FIRST DIVISION
[G.R. No. 202559. June 10, 2019.]
NEUTRON CONSTRUCTION & MARKETING CORPORATION, petitioners, vs.FARMONT MINES CO., INC., respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedJune 10, 2019which reads as follows:
"G.R. No. 202559 (Neutron Construction & Marketing Corporation v. Farmont Mines Co., Inc.). — This is a petition for review on certiorari1 of the Decision dated February 28, 2012 2 of the Court of Appeals in CA-G.R. SP No. 111939 where it reversed and set aside the Decision dated June 2, 2009 3 of the Mines and Adjudication Board, Department of Environment and Natural Resources (MAB-DENR) in MAB Case No. 0168-08.
The present dispute arose from the filing of two Mineral Production Sharing Agreement (MPSA) applications which overlapped in the inclusion of a particular group of mining claims. 4 Petitioner Neutron Construction & Marketing Corporation (Neutron) filed MPSA Nos. P-111-26 and P-111-50-97, while respondent Farmont Mines Company, Incorporated (Farmont) filed MPSA No. P-111-28, with Declaration of Locations (DOL) all situated in Doña Remedios Trinidad, Bulacan. 5 Further, upon plotting, it was found that the "FARMONT" mining claims covered by MPSA-P-111-28 overlapped with Neutron's "ROY" mining claims covered by MPSA-P-111-50-97. 6
On February 7, 2003, Neutron filed a protest 7 with the Panel of Arbitrators, Mines and Geosciences Bureau of the DENR (Panel of Arbitrators) against Farmont's application for MPSA. 8 This protest, docketed as MPSA-P-111-28, covered the latter's mining claims located in the Province of Bulacan, specifically, PLC-V-208, PLC-V-209, PLC-V-154, LLC-V-514, LLC-V-474, LLC-V-475, PLC-V-1041, PLC-V-1046 and PLC-V-765. 9
In its position paper, 10 Neutron alleged that the aforesaid mining claims have already been declared abandoned in the Order of Rejection dated November 26, 1980 issued by then Bureau of Mines and Geo-Sciences Director Juanito Fernandez due to Farmont's failure to submit its Annual Assessment of Work Obligations (AAWO), as required under Section 178 of the Consolidated Mines Administrative Order (CMAO). 11 No appeal was taken by Farmont, hence, Neutron argues that the claims were allegedly deemed cancelled with finality. 12
In response, Farmont submitted a legal opinion 13 dated June 25, 1999 rendered by former Department of Environment and Natural Resources (DENR) Undersecretary (Usec.) Teodoro Pison. This opinion stated that: (1) the aforementioned Order of Rejection was not signed by the DENR Secretary; (2) automatic cancellation does not apply to mining claims; (3) it is the failure to perform the required annual work obligations and not the failure to file the AAWO which is a valid ground for cancellation of mining claims; (4) the Order of Rejection had no basis in fact and in law; and (5) the mining claims therefore remain valid and subsisting. 14
On April 2, 2004, the Panel of Arbitrators issued a Resolution 15 in favor of Neutron. The dispositive portion reads as follows:
Wherefore, the mining lease/claims which are the basis of the MPSA No. P-III-28 of FARMONT Mines Company, Inc. having been rejected in the Order dated November 26, 1980, renders the existing application filed nugatory and contrary to existing laws, rules and regulations. The MPSA P-III-26 and P-III-50-97 of NEUTRON CONSTRUCTION & MARKETING CORPORATION is hereby given due course.
SO ORDERED. 16
Farmont filed a motion for reconsideration 17 which was granted in a Resolution dated April 1, 2005. 18 The Panel of Arbitrators relied on Undersecretary Pison's legal opinion in overturning its previous Resolution. It reasoned that in the first instance, when it ruled against Farmont, it relied on Memorandum Order (M.O.) No. 97-07, Series of 1997, which provided that a mining claim over which an order of rejection has been issued shall not be considered valid and existing. The panel explained that M.O. No. 97-07 was actually in conflict with Sec. 27 of Presidential Decree (P.D.) 463, 19 as amended, as has since been interpreted by this Court in Medrana v. Office of the President20 and Santiago v. Deputy Executive Secretary. 21 It further added that, as cited by Usec. Pison, the Order of Rejection was rightly deemed "non-consequential" since it was issued at a time when there was yet no relevant jurisprudence on the matter of automatic cancellations. 22
Neutron, in turn, filed a motion for reconsideration, which was denied in a Resolution dated June 30, 2005. 23
Aggrieved, Neutron filed an appeal with the MAB-DENR. On June 2, 2009, the MAB-DENR issued a Decision 24 in favor of Neutron. It found that the area subject of the supposed application of Farmont was already closed to further mining application as the same was covered by a valid and pre-existing mining right of Neutron by virtue of its MPSA P-111-50-97. 25 The MAB-DENR further held that, since Farmont's application for availment was rejected with finality as early as November 26, 1980, Neutron's application effectively made it the rightful and duly constituted claimant and holder of such mining rights. 26 It dismissed Farmont's reliance on Usec. Pison's 1999 legal opinion as misplaced, observing that the same was issued 19 years after the finality of the Order of Rejection, and therefore could not properly be deemed to have affected the long-settled facts of the case. 27
Farmont filed a motion for reconsideration which was denied in an Order 28 dated November 25, 2009.
