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

Facts:
The case involves the Diwalwal Gold Rush Area
(Diwalwal), a rich tract of mineral land
located inside the Agusan-Davao-Surigao Forest Reserve in Davao
del Norte and Davao Oriental. Since the early 1980s, Diwalwal has
been stormed by conflicts brought about by numerous mining
claims over it. Such land was later on declared as a mineral
reservation and as an environmentally critical area by virtue of
Proclamation No. 297
On March 10, 1986, Marcopper Mining Corporation (MMC)
was granted an Exploration Permit (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. On February 16 1994, 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.
Apex and Balete asks the Court to order MGB to accept its
application.
Issues:

1. W/N SEM has a vested right over the disputed area by virtue
of Exploration Permit 133 which was subsequently
transferred by Marcopper to SEM.
2. W/N Proclamation No. 297 declaring the disputed area as
mineral reservation was constitutional.
3. Who (among petitioners Apex and Balite) has priority right
over Diwalwal?
Held/Ratio:
1. NO. Contrary to SEMs contention, that relied on the cases of
Mac Donald and Greek Mining Corporation, the company
had not acquired a perfected right. In two cases, Mac Donald
and Mining Corp, had vested right by virtue of Philippine Bill
of 1902, stating that the mining claim under this Bill is
property in the highest sense of that term, which may be sold
and conveyed, and will past by descent and not subject
therefore to the disposal of the Government.

Meaning their claims (mcdonald and Greek

mining) were already perfected making the 1935
constitution inoperative considering that the lands
were not part of the public domain.
SEM was not able to that it has a vested right when
Philippine Bill of 1902 was still operative
o It is impossible. Considering that SEMs
predecessor-in-interest filed its declaration of
locations and permit operation only in 1984
o MMC did not transmit a mining rights but only
exploration permit
SEM did not acquire the rights inherent in
the permit as the assignment was in
violation of the conditions stipulated in
the permit
PD 463 requires approval of Secretary of
DENR. Also, PD 463 (Mineral Resources

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.
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. With
the expiration of EP 133 on July 6, 1994,
MMC lost any right to the Diwalwal Gold
Rush 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 over
the area covered by EP 133.

EXPLORATION PERMIT
INTO A VESTED RIGHT

DOES

NOT

RIPEN

2. 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 citizens, or corporations or associations at least
sixty per centum of whose capital is owned by such citizens.
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. 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.
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.)
Mining operations in the Diwalwal Mineral Reservation are
now, therefore, within the full control of the State through
the executive branch. 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.
4.
5. PETITIONS ARE ALL DENIED