SOUTHEAST MINDANAO GOLD MINING CORPORATION, petitioner, over that of another mining firm, Apex Mining Corporation (Apex).

ng Corporation (Apex). The

vs.BALITE PORTAL MINING COOPERATIVE and others similarly Court found that Apex did not comply with the procedural requisites for
situated; and THE HONORABLE ANTONIO CERILLES, in his capacity as acquiring mining rights within forest reserves.
Secretary of the Department of Environment and Natural Resources
(DENR), PROVINCIAL MINING REGULATORY BOARD OF DAVAO Not long thereafter, Congress enacted on June 27, 1991 Republic Act No.
(PMRB-Davao), respondents. 7076, or the People's Small-Scale Mining Act. The law established a
People's Small-Scale Mining Program to be implemented by the
YNARES-SANTIAGO, J.: Secretary of the DENR3 and created the Provincial Mining Regulatory
Board (PMRB) under the DENR Secretary's direct supervision and
This is a petition for review of the March 19, 1998 decision of the Court control.4 The statute also authorized the PMRB to declare and set aside
of Appeals in CA-G.R. SP No. 44693, dismissing the special civil action small-scale mining areas subject to review by the DENR Secretary 5 and
for certiorari, prohibition and mandamus, and the resolution dated award mining contracts to small-scale miners under certain conditions.6
August 19, 1998 denying petitioner's motion for reconsideration.
On December 21, 1991, DENR Secretary Fulgencio S. Factoran issued
The instant case involves a rich tract of mineral land situated in the Department Administrative Order (DAO) No. 66, declaring 729 hectares
Agusan-Davao-Surigao Forest Reserve known as the "Diwalwal Gold of the Diwalwal area as non-forest land open to small-scale mining. 7 The
Rush Area." Located at Mt. Diwata in the municipalities of Monkayo and issuance was made pursuant to the powers vested in the DENR
Cateel in Davao Del Norte, the land has been embroiled in controversy Secretary by Proclamation No. 369, which established the Agusan-
since the mid-80's due to the scramble over gold deposits found within Davao-Surigao Forest Reserve.
its bowels.
Subsequently, a petition for the cancellation of EP No. 133 and the
From 1985 to 1991, thousands of people flocked to Diwalwal to stake admission of a Mineral Production Sharing Arrangement (MPSA)
their respective claims. Peace and order deteriorated rapidly, with proposal over Diwalwal was filed before the DENR Regional Executive
hundreds of people perishing in mine accidents, man-made or Director, docketed as RED Mines Case No. 8-8-94 entitled, "Rosendo
otherwise, brought about by unregulated mining activities. The Villaflor, et al. v. Marcopper Mining Corporation."
multifarious problems spawned by the gold rush assumed gargantuan
proportions, such that finding a "win-win" solution became a veritable On February 16, 1994, while the RED Mines case was pending,
needle in a haystack. Marcopper assigned its EP No. 133 to petitioner Southeast Mindanao
Gold Mining Corporation (SEM),8 which in turn applied for an
On March 10, 1988, Marcopper Mining Corporation (Marcopper) was integrated MPSA over the land covered by the permit.
granted Exploration Permit No. 133 (EP No. 133) over 4,491 hectares of
land, which included the hotly-contested Diwalwal area. 1 Marcopper's In due time, the Mines and Geosciences Bureau Regional Office No. XI in
acquisition of mining rights over Diwalwal under its EP No. 133 was Davao City (MGB-XI) accepted and registered the integrated MPSA
subsequently challenged before this Court in "Apex Mining Co., Inc., et al. application of petitioner. After publication of the application, the
v. Hon. Cancio C. Garcia, et al.," 2 where Marcopper's claim was sustained following filed their oppositions:
a) MAC Case No. 004(XI) - JB Management Mining Corporation; Resolution No. 26, Series of 1997, authorizing the issuance of ore
transport permits (OTPs) to small-scale miners operating in the
b) MAC Case No. 005(XI) - Davao United Miners Cooperative; Diwalwal mines.

