LEPANTO

4/12/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 507
VOL. 507, NOVEMBER 20, 2006 315

Lepanto Consolidated Mining Co. vs. WMC Resources Int’l. Pty.
Ltd.
*
G.R. No. 162331. November 20, 2006.
LEPANTO CONSOLIDATED MINING CO., petitioner, vs. WMC

RESOURCES INT’L. PTY. LTD., WMC PHILIPPINES, INC. and
SAGITTARIUS MINES, INC., respondents.
Statutes; Statutory Construction; Statutes are to be construed as

having only a prospective operation unless the contrary is expressly stated
or necessarily implied from the language used in the law; It must be borne
in mind that a law is a rule established to guide our actions without no
binding effect until it is enacted, wherefore, it has no application to past
times but only to future time.—This posture of petitioner would clearly
contradict the established legal doctrine that statutes are to be construed as
having only a prospective operation unless the contrary is expressly stated
or necessarily implied from the language used in the law. As reiterated in
the case of Segovia v. Noel, 47 Phil. 543 (1925), a sound cannon of statutory
construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made manifest
either by the express terms of the statute or by necessary implication. Article
4 of the Civil Code provides that: “Laws shall not have a retroactive effect
unless therein otherwise provided.” According to this provision of law, in
order that a law may have retroactive effect it is necessary that an express
provision to this effect be made in the law, otherwise nothing should be
understood which is not embodied in the law. Furthermore, it must be borne
in mind that a law is a rule established to guide our actions without no
binding effect until it is enacted, wherefore, it has no application to past
times but only to future time, and that is why it is said that the law looks to
the future only and has no retroactive effect unless the legislator may have
formally given that effect to some legal provisions.
Same; Same; Philippine Mining Act of 1995 (R.A. No. 7942); There is
an absence of either an express declaration or an implication in the
Philippine Mining Act of 1995 that its provisions must be made to apply
retroactively.—In the case at bar, there is an absence of either an express
declaration or an implication in the Philippine
_______________
www.central.com.ph/sfsreader/session/000001716d071fd891254af5003600fb002c009e/t/?o=False 1/16
* FIRST DIVISION.
316
316 SUPREME COURT REPORTS ANNOTATED
Lepanto Consolidated Mining Co. vs. WMC Resources Int’l. Pty. Ltd.
Mining Act of 1995 that the provisions of said law shall be made to apply
retroactively, therefore, any section of said law must be made to apply only
prospectively, in view of the rule that a statute ought not to receive a
construction making it act retroactively, unless the words used are so clear,
strong, and imperative that no other meaning can be annexed to them, or
unless the intention of the legislature cannot be otherwise satisfied.
Same; Contract Clauses; A law which changes the terms of a legal
contract between the parties, either in the time or mode of performance, or
imposes new conditions, or dispenses with those expressed, or authorizes for
its satisfaction something different from that provided in its terms, is law
which impairs the obligation of a contract and is therefore null and void.—
It is engrained in jurisprudence that the constitutional prohibition on the
impairment of the obligation of contract does not prohibit every change in
existing laws, and to fall within the prohibition, the change must not only
impair the obligation of the existing contract, but the impairment must be
substantial. Substantial impairment as conceived in relation to impairment
of contracts has been explained in the case of Clemons v. Nolting, 42 Phil.
702 (1922), which stated that: a law which changes the terms of a legal
contract between parties, either in the time or mode of performance, or
imposes new conditions, or dispenses with those expressed, or authorizes
for its satisfaction something different from that provided in its terms, is law
which impairs the obligation of a contract and is therefore null and void.
Section 40 of the Philippine Mining Act of 1995 requiring the approval of
the President with respect to assignment or transfer of FTAAs, if made
applicable retroactively to the Columbio FTAA, would be tantamount to an
impairment of the obligations under said contract as it would effectively
restrict the right of the parties thereto to assign or transfer their interests in
the said FTAA.
PETITION for review on certiorari of a decision of the Court of

Appeals.
The facts are stated in the opinion of the Court.

