CELESTIAL NICKEL MINING CORPORATION v MACRO-ASIA
G.R. No. 169080
December 19, 2007
FACTS:
On September 24, 1973, the then Secretary of Agriculture and Natural Resources and Infanta Mineral and Industrial Corporation (Infanta) entered into a Mining Lease Contract (V-1050) for a term of 25 years up to September 23, 1998 for mining lode claims covering an area of 216 hectares at Sitio Linao, Ipilan, Brooke's Point, Palawan.
Infanta's corporate name was changed to Cobertson Holdings Corporation on January 26, 1994 and subsequently to its present name, Macroasia Corporation, on November 6, 1995.
Sometime in 1997, Celestial filed a Petition to Cancel the subject mining lease contracts and other mining claims of Macroasia including those covered by Mining Lease Contract No. V-1050, before the Panel of Arbitrators (POA) of the Mines and Geo-Sciences Bureau (MGB) of the DENR. The petition was docketed as DENR Case No. 97-01.
Celestial is the assignee of 144 mining claims covering such areas contiguous to Infanta's (now Macroasia) mining lode claims.
Celestial sought the cancellation of Macroasia's lease contracts on the following grounds: (1) the nonpayment of Macroasia of required occupational fees and municipal taxes; (2) the non-filing of Macroasia of Affidavits of Annual Work Obligations; (3) the failure of Macroasia to provide improvements on subject mining claims; (4) the concentration of Macroasia on logging; (5) the encroachment, mining, and extraction by Macroasia of nickel ore from Celestial's property; (6) the ability of Celestial to subject the mining areas to commercial production; and (7) the willingness of Celestial to pay fees and back taxes of Macroasia.
DECISION OF LOWER COURTS:
* POA: the POA found that Macroasia and Lebach not only automatically abandoned their areas/mining claims but likewise had lost all their rights to the mining claims. The POA granted the petition of Celestial to cancel the following Mining Lease Contracts * MAB: affirmed POA. The MAB found that Macroasia did not comply with its work obligations from 1986 to 1991.
However, contrary to the findings of the POA, the MAB found that it was Blue Ridge that had prior and preferential rights over the mining claims of Macroasia, and not Celestial. In case Blue Ridge defaults, Celestial could exercise the secondary priority and preferential rights, and subsequently, in case Celestial also defaults, other qualified applicants could file.
(motion for reconsideration) Macroasia, in its Motion for Reconsideration, reiterated that it did not abandon its mining claims, and even if mining was not listed among its purposes in its amended Articles of Incorporation, its mining activities were acts that were only ultra vires but were ratified as a secondary purpose by its stockholders in subsequent amendments of its Articles of Incorporation.
(special motion for reconsideration) Macroasia averred that the power and authority to grant, cancel, and revoke mineral agreements is exclusively lodged with the DENR Secretary. Macroasia further pointed out that in arrogating upon itself such power, the POA whimsically and capriciously discarded the procedure on conferment of mining rights laid down in Republic Act No. (RA) 7942, The Philippine Mining Act of 1995, and DENR Administrative Order No. (AO) 96-40.
* MAB (on issue of jurisdiction): The MAB further held that the power to cancel or revoke a mineral agreement was exclusively lodged with the DENR Secretary; that a petition for cancellation is not a mining dispute under the exclusive jurisdiction of the POA pursuant to Sec. 77 of RA 7942; and that the POA could only adjudicate claims or contests during the MPSA application and not when the claims and leases were already granted and subsisting.
IRONIC DECISIONS OF THE CA
* CA (Celestial appeal): affirmed the November 26, 2004 MAB Resolution which declared Macroasia's seven mining lease contracts as subsisting; rejected Blue Ridge's claim for preferential right over said mining claims; and upheld the exclusive authority of the DENR Secretary to approve, cancel, and revoke mineral agreements.
* CA (Blue Ridge's appeal): granted Blue Ridge's petition; reversed and set aside the November 26, 2004 and July 12, 2005 Resolutions of the MAB; and reinstated the October 24, 2000 Decision in MAB Case Nos. 056-97 and 057-97. The Special Tenth Division canceled Macroasia's lease contracts; granted Blue Ridge prior and preferential rights; and treated the cancellation of a mining lease agreement as a mining dispute within the exclusive jurisdiction of the POA under Sec. 77 of RA 7942, explaining that the power to resolve mining disputes, which is the greater power, necessarily includes the lesser power to cancel mining agreements.
ISSUE: who has authority and jurisdiction to cancel existing mineral agreements under RA 7942 in relation to PD 463 and pertinent rules and regulations?