c) MAC Case No. 006(XI) - Balite Integrated Small Scale Miner's Thus, on May 30, 1997, petitioner filed a complaint for damages before
Cooperative; the Regional Trial Court of Makati City, Branch 61, against the DENR
Secretary and PMRB-Davao. SEM alleged that the illegal issuance of the
d) MAC Case No. 007(XI) - Monkayo Integrated Small Scale Miner's OTPs allowed the extraction and hauling of P60,000.00 worth of gold
Association, Inc.; ore per truckload from SEM's mining claim.

e) MAC Case No. 008(XI) - Paper Industries Corporation of the Meanwhile, on June 13, 1997, the RPA resolved the Consolidated Mines
Philippines; cases and decreed in an Omnibus Resolution as follows:

f) MAC Case No. 009(XI) - Rosendo Villaflor, et al.; VIEWED IN THE LIGHT OF THE FOREGOING, the validity of Exploration
Permit No. 133 is hereby reiterated and all the adverse claims against
MPSAA No. 128 are DISMISSED.9
g) MAC Case No. 010(XI) - Antonio Dacudao;
On June 24, 1997, the DENR Secretary issued Memorandum Order No.
h) MAC Case No. 011(XI) - Atty. Jose T. Amacio; 97-0310 which provided, among others, that:

i) MAC Case No. 012(XI) - Puting-Bato Gold Miners Cooperative; 1. The DENR shall study thoroughly and exhaustively the option of direct
state utilization of the mineral resources in the Diwalwal Gold-Rush Area.
j) MAC Case No. 016(XI) - Balite Communal Portal Mining Cooperative; Such study shall include, but shall not be limited to, studying and
and weighing the feasibility of entering into management agreements or
operating agreements, or both, with the appropriate government
k) MAC Case No. 97-01(XI) - Romeo Altamera, et al. instrumentalities or private entities, or both, in carrying out the
declared policy of rationalizing the mining operations in the Diwalwal
In the meantime, on March 3, 1995, Republic Act No. 7942, the Gold Rush Area; such agreements shall include provisions for profit-
Philippine Mining Act, was enacted. Pursuant to this statute, the above- sharing between the state and the said parties, including profit-sharing
enumerated MAC cases were referred to a Regional Panel of Arbitrators arrangements with small-scale miners, as well as the payment of
(RPA) tasked to resolve disputes involving conflicting mining rights. The royalties to indigenous cultural communities, among others. The
RPA subsequently took cognizance of the RED Mines case, which was Undersecretary for Field Operations, as well as the Undersecretary for
consolidated with the MAC cases. Legal and Legislative Affairs and Attached Agencies, and the Director of
the Mines and Geo-sciences Bureau are hereby ordered to undertake
On April 1, 1997, Provincial Mining Regulatory Board of Davao passed such studies. x x x11
On July 16, 1997, petitioner filed a special civil action for certiorari, revoked, amended or modified by the Chief Executive when the national
prohibition and mandamus before the Court of Appeals against PMRB- interest so requires. The Court of Appeals, however, declined to rule on
Davao, the DENR Secretary and Balite Communal Portal Mining the validity of the OTPs, reasoning that said issue was within the