Zaldy V. Trespeses for petitioner.
Carag, Caballes, Jamora & Somera Law Offices for
respondents WMC and WMCP.
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Ltd.
Mario C.V. Jalandoni for respondent Sagittarius Mines, Inc.
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of

1
the Rules of Civil Procedure, assailing the Decision of the Court of
Appeals in CA-G.R. SP No. 74161, dated 21 November 2003, which
2
dismissed herein petitioner’s Petition for Review of the Decision of
the Office of the President dated 23 July 2002 affirming in toto the
3
Order of the Secretary of the Department of Environment and
Natural Resources (DENR) dated 18 December 2001 approving the
application for and the consequent registration of FTAA No. 02-95-
XI from WMC Philippines to Sagittarius Mines, Inc.
On 22 March 1995, the Philippine Government and WMC
Philippines, the local wholly-owned subsidiary of WMC Resources
International Pty. Ltd. (WMC Resources) executed a Financial and
Technical Assistance Agreement, denominated as the Columbio
FTAA No. 02-95-XI (Columbio FTAA) for the purpose of large
scale exploration, development, and commercial exploration of
possible mineral resources in an initial contract area of 99,387
hectares located in the provinces of South Cotabato, Sultan Kudarat,
Davao del Sur, and North Cotabato in accordance with Executive
Order No. 279 and Department Administrative Order No. 63, Series
of 1991.
The Columbio FTAA is covered in part by 156 mining claims
held under various Mineral Production Sharing Agreements (MPSA)
by Southcot Mining Corporation, Tampakan Mining Corporation,
and Sagittarius Mines, Inc. (col-
_______________
1 Penned by Associate Justice Romeo A. Brawner, with Associate Justices Jose L.

Sabio, Jr. and Jose C. Reyes, Jr., concurring. Rollo, pp. 55-68.
2 O.P. Case No. 02-A-023; id., at pp. 379-391.
3 Re: Transfer of the Financial and Technical Assistance Agreement Denominated
as FTAA No. 02- 95-XI; id., at pp. 312-314.
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Ltd.
lectively called the Tampakan Companies), in accordance with the

Tampakan Option Agreement entered into by WMC Philippines and
the Tampakan Companies on 25 April 1991, as amended by
Amendatory Agreement dated 15 July 1994, for purposes of
exploration of the mining claims in Tampakan, South Cotabato. The
Option Agreement, among other things, provides for the grant of the
right of first refusal to the Tampakan Companies in case WMC
Philippines desires to dispose of its rights and interests in the mining
claims covering the area subject of the agreement.
WMC Resources subsequently divested itself of its rights and
interests in the Columbio FTAA, and on 12 July 2000 executed a
Sale and Purchase Agreement with petitioner Lepanto over its entire
shareholdings in WMC Philippines, subject to the exercise of the
Tampakan Companies’ exercise of their right of first refusal to
purchase the subject shares. On 28 August 2000, petitioner sought
the approval of the 12 July 2000 Agreement from the DENR
Secretary.
In an Agreement dated 6 October 2000, however, the Tampakan
Companies sought to exercise its right of first refusal. Thus, in a
letter dated 13 October 2000, petitioner assailed the Tampakan
Companies’ exercise of its right of first refusal, alleging that the
Tampakan Companies failed to match the terms and conditions set
forth in the 12 July 2000 Agreement. 4
Thereafter, petitioner filed a case for Injunction, Specific
Performance, Annulment of Contracts and Contractual Interference
with the Regional Trial Court of Makati, Branch 135, against WMC
Resources, WMC Philippines, and the Tampakan Companies. WMC
Philippines and the Tampakan Companies moved for the dismissal
of said case. Said Motion to Dismiss having been denied, WMC5
Philippines challenged the order dismissing the Motion on appeal
before the Court of
_______________
4 Docketed as Civil Case No. 01-87.

5 CA-G.R. SP No. 65496.
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Appeals which subsequently ordered the dismissal of the case on the

ground of forum shopping in this wise:
“Nevertheless, the Court finds that private respondent is guilty of forum

shopping. There is forum shopping whenever, as a result of an adverse
opinion in one forum, a party seeks a favorable opinion (other than by

