Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. Nos. 152613 & 152628
2009

November 20,

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.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 152619-20
BALITE COMMUNAL PORTAL MINING COOPERATIVE,
petitioner,
vs.
SOUTHEAST MINDANAO GOLD MINING CORP., APEX
MINING CO., INC., The Mines Adjudication Board,
Provincial Mining Regulatory Board (PMRBDAVAO), MONKAYO INTEGRATED SMALL SCALE
MINERS ASSOCIATION, INC., ROSENDO VILLAFLOR,
DAVAO UNITED MINERS COOPERATIVE, ANTONIO
DACUDAO,
PUTING-BATO
GOLD
MINERS
COOPERATIVE,
ROMEO
ALTAMERA,
THELMA
CATAPANG, LUIS GALANG, RENATO BASMILLO,
FRANCISCO YOBIDO, EDUARDO GLORIA, EDWIN
ASION,
MACARIO
HERNANDEZ,
REYNALDO
CARUBIO, ROBERTO BUNIALES, RUDY ESPORTONO,
ROMEO CASTILLO, JOSE REA, GIL GANADO,
PRIMITIVA LICAYAN, LETICIA ALQUEZA and JOEL
BRILLANTES Management Mining Corporation,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 152870-71
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.
RESOLUTION

NAT RES

CHICO-NAZARIO, J.:
This resolves the motion for reconsideration dated 12
July 2006, filed by Southeast Mindanao Gold Mining
Corporation (SEM), of this Courts Decision dated 23 June
2006 (Assailed Decision). The Assailed Decision held that
the assignment of Exploration Permit (EP) 133 in favor of
SEM violated one of the conditions stipulated in the
permit, i.e., that the same shall be for the exclusive use
and benefit of Marcopper Mining Corporation (MMC) or
its duly authorized agents. Since SEM did not claim or
submit evidence that it was a designated agent of MMC,
the latter cannot be considered as an agent of the
former that can use EP 133 and benefit from it. It also
ruled that the transfer of EP 133 violated Presidential
Decree No. 463, which requires that the assignment of a
mining right be made with the prior approval of the
Secretary of the Department of Environment and Natural
Resources (DENR). Moreover, the Assailed Decision
pointed out that EP 133 expired by non-renewal since it
was not renewed before or after its expiration.
The Assailed Decision likewise upheld the validity of
Proclamation No. 297 absent any question against its
validity. In view of this, and considering that under
Section 5 of Republic Act No. 7942, otherwise known as
the "Mining Act of 1995," mining operations in mineral
reservations may be undertaken directly by the State or
through a contractor, the Court deemed the issue of
ownership of priority right over the contested Diwalwal
Gold Rush Area as having been overtaken by the said
proclamation. Thus, it was held in the Assailed Decision
that it is now within the prerogative of the Executive
Department to undertake directly the mining operations
of the disputed area or to award the operations to
private entities including petitioners Apex and Balite,
subject to applicable laws, rules and regulations, and
provided that these private entities are qualified.
SEM also filed a Motion for Referral of Case to the Court
En Banc and for Oral Arguments dated 22 August 2006.
Apex, for its part, filed a Motion for Clarification of the
Assailed Decision, praying that the Court elucidate on
the Decisions pronouncement that "mining operations,
are now, therefore within the full control of the State
through the executive branch." Moreover, Apex asks this
Court to order the Mines and Geosciences Board (MGB)
to accept its application for an exploration permit.
In its Manifestation and Motion dated 28 July 2006, Balite
echoes the same concern as that of Apex on the actual
takeover by the State of the mining industry in the
disputed area to the exclusion of the private sector. In
addition, Balite prays for this Court to direct MGB to
accept its application for an exploration permit.
Camilo Banad, et al., likewise filed a motion for
reconsideration and prayed that the disputed area be
awarded to them.
In the Resolution dated 15 April 2008, the Court En Banc
resolved to accept the instant cases. The Court, in a
resolution dated 29 April 2008, resolved to set the cases
for Oral Argument on 1 July 2008.
During the Oral Argument, the Court identified the
following principal issues to be discussed by the parties:

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

1. Whether the transfer or assignment of

Exploration Permit (EP) 133 by MMC to SEM was
validly made without violating any of the terms
and conditions set forth in Presidential Decree
No. 463 and EP 133 itself.
2. Whether Southeast Mindanao Mining Corp.
acquired a vested right over the disputed area,
which constitutes a property right protected by
the Constitution.
3. Whether the assailed Decision dated 23 June
2006 of the Third Division in this case is
contrary to and overturns the earlier Decision of
this Court in Apex v. Garcia (G.R. No. 92605, 16
July 1991, 199 SCRA 278).
4. Whether the issuance of Proclamation No.
297 declaring the disputed area as mineral
reservation outweighs the claims of SEM, Apex
Mining Co. Inc. and Balite Communal Portal
Mining Cooperative over the Diwalwal Gold
Rush Area.
5.
Whether
the
issue
of
legality/constitutionality of Proclamation
297 was belatedly raised.

the
No.

6. Assuming that the legality/constitutionality of

Proclamation No. 297 was timely raised,
whether said proclamation violates any of the
following:
a. Article XII,
Constitution;

Section

of

the

b. Section 1 of Republic Act No. 3092;

c. Section 14 of the Administrative
Code of 1987;
d. Section 5(a) of Republic Act No.
7586;
e. Section 4(a) of Republic Act No.
6657; and
f. Section 2, Subsection 2.1.2 of
Executive Order No. 318 dated 9 June
2004.
After hearing the arguments of the parties, the Court
required them to submit their respective memoranda.
Memoranda were accordingly filed by SEM, Apex, Balite
and Mines Adjudication Board (MAB).
We shall resolve the second issue before dwelling on the
first, third and the rest of the issues.
MMC or SEM Did Not Have Vested Rights Over the
Diwalwal Gold Rush Area
Petitioner SEM vigorously argues that Apex Mining Co.,
Inc. v. Garcia1 vested in MMC mining rights over the

NAT RES

disputed area. It claims that the mining rights that MMC

acquired under the said case were the ones assigned to
SEM, and not the right to explore under MMCs EP 133. It
insists that mining rights, once obtained, continue to
subsist regardless of the validity of the exploration
permit; thus, mining rights are independent of the
exploration permit and therefore do not expire with the
permit. SEM insists that a mining right is a vested
property right that not even the government can take
away. To support this thesis, SEM cites this Courts ruling
in McDaniel v. Apacible and Cuisia 2 and in Gold Creek
Mining Corporation v. Rodriguez,3 which were decided in
1922 and 1938, respectively.
McDaniel and Gold Creek Mining Corporation are not in
point.
In 1916, McDaniel, petitioner therein, located minerals,
i.e., petroleum, on an unoccupied public land and
registered his mineral claims with the office of the
mining recorder pursuant to the Philippine Bill of 1902,
where a mining claim locator, soon after locating the
mine, enjoyed possessory rights with respect to such
mining claim with or without a patent therefor. In that
case, the Agriculture Secretary, by virtue of Act No.
2932, approved in 1920, which provides that "all public
lands may be leased by the then Secretary of Agriculture
and Natural Resources," was about to grant the
application for lease of therein respondent, overlapping
the mining claims of the subject petitioner. Petitioner
argued that, being a valid locator, he had vested right
over the public land where his mining claims were
located. There, the Court ruled that the mining claim
perfected under the Philippine Bill of 1902, is "property
in the highest sense of that term, which may be sold and
conveyed, and will pass by descent, and is not therefore
subject to the disposal of the Government." The Court
then declared that since petitioner had already perfected
his mining claim under the Philippine Bill of 1902, a
subsequent statute, i.e., Act No. 2932, could not operate
to deprive him of his already perfected mining claim,
without violating his property right.
Gold Creek Mining reiterated the ruling in McDaniel that
a perfected mining claim under the Philippine Bill of
1902 no longer formed part of the public domain; hence,
such mining claim does not come within the prohibition
against the alienation of natural resources under Section
1, Article XII of the 1935 Constitution.
Gleaned from the ruling on the foregoing cases is that
for this law to apply, it must be established that the
mining claim must have been perfected when the
Philippine Bill of 1902 was still in force and effect. This is
so because, unlike the subsequent laws that prohibit the
alienation of mining lands, the Philippine Bill of 1902
sanctioned the alienation of mining lands to private
individuals. The Philippine Bill of 1902 contained
provisions for, among many other things, the open and
free exploration, occupation and purchase of mineral
deposits and the land where they may be found. It
declared "all valuable mineral deposits in public lands in
the Philippine Islands, both surveyed and unsurveyed x x
x to be free and open to exploration, occupation, and
purchase, and the land in which they are found to
occupation and purchase, by citizens of the United
States, or of said Islands x x x." 4 Pursuant to this law, the
holder of the mineral claim is entitled to all the minerals
that may lie within his claim, provided he does three
acts: First, he enters the mining land and locates a plot

