 231 and P.D. No. 426, respectively, properly apply to petitioner Floro Cement
Corporation.
WHEREFORE, the petition is DENIED for lack of merit and the decision dated
November 29, 1976 of the then Court of First Instance of Misamis Oriental is
Affirmed.
SO ORDERED.
Fernan, C.J., (Chairman), Gutierrez, Jr., Feliciano and Davide, Jr., JJ., concur.
Petition denied. Decision affirmed.
 ENVIRONMENTAL LAW & NATURAL RESOURCES
Note.—As a general rule, there must be a statutory grant before a local government
unit may lawfully impose a gross receipt tax. (Progressive Development Corporation
vs. Quezon City, 172 SCRA 629.)
——o0o——
No. L-55132. August 30, 1988.*
PEOPLE OF THE PHILIPPINES, represented by the Office of the Provincial
Fiscal Lagawe, Ifugao, petitioner, vs. HON. FRANCISCO MEN ABAD, Judge
of the Court of First Instance of Ifugao, Lagawe, Ifugao, JULIUS ROBLES,
EDUARDO BANDAO, MARCOS OYAGON, DAGYO UYANG, UDULON, LATTOD,
BUCCAHAN MUNDIGUING, JUNIOR MUNDIGUING, PIWIT TUNDAGUI,
GUINOMON CHONGAAP, FERNANDO TID-ONG, JULIO BALLOGAN, FERNAN
GAGGO, CARMEN GAGGO AND BALBINA POCYA, respondents.
Remedial Law; Criminal Procedure; Since the accused invoked the ground that the
facts charged do not constitute an offense, the sufficiency of the information hinges
on the question of whether the facts alleged, if hypothetically admitted, meet the
essential elements of the offense.— It is basic that since respondents-accused invoked
the ground “that the facts charged do not constitute an offense” (Rule 117, Sec. 2[a]
Rules of Court), the sufficiency of the Information hinges on the question of whether
Session 5 P a g e | 132
the facts alleged, if hypothetically admitted, meet the essential elements of the
offense as defined in the law (People vs. Segovia, 103 Phil. 1162 [1958]).
Same; Same; Information; Elements of the offense of theft of minerals.— The
elements of the offense, therefore, are that: (1) the accused extracted, removed
and/or disposed of minerals; (2) these minerals belong to the Government or have
been taken from a mining claim or claims leased, held or owned by other persons;
and (3) the accused did not possess a mining lease or a temporary permit or any
other permit to mine granted by the Secretary or the Director under existing mining
decrees, laws and regulations.
Same; Same; Same; Same; All the elements of the offense charged are present in
case at bar.—Evidently, the Information filed in the Court below includes all the
foregoing elements. Thus, it alleged (1) that the accused, conspiring and mutually
helping one another, wilfully and feloniously extracted, removed and/or disposed of
minerals or material aggregates like sand and gravel; (2) the minerals were taken
from the Sumigar Quarry, Banaue, Ifugao, which is covered by a commercial permit
issued by the Bureau of Mines, Baguio City, in favor of complaining witness Felix de
Castro; and (3) the extracting was done without any mining lease or permit of their
own pursuant to law.
Same; Same; Same; Same; Judge committed grave abuse of discretion when he
considered matters of defense extrinsic to the allegations in the information and
which should be substantiated during the trial; Receipts of tax payments are
insufficient to prove that the proper government office had granted the required
permit to extract minerals from the quarry.— It will have to be held, therefore, that
based upon the facts alleged in the Information, the essential requisites of the
offense of “Theft of Minerals,” as specified by substantive law, are present. Thus,
respondent Judge, in considering as evidence the three receipts of tax payments
issued by the Municipal Treasurer of Banawe, Ifugao, exceeded his jurisdiction
amounting to grave abuse of discretion when he considered matters of defense
extrinsic to the allegations in the Information and which should be substantiated
during the trial, Moreover, said receipts merely show payment of taxes pursuant to
Provincial Ordinance No. 14 and not the authority to extract, remove, and/or dispose
of minerals from the Sumigar Quarry as required by P.D. No. 463. Those receipts are
insufficient evidence to prove that the proper Government office had, in effect,
granted the required permit to extract minerals from said quarry.