appeal or certiorari) in another. The principle applies not only with respect
to suits filed in courts but also in connection with litigation commenced in
the courts while an administrative processes and in anticipation of an
unfavorable administrative ruling and a favorable court ruling.
In this case, petitioners argue that private respondent is guilty of forum
shopping for having lodged the complain before respondent Court pending
action by the Secretary of the DENR through the Mines and Geo-Sciences
Bureau (MGB) on its approval of the Sale and Purchase Agreement dated
July 12, 2000. Private respondent on the other hand, opposes the foregoing
contention arguing that the MGB will be merely exercising its
administrative not quasi-judicial power.
The action before respondent court was filed by private respondent to
compel petitioner WMC Resources to convey its equity in WMC Phils. and
Hillcrest to the former. Meanwhile, in the case before the MGB, private
respondent sought the approval of Sale and that the MGB’s authority over
the case is purely administrative, but further review shows that private
respondent raised contentious issues which need resolution by the MGB
before it can recommend any approval to the Secretary of the DENR.
Particularly, in its letter dated October 13, 2000 to the Secretary of the
DENR, private respondent posed its objection to the approval of the Sales
and Purchase agreements between WMC Resources and the Tampakan
Companies, asserting that the latter failed to validly exercise its right of first
refusal. Also, in its letter to the Director of the MGB dated December 8,
2000, private respondent spelled out in detail its reasons for objecting to the
agreement between WMC Resources and the Tampakan Companies, and in
the same breath, argued for the approval of its own contract. And because of
the opposing claims posited by private respondent and petitioners, the MGB
was constrained to require the parties to submit their respective comments.
At the juncture, the MGB’s authority ceased to be administrative. Evidently,
the MGB has to review all these opposing contentions and resolve the same.
A resolution of the MGB on which contract to
320

Ltd.
recommend or endorse to the Secretary of the DENR for approval will

necessarily include a declaration on the validity of the different Sale and
Purchase Agreements executed between the disagreeing parties, as well as
on the exercise of the Tampakan Companies exercise of its right of first
refusal and its qualification as a contractor under the FTAA. Even the MGB
is aware that the dispute revolves around these sales and purchase
agreements. Hence, it cannot be gainsaid that the MGB will be exercising its
quasi-judicial powers in resolving the conflict before it. Whether the MGB
can validly exercise such jurisdiction over the controversy is another issue
but nonetheless immaterial in determining whether private respondent is

guilty of forum-shopping. What is determinative is the filing of two (2)
separate actions in different for a based principally on the same cause on the
supposition that one or the other court would make a favorable disposition.
Thus, it is not highly unlikely that respondent Court and MGB will come up
with conflicting pronouncements on the dispute, thereby creating a quandary
as to which one will prevail. Private respondent’s act undisputably
constitutes a clear case of forum-shopping, a ground for summary dismissal
with prejudice of the action. The respondent court committed grave abuse of
discretion in refusing to dismiss Civil Case No. 01-087 on ground of
6
forumshopping.”
7
With the denial of petitioner’s Motion for Reconsideration, the case
was elevated to this Court. In a Decision dated 24 September 2003,
the Court affirmed the Decision of the appellate court and dismissed
the petition. In said Decision, the Court elucidated that:
“True, the questioned agreements of sale between petitioner and WMC on

one hand and between WMC and the Tampakan Companies on the other
pertain to transfer of shares of stock from one entity to another. But said
shares of stock represent ownership of mining rights or interest in mining
agreements. Hence, the power of the MGB to rule on the validity of the
questioned agreements of sale,
_______________
6 Rollo, pp. 320-322.

7 Lepanto Consolidated Mining Co. v. WMC Resources Int’l. Pty Ltd., G.R. Nos.
153885 & 156214, 24 September 2003, 412 SCRA 101.
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which was raised by petitioner before the DENR, is inextricably linked to

the very nature of such agreements over which the MGB has jurisdiction
under the law. Unavoidably, there is identity of reliefs that petitioner seeks
from both the MGB and the RTC.
Forum shopping exists when both actions involve the same transactions,
same essential facts and circumstances and raise identical causes of actions,
subject matter, and issues. Such elements are evidently present in both the
proceedings before the MGB and before the trial court. The case instituted
with the RTC was thus correctly ordered dismissed by the appellate court on
the ground of forum shopping. Besides, not only did petitioner commit
forum shopping but it also failed to exhaust administrative remedies by
opting to go ahead in seeking reliefs from the court even while those same
8
reliefs were appropriately awaiting resolution by the MGB.”
In the interim, on 10 January 2001, contending that the 12 July

Agreement between petitioner and WMC Philippines had expired
due to failure to meet the necessary preconditions for its validity,
WMC Resources and the Tampakan Companies executed another
Sale and Purchase Agreement, where Sagittarius Mines, Inc. was
designated assignee and corporate vehicle which would acquire the
shareholdings and undertake the Columbio FTAA activities. On 15
January 2001, Sagittarius Mines, Inc. increased its authorized
capitalization to P250 million. Subsequently, WMC Resources and
Sagittarius Mines, Inc. executed a Deed of Absolute Sale of Shares
of Stocks on 23 January 2001.
After due consideration and evaluation of the financial and
technical qualifications of Sagittarius Mines, Inc., the DENR
Secretary approved the transfer of the Columbio FTAA from WMC
Philippines to Sagittarius Mines, Inc. in the assailed Order.
According to said Order, pursuant to Section 66 of Department
Administrative Order No. 96-40, as amended, Sagittarius Mines,
Inc. meets the qualification requirements as Contractor-Transferee of
FTAA No. 02-95-XI, and that the
_______________
8 Id., at pp. 108-109.
322