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

of ground measuring, where possible, but not exceeding,

one thousand feet in length by one thousand feet in
breadth, in as nearly a rectangular form as possible. 5
Second, the mining locator has to record the mineral
claim in the mining recorder within thirty (30) days after
the location thereof.6 Lastly, he must comply with the
annual actual work requirement. 7 Complete mining
rights, namely, the rights to explore, develop and utilize,
are acquired by a mining locator by simply following the
foregoing requirements.1avvphi1
With the effectivity of the 1935 Constitution, where the
regalian doctrine was adopted, it was declared that all
natural resources of the Philippines, including mineral
lands and minerals, were property belonging to the
State.8 Excluded, however, from the property of public
domain were the mineral lands and minerals that were
located and perfected by virtue of the Philippine Bill of
1902, since they were already considered private
properties of the locators.9
Commonwealth Act No. 137 or the Mining Act of 1936,
which expressly adopted the regalian doctrine following
the provision of the 1935 Constitution, also proscribed
the alienation of mining lands and granted only lease
rights to mining claimants, who were prohibited from
purchasing the mining claim itself.
When Presidential Decree No. 463, which revised
Commonwealth Act No. 137, was in force in 1974, it
likewise recognized the regalian doctrine embodied in
the 1973 Constitution. It declared that all mineral
deposits and public and private lands belonged to the
state while, nonetheless, recognizing mineral rights that
had already been existing under the Philippine Bill of
1902 as being beyond the purview of the regalian
doctrine.10 The possessory rights of mining claim holders
under the Philippine Bill of 1902 remained intact and
effective, and such rights were recognized as property
rights that the holders could convey or pass by
descent.11
In the instant cases, SEM does not aver or prove that its
mining rights had been perfected and completed when
the Philippine Bill of 1902 was still the operative law.
Surely, it is impossible for SEM to successfully assert that
it acquired mining rights over the disputed area in
accordance with the same bill, since it was only in 1984
that MMC, SEMs predecessor-in-interest, filed its
declaration of locations and its prospecting permit
application in compliance with Presidential Decree No.
463. It was on 1 July 1985 and 10 March 1986 that a
Prospecting Permit and EP 133, respectively, were issued
to MMC. Considering these facts, there is no possibility
that MMC or SEM could have acquired a perfected
mining claim under the auspices of the Philippine Bill of
1902. Whatever mining rights MMC had that it invalidly
transferred to SEM cannot, by any stretch of imagination,
be considered "mining rights" as contemplated under
the Philippine Bill of 1902 and immortalized in McDaniel
and Gold Creek Mining.
SEM likens EP 133 with a building permit. SEM likewise
equates its supposed rights attached to the exploration
permit with the rights that a private property land owner
has to said landholding. This analogy has no basis in law.
As earlier discussed, under the 1935, 1973 and 1987
Constitutions, national wealth, such as mineral
resources, are owned by the State and not by their

NAT RES

discoverer. The discoverer or locator can only develop

and utilize said minerals for his own benefit if he has
complied with all the requirements set forth by
applicable laws and if the State has conferred on him
such right through permits, concessions or agreements.
In other words, without the imprimatur of the State, any
mining aspirant does not have any definitive right over
the mineral land because, unlike a private landholding,
mineral land is owned by the State, and the same cannot
be alienated to any private person as explicitly stated in
Section 2, Article XIV of the 1987 Constitution:
All lands of public domain, waters, minerals x x x and all
other natural resources are owned by the State. With the
exception of agricultural lands, all other natural
resources shall not be alienated. (Emphases supplied.)
Further, a closer scrutiny of the deed of assignment in
favor of SEM reveals that MMC assigned to the former
the rights and interests it had in EP 133, thus:
1. That for ONE PESO (P1.00) and other valuable
consideration received by the ASSIGNOR from the
ASSIGNEE, the ASSIGNOR hereby ASSIGNS, TRANSFERS
and CONVEYS unto the ASSIGNEE whatever rights or
interest the ASSIGNOR may have in the area situated in
Monkayo, Davao del Norte and Cateel, Davao Oriental,
identified as Exploration Permit No. 133 and Application
for a Permit to Prospect in Bunawan, Agusan del Sur
respectively. (Emphasis supplied.)
It is evident that what MMC had over the disputed area
during the assignment was an exploration permit.
Clearly, the right that SEM acquired was limited to
exploration, only because MMC was a mere holder of an
exploration permit. As previously explained, SEM did not
acquire the rights inherent in the permit, as the
assignment by MMC to SEM was done in violation of the
condition stipulated in the permit, and the assignment
was effected without the approval of the proper
authority in contravention of the provision of the mining
law governing at that time. In addition, the permit
expired on 6 July 1994. It is, therefore, quite clear that
SEM has no right over the area.
Even assuming arguendo that SEM obtained the rights
attached in EP 133, said rights cannot be considered as
property rights protected under the fundamental law.
An exploration permit does not automatically ripen into a
right to extract and utilize the minerals; much less does
it develop into a vested right. The holder of an
exploration permit only has the right to conduct
exploration works on the area awarded. Presidential
Decree No. 463 defined exploration as "the examination
and investigation of lands supposed to contain valuable
minerals, by drilling, trenching, shaft sinking, tunneling,
test pitting and other means, for the purpose of probing
the presence of mineral deposits and the extent thereof."
Exploration does not include development and
exploitation of the minerals found. Development is
defined by the same statute as the steps necessarily
taken to reach an ore body or mineral deposit so that it
can be mined, whereas exploitation is defined as "the
extraction and utilization of mineral deposits." An
exploration permit is nothing more than a mere right
accorded to its holder to be given priority in the
governments consideration in the granting of the right
to develop and utilize the minerals over the area. An

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

exploration permit is merely inchoate, in that the holder

still has to comply with the terms and conditions
embodied in the permit. This is manifest in the language
of Presidential Decree No. 463, thus:
Sec. 8. x x x The right to exploit therein shall be awarded
by the President under such terms and conditions as
recommended by the Director and approved by the
Secretary Provided, That the persons or corporations
who undertook prospecting and exploration of said area
shall be given priority.
In La Bugal-Blaan Tribal Association, Inc. v. Ramos, 12 this
Court emphasized:
Pursuant to Section 20 of RA 7942, an exploration permit
merely grants to a qualified person the right to conduct
exploration for all minerals in specified areas. Such a
permit does not amount to an authorization to extract
and carry off the mineral resources that may be
discovered. x x x.
Pursuant to Section 24 of RA 7942, an exploration permit
grantee who determines the commercial viability of a
mining area may, within the term of the permit, file with
the MGB a declaration of mining project feasibility
accompanied by a work program for development. The
approval of the mining project feasibility and compliance
with other requirements of RA 7942 vests in the grantee
the exclusive right to an MPSA or any other mineral
agreement, or to an FTAA. (Underscoring ours.)
The non-acquisition by MMC or SEM of any vested right
over the disputed area is supported by this Courts ruling
in Southeast Mindanao Gold Mining Corporation v. Balite
Portal Mining Cooperative13 :
Clearly then, the Apex Mining case did not invest
petitioner with any definite right to the Diwalwal mines
which it could now set up against respondent BCMC and
other mining groups.
Incidentally, it must likewise be pointed out that under
no circumstances may petitioners rights under EP No.
133 be regarded as total and absolute. As correctly held
by the Court of Appeals in its challenged decision, EP No.
133 merely evidences a privilege granted by the State,
which may be amended, modified or rescinded when the
national interest so requires. x x x. (Underscoring
supplied.)
Unfortunately, SEM cannot be given priority to develop
and exploit the area covered by EP 133 because, as
discussed in the assailed Decision, EP 133 expired by
non-renewal on 6 July 1994. Also, as already mentioned,
the transfer of the said permit to SEM was without legal
effect because it was done in contravention of
Presidential Decree No. 463 which requires prior
approval from the proper authority. Simply told, SEM
holds nothing for it to be entitled to conduct mining
activities in the disputed mineral land.
SEM wants to impress on this Court that its alleged
mining rights, by virtue of its being a transferee of EP
133, is similar to a Financial and Technical Assistance
Agreement (FTAA) of a foreign contractor, which merits
protection by the due process clause of the Constitution.

