G.R. No. 202877 - Narra Nickel Mining and Development Corp. vs. Redmont Consolidated Mines Corp.

Case Summary (G.R. No. 202877)

Facts — Applications, Conversions and FTAA Execution

Petitioners acquired predecessor mineral agreement applications (MPSAs and EPs) covering specified hectares in Palawan and sought conversion to Financial or Technical Assistance Agreements (FTAAs). Narra Nickel filed its FTAA conversion application earlier (converted March 30, 2006); Tesoro and McArthur filed conversion applications in May 2007. Upon DENR recommendation, petitioners’ FTAA applications were approved (April 5, 2010) and the Republic, through the Executive Secretary acting for the President, executed FTAA No. 05‑2010‑IVB on April 12, 2010, covering the subject areas.

Facts — Redmont’s Challenges and Allegations

Redmont applied for an exploration permit on November 8, 2006 and later discovered the areas were subject to petitioners’ mineral agreements or applications. Redmont initiated three petitions before the DENR‑MGB Panel of Arbitrators (POA) on January 2, 2007 seeking denial of petitioners’ MPSA/EP applications, alleging that petitioners were controlled by MBMI (a 100% Canadian‑owned corporation) and thus ineligible under nationality restrictions. Separately, Redmont filed a petition before the OP on May 7, 2010 seeking cancellation/revocation of the executed FTAA on grounds of alleged misrepresentation, irregularity and constitutional circumvention by petitioners and MBMI.

Procedural History — OP and CA Proceedings

The Office of the President issued a decision dated April 6, 2011 granting Redmont’s May 7, 2010 petition and canceling/revoking the FTAA, finding that petitioners misrepresented their status as Filipino corporations qualified to engage in mining. Petitioners appealed to the Court of Appeals, which affirmed the OP’s decision in a February 23, 2012 decision and denied reconsideration in a July 27, 2012 resolution. The present petition for review on certiorari to the Supreme Court followed.

Issue Presented to the Supreme Court

Whether the Court of Appeals correctly affirmed the Office of the President’s cancellation and/or revocation of the FTAA, i.e., whether the CA had jurisdiction to entertain an appeal under Rule 43 from the OP’s action.

Supreme Court Holding — Disposition

The Supreme Court granted the petition. It held that the Court of Appeals improperly took cognizance of the case on appeal under Rule 43 because the OP’s cancellation/revocation of the FTAA was not an exercise of quasi‑judicial authority and therefore was not a decision from which an appeal under Rule 43 to the CA lay. Accordingly, the CA Decision dated February 23, 2012 and the Resolution dated July 27, 2012 were declared null and void for lack of jurisdiction. The SC added that this ruling is without prejudice to other appropriate remedies the parties may pursue.

Legal Reasoning — Quasi‑Judicial Function and Rule 43

Rule 43 permits appeals to the Court of Appeals only from judgments, final orders, resolutions or awards of quasi‑judicial agencies when such agencies are exercising quasi‑judicial functions. The Court recited the legal meaning of a quasi‑judicial adjudication—settling rights and duties of parties in a judicial manner—and emphasized that the OP’s cancellation of the FTAA did not constitute such an adjudication. The OP, as a contracting party representing the Republic, exercised an administrative contractual right (i.e., cancellation under a contractual termination clause) rather than a judicial or quasi‑judicial determination amenable to Rule 43 appellate review.

Legal Reasoning — Nature of FTAA as Government Contract and Limits on Executive Adjudication

An FTAA is a contract entered into by the President on behalf of the State under Article XII, Section 2, and is described in RA 7942 as a contract involving financial or technical assistance for large‑scale mineral exploitation. As a government or public contract, it is generally governed by contract principles applicable to private contracts, including mutuality of obligation (Civil Code, Article 1308). The Court relied on jurisprudence (La Bugal‑Oposa and Celestial) recognizing FTAA contractors’ contract/property interests that warrant due process protection and distinguishing FTAAs from revocable licenses. Because the OP was itself a contracting party to the FTAA, it could not, in effect, act as an impartial adjudicator resolving the contract’s own validity; its cancellation was an administrative exercise of contractual rights, not a quasi‑judicial adjudication.

Legal Reasoning — Contractual Termination Clause and Misrepresentation

The OP invoked paragraph a(iii), Section 17.2 of the FTAA (termination for “any intentional and materially false statement or omission of facts by a Party”) and Section 99 of RA 7942 (statements in agreements are essential parts and conditions). The Court noted that a material misrepresentation, if established through proper judicial proceedings, would constitute a breach entitling the aggrieved party to cancel the agreement. However, where cancellation is effected administratively by the contracting party (OP) without functioning as an adjudicatory tribunal, the action cannot be treated as a quasi‑judicial decision subject to Rule 43 appellate review.

Legal Reasoning — Conversion, Publication and Proper Channels for Objections

The Court summarized RIRR procedures for conversion (Section 45) and the publication/posting requirement (Section 55), explaining that third‑party objections to FTAA applications may be presented during the prescribed publication/posting window (ten days for fresh applications), while conversion applications are often exempt from re‑publication if prior publication was already satisfied. The Court observed that Red

Case Syllabus (G.R. No. 202877)

Case Caption and Procedural Reference

Supreme Court First Division decision in G.R. No. 202877, dated December 09, 2015; reported at 775 Phil. 238.
Petitioners: Narra Nickel Mining and Development Corporation; Tesoro Mining and Development, Inc.; McArthur Mining, Inc.
Respondent: Redmont Consolidated Mines Corporation.
Collateral proceedings and records invoked: Decision of the Court of Appeals dated February 23, 2012 and Resolution dated July 27, 2012 in CA-G.R. SP No. 120409; Decision of the Office of the President dated April 6, 2011 and Resolution dated July 6, 2011 in O.P. Case No. 10-E-229.
Relief sought in this petition for review on certiorari: annulment of the CA Decision and Resolution that affirmed the OP’s cancellation/revocation of FTAA No. 05-2010-IVB (MIMAROPA).