Cooperative (BCPMC), which represented all the OTP grantees. It exclusive jurisdiction of the RPA.
prayed for the nullification of the above-quoted Memorandum Order
No. 97-03 on the ground that the "direct state utilization" espoused Petitioner filed a motion for reconsideration of the above decision,
therein would effectively impair its vested rights under EP No. 133; that which was denied for lack of merit on August 19, 1998. 14
the DENR Secretary unduly usurped and interfered with the jurisdiction
of the RPA which had dismissed all adverse claims against SEM in the Hence this petition, raising the following errors:
Consolidated Mines cases; and that the memorandum order arbitrarily
imposed the unwarranted condition that certain studies be conducted
before mining and environmental laws are enforced by the DENR. I. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE
ERROR, AND HAS DECIDED A QUESTION OF SUBSTANCE NOT
THERETOFORE DETERMINED BY THIS HONORABLE SUPREME COURT,
Meanwhile, on January 6, 1998, the MAB rendered a decision in the OR HAS DECIDED IT IN A WAY PROBABLY NOT IN ACCORD WITH LAW
Consolidated Mines cases, setting aside the judgment of the RPA. 12 This OR WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT IN
MAB decision was then elevated to this Court by way of a consolidated UPHOLDING THE QUESTIONED ACTS OF RESPONDENT DENR
petition, docketed as G.R. Nos. 132475 and 132528.1wphi1.nt SECRETARY WHICH ARE IN VIOLATION OF MINING LAWS AND IN
DEROGATION OF PETITIONER'S VESTED RIGHTS OVER THE AREA
On March 19, 1998, the Court of Appeals, through a division of five COVERED BY ITS EP NO. 133;
members voting 3-2,13 dismissed the petition in CA-G.R. SP No. 44693. It
ruled that the DENR Secretary did not abuse his discretion in issuing II. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE
Memorandum Order No. 97-03 since the same was merely a directive to ERROR IN HOLDING THAT AN ACTION ON THE VALIDITY OF ORE
conduct studies on the various options available to the government for TRANSPORT PERMIT (OTP) IS VESTED IN THE REGIONAL PANEL OF
solving the Diwalwal conflict. The assailed memorandum did not ARBITRATORS.15
conclusively adopt "direct state utilization" as official government
policy on the matter, but was simply a manifestation of the DENR's
intent to consider it as one of its options, after determining its In a resolution dated September 11, 2000, the appealed Consolidated
feasibility through studies. MO 97-03 was only the initial step in the Mines cases, docketed as G.R. Nos. 132475 and 132528, were referred
ladder of administrative process and did not, as yet, fix any obligation, to the Court of Appeals for proper disposition pursuant to Rule 43 of
legal relationship or right. It was thus premature for petitioner to claim the 1997 Rules of Civil Procedure. 16 These cases, which were docketed
that its "constitutionally-protected rights" under EP No. 133 have been as CA-G.R. SP Nos. 61215 and 61216, are still pending before the Court
encroached upon, much less, violated by its issuance. of Appeals.