NAT RES

SEM cites La Bugal-Blaan Tribal Association, Inc. v.

Ramos,14 as follows:
To say that an FTAA is just like a mere timber license or
permit and does not involve contract or property rights
which merit protection by the due process clause of the
Constitution, and may therefore be revoked or cancelled
in the blink of an eye, is to adopt a well-nigh confiscatory
stance; at the very least, it is downright dismissive of the
property rights of businesspersons and corporate entities
that have investments in the mining industry, whose
investments, operations and expenditures do contribute
to the general welfare of the people, the coffers of
government, and the strength of the economy. x x x.
Again, this argument is not meritorious. SEM did not
acquire the rights attached to EP 133, since their
transfer was without legal effect. Granting for the sake of
argument that SEM was a valid transferee of the permit,
its right is not that of a mining contractor. An exploration
permit grantee is vested with the right to conduct
exploration only, while an FTAA or MPSA contractor is
authorized to extract and carry off the mineral resources
that may be discovered in the area.15 An exploration
permit holder still has to comply with the mining project
feasibility and other requirements under the mining law.
It has to obtain approval of such accomplished
requirements
from
the
appropriate
government
agencies. Upon obtaining this approval, the exploration
permit holder has to file an application for an FTAA or an
MPSA and have it approved also. Until the MPSA
application of SEM is approved, it cannot lawfully claim
that it possesses the rights of an MPSA or FTAA holder,
thus:
x x x prior to the issuance of such FTAA or mineral
agreement, the exploration permit grantee (or
prospective contractor) cannot yet be deemed to have
entered into any contract or agreement with the State x
x x.16
But again, SEM is not qualified to apply for an FTAA or
any mineral agreement, considering that it is not a
holder of a valid exploration permit, since EP 133 expired
by non-renewal and the transfer to it of the same permit
has no legal value.
More importantly, assuming arguendo that SEM has a
valid exploration permit, it cannot assert any mining
right over the disputed area, since the State has taken
over the mining operations therein, pursuant to
Proclamation No. 297 issued by the President on 25
November 2002. The Court has consistently ruled that
the nature of a natural resource exploration permit is
analogous to that of a license. In Republic v. Rosemoor
Mining and Development Corporation, this Court
articulated:
Like timber permits, mining exploration permits do not
vest in the grantee any permanent or irrevocable right
within the purview of the non-impairment of contract
and due process clauses of the Constitution, since the
State, under its all-encompassing police power, may
alter, modify or amend the same, in accordance with the
demands of the general welfare.17 (Emphasis supplied.)
As a mere license or privilege, an exploration permit can
be validly amended by the President of the Republic

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

when national interests suitably necessitate. The Court

instructed thus:
Timber licenses, permits and license agreements are the
principal instruments by which the State regulates the
utilization and disposition of forest resources to the end
that the public welfare is promoted. x x x They may be
validly amended, modified, replaced or rescinded by the
Chief Executive when national interests so require. 18
Recognizing the importance of the countrys natural
resources, not only for national economic development,
but also for its security and national defense, Section 5
of Republic Act No. 7942 empowers the President, when
the national interest so requires, to establish mineral
reservations where mining operations shall be
undertaken directly by the State or through a contractor,
viz:
SEC 5. Mineral Reservations. When the national
interest so requires, such as when there is a need to
preserve strategic raw materials for industries critical to
national development, or certain minerals for scientific,
cultural or ecological value, the President may establish
mineral reservations upon the recommendation of the
Director through the Secretary. Mining operations in
existing
mineral
reservations
and
such
other
reservations as may thereafter be established, shall be
undertaken by the Department or through a contractor x
x x. (Emphasis supplied.)
Due to the pressing concerns in the Diwalwal Gold Rush
Area brought about by unregulated small to mediumscale mining operations causing ecological, health and
peace and order problems, the President, on 25
November 2002, issued Proclamation No. 297, which
declared the area as a mineral reservation and as an
environmentally critical area. This executive fiat was
aimed at preventing the further dissipation of the natural
environment and rationalizing the mining operations in
the area in order to attain an orderly balance between
socio-economic growth and environmental protection.
The area being a mineral reservation, the Executive
Department has full control over it pursuant to Section 5
of Republic Act No. 7942. It can either directly undertake
the exploration, development and utilization of the
minerals found therein, or it can enter into agreements
with qualified entities. Since the Executive Department
now has control over the exploration, development and
utilization of the resources in the disputed area, SEMs
exploration permit, assuming that it is still valid, has
been effectively withdrawn. The exercise of such power
through Proclamation No. 297 is in accord with jura
regalia, where the State exercises its sovereign power as
owner of lands of the public domain and the mineral
deposits found within. Thus, Article XII, Section 2 of the
1987 Constitution emphasizes:
SEC. 2. All lands of the public domain, water, minerals,
coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife,
flora and fauna, and other natural resources are owned
by the State. With the exception of agricultural lands, all
other natural resources shall not be alienated. The
exploration, development, and utilization of natural
resources shall be under the full control and supervision
of the State. The State may directly undertake such
activities, or it may enter into co-production, joint
venture, or product-sharing agreements with Filipino

NAT RES

citizens, or corporations or associations at least sixty per

centum of whose capital is owned by such citizens.
(Emphasis supplied.)
Furthermore, said proclamation cannot be denounced as
offensive to the fundamental law because the State is
sanctioned to do so in the exercise of its police power. 19
The issues on health and peace and order, as well the
decadence of the forest resources brought about by
unregulated mining in the area, are matters of national
interest. The declaration of the Chief Executive making
the area a mineral reservation, therefore, is sanctioned
by Section 5 of Republic Act No. 7942.
The Assignment of EP No. 133 by MMC in Favor of SEM
Violated Section 97 of Presidential Decree No. 463 and
the Terms and Conditions Set Forth in the Permit
SEM claims that the approval requirement under Section
97 of Presidential Decree No. 463 is not applicable to this
case, because MMC neither applied for nor was granted
a mining lease contract. The said provision states:
SEC. 97. Assignment of Mining Rights. A mining lease
contract or any interest therein shall not be transferred,
assigned, or subleased without the prior approval of the
Secretary: Provided, that such transfer, assignment or
sublease may be made only to a qualified person
possessing the resources and capability to continue the
mining operations of the lessee and that the assignor
has complied with all the obligations of the lease:
Provided, further, That such transfer or assignment shall
be duly registered with the office of the mining recorder
concerned. (Emphasis supplied.)
Exploration Permit 133 was issued in favor of MMC on 10
March 1986, when Presidential Decree No. 463 was still
the governing law. Presidential Decree No. 463 pertains
to the old system of exploration, development and
utilization of natural resources through "license,
concession or lease."20
Pursuant to this law, a mining lease contract confers on
the lessee or his successors the right to extract, to
remove, process and utilize the mineral deposits found
on or underneath the surface of his mining claims
covered by the lease. The lessee may also enter into a
service contract for the exploration, development and
exploitation of the minerals from the lands covered by
his lease, to wit:
SEC. 44. A mining lease contract shall grant to the
lessee, his heirs, successors, and assigns the right to
extract all mineral deposits found on or underneath the
surface of his mining claims covered by the lease,
continued vertically downward; to remove, process, and
otherwise utilize the mineral deposits for his own
benefit; and to use the lands covered by the lease for
the purpose or purposes specified therein x x x That a
lessee may on his own or through the Government, enter
into a service contract for the exploration,
development and exploitation of his claims and the
processing and marketing of the product thereof, subject
to the rules and regulations that shall be promulgated by
the Director, with the approval of the Secretary x x x.
(Emphases supplied.)

