Title
Dizon Copper Silver Mines, Inc. vs. Dizon
Case
G.R. No. 183573
Decision Date
Jul 18, 2012
A dispute over 57 mining claims in Zambales arose between Dizon Copper-Silver Mines, Inc. and a family member, involving invalid MPSA applications, abandonment of claims, and DENR-approved rights.
void ab initio
mining claims
mining lease contracts
A

Case Summary (G.R. No. L-33604-05)

Factual Background

The antecedent facts involve fifty-seven mining claims declared in 1935 by Celestino M. Dizon and recorded in various family members' names, aggregating 513 hectares in San Marcelino, Zambales. In 1966 Dizon Copper-Silver Mines, Inc. was incorporated with Celestino and his son, Dr. Luis D. Dizon, among its incorporators. In 1967 Celestino assigned the fifty-seven claims to petitioner. In 1975 petitioner entered into an Operating Agreement with Benguet Corporation under which Benguet was authorized to explore, develop and operate the claims. Mining lease contracts (MLCs) were later issued in 1980 covering six of the claims in the names of Celestino and his heirs. The MLCs were valid until 31 January 2005.

The MPSA Applications

In 1991 Benguet filed an MPSA application designated MPSA-P-III-16 to place mining claims and interests it operated under production-sharing agreements. The application originally covered more than 8,000 hectares and was later reduced. After enactment of Republic Act No. 7942 in 1995 and the termination in 1997 of the Operating Agreement between petitioner and Benguet, Benguet assigned MPSA-P-III-16 to petitioner in 2004. Petitioner sought inclusion of the six claims under the MLCs in its MPSA. Petitioner then filed a separate MPSA application on 31 January 2005 designated MPSA-P-III-03-05 covering all fifty-seven claims. Respondent filed his own MPSA application on 28 February 2005, MPSA-P-III-05-05, which overlapped parts of the areas claimed by petitioner.

DENR Administrative Actions

The DENR Mines and Geosciences Bureau Regional Office III evaluated the overlapping applications and the relevant area clearances. On 29 December 2005 the DENR Secretary issued an order declaring MPSA-P-III-16 and MPSA-P-III-03-05 void ab initio while holding respondent's application valid and instructing that it be given due course. The DENR concluded that Benguet lacked legal personality to file MPSA-P-III-16 on its own behalf and that MPSA-P-III-03-05 had been filed while areas were still closed to mining applications because of existing MLCs. Petitioner sought reconsideration, which the Acting DENR Secretary denied on 14 February 2006, noting that respondent's application had been approved as MPSA No. 227-2006-III on 17 January 2006.

Office of the President Ruling and Appellate Proceedings

Petitioner appealed to the Office of the President. The OP, by decision dated 4 December 2006, reversed the DENR orders, set aside the issuance of MPSA No. 227-2006-III to respondent, and remanded petitioner's MPSA-P-III-03-05 for re-evaluation. Respondent then appealed to the Court of Appeals. The Court of Appeals reversed the OP decision and reinstated the DENR orders of 29 December 2005 and 14 February 2006, declaring petitioner's applications void ab initio but upholding respondent's MPSA as valid. Petitioner filed the present Rule 45 petition to the Supreme Court.

Issues Presented

The core issue distilled by the Supreme Court was whether the Court of Appeals erred in reinstating the DENR Secretary's orders that declared petitioner's MPSA applications void ab initio and validated respondent's application. Subsidiary issues included whether Benguet had authority to file MPSA-P-III-16 on behalf of petitioner, whether petitioner's later application complied with the deadlines and preferential rights under Section 113 of Republic Act No. 7942, and whether the DENR acted with grave abuse of discretion in approving respondent's MPSA.

Parties' Contentions

Petitioner asserted that (1) Benguet had authority under the Operating Agreement and a letter dated 14 June 1991 to file MPSA-P-III-16; (2) Benguet complied with the requirements of Sections 112 and 113 of R.A. 7942 so that petitioner retained preferential rights; and (3) MPSA-P-III-03-05 should not be nullified because only a small portion overlapped existing MLCs, and the DENR hastily approved respondent's application without compliance with Sections 37 and 38 of the IRR. Respondent relied on the DENR findings that Benguet lacked capacity to file in its own name and that petitioner's later filing came after the statutorily mandated windows had closed, and thus respondent's earlier-completed procedures justified approval.

Ruling of the Supreme Court (Disposition)

The Supreme Court denied the petition and affirmed the Court of Appeals Decision dated 9 May 2008 and Resolution dated 1 July 2008. Costs were assessed against petitioner. The Court held that MPSA-P-III-16 was not a valid MPSA application and that petitioner had lost its preferential rights to the majority of the claims by failing to timely and validly exercise them under R.A. 7942 and its IRR. The Court also upheld the DENR Secretary's approval of respondent's MPSA against petitioner's charge of procedural haste.

Legal Basis and Reasoning — Authority to File MPSAs

The Court emphasized that an MPSA is a new mode of mineral agreement introduced under the 1987 Constitution and implemented by Republic Act No. 7942, which represents a substantial departure from prior regimes of patents, leases and concessions. The Court found that Benguet, as mere operator, could not file MPSA-P-III-16 in its own name absent valid authorization from the claim holders. The Court examined the Operating Agreement provisions relied upon by petitioner—Sections 1.01(b), 1.03, 7.01(j) and 9.04—and concluded that those clauses, read in context, did not confer authority to Benguet to enter into or to file an MPSA on behalf of petitioner. The Court stressed that the Operating Agreement was executed in 1975 when Presidential Decree No. 463 governed mining and did not contemplate the post-1987 constitutional scheme of production-sharing agreements. The Court therefore agreed with the DENR and the Court of Appeals that MPSA-P-III-16 was filed without valid authorization.

Legal Basis and Reasoning — Effect of Invalidity and Abandonment

The Court analyzed Section 113 of Republic Act No. 7942 and Section 273 of the IRR, as clarified by DENR Memorandum Order No. 97-07, which afforded holders of valid and existing mining claims a preferential right to enter into mineral agreements until September 14, 1997 (extended to September 15, 1997). The Court observed that MPSA-P-III-16 was the only application filed before the deadline but was invalid for lack of authorization. Because petitioner filed no valid MPSA before the deadline, the Court held that petitioner failed to exercise its preferential right and was deemed to have abandoned the fifty-one claims not covered by MLCs as of 15 September 1997. The 2004 assignment of MPSA-P-III-16 to petitioner thus had no legal consequence because it occurred well after the statutory deadline and after abandonment.

Legal Basis and Reasoning — Validity of Respondent's MPSA and Administrative Deference

On the contention that respondent did not comply with Sections 37 and 38 of the IRR, the Court declined to entertain a factual challenge raised for the first time in the Supreme Court. The Court further invoked the doctrine of primary jurisdiction and deference to administrative expertise, citing Celestial Nickel Mining Exploration Corporation v. M

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