HELD: DENR Secretary, not the POA, has the jurisdiction to cancel existing mineral lease contracts or mineral agreements based on the following reasons:
1. The power of the DENR Secretary to cancel mineral agreements emanates from his administrative authority, supervision, management, and control over mineral resources under Chapter I, Title XIV of Book IV of the Revised Administrative Code of 1987;
It is the DENR, through the Secretary, that a. manages, supervises, and regulates the use and development of all mineral resources of the country; b. has exclusive jurisdiction over the management of all lands of public domain, which covers mineral resources and deposits from said lands; c. has the power to oversee, supervise, and police our natural resources which include mineral resources.
Derived from the broad and explicit powers of the DENR and its Secretary under the Administrative Code of 1987 is the power to approve mineral agreements and necessarily to cancel or cause to cancel said agreements.
2. RA 7942 confers to the DENR Secretary specific authority over mineral resources.
To enforce PD 463, the CMAO containing the rules and regulations implementing PD 463 was issued. Sec. 44 of the CMAO provides:
SEC. 44. Procedure for Cancellation.––Before any mining lease contract is cancelled for any cause enumerated in Section 43 above, the mining lessee shall first be notified in writing of such cause or causes, and shall be given an opportunity to be heard, and to show cause why the lease shall not be cancelled.
If, upon investigation, the Secretary shall find the lessee to be in default, the former may warn the lessee, suspend his operations or CANCEL THE LEASE CONTRACT (emphasis supplied).
Sec. 4 of EO 279 provided that the provisions of PD 463 and its implementing rules and regulations, not inconsistent with the executive order, continue in force and effect.
When RA 7942 took effect on March 3, 1995, there was no provision on who could cancel mineral agreements. However, since the aforequoted Sec. 44 of the CMAO implementing PD 463 was not repealed by RA 7942 and DENR AO 96-40, not being contrary to any of the provisions in them, then it follows that Sec. 44 serves as basis for the DENR Secretary's authority to cancel mineral agreements.
Historically, the DENR Secretary has the express power to approve mineral agreements or contracts and the implied power to cancel said agreements.
3. Under RA 7942, the power of control and supervision of the DENR Secretary over the MGB to cancel or recommend cancellation of mineral rights clearly demonstrates the authority of the DENR Secretary to cancel or approve the cancellation of mineral agreements.
Sec. 7. Organization and Authority of the Bureau (MGB). e. To CANCEL OR TO RECOMMEND CANCELLATION AFTER DUE PROCESS, MINING RIGHTS, mining applications and mining claims for non-compliance with pertinent laws, rules and regulations.
It is explicit from the foregoing provision that the DENR Secretary has the authority to cancel mineral agreements based on the recommendation of the MGB Director. As a matter of fact, the power to cancel mining rights can even be delegated by the DENR Secretary to the MGB Director. Clearly, it is the Secretary, not the POA, that has authority and jurisdiction over cancellation of existing mining contracts or mineral agreements.
4. The DENR Secretary's power to cancel mining rights or agreements through the MGB can be inferred from Sec. 230, Chapter XXIV of DENR AO 96-40 on cancellation, revocation, and termination of a permit/mineral agreement/ FTAA.
As the MGB is under the supervision of the DENR Secretary, then the logical conclusion is that it is the DENR Secretary who can cancel the mineral agreements and not the POA nor the MAB.
5. Celestial and Blue Ridge are not unaware of the stipulations in the Mining Lease Contract Nos. V-1050 and MRD-52,[50] the cancellation of which they sought from the POA. It is clear from said lease contracts that the parties are the Republic of the Philippines represented by the Secretary of Agriculture and Natural Resources (now DENR Secretary) as lessor, and Infanta (Macroasia) as lessee. [which declares that the lessor can order the lease cancelled)
RATIO: (1) RA 7942, The Philippine Mining Act of 1995 enacted on March 3, 1995, repealed the provisions of PD 463 inconsistent with RA 7942. Unlike PD 463, where the application was filed with the Bureau of Mines Director, the applications for mineral agreements are now required to be filed with the Regional Director as provided by Sec. 29 of RA 7942. The proper filing gave the proponent the prior right to be approved by the Secretary and thereafter to be submitted to the President. The President shall provide a list to Congress of every approved mineral agreement within 30 days from its approval by the Secretary. Again, RA 7942 is silent on who has authority to cancel the agreement.