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

In other words, the lessees interests are not only limited

to the extraction or utilization of the minerals in the
contract area, but also to include the right to explore and
develop the same. This right to explore the mining claim
or the contract area is derived from the exploration
permit duly issued by the proper authority. An
exploration permit is, thus, covered by the term "any
other interest therein." Section 97 is entitled,
"Assignment of Mining Rights." This alone gives a hint
that before mining rights -- namely, the rights to explore,
develop and utilize -- are transferred or assigned, prior
approval must be obtained from the DENR Secretary. An
exploration permit, thus, cannot be assigned without the
imprimatur of the Secretary of the DENR.
It is instructive to note that under Section 13 of
Presidential Decree No. 463, the prospecting and
exploration of minerals in government reservations, such
as forest reservations, are prohibited, except with the
permission of the government agency concerned. It is
the government agency concerned that has the
prerogative to conduct prospecting, exploration and
exploitation of such reserved lands.21 It is only in
instances wherein said government agency, in this case
the Bureau of Mines, cannot undertake said mining
operations that qualified persons may be allowed by the
government to undertake such operations. PNOC-EDC v.
Veneracion, Jr.22 outlines the five requirements for
acquiring mining rights in reserved lands under
Presidential Decree No. 463: (1) a prospecting permit
from the agency that has jurisdiction over the land; (2)
an exploration permit from the Bureau of Mines and GeoSciences (BMGS); (3) if the exploration reveals the
presence of commercial deposit, application to BMGS by
the permit holder for the exclusion of the area from the
reservation; (4) a grant by the President of the
application to exclude the area from the reservation; and
(5) a mining agreement (lease, license or concession)
approved by the DENR Secretary.
Here, MMC met the first and second requirements and
obtained an exploration permit over the disputed forest
reserved land. Although MMC still has to prove to the
government that it is qualified to develop and utilize the
subject mineral land, as it has yet to go through the
remaining process before it can secure a lease
agreement, nonetheless, it is bound to follow Section 97
of Presidential Decree No. 463. The logic is not hard to
discern. If a lease holder, who has already demonstrated
to the government his capacity and qualifications to
further develop and utilize the minerals within the
contract area, is prohibited from transferring his mining
rights (rights to explore, develop and utilize), with more
reason will this proscription apply with extra force to a
mere exploration permit holder who is yet to exhibit his
qualifications in conducting mining operations. The
rationale for the approval requirement under Section 97
of Presidential Decree No. 463 is not hard to see.
Exploration permits are strictly granted to entities or
individuals possessing the resources and capability to
undertake mining operations. Mining industry is a major
support of the national economy and the continuous and
intensified exploration, development and wise utilization
of mining resources is vital for national development. For
this reason, Presidential Decree No. 463 makes it
imperative that in awarding mining operations, only
persons possessing the financial resources and technical
skill for modern exploratory and development
techniques are encouraged to undertake the exploration,
development and utilization of the countrys natural

NAT RES

resources. The preamble of Presidential Decree No. 463

provides thus:
WHEREAS, effective and continuous mining operations
require considerable outlays of capital and resources,
and make it imperative that persons possessing the
financial resources and technical skills for modern
exploratory and development techniques be encouraged
to undertake the exploration, development and
exploitation of our mineral resources;
The Court has said that a "preamble" is the key to
understanding the statute, written to open the minds of
the makers to the mischiefs that are to be remedied, and
the purposes that are to be accomplished, by the
provisions of the statute. 23 As such, when the statute
itself is ambiguous and difficult to interpret, the
preamble may be resorted to as a key to understanding
the statute.
Indubitably, without the scrutiny by the government
agency as to the qualifications of the would-be
transferee of an exploration permit, the same may fall
into the hands of non-qualified entities, which would be
counter-productive to the development of the mining
industry. It cannot be overemphasized that the
exploration, development and utilization of the countrys
natural resources are matters vital to the public interest
and the general welfare; hence, their regulation must be
of utmost concern to the government, since these
natural resources are not only critical to the nations
security, but they also ensure the countrys survival as a
viable and sovereign republic.24
The approval requirement of the Secretary of the DENR
for the assignment of exploration permits is bolstered by
Section 25 of Republic Act No. 7942 (otherwise known as
the Philippine Mining Act of 1995), which provides that:
Sec. 25. Transfer or Assignment. An exploration permit
may be transferred or assigned to a qualified person
subject to the approval of the Secretary upon the
recommendation of the Director.
SEM further posits that Section 97 of Presidential Decree
No. 463, which requires the prior approval of the DENR
when there is a transfer of mining rights, cannot be
applied to the assignment of EP 133 executed by MMC in
favor of SEM because during the execution of the Deed
of Assignment on 16 February 1994, Executive Order No.
27925 became the governing statute, inasmuch as the
latter abrogated the old mining system -- i.e., license,
concession or lease -- which was espoused by the
former.
This contention is not well taken. While Presidential
Decree No. 463 has already been repealed by Executive
Order No. 279, the administrative aspect of the former
law nonetheless remains applicable. Hence, the transfer
or assignment of exploration permits still needs the prior
approval of the Secretary of the DENR. As ruled in Miners
Association of the Philippines, Inc. v. Factoran, Jr. 26 :
Presidential Decree No. 463, as amended, pertains to the
old system of exploration, development and utilization of
natural resources through "license, concession or lease"
which, however, has been disallowed by Article XII,
Section 2 of the 1987 Constitution. By virtue of the said

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

constitutional mandate and its implementing law,

Executive Order No. 279, which superseded Executive
Order No. 211, the provisions dealing on "license,
concession, or lease" of mineral resources under
Presidential Decree No. 463, as amended, and other
existing mining laws are deemed repealed and,
therefore, ceased to operate as the governing law. In
other words, in all other areas of administration and
management of mineral lands, the provisions of
Presidential Decree No. 463, as amended, and other
existing mining laws, still govern. (Emphasis supplied.)
Not only did the assignment of EP 133 to SEM violate
Section 97 of Presidential Decree No. 463, it likewise
transgressed one of the conditions stipulated in the
grant of the said permit. The following terms and
conditions attached to EP 133 are as follows:27
1. That the permittee shall abide by the work
program submitted with the application or
statements made later in support thereof, and
which shall be considered as conditions and
essential parts of this permit;
2. That permittee shall maintain a complete
record of all activities and accounting of all
expenditures incurred therein subject to
periodic
inspection
and
verification
at
reasonable intervals by the Bureau of Mines at
the expense of the applicant;
3. That the permittee shall submit to the
Director of Mines within 15 days after the end of
each calendar quarter a report under oath of a
full and complete statement of the work done in
the area covered by the permit;
4. That the term of this permit shall be for two
(2) years to be effective from this date,
renewable for the same period at the discretion
of the Director of Mines and upon request of the
applicant;
5. That the Director of Mines may at any time
cancel this permit for violation of its provision or
in case of trouble or breach of peace arising in
the area subject hereof by reason of conflicting
interests without any responsibility on the part
of the government as to expenditures for
exploration that might have been incurred, or
as to other damages that might have been
suffered by the permittee;
6. That this permit shall be for the exclusive use
and benefit of the permittee or his duly
authorized agents and shall be used for mineral
exploration purposes only and for no other
purpose.
It must be noted that under Section 9028 of Presidential
Decree No. 463, which was the applicable statute during
the issuance of EP 133, the DENR Secretary, through the
Director of the Bureau of Mines and Geosciences, was
charged with carrying out the said law. Also, under
Commonwealth Act No. 136, also known as "An Act
Creating the Bureau of Mines," which was approved on 7
November 1936, the Director of Mines had the direct
charge of the administration of the mineral lands and