Same; Same; Same; In crimes punished by special laws, the act alone, irrespective of
its motives, constitutes the offense.— The rationalization by respondent Judge that
the taking away of sand and gravel was without malice because it was done with the
knowledge and participation of the Government since private respondents had paid
 ENVIRONMENTAL LAW & NATURAL RESOURCES
taxes on the sand and gravel extracted is not well-taken. In crimes punished by
special laws, the act alone, irrespective of its motives, constitutes the offense.
PETITION to review the orders of the Court of First Instance of Ifugao. Abad, J.
The facts are stated in the opinion of the Court.
     The Solicitor General for petitioner.
     Delano V. Europa for respondents.
MELENCIO-HERRERA, J.:
We annul the Order of respondent Judge of the Court of First Instance of Ifugao,
Lagawe Ifugao, dismissing the Information for "Theft of Minerals" filed against
private respondents Julius Robles and thirteen (13) others on the ground that the
facts charged do not constitute an offense.
The antecedental facts may be briefly recited thus:
1. Prior to 27 March 1978, the Director of Mines issued a commercial lease permit to
one Felix de Castro granting him the exclusive right to quarry, extract and carry away
sand and gravel from the Sumigar Quarry located at Banawe, Ifugao.
2. On complaint by Felix de Castro, an Information was filed in the Court of First
Instance of Ifugao (Criminal Case No. 316), presided over by respondent Judge,
charging private respondents with the crime of "Theft of Minerals" defined and
penalized under Section 78 of Presidential Decree No. 483, as amended by
Presidential Decree No. 1385.
3. The Information particularized the offense as follows:
That on or about March 27, 1978, continuing thru April, May and
June of 1978, thence to July, August and September of the same
year, ... and within the jurisdiction of this honorable Court, the
above-named accused, all residents of Banawe, Ifugao, conspiring,
confederating, confabulating and mutually helping one another with
evident premeditation, and with intent of gain, without the
knowledge or consent of the said Permitted as well as against the
latter's prohibition and protestations, and without any permit of
their own pursuant to law, did then and there wilfully, unlawfully,
and feloniously extract, gather, remove, take and/or dispose of the
minerals or material aggregates like sand, gravel, stones, and
boulders; by the use of force, threat and intimidations against the
Permittee and his laborers for the purpose of driving them away
from the Quarry Site, and by accused extracting, gathering, taking
and hauling said material aggregates or minerals therefrom, and
disposing of the same for gain, as in fact they did gain from the
Session 5 P a g e | 133
disposition of all said minerals or aggregates so extracted,
gathered, and removed, pursuant to FOUR (4) Contracts with the
Ministry of Public Highways, Ifugao Engineering District, Lagawe
Province of Ifugao, and ONE (1) Contract with the DIVISION
(Manila), Inc., stationed at Banawe, Ifugao, to the prejudice of said
FELIX DE CASTRO, as permittee in terms of the value of the
minerals and material aggregates thus gathered, extracted,
removed., and disposed of, to the extent of FORTY THOUSAND
FIVE HUNDRED AND NINETY TWO PESOS and THIRTY EIGHT
CENTAVOS (P 40,592.38) in addition to the royalty and the damage
caused thereby.
ALL CONTRARY TO LAW. (Annex "A," Petition, pp. 10-11, Rollo)
4. Respondents-accused filed a Motion to Quash on the ground that the facts charged
do not constitute an offense inasmuch as they had paid "sand and gravel tax," as
shown by three official receipts dated February 2, 1978, April 13, 1978, and April 27,
1978, respectively, to the Municipal Treasurer of Banawe, Ifugao, for the quarrying of
sand and gravel. The taking, therefore, according to private respondents, was with
the consent of the government. They also invoked LOI No. 243, which allows persons
to extract sand and gravel even within the leased area for use in government
infrastructures.
5. Petitioner opposed the quashal arguing that it is error to imply that consent was
given by the Government through the Municipal Treasurer inasmuch as the taxes paid
to the Municipal Government are not the fees required by the Bureau of Mines, which
is the government entity empowered to approve permits and licenses and to regulate
the exploitation of mineral resources. Further, LOI 243, as implemented by Mines
Administrative Order No. MRD-16 Series of 1977, grants to government entities only
the right to extract sand and gravel for infrastructure projects and not to any private
person or entity.