Ltd.
application for transfer of said FTAA went thru the procedure and
other requirements set forth under the law.
Aggrieved by the transfer of the Columbio FTAA in favor of
Sagittarius Mines, Inc., petitioner filed a Petition for Review of the
Order of the DENR Secretary with the Office of the President.
Petitioner assails the validity of the 18 December 2001 Order on the
ground that: 1) it violates the constitutional right of Lepanto to due
process; 2) it preempts the resolution of very crucial legal issues
pending with the regular courts; and 3) it blatantly violates Section
40 of the Mining Act.
In a Decision dated 23 July 2002, the Office of the President
dismissed the petition in this wise:
“At the outset, it bears emphasis that quite contrary to the argument of
petitioner Lepanto, the above Order of the DENR Secretary is not violative
of the Mining Law. Since the subject Columbio FTAA was granted in
accordance with the pertinent provisions of Executive Order No. 279 and
Department Administrative Order No. 63 on 22 March 1995, or prior to the
effectivity of the Philippine Mining Act of 1995, especially as it highlights

the non-impairment of existing mining and/or quarrying rights, under
Section 14.1 (b) thereof, only the consent of DENR Secretary is required. To
hold otherwise would be to unduly impose a burden on transferor WMC and
thereby restrict its freedom to dispose of or alienate this property right
without due process. Thus, under the Revised Implementing Rules and
Regulations of the Philippine Mining Act of 1995, Chapter XXX thereof
expressly echoes the guaranty:
“Section 272. Non-Impairment of Existing Mining/ Quarrying Rights.—All valid

and existing mining lease contracts, permits/licenses, leases pending renewal,
Mineral Production Sharing Agreements, FTAA granted under Executive Order No.
279, at the date of the Act shall remain valid, shall not be impaired and shall be
recognized by the Government
x x x.
x x x Provided, finally, That this provision is applicable only to all FTAA/MPSA
applications filed under Department Administrative Order No. 63 prior to the
effectivity of the act and these implementing rules and regulations.”
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Ltd.
As correctly stated by the MGB Director and affirmed by the DENR

Secretary, Section 14.1 of the Columbio FTAA provides that the FTAA may
be transferred provided that the Secretary consents to the same. Pursuant to
Section 112 of the Mining Act and Section 272 of DAO No. 96-40, as
amended, on non-impairment of existing mining rights, the subject
application for transfer of the Columbio FTAA to Sagittarius requires only
the approval of the DENR Secretary.
Moreover, there is no merit in petitioner Lepanto’s argument that the
DENR Secretary and consequently, this Office, has no jurisdiction over the
subject matter in issue. The assailed Order of the DENR Secretary was
pursuant to the latter’s exercise of the wellentrenched doctrine of primary
jurisdiction of administrative agencies.
By virtue of the operation of the doctrine of primary jurisdiction, “courts
cannot and will not determine a controversy involving a question which is
within the jurisdiction of an administrative tribunal, especially where the
question demands the exercise of sound administrative discretion requiring
the special knowledge, experience and services of the tribunal to determine
technical and intricate matters of fact and where a uniformity of ruling is
essential to comply with the purposes regulatory statute administered.”
(Province of Zamboanga del Norte v. Court of Appeals, 342 SCRA 549
[2000]; Factoran v. Court of Appeals, 320 SCRA 530 [1999]; Brett v.
Intermediate Appellate Court, 191 SCRA 687 [1990]; Qualitrans Limousine
Service, Inc. v. Royal Class Limousine Service, 179 SCRA 569 [1989]).
Thus, even though an action may be lodged in court that is ostensibly for
annulment or “rescission of what appears to be an ordinary civil contract
cognizable by a civil court,” the doctrine of primary jurisdiction still applies.
(Industrial Enterprises, Inc. v. Court of Appeals, 184 SCRA 426 [1990]).
Section 4, Chapter 1, Title XIV, Book IV of the Administrative Code of
1987 specifies the powers and functions of the DENR. Also, the Philippine
Mining Act of 1995 provides that the DENR “shall be the primary
government agency responsible for the conservation, management,
development, and proper use of the State’s mineral resources including
those in reservations, watershed areas, and lands of the public 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 regula
324