NAT RES

minerals; and of the survey, classification, lease or any

other form of concession or disposition thereof under the
Mining Act.29 This power of administration included the
power to prescribe terms and conditions in granting
exploration permits to qualified entities.
Thus, in the grant of EP 133 in favor of the MMC, the
Director of the BMG acted within his power in laying
down the terms and conditions attendant thereto. MMC
and SEM did not dispute the reasonableness of said
conditions.
Quite conspicuous is the fact that neither MMC nor SEM
denied that they were unaware of the terms and
conditions attached to EP 133. MMC and SEM did not
present any evidence that they objected to these
conditions. Indubitably, MMC wholeheartedly accepted
these terms and conditions, which formed part of the
grant of the permit. MMC agreed to abide by these
conditions. It must be accentuated that a party to a
contract cannot deny its validity, without outrage to
ones sense of justice and fairness, after enjoying its
benefits.30 Where parties have entered into a welldefined contractual relationship, it is imperative that
they should honor and adhere to their rights and
obligations as stated in their contracts, because
obligations arising from these have the force of law
between the contracting parties and should be complied
with in good faith.31 Condition Number 6 categorically
states that the permit shall be for the exclusive use and
benefit of MMC or its duly authorized agents. While it
may be true that SEM, the assignee of EP 133, is a 100%
subsidiary corporation of MMC, records are bereft of any
evidence showing that the former is the duly authorized
agent of the latter. This Court cannot condone such utter
disregard on the part of MMC to honor its obligations
under the permit. Undoubtedly, having violated this
condition, the assignment of EP 133 to SEM is void and
has no legal effect.
To boot, SEM squandered whatever rights it assumed it
had under EP 133. On 6 July 1993, EP 133 was extended
for twelve more months or until 6 July 1994. MMC or
SEM, however, never renewed EP 133 either prior to or
after its expiration. Thus, EP 133 expired by non-renewal
on 6 July 1994. With the expiration of EP 133 on 6 July
1994, MMC lost any right to the Diwalwal Gold Rush
Area.
The Assailed Decision Resolved Facts and Issues That
Transpired after the Promulgation of Apex Mining Co.,
Inc. v. Garcia
SEM asserts that the 23 June 2006 Decision reversed the
16 July 1991 Decision of the Court en banc entitled,
"Apex Mining Co., Inc. v. Garcia."32
The assailed Decision DID NOT overturn the 16 July 1991
Decision in Apex Mining Co., Inc. v. Garcia.
It must be pointed out that what Apex Mining Co., Inc. v.
Garcia resolved was the issue of which, between Apex
and MMC, availed itself of the proper procedure in
acquiring the right to prospect and to explore in the
Agusan-Davao-Surigao Forest Reserve. Apex registered
its Declarations of Location (DOL) with the then BMGS,
while MMC was granted a permit to prospect by the
Bureau of Forest Development (BFD) and was

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

subsequently granted an exploration permit by the

BMGS. Taking into consideration Presidential Decree No.
463, which provides that "mining rights within forest
reservation can be acquired by initially applying for a
permit to prospect with the BFD and subsequently for a
permit to explore with the BMGS," the Court therein
ruled that MMC availed itself of the proper procedure to
validly operate within the forest reserve or reservation.
While it is true that Apex Mining Co., Inc. v. Garcia
settled the issue of which between Apex and MMC was
legally entitled to explore in the disputed area, such
rights, though, were extinguished by subsequent events
that transpired after the decision was promulgated.
These subsequent events, which were not attendant in
Apex Mining Co., Inc. v. Garcia 33 dated 16 July 1991, are
the following:
(1) the expiration of EP 133 by non-renewal on
6 July 1994;
(2) the transfer/assignment of EP 133 to SEM on
16 February 1994 which was done in violation
to the condition of EP 133 proscribing its
transfer;
(3) the transfer/assignment of EP 133 to SEM is
without legal effect for violating PD 463 which
mandates that the assignment of mining rights
must be with the prior approval of the Secretary
of the DENR.
Moreover, in Southeast Mindanao Gold Mining
Corporation v. Balite Portal Mining Cooperative, 34 the
Court, through Associate Justice Consuelo YnaresSantiago (now retired), declared that Apex Mining Co.,
Inc. v. Garcia did not deal with the issues of the
expiration of EP 133 and the validity of the transfer of EP
133 to SEM, viz:
Neither can the Apex Mining case foreclose any question
pertaining to the continuing validity of EP No. 133 on
grounds which arose after the judgment in said case was
promulgated. While it is true that the Apex Mining case
settled the issue of who between Apex and Marcopper
validly acquired mining rights over the disputed area by
availing of the proper procedural requisites mandated by
law, it certainly did not deal with the question raised by
the oppositors in the Consolidated Mines cases, i.e.,
whether EP No. 133 had already expired and remained
valid subsequent to its transfer by Marcopper to
petitioner. (Emphasis supplied.)
What is more revealing is that in the Resolution dated 26
November
1992,
resolving
the
motion
for
reconsideration of Apex Mining Co., Inc. v. Garcia, the
Court clarified that the ruling on the said decision was
binding only between Apex and MMC and with respect
the particular issue raised therein. Facts and issues not
attendant to the said decision, as in these cases, are not
settled by the same. A portion of the disposition of the
Apex Mining Co., Inc. v. Garcia Resolution dated 26
November 1992 decrees:
x x x The decision rendered in this case is conclusive
only between the parties with respect to the particular
issue herein raised and under the set of circumstances
herein prevailing. In no case should the decision be

NAT RES

considered as a precedent to resolve or settle claims of

persons/entities not parties hereto. Neither is it intended
to unsettle rights of persons/entities which have been
acquired or which may have accrued upon reliance on
laws passed by the appropriate agencies. (Emphasis
supplied.)
The Issue of the Constitutionality of Proclamation Is
Raised Belatedly
In its last-ditch effort to salvage its case, SEM contends
that Proclamation No. 297, issued by President Gloria
Macapagal-Arroyo and declaring the Diwalwal Gold Rush
Area as a mineral reservation, is invalid on the ground
that it lacks the concurrence of Congress as mandated
by Section 4, Article XII of the Constitution; Section 1 of
Republic Act No. 3092; Section 14 of Executive Order No.
292, otherwise known as the Administrative Code of
1987; Section 5(a) of Republic Act No. 7586, and Section
4(a) of Republic Act No. 6657.
It is well-settled that when questions of constitutionality
are raised, the court can exercise its power of judicial
review only if the following requisites are present: (1) an
actual and appropriate case exists; (2) there is a
personal and substantial interest of the party raising the
constitutional question; (3) the exercise of judicial review
is pleaded at the earliest opportunity; and (4) the
constitutional question is the lis mota of the case.
Taking into consideration the foregoing requisites of
judicial review, it is readily clear that the third requisite
is absent. The general rule is that the question of
constitutionality must be raised at the earliest
opportunity, so that if it is not raised in the pleadings,
ordinarily it may not be raised at the trial; and if not
raised in the trial court, it will not be considered on
appeal.35
In the instant case, it must be pointed out that in the
Reply to Respondent SEMs Consolidated Comment filed
on 20 May 2003, MAB mentioned Proclamation No. 297,
which was issued on 25 November 2002. This
proclamation, according to the MAB, has rendered SEMs
claim over the contested area moot, as the President has
already declared the same as a mineral reservation and
as an environmentally critical area. SEM did not put to
issue the validity of said proclamation in any of its
pleadings despite numerous opportunities to question
the same. It was only after the assailed Decision was
promulgated -- i.e., in SEMs Motion for Reconsideration
of the questioned Decision filed on 13 July 2006 and its
Motion for Referral of the Case to the Court En Banc and
for Oral Arguments filed on 22 August 2006 -- that it
assailed the validity of said proclamation.
Certainly, posing the question on the constitutionality of
Proclamation No. 297 for the first time in its Motion for
Reconsideration is, indeed, too late.36
In fact, this Court, when it rendered the Decision it
merely recognized that the questioned proclamation
came from a co-equal branch of government, which
entitled it to a strong presumption of constitutionality. 37
The presumption of its constitutionality stands inasmuch
as the parties in the instant cases did not question its
validity, much less present any evidence to prove that
the same is unconstitutional. This is in line with the