Additionally, the appellate court pointed out that petitioner's rights In the first assigned error, petitioner insists that the Court of Appeals
under EP No. 133 are not inviolable, sacrosanct or immutable. Being in erred when it concluded that the assailed memorandum order did not
the nature of a privilege granted by the State, the permit can be adopt the "direct state utilization scheme" in resolving the Diwalwal
dispute. On the contrary, petitioner submits, said memorandum order Respondent DENR Secretary. And even if direct state exploitation was
dictated the said recourse and, in effect, granted management or opted by the government, the DENR still had to promulgate rules and
operating agreements as well as provided for profit sharing regulations to implement the same x x x, in coordination with the other
arrangements to illegal small-scale miners. concerned agencies of the government. 17

According to petitioner, MO 97-03 was issued to preempt the resolution Consequently, the petition was premature. The said memorandum
of the Consolidated Mines cases. The "direct state utilization scheme" order did not impose any obligation on the claimants or fix any legal
espoused in the challenged memorandum is nothing but a legal relation whatsoever between and among the parties to the dispute. At
shortcut, designed to divest petitioner of its vested right to the gold this stage, petitioner can show no more than a mere apprehension that
rush area under its EP No. 133. the State, through the DENR, would directly take over the mines after
studies point to its viability. But until the DENR actually does so and
We are not persuaded. petitioner's fears turn into reality, no valid objection can be entertained
against MO 97-03 on grounds which are purely speculative and
We agree with the Court of Appeals' ruling that the challenged MO 97- anticipatory.18
03 did not conclusively adopt "direct state utilization" as a policy in
resolving the Diwalwal dispute. The terms of the memorandum clearly With respect to the alleged "vested rights" claimed by petitioner, it is
indicate that what was directed thereunder was merely a study of this well to note that the same is invariably based on EP No. 133, whose
option and nothing else. Contrary to petitioner's contention, it did not validity is still being disputed in the Consolidated Mines cases. A
grant any management/operating or profit-sharing agreement to small- reading of the appealed MAB decision reveals that the continued
scale miners or to any party, for that matter, but simply instructed the efficacy of EP No. 133 is one of the issues raised in said cases, with
DENR officials concerned to undertake studies to determine its respondents therein asserting that Marcopper cannot legally assign the
feasibility. As the Court of Appeals extensively discussed in its decision: permit which purportedly had expired. In other words, whether or not
petitioner actually has a vested right over Diwalwal under EP No. 133 is
x x x under the Memorandum Order, the State still had to study still an indefinite and unsettled matter. And until a positive
prudently and exhaustively the various options available to it in pronouncement is made by the appellate court in the Consolidated
rationalizing the explosive and ever perilous situation in the area, the Mines cases, EP No. 133 cannot be deemed as a source of any conclusive
debilitating adverse effects of mining in the community and at the same rights that can be impaired by the issuance of MO 97-03.
time, preserve and enhance the safety of the mining operations and
ensure revenues due to the government from the development of the Similarly, there is no merit in petitioner's assertion that MO 97-03
mineral resources and the exploitation thereof. The government was sanctions violation of mining laws by allowing illegal miners to enter
still in earnest search of better options that would be fair and just to all into mining agreements with the State. Again, whether or not
parties concerned, including, notably, the Petitioner. The direct state respondent BCMC and the other mining entities it represents are
utilization of the mineral resources in the area was only one of the conducting illegal mining activities is a factual matter that has yet to be
options of the State. Indeed, it is too plain to see, x x x that before the finally determined in the Consolidated Mines cases. We cannot
State will settle on an option, x x x an extensive and intensive study of rightfully conclude at this point that respondent BCMC and the other
all the facets of a direct state exploitation was directed by the Public mining firms are illegitimate mining operators. Otherwise, we would be
preempting the resolution of the cases which are still pending before Incidentally, it must likewise be pointed out that under no
the Court of Appeals.19 circumstances may petitioner's rights under EP No. 133 be regarded as
total and absolute. As correctly held by the Court of Appeals in its
Petitioner's reliance on the Apex Mining case to justify its rights under challenged decision, EP No. 133 merely evidences a privilege granted by
E.P. No. 133 is misplaced. For one, the said case was litigated solely the State, which may be amended, modified or rescinded when the
between Marcopper and Apex Mining Corporation and cannot thus be national interest so requires. This is necessarily so since the
deemed binding and conclusive on respondent BCMC and the other exploration, development and utilization of the country's natural
mining entities presently involved. While petitioner may be regarded as mineral resources are matters impressed with great public interest.
Marcopper's successor to EP No. 133 and therefore bound by the Like timber permits, mining exploration permits do not vest in the