Compared to PD 463 where disputes were decided by the Bureau of Mines Director whose decisions were appealable to the DENR Secretary and then to the President, RA 7942 now provides for the creation of quasi-judicial bodies (POA and MAB) that would have jurisdiction over conflicts arising from the applications and mineral agreements. Secs. 77, 78, and 79 lay down the procedure, thus:
SEC. 77. Panel of Arbitrators.––There shall be a panel of arbitrators in the regional office of the Department composed of three (3) members, two (2) of whom must be members of the Philippine Bar in good standing and one [1] licensed mining engineer or a professional in a related field, and duly designated by the Secretary as recommended by the Mines and Geosciences Bureau Director. Those designated as members of the panel shall serve as such in addition to their work in the Department without receiving any additional compensation. As much as practicable, said members shall come from the different bureaus of the Department in the region. The presiding officer thereof shall be selected by the drawing of lots. His tenure as presiding officer shall be on a yearly basis. The members of the panel shall perform their duties and obligations in hearing and deciding cases until their designation is withdrawn or revoked by the Secretary. Within thirty (30) working days, after the submission of the case by the parties for decision, the panel shall have exclusive and original jurisdiction to hear and decide on the following:
(a) DISPUTES INVOLVING RIGHTS TO MINING AREAS;
[NOTE: The phrase “disputes involving rights to mining areas” refers to any adverse claim, protest, or opposition to an APPLICATION FOR MINERAL AGREEMENTS. The POA therefore has the jurisdiction to resolve any adverse claim, protest, or opposition to a pending application for a mineral agreement filed with the concerned Regional Office of the MGB.
Clearly, POA's jurisdiction over “disputes involving rights to mining areas” has nothing to do with the cancellation of existing mineral agreements.]
(b) DISPUTES INVOLVING MINERAL AGREEMENTS OR PERMITS;
[A petition for the cancellation of an existing mineral agreement covering an area applied for by an applicant based on the alleged violation of any of the terms thereof, is not a “dispute” involving a mineral agreement under Sec. 77 (b) of RA 7942. It does not pertain to a violation by a party of the right of another. The applicant is not a real party-in-interest as he does not have a material or substantial interest in the mineral agreement but only a prospective or expectant right or interest in the mining area. He has no legal right to such mining claim and hence no dispute can arise between the applicant and the parties to the mineral agreement. The court rules therefore that a petition for cancellation of a mineral agreement anchored on the breach thereof even if filed by an applicant to a mining claim, like Celestial and Blue Ridge, falls within the jurisdiction of the DENR Secretary and not POA. Such petition is excluded from the coverage of the POA's jurisdiction over disputes involving mineral agreements under Sec. 77 (b) of RA 7942.]
(c) Disputes involving surface owners, occupants and claimholders/concessionaires; and
(d) Disputes pending before the Bureau and the Department at the date of the effectivity of this Act.
SEC. 78. Appellate Jurisdiction.—The decision or order of the panel of arbitrators may be appealed by the party not satisfied thereto to the Mines Adjudication Board within fifteen (15) days from receipt thereof which must decide the case within thirty (30) days from submission thereof for decision.
SEC. 79. Mines Adjudication Board.—The Mines Adjudication Board shall be composed of three (3) members. The Secretary shall be the chairman with the Director of the Mines and Geosciences Bureau and the Undersecretary for Operations of the Department as members thereof.
(2) SEC. 8. Authority of the Department.––The Department shall be the primary government agency responsible for the conservation, management, development, and proper use of the States mineral resources including those in reservations, watershed areas, and lands of the public domain. THE SECRETARY SHALL HAVE THE AUTHORITY TO ENTER INTO MINERAL AGREEMENTS ON BEHALF OF THE GOVERNMENT UPON THE RECOMMENDATION OF THE DIRECTOR, promulgate such rules and regulations as may be necessary to implement the intent and provisions of this Act.
SEC. 29. Filing and approval of Mineral Agreements.––x x x.
The filing of a proposal for a mineral agreement shall give the proponent the prior right to areas covered by the same. THE PROPOSED MINERAL AGREEMENT WILL BE APPROVED BY THE SECRETARY and copies thereof shall be submitted to the President. Thereafter, the President shall provide a list to Congress of every approved mineral agreement within thirty (30) days from its approval by the Secretary. (Emphasis supplied.)
OBITER DICTA:
(1) a preferential right would at most be an inchoate right to be given priority in the grant of a mining agreement. It has not yet been transformed into a legal and vested right unless approved by the MGB or DENR Secretary. Even if Blue Ridge has a preferential right over the subject mining claims, it is still within the competence and discretion of the DENR Secretary to grant mineral agreements to whomever he deems best to pursue the mining claims over and above the preferential status given to Blue Ridge. Besides, being simply a preferential right, it is ineffective to dissolve the pre-existing or subsisting mining lease contracts of Macroasia.
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