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

precept that administrative issuances have the force and

effect of law and that they benefit from the same
presumption of validity and constitutionality enjoyed by
statutes.38
Proclamation No. 297 Is in Harmony with Article XII,
Section 4, of the Constitution
At any rate, even if this Court were to consider the
arguments belatedly raised by SEM, said arguments are
not meritorious.
SEM asserts that Article XII, Section 4 of the Constitution,
bars
the
President
from
excluding
forest
reserves/reservations and proclaiming the same as
mineral reservations, since the power to de-classify them
resides in Congress.
Section 4, Article XII of the Constitution reads:
The Congress shall as soon as possible, determine by
law the specific limits of forest lands and national parks,
marking clearly their boundaries on the ground.
Thereafter, such forest lands and national parks shall be
conserved and may not be increased nor diminished,
except by law. The Congress shall provide, for such
periods as it may determine, measures to prohibit
logging in endangered forests and in watershed areas.
The above-quoted provision says that the area covered
by forest lands and national parks may not be expanded
or reduced, unless pursuant to a law enacted by
Congress. Clear in the language of the constitutional
provision is its prospective tenor, since it speaks in this
manner: "Congress shall as soon as possible." It is only
after the specific limits of the forest lands shall have
been determined
by the legislature will this
constitutional restriction apply. SEM does not allege nor
present any evidence that Congress had already enacted
a statute determining with specific limits forest lands
and national parks. Considering the absence of such law,
Proclamation No. 297 could not have violated Section 4,
Article XII of the 1987 Constitution. In PICOP Resources,
Inc. v. Base Metals Mineral Resources Corporation, 39 the
Court had the occasion to similarly rule in this fashion:
x x x Sec. 4, Art. XII of the 1987 Constitution, on the
other hand, provides that Congress shall determine the
specific limits of forest lands and national parks, marking
clearly their boundaries on the ground. Once this is
done, the area thus covered by said forest lands and
national parks may not be expanded or reduced except
also by congressional legislation. Since Congress has yet
to enact a law determining the specific limits of the
forest lands covered by Proclamation No. 369 and
marking clearly its boundaries on the ground, there can
be no occasion that could give rise to a violation of the
constitutional provision.
Section 4, Article XII of the Constitution, addresses the
concern of the drafters of the 1987 Constitution about
forests and the preservation of national parks. This was
brought about by the drafters awareness and fear of the
continuing destruction of this countrys forests. 40 In view
of this concern, Congress is tasked to fix by law the
specific limits of forest lands and national parks, after
which the trees in these areas are to be taken care of. 41
Hence, these forest lands and national parks that

NAT RES

Congress is to delimit through a law could be changed

only by Congress.
In addition, there is nothing in the constitutional
provision that prohibits the President from declaring a
forest land as an environmentally critical area and from
regulating the mining operations therein by declaring it
as a mineral reservation in order to prevent the further
degradation of the forest environment and to resolve the
health and peace and order problems that beset the
area.
A closer examination of Section 4, Article XII of the
Constitution and Proclamation No. 297 reveals that there
is nothing contradictory between the two. Proclamation
No. 297, a measure to attain and maintain a rational and
orderly balance between socio-economic growth and
environmental protection, jibes with the constitutional
policy of preserving and protecting the forest lands from
being further devastated by denudation. In other words,
the proclamation in question is in line with Section 4,
Article XII of the Constitution, as the former fosters the
preservation of the forest environment of the Diwalwal
area and is aimed at preventing the further degradation
of the same. These objectives are the very same reasons
why the subject constitutional provision is in place.
What is more, jurisprudence has recognized the policy of
multiple land use in our laws towards the end that the
countrys precious natural resources may be rationally
explored, developed, utilized and conserved. 42 It has
been held that forest reserves or reservations can at the
same time be open to mining operations, provided a
prior written clearance by the government agency
having jurisdiction over such reservation is obtained. In
other words mineral lands can exist within forest
reservations. These two terms are not anti-thetical. This
is made manifest if we read Section 47 of Presidential
Decree No. 705 or the Revised Forestry Code of the
Philippines, which provides:
Mining operations in forest lands shall be regulated and
conducted with due regard to protection, development
and utilization of other surface resources. Location,
prospecting, exploration, utilization or exploitation of
mineral resources in forest reservations shall be
governed by mining laws, rules and regulations.
(Emphasis supplied.)
Also, Section 6 of Republic Act No. 7942 or the Mining
Act of 1995, states that mining operations in reserved
lands other than mineral reservations, such as forest
reserves/reservations, are allowed, viz:
Mining operations in reserved lands other than mineral
reservations may be undertaken by the Department,
subject to limitations as herein provided. In the event
that the Department cannot undertake such activities,
they may be undertaken by a qualified person in
accordance with the rules and regulations promulgated
by the Secretary. (Emphasis supplied.)
Since forest reservations can be made mineral lands
where mining operations are conducted, then there is no
argument that the disputed land, which lies within a
forest reservation, can be declared as a mineral
reservation as well.

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

Republic Act No. 7942 Otherwise Known as the

"Philippine Mining Act of 1995," is the Applicable Law

Republic Act No. 7942, also known as the "Philippine

Mining Act of 1995."

Determined to rivet its crumbling cause, SEM then

argues that Proclamation No. 297 is invalid, as it
transgressed the statutes governing the exclusion of
areas already declared as forest reserves, such as
Section 1 of Republic Act No. 3092,43 Section 14 of the
Administrative Code of 1987, Section 5(a) of Republic Act
No. 7586,44 and Section 4(a) of Republic Act No. 6657.45

Proclamation No. 297 did not modify the boundaries of

the Agusan-Davao-Surigao Forest Reserve since, as
earlier discussed, mineral reservations can exist within
forest reserves because of the multiple land use policy.
The metes and bounds of a forest reservation remain
intact even if, within the said area, a mineral land is
located and thereafter declared as a mineral reservation.

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

as follows:

More to the point, a perusal of Republic Act No. 3092,

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

Upon the recommendation of the Director of Forestry,

with the approval of the Department Head, the President
of the Philippines shall set apart forest reserves which
shall include denuded forest lands from the public lands
and he shall by proclamation declare the establishment
of such forest reserves and the boundaries thereof, and
thereafter such forest reserves shall not be entered, or
otherwise disposed of, but shall remain indefinitely as
such for forest uses.
The President of the Philippines may, in like manner
upon the recommendation of the Director of Forestry,
with the approval of the Department head, by
proclamation, modify the boundaries of any such forest
reserve to conform with subsequent precise survey but
not to exclude any portion thereof except with the
concurrence of Congress. (Underscoring supplied.)
SEM submits that the foregoing provision is the
governing statute on the exclusion of areas already
declared as forest reserves. Thus, areas already set
aside by law as forest reserves are no longer within the
proclamation powers of the President to modify or set
aside for any other purposes such as mineral
reservation.
To bolster its contention that the President cannot
disestablish forest reserves into mineral reservations,
SEM makes reference to Section 14, Chapter 4, Title I,
Book III of the Administrative Code of 1987, which partly
recites:
The President shall have the power to reserve for
settlement or public use, and for specific public
purposes, any of the lands of the public domain, the use
of which is not otherwise directed by law. The reserved
land shall thereafter remain subject to the specific public
purpose indicated until otherwise provided by law or
proclamation. (Emphases supplied.)
SEM further contends that Section 7 of Republic Act No.
7586,46 which declares that the disestablishment of a
protected area shall be done by Congress, and Section
4(a) of Republic Act No. 6657,47 which in turn requires a
law passed by Congress before any forest reserve can be
reclassified, militate against the validity of Proclamation
No. 297.
Proclamation No. 297, declaring a certain portion of land
located in Monkayo, Compostela Valley, with an area of
8,100 hectares, more or less, as a mineral reservation,
was issued by the President pursuant to Section 5 of

10

NAT RES

Over and above that, Section 5 of Republic Act No. 7942

authorizes
the
President
to
establish
mineral
reservations, to wit:
Sec. 5. Mineral Reservations. - When the national
interest so requires, such as when there is a need to
preserve strategic raw materials for industries critical to
national development, or certain minerals for scientific,
cultural or ecological value, the President may establish
mineral reservations upon the recommendation of the
Director through the Secretary. Mining operations in
existing
mineral
reservations
and
such
other
reservations as may thereafter be established, shall be
undertaken by the Department or through a contractor x
x x. (Emphasis supplied.)
It is a rudimentary principle in legal hermeneutics that
where there are two acts or provisions, one of which is
special and particular and certainly involves the matter
in question, the other general, which, if standing alone,
would include the matter and thus conflict with the
special act or provision, the special act must as intended
be taken as constituting an exception to the general act
or provision, especially when such general and special
acts or provisions are contemporaneous, as the
Legislature is not to be presumed to have intended a
conflict.
Hence, it has become an established rule of statutory
construction that where one statute deals with a subject
in general terms, and another deals with a part of the
same subject in a more detailed way, the two should be
harmonized if possible; but if there is any conflict, the
latter shall prevail regardless of whether it was passed
prior to the general statute. Or where two statutes are of
contrary tenor or of different dates but are of equal
theoretical application to a particular case, the one
specially designed therefor should prevail over the other.