judgment rendered in the Apex Mining case, the same cannot be said of grantee any permanent or irrevocable right within the purview of the
respondent BCMC and the other oppositor mining firms, who were not non-impairment of contract and due process clauses of the
impleaded as parties therein. Constitution,21 since the State, under its all-encompassing police power,
may alter, modify or amend the same, in accordance with the demands
Neither can the Apex Mining case foreclose any question pertaining to of the general welfare.22
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 Additionally, there can be no valid opposition raised against a mere
Mining case settled the issue of who between Apex and Marcopper study of an alternative which the State, through the DENR, is authorized
validly acquired mining rights over the disputed area by availing of the to undertake in the first place. Worth noting is Article XII, Section 2, of
proper procedural requisites mandated by law, it certainly did not deal the 1987 Constitution, which specifically provides:
with the question raised by the oppositors in the Consolidated Mines
cases, i.e. whether EP No. 133 had already expired and remained valid SEC. 2. All lands of the public domain, waters, minerals, coal, petroleum,
subsequent to its transfer by Marcopper to petitioner. Besides, as clarified and other mineral oils, all forces of potential energy, fisheries, forests or
in our decision in the Apex Mining case: timber, wildlife, flora and fauna, and other natural resources are owned
by the State. With the exception of agricultural lands, all other natural
x x x is conclusive only between the parties with respect to the resources shall not be alienated. The exploration, development, and
particular issue herein raised and under the set of circumstances herein utilization of natural resources shall be under the full control and
prevailing. In no case should the decision be considered as a precedent supervision of the State. The State may directly undertake such
to resolve or settle claims of persons/entities not parties hereto. activities, or it may enter into co-production, joint venture, or
Neither is it intended to unsettle rights of persons/entities which have production-sharing agreements with Filipino citizens, or corporations
been acquired or which may have accrued upon reliance on laws passed or associations at least sixty per centum of whose capital is owned by
by appropriate agencies.20 such citizens. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and
Clearly then, the Apex Mining case did not invest petitioner with any under such terms and conditions as may be provided by law. In cases of
definite right to the Diwalwal mines which it could now set up against water rights for irrigation, water supply, fisheries, or industrial uses
respondent BCMC and the other mining groups. other than the development of water power, beneficial use may be the
measure and limit of the grant. (Underscoring ours)
Likewise, Section 4, Chapter II of the Philippine Mining Act of 1995 factual issues are to be properly threshed out in CA G.R. SP Nos. 61215
states: and 61216, which have yet to be decided by the Court of Appeals. Any
objection raised against MO 97-03 is likewise premature at this point,
SEC. 4. Ownership of Mineral Resources. - Mineral Resources are owned inasmuch as it merely ordered a study of an option which the State is
by the State and the exploration, development, utilization, and authorized by law to undertake.
processing thereof shall be under its full control and supervision. The
State may directly undertake such activities or it may enter into mineral We see no need to rule on the matter of the OTPs, considering that the
agreements with contractors. (Underscoring ours) grounds invoked by petitioner for invalidating the same are inextricably
linked to the issues raised in the Consolidated Mines cases.
Thus, the State may pursue the constitutional policy of full control and
supervision of the exploration, development and utilization of the WHEREFORE, in view of the foregoing, the instant petition is DENIED.
country's natural mineral resources, by either directly undertaking the The decision of the Court of Appeals in CA-G.R. SP No. 44693 is
same or by entering into agreements with qualified entities. The DENR AFFIRMED.
Secretary acted within his authority when he ordered a study of the
first option, which may be undertaken consistently in accordance with SO ORDERED.
the constitutional policy enunciated above. Obviously, the State may not
be precluded from considering a direct takeover of the mines, if it is the
only plausible remedy in sight to the gnawing complexities generated
by the gold rush. As implied earlier, the State need be guided only by the
demands of public interest in settling for this option, as well as its
material and logistic feasibility.

In this regard, petitioner's imputation of bad faith on the part of the

DENR Secretary when the latter issued MO 97-03 is not well-taken. The
avowed rationale of the memorandum order is clearly and plainly
stated in its "whereas" clauses. 23 In the absence of any concrete
evidence that the DENR Secretary violated the law or abused his
discretion, as in this case, he is presumed to have regularly issued the
memorandum with a lawful intent and pursuant to his official
functions.1wphi1.nt

Given these considerations, petitioner's first assigned error is baseless

and premised on tentative assumptions. Petitioner cannot claim any
absolute right to the Diwalwal mines pending resolution of the
Consolidated Mines cases, much less ask us to assume, at this point, that
respondent BCMC and the other mining firms are illegal miners. These