Ltd.
tions as may be necessary to implement the intent and provisions of this

Act.” (Chapter II, Section 8). Since an FTAA is “a contract involving
financial or technical assistance for large-scale exploration, development
and utilization of mineral resources” (Ibid., Chapter 1, Section 3 [r]), any
issue affecting the same is indubitably within the primary jurisdiction of the
DENR, as in fact, the government enters into FTAA’s through the DENR
(Ibid., Chapter VI, Section 33).
There is no dispute that the instant case involves and requires the special
technical knowledge and expertise of the DENR. In the determination by the
DENR of a “qualified person” pursuant to the Philippine Mining Act of
1995, such person must possess the technical and financial capability to
undertake mineral resources development”. (Chapter I, Section 3 [aq])
Obviously, this determination peculiarly lies within the expertise of the
DENR.
The validity of the successive transfers is not a civil issue, contrary to the
allegation of petitioner Lepanto, because validity of transfer depends on
technical qualifications of the transferee and compliance with the DENR
requirements on qualifications, all of which require administrative expertise.
Notably, petitioner Lepanto is estopped from assailing the primary
jurisdiction of the DENR since petitioner Lepanto itself anchored its
Petition (cf. pp. 4-5) on the contention that, allegedly, “the Tampakan
Companies failed to match the terms and conditions of the July 12
Agreement with petitioner Lepanto in that they did not possess the
financial and technical qualifications under the Mining Act and its
Implementing Rules.” Petitioner Lepanto’s objections therefore go into
the very qualifications of a transferee which is a technical issue.
This contention is a recognition by petitioner Lepanto itself of the fact
that the crucial and determinative issue in the instant case is grounded on the
financial and technical qualifications of a transferee, which issue,

indisputably, is within the exclusive domain and expertise of the DENR and
not of the courts.
xxxx
Moreover, petitioner Lepanto, by its conduct, is again estopped from
assailing the DENR’s jurisdiction after actively participating in the
proceedings therein and seeking affirmative relief. A party who invoked
the jurisdiction [of] a tribunal and actively participated in the proceedings
therein cannot impugn such jurisdiction when faced with an adverse
decision. (cf.
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Briad Agro Development Corporation v. dela Serna, 174 SCRA 524

9
[1989]).” [Emphasis ours]
With the denial of its Motion for Reconsideration, petitioner lodged

an appeal before the Court of Appeals which was consequently
dismissed by the appellate court in the herein assailed Decision.
According to the Court of Appeals:
“Petitioner forcefully argues that the DENR Secretary had usurped the
power of the President of the Philippines to approve the transfer of FTAA,
as under the provision of Section 40 of the Philippine Mining Act of 1995,
any transfer or assignment of an FTAA has to be approved not by the DENR
Secretary but by the President.
The argument does not wash.
The issue hinges on the applicability of Section 40 of RA 7942 or the
Philippine Mining Act of 1995, which took force on 14 April 1995, on the
transfer of FTAA from WMC to the Tampakan Companies, particularly the
Sagittarius Mines, Inc.
The said law provides:
“Sec. 40. Assignment/Transfer.—A financial or technical assistance agreement may

be assigned or transferred, in whole or in part, to a qualified person subject to the
prior approval of the President: Provided, that the President shall notify Congress of
every financial or technical assistance agreement assigned or converted in
accordance with this provision within thirty (30) days from the date of approval.”
However, the above provision does not apply to the Columbio FTAA
which was entered into by and between the Philippine Government and
WMCP on 22 March 1995, or prior to the effectivity of RA No. 7942.
Section 14.1 of the Columbio FTAA, under which the Tampakan Companies
claim their rights to first refusal, reads:
“14.1 Assignment
“The Contractor may assign, transfer, convey or otherwise dispose of all or any
part of its interest in the Agreement provided that such assignment, transfer,
conveyance or dispo
_______________
9 OP Decision pp. 4-6, 11-12; Rollo, pp. 382-384, 389-390.
326