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

It must be observed that Republic Act No. 3092, "An Act

to Amend Certain Sections of the Revised Administrative
Code of 1917," and the Administrative Code of 1987, are
general laws. Section 1 of Republic Act No. 3092 and
Section 14 of the Administrative Code of 1987 require
the concurrence of Congress before any portion of a
forest reserve can be validly excluded therefrom. These
provisions are broad since they deal with all kinds of
exclusion or reclassification relative to forest reserves,
i.e., forest reserve areas can be transformed into all
kinds of public purposes, not only the establishment of a
mineral reservation. Section 5 of Republic Act No. 7942
is a special provision, as it specifically treats of the
establishment of mineral reservations only. Said
provision grants the President the power to proclaim a
mineral land as a mineral reservation, regardless of
whether such land is also an existing forest reservation.
Sec. 5(a) of Republic Act No. 7586 provides:
Sec. 5. Establishment and Extent of the System. The
establishment and operationalization of the System shall
involve the following:
(a) All areas or islands in the Philippines proclaimed,
designated or set aside, pursuant to a law, presidential
decree, presidential proclamation or executive order as
national park, game refuge, bird and wildlife sanctuary,
wilderness area, strict nature reserve, watershed,
mangrove reserve, fish sanctuary, natural and historical
landmark, protected and managed landscape/seascape
as well as identified virgin forests before the effectivity
of this Act are hereby designated as initial components
of the System. The initial components of the System
shall be governed by existing laws, rules and regulations,
not inconsistent with this Act.
Glaring in the foregoing enumeration of areas
comprising the initial component of the NIPAS System
under Republic Act No. 7586 is the absence of forest
reserves. Only protected areas enumerated under said
provision cannot be modified. Since the subject matter
of Proclamation No. 297 is a forest reservation
proclaimed as a mineral reserve, Republic Act No. 7586
cannot possibly be made applicable. Neither can
Proclamation No. 297 possibly violate said law.
Similarly, Section 4(a) of Republic Act No. 6657 cannot
be made applicable to the instant case.
Section 4(a) of Republic Act No. 6657 reads:
All alienable and disposable lands of the public domain
devoted to or suitable for agriculture. No reclassification
of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress,
taking into account ecological, developmental and equity
considerations, shall have determined by law, the
specific limits of the public domain. (Underscoring
supplied.)
Section 4(a) of Republic Act No. 6657 prohibits the
reclassification of forest or mineral lands into agricultural
lands until Congress shall have determined by law the
specific limits of the public domain. A cursory reading of
this provision will readily show that the same is not
relevant to the instant controversy, as there has been no

11

NAT RES

reclassification of a forest or mineral land into an

agricultural land.
Furthermore, the settled rule of statutory construction is
that if two or more laws of different dates and of
contrary tenors are of equal theoretical application to a
particular case, the statute of later date must prevail
being a later expression of legislative will. 48
In the case at bar, there is no question that Republic Act
No. 7942 was signed into law later than Republic Act No.
3092, the Administrative Code of 1987,49 Republic Act
No. 7586 and Republic Act No. 6657. Applying the cited
principle, the provisions of Republic Act No. 3092, the
Administrative Code of 1987, Republic Act No. 7586 and
Republic Act No. 6657 cited by SEM must yield to Section
5 of Republic Act No. 7942.
Camilo Banad, et al., Cannot Seek Relief from This Court
Camilo Banad and his group admit that they are
members of the Balite Cooperative. They, however,
claim that they are distinct from Balite and move that
this Court recognize them as prior mining locators.
Unfortunately for them, this Court cannot grant any relief
they seek. Records reveal that although they were
parties to the instant cases before the Court of Appeals,
they did not file a petition for review before this Court to
contest the decision of the appellate court. The only
petitioners in the instant cases are the MAB, SEM, Balite
and Apex. Consequently, having no personality in the
instant cases, they cannot seek any relief from this
Court.
Apexs Motion for Clarification and Balites Manifestation
and Motion
In its Motion for Clarification, Apex desires that the Court
elucidate the assailed Decisions pronouncement that
"mining operations, are now, therefore within the full
control of the State through the executive branch" and
place the said pronouncement in the proper perspective
as the declaration in La Bugal-BLaan, which states that
The concept of control adopted in Section 2 of Article XII
must be taken to mean less than dictatorial, allencompassing control; but nevertheless sufficient to give
the State the power to direct, restrain, regulate and
govern the affairs of the extractive enterprise. 50
Apex states that the subject portion of the assailed
Decision could send a chilling effect to potential
investors in the mining industry, who may be of the
impression that the State has taken over the mining
industry, not as regulator but as an operator. It is of the
opinion that the State cannot directly undertake mining
operations.
Moreover, Apex is apprehensive of the following portion
in the questioned Decision "The State can also opt to
award mining operations in the mineral reservation to
private entities including petitioner Apex and Balite, if it
wishes." It avers that the phrase "if it wishes" may
whimsically be interpreted to mean a blanket authority
of the administrative authority to reject the formers
application for an exploration permit even though it

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

complies with the prescribed

regulations.1 a vv p h i 1

policies,

rules

and

Apex likewise asks this Court to order the MGB to accept

its application for an exploration permit.
Balite echoes the same concern as that of Apex on the
actual take-over by the State of the mining industry in
the disputed area to the exclusion of the private sector.
In addition, Balite prays that this Court direct MGB to
accept Balites application for an exploration permit.
Contrary to the contention of Apex and Balite, the fourth
paragraph of Section 2, Article XII of the Constitution and
Section 5 of Republic Act No. 7942 sanctions the State,
through the executive department, to undertake mining
operations directly, as an operator and not as a mere
regulator of mineral undertakings. This is made clearer
by the fourth paragraph of Section 2, Article XII of the
1987 Constitution, which provides in part:
SEC. 2. x x x The State may directly undertake such
activities, or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino
citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. x x x.
(Emphasis supplied.)
Also, Section 5 of Republic Act No. 7942 states that the
mining operations in mineral reservations shall be
undertaken by the Department of Environment and
Natural Resources or a contractor, to wit:
SEC. 5. Mineral Reservations. When the national
interest so requires, such as when there is a need to
preserve strategic raw materials for industries critical to
national development, or certain minerals for scientific,
cultural or ecological value, the President may establish
mineral reservations upon the recommendation of the
Director through the Secretary. Mining operations in
existing
mineral
reservations
and
such
other
reservations as may thereafter be established, shall be
undertaken by the Department or through a contractor x
x x. (Emphasis supplied.)
Undoubtedly, the Constitution, as well as Republic Act
No. 7942, allows the executive department to undertake
mining operations. Besides, La Bugal-BLaan, cited by
Apex, did not refer to the fourth sentence of Section 2,
Article XII of the Constitution, but to the third sentence
of the said provision, which states:
SEC. 2. x x x The exploration, development, and
utilization of natural resources shall be under the full
control and supervision of the State. x x x.
Pursuant to Section 5 of Republic Act No. 7942, the
executive department has the option to undertake
directly the mining operations in the Diwalwal Gold Rush
Area or to award mining operations therein to private
entities. The phrase "if it wishes" must be understood
within the context of this provision. Hence, the Court
cannot dictate this co-equal branch to choose which of
the two options to select. It is the sole prerogative of the
executive department to undertake directly or to award
the mining operations of the contested area.

12

NAT RES

Even assuming that the proper authority may decide to

award the mining operations of the disputed area, this
Court cannot arrogate unto itself the task of determining
who, among the applicants, is qualified. It is the duty of
the appropriate administrative body to determine the
qualifications of the applicants. It is only when this
administrative body whimsically denies the applications
of qualified applicants that the Court may interfere. But
until then, the Court has no power to direct said
administrative body to accept the application of any
qualified applicant.
In view of this, the Court cannot grant the prayer of Apex
and Balite asking the Court to direct the MGB to accept
their applications pending before the MGB.
SEMs Manifestation and Motion dated 25 January 2007
SEM wants to emphasize that its predecessor-in-interest,
Marcopper or MMC, complied with the mandatory
exploration work program, required under EP 133, by
attaching therewith quarterly reports on exploration
work from 20 June 1986 to March 1994.
It must be observed that this is the very first time at this
very late stage that SEM has presented the quarterly
exploration reports. From the early phase of this
controversy, SEM did not disprove the arguments of the
other parties that Marcopper violated the terms under EP
133, among other violations, by not complying with the
mandatory exploration work program. Neither did it
present evidence for the appreciation of the lower
tribunals. Hence, the non-compliance with the
mandatory exploration work program was not made an
issue in any stage of the proceedings. The rule is that an
issue that was not raised in the lower court or tribunal
cannot be raised for the first time on appeal, as this
would violate the basic rules of fair play, justice and due
process.51 Thus, this Court cannot take cognizance of the
issue of whether or not MMC complied with the
mandatory work program.
In sum, this Court finds:
1. The assailed Decision did not overturn the 16
July 1991 Decision in Apex Mining Co., Inc. v.
Garcia. The former was decided on facts and
issues that were not attendant in the latter,
such as the expiration of EP 133, the violation
of the condition embodied in EP 133 prohibiting
its assignment, and the unauthorized and
invalid assignment of EP 133 by MMC to SEM,
since this assignment was effected without the
approval of the Secretary of DENR;
2. SEM did not acquire vested right over the
disputed area because its supposed right was
extinguished by the expiration of its exploration
permit and by its violation of the condition
prohibiting the assignment of EP 133 by MMC to
SEM. In addition, even assuming that SEM has a
valid exploration permit, such is a mere license
that can be withdrawn by the State. In fact, the
same has been withdrawn by the issuance of
Proclamation No. 297, which places the
disputed area under the full control of the State
through the Executive Department;