Summary of Facts

On November 8, 2006, Redmont filed an Application for an Exploration Permit (EP) over mining areas in the Municipalities of Rizal, Bataraza, and Narra, Palawan.
Redmont discovered the areas it applied for were already covered by existing Mineral Production Sharing Agreements (MPSA) and an EP, originally applied for by petitioners’ predecessors-in-interest at the Mines and Geosciences Bureau (MGB), DENR Region IV-B.
Narra Nickel:
- Acquired application MPSA-IV-I-12 covering 3,277 hectares in Barangays Calategas and San Isidro, Narra, from Alpha Resources and Development Corporation and Patricia Louise Mining and Development Corporation.
- Converted its MPSA into an FTAA application AFTA‑IVB‑07 on March 30, 2006 (prior to Redmont’s EP application).
Tesoro Mining:
- Acquired MPSA-AMA-IVB-154 (formerly EPA-IVB-47) covering 3,402 hectares in Barangays Malinao and Princesa Urduja, Narra, from Sara Marie Mining, Inc.
- Filed FTAA conversion application AFTA‑IVB‑08 in May 2007 (after Redmont’s EP application).
McArthur Mining:
- Acquired MPSA-AMA-IVB-153 and EPA-IVB-44 covering 1,782 hectares and 3,720 hectares in Barangays Sumbiling and Malatagao, Bataraza, respectively, from Madridejos Mining Corporation (an SMMI assignee).
- Filed FTAA conversion application AFTA‑IVB‑09 in May 2007.
MBMI Resources, Inc. (MBMI) was the common majority stockholder of petitioners and was 100% Canadian-owned.
DENR Secretary Jose L. Atienza, Jr., by memorandum dated November 9, 2009, recommended approval; petitioners’ FTAA applications were approved on April 5, 2010.
On April 12, 2010, the Republic, represented by Executive Secretary Leandro R. Mendoza acting by authority of President Gloria Macapagal‑Arroyo, and petitioners executed FTAA No. 05-2010-IVB (MIMAROPA).

Collateral and Parallel Proceedings Relevant to the Dispute

Prior challenges by Redmont:
- On January 2, 2007, Redmont filed three separate petitions for denial of petitioners’ MPSA and/or EP applications before the Panel of Arbitrators (POA), docketed as DENR Case Nos. 2007‑01, 2007‑02, and 2007‑03.
- The primary contention in those petitions: petitioners were controlled by MBMI and thus disqualified from MPSA/EP grants on nationality grounds.
This nationality issue reached the Supreme Court in G.R. No. 195580; on April 21, 2014, the Court declared petitioners to be foreign corporations under the “Grandfather Rule.” Reconsideration was denied January 28, 2015.
Separately, Redmont filed a Petition dated May 7, 2010 before the Office of the President (O.P. Case No. 10‑E‑229) seeking cancellation and/or revocation of the executed FTAA, alleging anomalies, irregularities, and that petitioners and MBMI had a history of violating and circumventing law.
Petitioners opposed Redmont’s OP petition via a motion to dismiss asserting procedural defects (no appeal from a department secretary’s memorandum, tardiness, improper service, and lack of real party‑in‑interest).
The Office of the President issued a Decision dated April 6, 2011 granting Redmont’s petition and cancelling/revoking the FTAA; this was followed by a Resolution dated July 6, 2011.
Petitioners appealed to the Court of Appeals; the CA issued a Decision on February 23, 2012 affirming the OP Decision and a Resolution dated July 27, 2012 denying reconsideration, prompting this Supreme Court petition.

Issue Presented to the Supreme Court

Whether the Court of Appeals correctly affirmed the Office of the President’s cancellation and/or revocation of the FTAA.

Office of the President’s Decision (OP Ruling)

The OP held it had the authority to cancel the FTAA, reasoning that the President’s exclusive power to enter into agreements under RA 7942 carries with it the authority to cancel such agreements.
The OP found petitioners had misrepresented that they were Filipino corporations qualified to engage in mining activities.
Based on paragraph a(iii), Section 17.2 of the FTAA (termination for “any intentional and materially false statement or omission of facts by a Party”), the OP cancelled/revoked the FTAA and gave due course to Redmont’s EP application.

Court of Appeals Ruling (CA Ruling)

The CA, in its February 23, 2012 Decision, affirmed the OP’s ruling.
It found no procedural error in the OP’s action and treated the OP’s cancellation as consistent with the President’s power of control over executive departments.
On the merits, the CA relied on FTAA paragraph a(iii), Section 17.2 to uphold cancellation for material misrepresentation and sustained the OP finding that petitioners committed misrepresentations warranting cancellation.
A motion for reconsideration to the CA was denied in a July 27, 2012 Resolution.

Supreme Court Holding (Disposition)

The petition to the Supreme Court was found meritorious.
The Supreme Court held that the Court of Appeals improperly took cognizance of the appeal under Rule 43 of the Rules of Court because the OP’s cancellation/revocation of the FTAA was not a