Ltd.
sition does not infringe any Philippine law applicable to foreign ownership:
(a) to an Affiliate provided that it gives notice of such assignment to the Secretary
within 30 days after such assignment; or
(b) to any third party provided that the Secretary consents to the same, which
consent shall not be unreasonably withheld.”
Section 10, Article III of the Philippine Constitution enjoins Congress from
passing a law impairing the obligation of contracts. It is axiomatic that a law
that impairs an obligation of contract also violates the due process clause.
The obligation of an existing contract is impaired when its terms and
conditions are changed by law, ordinance, or any issuance having the force
of law, thereby weakening the position or diminishing the rights of a party
to the contract. The extent of the change is not material. It is not a question
of degree or manner or cause, but of encroaching in any respect on its
obligations or dispensing with any part of its force. Impairment has also
been predicated on laws which, without destroying contracts, derogate from
substantial contractual rights.
The condition of RA No. 7942 requiring the further approval of the
President, if made to apply retroactively to the Columbio FTAA, would
impair the obligation of contracts simply because it constitutes a restriction
on the right of the contractor to assign or transfer its interest in an FTAA. In
other words, it diminished the vested rights of the contractor to assign or
transfer its interests on mere approval of the DENR Secretary. The
restriction is therefore substantive, and not merely procedural, contrary to
the contention of petitioner.
xxxx
Likewise militating against the petitioner’s side is the doctrine that
statutes are to be construed as having only a prospective operation unless
the purpose and intention of the Legislature to give them a retrospective
effect is expressly declared or is necessarily implied from the language used.
In case of doubt, the doubt must be resolved against the retrospective effect.
At any rate, even if RA No. 7942 be accorded a retroactive effect, this does
not ipso facto permit the application of the requirement of securing a prior
presidential consent to the transfer of FTAA, for, to iterate, this would

impair the
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obligation of contract. In such a case, the correct application of RA No.

7942 is for the provisions to [be] made to apply on existing FTAAs only if
the same would not result in impairment of obligation of contracts.
This is as it should be. To hold otherwise would be to unduly impose a
burden on transferor WMC and thereby restrict its freedom to dispose of or
alienate its property right without due process. It constitutes impairment of
obligation of contracts, which the Fundamental Law enjoins, and
10
contravenes the doctrine of prospective application of laws.”
Hence, the instant Petition.

The pivotal issue to be resolved herein involves the propriety of
the application to the Columbio FTAA of Republic Act No. 7942 or
the Philippine Mining Act of 1995, particularly Section 40 thereof
requiring the approval of the President of the assignment or transfer
of financial or technical assistance agreements. Petitioner maintains
that respondents failed to comprehend the express language of
Section 40 of the Philippine Mining Act of 1995 requiring the
approval of the President on the transfer or assignment of a financial
or technical assistance agreement.
To resolve this matter, it is imperative at this point to stress the
fact that the Columbio FTAA was entered into by the Philippine
Government and WMC Philippines on 22 March 1995, undoubtedly
before the Philippine Mining Act of 1995 took effect on 14 April
1995. Furthermore, it is undisputed that said FTAA was granted in
accordance with Executive Order No. 279 and Department
Administrative Order No. 63, Series of 1991, which does not contain
any similar condition on the transfer or assignment of financial or
technical assistance agreements. Thus, it would seem that what
petitioner would want this Court to espouse is the retroactive
application of the Philippine Mining Act of 1995 to the
_______________
10 CA Decision, pp. 6-9; Rollo, pp. 60-63.
328

Ltd.
Columbio FTAA, a valid agreement concluded prior to the naissance

of said piece of legislation.
This posture of petitioner would clearly contradict the established
legal doctrine that statutes are to be construed as having only a
prospective operation unless the contrary is expressly stated or
necessarily implied from the language used in the law. As reiterated
11
in the case of Segovia v. Noel, a sound cannon of statutory
construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made
manifest either by the express terms of the statute or by necessary
implication.
Article 4 of the Civil Code provides that: “Laws shall not have a
retroactive effect unless therein otherwise provided.” According to
this provision of law, in order that a law may have retroactive effect
it is necessary that an express provision to this effect be made in the
law, otherwise nothing should be understood which is not embodied
12
in the law. Furthermore, it must be borne in mind that a law is a
rule established to guide our actions without no binding effect until
it is enacted, wherefore, it has no application to past times but only
to future time, and that is why it is said that the law looks to the
future only and has no retroactive effect unless the legislator may
13
have formally given that effect to some legal provisions.
In the case at bar, there is an absence of either an express
declaration or an implication in the Philippine Mining Act of 1995
that the provisions of said law shall be made to apply retroactively,
therefore, any section of said law must be made to apply only
prospectively, in view of the rule that a statute ought not to receive a
construction making it act retroactively,
_______________
11 47 Phil. 543 (1925).