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

3. The approval requirement under Section 97

of Presidential Decree No. 463 applies to the
assignment of EP 133 by MMC to SEM, since the
exploration permit is an interest in a mining
lease contract;
4. The issue of the constitutionality and the
legality of Proclamation No. 297 was raised
belatedly, as SEM questions the same for the
first time in its Motion for Reconsideration. Even
if the issue were to be entertained, the said
proclamation is found to be in harmony with the
Constitution and other existing statutes;
5. The motion for reconsideration of Camilo
Banad, et al. cannot be passed upon because
they are not parties to the instant cases;
6. The prayers of Apex and Balite asking the
Court to direct the MGB to accept their
applications for exploration permits cannot be
granted, since it is the Executive Department
that has the prerogative to accept such
applications, if ever it decides to award the
mining operations in the disputed area to a
private entity;
7. The Court cannot pass upon the issue of
whether or not MMC complied with the
mandatory exploration work program, as such
was a non-issue and was not raised before the
Court of Appeals and the lower tribunals.
WHEREFORE, premises considered, the Court holds:
1. The Motions for Reconsideration filed by
Camilo Banad, et al. and Southeast Mindanao
Gold Mining Corporation are DENIED for lack of
merit;
2. The Motion for Clarification of Apex Mining
Co., Inc. and the Manifestation and Motion of
the Balite Communal Portal Mining Cooperative,
insofar as these motions/manifestation ask the
Court to direct the Mines and Geo-Sciences
Bureau to accept their respective applications
for exploration permits, are DENIED;
3. The Manifestation and Urgent Motion dated
25 January 2007 of Southeast Mindanao Gold
Mining Corporation is DENIED.
4.
The
State,
through
the
Executive
Department, should it so desire, may now
award mining operations in the disputed area to
any qualified entities it may determine. The
Mines and Geosciences Bureau may process
exploration permits pending before it, taking
into consideration the applicable mining laws,
rules and regulations relative thereto.
SO ORDERED.

Apex Mining Co., Inc. v. Southeast Mindanao Gold Mining

Corp. (2006)
Facts:The case involves the Diwalwal Gold Rush Area
(Diwalwal), a rich tract of mineral landlocated inside the
Agusan-Davao-Surigao Forest Reserve in Davao del
Norte and Davao Oriental. Sincethe early 1980s,
Diwalwal has been stormed by conflicts brought about
by numerous mining claims over it. O n M a r c h 1 0 ,
1986, Marcopper Mining Corporation (MMC)
w a s g r a n t e d a n E x p l o r a t i o n Pe rm i t (EP 133) by
the Bureau of Mines and Geo-Sciences (BMG). A long
battle ensued between Apex and MMC with the latter
seeking the cancellation of the mining claims of Apex on
the ground that such mining claims were within a forest
reservation (Agusan-Davao-Surigao Forest Reserve) and
thus the acquisition on mining rights should have been
through an application for a permit to prospect with the
BFD and not through registration of a DOL with the BMG.
When it reached the SC in 1991, the Court ruled against
Apex holding that the area is a forest reserve and thus it
should have applied for a permit to prospect with the
BFD. O n Fe b r u a r y 1 6 1 9 9 4 ,
MMC assigned all its rights to EP 133 to Southeast
Mindanao Gold Mining Corporation (SEM), a domestic
corporation which is alleged to be a 100%-owned
subsidiary of MMC. Subsequently, BMG registered SEMs
Mineral Production Sharing Agreement (MPSA)application
and the Deed of Assignment. Several oppositions were
filed. The Panel of Arbitrators created by the DENR
upheld the validity of EP 133.
During the pendency of the case, DENR AO No. 2002-18
was issued declaring an emergency situation in the
Diwalwal Gold Rush Area and ordering the stoppage of
all mining operations therein.
Issues:
1. W / N E P 1 3 3 a n d i t s s u b s e q u e n t t r a n s f e r t o
SEM is valid.
2.W/N the DENR Secretary has authority to issue DAO 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.
3.Who (among petitioners Apex and Balite) has priority
right over Diwalwal?
Held/Ratio:1.
I N VA L I D . O n e o f t h e t e r m s a n d c o n d i t i o n s o f
EP 133 is: That this permit shall be for the
exclusive use and benefit of the permittee or his duly
authorized agents a n d s h a l l b e u s e d f o r mineral
exploration purposes only and for no other purpose.
While it may be true that SEM is a100% subsidiary
corporation of MMC, there is no showing that the former
is the duly authorized agent of the latter. As such, the
assignment is null and void
as it directly contravenes the terms a n d c o n d i t i o n s o f
the grant of EP 133.
a. The Deed of Assignment was a total abdication of
MMCs rights over the permit. It is not a mere grant of
authority to SEM as agent.

13

NAT RES

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD

b. Reason for the stipulation.

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 of acquiring the permit from the original
permittee.
c. Separate personality.
The fact that SEM is a 100% subsidiary of MMC
d o e s n o t automatically make it an agent of MMC. A
corporation is an artificial being invested by law with a
personality separate and distinct from persons
composing it as well as from that of any other legal
entity to which it may be related. Absent any clear proof
to the contrary, SEM is a separate and distinct entity
from MMC.

c o n t ro l o f t h e S t a t e t h ro u g h t h e exe c u t i v e
b r a n c h . Pursuant to Sec. 5 of RA 7942, the State can
either:
(1)
directly
undertake
the
exploration,
development and utilization of the area or (2) 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.

d. Doctrine of piercing the corporate veil inapplicable.

Only in cases where the corporate fiction was used as a
shield for fraud, illegality or inequity may the veil be
pierced and removed. The doctrine of piercing the
corporate veil cannot therefore be used as a vehicle to
commit prohibited acts. The assignment of the permit in
favor of SEM is utilized to circumvent the condition of
nontransferability 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 an illegal
act which is what the doctrine precisely seeks to
forestall.
e. PD 463 requires approval of Secretary of DENR.
A l s o , P D 4 6 3 ( M i n e r a l Re s o u r c e s Development
Decree), 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. Such is not present in
this case.
f. EP 133 expired by non-renewal.
Although EP 133 was extended for 12 months until July
6,1994, MMC never renewed its permit prior and after its
expiration. Wi t h t h e ex p i r a t i o n o f E P 1 3 3 o n J u l y
6, 1994, MMC lost any right to the Diwalwal
G o l d Ru s h 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 not acquired any vested right o v e r t h e a re a
c o v e r e d b y E P 1 3 3 . 2.
NO. The DENR Secretary has no power to convert forest
reserves into non-forest reserves. Such power is vested
with the President. The DENR Secretary may only
recommend to the President which forest reservations
are to be withdrawn from the coverage thereof. Thus,
DAO No. 66 is null and void for having been issued in
excess of the DENR Secretarys authority.3.
(Since its been held that neither MMC nor SEM has any
right over Diwalwal, it is thus necessary to make a
determination of the existing right of the remaining
claimants, petitioners Apex and Balite, in the dispute.)
The issue on who has priority right over Diwalwal is
deemed overtaken by the issuance of Proclamation 297
and DAO No. 2002-18, both being constitutionallysanctioned acts of the Executive Branc h. M i n i n g
operations
in
the
Diwalwal
Mineral
Re s e r v a t i o n a r e n o w , t h e r e f o r e , w i t h i n t h e f u l l

14

NAT RES

APEX MINING CORP vs. SOUTHEAST MINDANAO GOLD