6. On 28 January 1980, respondent Judge issued the assailed Order quashing the
Information on the ground that violation of P.D. No. 463 is limited to an
administrative violation and that the crime of Theft under the Revised Penal Code
(Article 308) has not been committed since malice, which is an essential element in
the commission of a crime, is lacking.
7. The reconsideration prayed for by petitioner was denied by respondent on 18 July
1980. Hence, this certiorari Petition alleging grave abuse of discretion on the part of
respondent Judge.
The crucial issue for resolution is whether or not the facts charged in the Information
constitute an offense.
It is basic that since respondents-accused invoked the ground "that the facts charged
do not constitute an offense" (Rule 1 17, Sec. 2[a] Rules of Court), the sufficiency of
 ENVIRONMENTAL LAW & NATURAL RESOURCES Session 5 P a g e | 134

the Information hinges on the question of whether the facts alleged, if hypothetically P.D. No. 463. Those receipts are insufficient evidence to prove that the proper
admitted, meet the essential elements of the offense as defined in the law (People Government office had, in effect, granted the required permit to extract minerals
vs. Segovia 103 Phil. 1162 [1958]). from said quarry.

The Information, filed on 31 May 1979, charged private respondents with the crime The rationalization by respondent Judge that the taking away of sand and gravel was
of "Theft of Minerals" defined and penalized under Section 78 of P.D. No. 463, as without malice because it was done with the knowledge and participation of the
amended by Section 23 of P.D. No. 1385, effective 25 May 1978, providing: Government since private respondents had paid taxes on the sand and gravel
extracted is not well-taken. In crimes punished by special laws, the act alone,
Section 78. Theft of Minerals. Any person who, without a mining irrespective of its motives, constitutes the offense.
lease or a temporary permit or, any other permit granted by the
Secretary or the Director under existing mining decrees, laws and WHEREFORE, the Petition is granted; the Orders, dated 28 January 1980 and 18 July
regulations to mine, shall extract, remove and/or dispose of 1980, of respondent Judge are annulled and set aside; and Criminal Case No. 316 of
minerals belonging to the Government or from a mining claim or the Court a quo is ordered reinstated for further proceedings in accordance with law.
claims leased, held or owned by other persons, shall be deemed to
have stolen the ores or the products thereof from the mines or SO ORDERED.
mills. He shall, upon conviction, be imprisoned from six (6) months
to six (6) years or pay a fine from one hundred pesos (Pl00.00) to Paras, Padilla, Sarmiento and Regalado, JJ., concur.
ten thousand pesos (P10,000.00) or both, in the discretion of the
court, besides paying compensation for the minerals removed, Petition granted; orders annulled and set aside.
extracted and disposed of, the royalty and the damage caused
thereby. Note.—For Theft to be committed there must be physical handling of personal
property. (Jais vs. Intermediate Appellate Court, 132 SCRA 359.)
The elements of the offense, therefore, are that : (1) the accused extracted, removed
and/or disposed of minerals; (2) these minerals belong to the Government or have
——o0o——
been taken from a mining claim or claims leased, held or owned by other persons;
and (3) the accused did not possess a mining lease or a temporary permit or any
other permit to mine granted by the Secretary or the Director under existing mining
decrees, laws and regulations.

Evidently, the Information filed in the Court below includes all the foregoing
elements. Thus, it alleged (1) that the accused, conspiring and mutually helping one
another, wilfully and feloniously extracted, removed and/or disposed of minerals or
material aggregates like sand and gravel; (2) the minerals were taken from the
Sumigar Quarry, Banawe, Ifugao, which is covered by a commercial permit issued by
the Bureau of Mines, Baguio City, in favor of complaining witness Felix de Castro; and
(3) the extracting was done without any mining lease or permit of their own pursuant
to law.

It will have to be held, therefore, that based upon the facts alleged in the
Information, the essential requisites of the Offense of "Theft of Minerals," as specified
by substantive law, are present. Thus, respondent Judge, in considering as evidence
the three receipts of tax payments issued by the Municipal Treasurer of Banawe,
Ifugao, exceeded his jurisdiction amounting to grave abuse of discretion when he
considered matters of defense extrinsic to the allegations in the Information and
which should be substantiated during the trial. Moreover, said receipts merely show
payment of taxes pursuant to Provincial Ordinance No. 14 and not the authority to
extract, remove, and/or dispose of minerals from the Sumigar Quarry as required by