12 Balatbat v. Court of Appeals, G.R. No. 36378, 27 January 1992, 205 SCRA 419,
426.
13 Id.
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Ltd.
unless the words used are so clear, strong, and imperative that no
other meaning can be annexed to them, or unless the intention of the
14
legislature cannot be otherwise satisfied.
Be that as it may, assuming for the sake of argument that We are

to apply the Philippine Mining Act of 1995 retrospectively to the
Columbio FTAA, the lack of presidential approval will not be fatal
as to render the transfer illegal, especially since, as in the instant
case, the alleged lack of presidential approval has been remedied
when petitioner appealed the matter to the Office of the President
which approved the Order of the DENR Secretary granting the
application for transfer of the Columbio FTAA to Sagittarius Mines,
Inc. As expounded by the Court in the Resolution of the Motion for
Reconsideration in the La Bugal-B’Laan Tribal Association, Inc. v.
15
Ramos case, involving the same FTAA subject of the instant case:
“x x x Moreover, when the transferee of an FTAA is another foreign

corporation, there is a logical application of the requirement of prior
approval by the President of the Republic and notification to Congress in the
event of assignment or transfer of an FTAA. In this situation, such approval
and notification are appropriate safeguards, considering that the new
contractor is the subject of a foreign government.
On the other hand, when the transferee of the FTAA happens to be a
Filipino corporation, the need for such safeguard is not critical; hence,
the lack of prior approval and notification may not be deemed fatal as
to render the transfer invalid. Besides, it is not as if approval by the
President is entirely absent in this instance. x x x That case involved the
review of the Decision of the Court of Appeals dated November 21, 2003 in
CA-G.R. SP No. 74161, which affirmed the DENR Order dated December
31, 2001 and the Decision of the Office of the Presi
_______________
14 Supra note 9.
15 G.R. No. 127882, 1 December 2004, 445 SCRA 1.
330

Ltd.
dent dated July 23, 2002, both approving the assignment of the WMCP
16
FTAA to Sagittarius.” (Emphasis ours.)
Furthermore, if petitioner was indeed of the mind that Section 40 of

the Philippine Mining Act of 1995 is applicable to the Columbio
FTAA, thus necessitating the approval of the President for the
validity of its transfer or assignment, it would seem contradictory
that petitioner sought the approval of the DENR Secretary, and not
that of the President, of its 12 July 2000 Sale and Purchase
Agreement with WMC Resources. Hence, it may be glimpsed from
the very act of petitioner that it recognized that the provision of the
Columbio FTAA regarding the consent of the DENR Secretary with

respect to the transfer of said FTAA must be upheld.
It is engrained in jurisprudence that the constitutional prohibition
on the impairment of the obligation of contract does not prohibit
17
every change in existing laws, and to fall within the prohibition,
the change must not only impair the obligation of the existing
18
contract, but the impairment must be substantial. Substantial
impairment as conceived in relation to impairment of contracts has
19
been explained in the case of Clemons v. Nolting, which stated that:
a law which changes the terms of a legal contract between parties,
either in the time or mode of performance, or imposes new
conditions, or dispenses with those expressed, or authorizes for its
satisfaction something different from that provided in its terms, is
law which impairs the obligation of a contract and is therefore null
and void. Section 40 of the Philippine Mining Act of 1995 requiring
the approval of the President with respect to assignment or transfer
of FTAAs, if made applicable
_______________
16 Id., at p. 89.
17 Phil. Rural Electric Coop. Assoc. Inc. v. Department of Interior and Local
Government Secretary, 451 Phil. 683, 699; 403 SCRA 558, 573 (2003).
18 Id.
19 42 Phil. 702, 717 (1922).
331
VOL. 507, NOVEMBER 20, 2006 331

Ltd.
retroactively to the Columbio FTAA, would be tantamount to an

impairment of the obligations under said contract as it would
effectively restrict the right of the parties thereto to assign or transfer
their interests in the said FTAA.
By imposing a new condition apart from those already contained
in the agreement, before the parties to the Columbio FTAA may
assign or transfer its rights and interest in the said agreement,
Section 40 of the Philippine Mining Act of 1995, if made to apply to
the Columbio FTAA, will effectively modify the terms of the
original contract and thus impair the obligations of the parties
thereto and restrict the exercise of their vested rights under the
original agreement. Such modification to the Columbio FTAA,
particularly in the conditions imposed for its valid transfer is
equivalent to an impairment of said contract violative of the
Constitution.
WHEREFORE, premises considered, the instant petition is

hereby DENIED. The Decision of the Court of Appeals in CAG.R.
SP No. 74161 dated 21 November 2003 is hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ.,

concur.
Panganiban, (C.J., Chairperson), In the result.
Petition denied.
Notes.—The sole purpose of the impairment clause of the

Constitution is to safeguard the integrity of valid contractual
agreements against unwarranted interference by the State in the form
of laws—private individuals’ intrusions on interest rates is governed
by statutory enactments like the Civil Code. (New Sampaguita
Builders Construction, Inc. vs. Philippine National Bank, 435 SCRA
565 [2004])
332

Rebucan vs. People
All contracts are “subject to the overriding demands, needs and

interests of the greater number as the State may determine in the
legitimate exercise of its police power.” (Philippine Ports Authority
vs. Cipres Stevedoring & Arrastre, Inc., 463 SCRA 358 [2005])
——o0o——
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4/12/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 507

VOL. 507, NOVEMBER 20, 2006 315

LEPANTO CONSOLIDATED MINING CO., petitioner, vs. WMC

Statutes; Statutory Construction; Statutes are to be construed as

316 SUPREME COURT REPORTS ANNOTATED

PETITION for review on certiorari of a decision of the Court of

The facts are stated in the opinion of the Court.

VOL. 507, NOVEMBER 20, 2006 317

Mario C.V. Jalandoni for respondent Sagittarius Mines, Inc.

Before Us is a Petition for Review on Certiorari under Rule 45 of

1 Penned by Associate Justice Romeo A. Brawner, with Associate Justices Jose L.

318 SUPREME COURT REPORTS ANNOTATED

lectively called the Tampakan Companies), in accordance with the

4 Docketed as Civil Case No. 01-87.

VOL. 507, NOVEMBER 20, 2006 319

Appeals which subsequently ordered the dismissal of the case on the

“Nevertheless, the Court ﬁnds that private respondent is guilty of forum

opinion in one forum, a party seeks a favorable opinion (other than by

320 SUPREME COURT REPORTS ANNOTATED

recommend or endorse to the Secretary of the DENR for approval will

but nonetheless immaterial in determining whether private respondent is

“True, the questioned agreements of sale between petitioner and WMC on

6 Rollo, pp. 320-322.

VOL. 507, NOVEMBER 20, 2006 321

which was raised by petitioner before the DENR, is inextricably linked to

In the interim, on 10 January 2001, contending that the 12 July

8 Id., at pp. 108-109.

322 SUPREME COURT REPORTS ANNOTATED

effectivity of the Philippine Mining Act of 1995, especially as it highlights

“Section 272. Non-Impairment of Existing Mining/ Quarrying Rights.—All valid

VOL. 507, NOVEMBER 20, 2006 323

As correctly stated by the MGB Director and afﬁrmed by the DENR

324 SUPREME COURT REPORTS ANNOTATED

tions as may be necessary to implement the intent and provisions of this

ﬁnancial and technical qualiﬁcations of a transferee, which issue,

VOL. 507, NOVEMBER 20, 2006 325

Briad Agro Development Corporation v. dela Serna, 174 SCRA 524

With the denial of its Motion for Reconsideration, petitioner lodged

“Sec. 40. Assignment/Transfer.—A ﬁnancial or technical assistance agreement may

9 OP Decision pp. 4-6, 11-12; Rollo, pp. 382-384, 389-390.

326 SUPREME COURT REPORTS ANNOTATED

presidential consent to the transfer of FTAA, for, to iterate, this would

VOL. 507, NOVEMBER 20, 2006 327

obligation of contract. In such a case, the correct application of RA No.

Hence, the instant Petition.

10 CA Decision, pp. 6-9; Rollo, pp. 60-63.

328 SUPREME COURT REPORTS ANNOTATED

Columbio FTAA, a valid agreement concluded prior to the naissance

11 47 Phil. 543 (1925).

VOL. 507, NOVEMBER 20, 2006 329

Be that as it may, assuming for the sake of argument that We are

“x x x Moreover, when the transferee of an FTAA is another foreign

330 SUPREME COURT REPORTS ANNOTATED

Furthermore, if petitioner was indeed of the mind that Section 40 of

Columbio FTAA regarding the consent of the DENR Secretary with

VOL. 507, NOVEMBER 20, 2006 331

retroactively to the Columbio FTAA, would be tantamount to an

WHEREFORE, premises considered, the instant petition is

Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ.,

Notes.—The sole purpose of the impairment clause of the