Thus, Farmont filed a petition for review 29 with the CA. It raised the sole issue of whether the MAB-DENR patently erred in denying its MPSA Application No. P-111-28 by peremptorily ruling that its mineral claims are considered abandoned and no longer existing and valid by virtue of the Order of Rejection dated November 26, 1980 issued by then Director of Mines Juanito Fernandez. 30
In its assailed Decision, the CA granted Farmont's petition and reversed the MAB-DENR's Decision. The CA ruled that the AAWO is a legal requirement, which serves as proof of compliance with the annual work obligations of the claim owner and gives rise to a presumption that the work obligations were actually performed. It is required only for purposes of proving that there had actually been work or improvements done. 31 While Farmont failed to file its AAWO for the years 1976, 1977 and 1979, which resulted in the cancellation of its claims, it was duly established that Farmont actually performed mining operations continually in 1976, 1977, 1978 and 1979 as evidenced by its production report and payment of ad valorem tax for these years. 32 Jurisprudence holds that what the law deems more important is the performance of work obligations and not the mere filing of an AAWO. 33 Furthermore, since the exclusive jurisdiction to cancel mining claims is lodged with the DENR Secretary and not with the Director of the Bureau of Mines and Geo-Sciences or with the Panel of Arbitrators, the Order of Rejection dated November 26, 1980 is null and void. 34
In its petition, Neutron argues that the CA erred and committed grave abuse of discretion in resurrecting and raising from the dead a mining claim that has been rejected with finality 32 years ago. 35 The CA also allegedly erred in applying the cases of Medrana v. Office of the President36 and Celestial Nickel Mining Corporation v. Macroasia Corporation37 in the case at bar. 38 Neutron argues that the guideline laid down by said cases, namely that only the DENR Secretary has the power and authority to effect cancellation of a mere lease application, is inapplicable in this case, for the reason that, at the time the Order of Rejection was issued, the applicable law was Section 100 of P.D. 463, which in turn expressly vested authority in the Director of Mines to approve or reject availment applications. It additionally contended that the CA misappreciated the facts by focusing on the required performance of work, when the sole issue was allegedly only with respect to the fact that Farmont failed to comply with Section 100 of P.D. 463, in relation to Section 178 of the 1986 Consolidated Mines Administrative Order (CMAO). Lastly, Neutron submits that the CA palpably erred and violated Section 4, Rule 43 of the Rules of Court in failing to address and consider that Farmont's petition for review was filed out of time. 39
All the relevant issues and arguments considered, we resolve to DENY the petition.
The fulcrum issue, around which the validity of the mining claims of the parties may be ascertained, involves the question of whether the required compliance, as textually provided by Section 27 of P.D. 463, involves the actual undertaking of annual work obligations, or the mere submission of proof of work. If what is veritably required is the actual undertaking of the work, the submission of proof may conceivably admit of plurality, and mere failure to submit AAWOs will not necessarily result in the abandonment or cancellation of the pertinent mining claim. Conversely, if what is contemplated by law is the exclusive requirement of the very submission of proof of the work obligations in the form of the AAWO submission, then failure to comply with such submission may, after due process, very well result in the abandonment or cancellation of the mining claim.
In addition, corollary to said central issue is whether there is, in fact, a legally contemplated automaticity in the cancellation of existing mining claims upon failure to comply with the enlisted requirements under the law.
Chapter VI of P.D. 463 provides for the requirement of "Annual Work Obligations," which must be undertaken on the mining claim in order to maintain it, stipulating therein the minimum value, 40 the schedule of undertaking, 41 its legitimate expenditures, 42 as well as the extent of concentration of the performance of work obligation vis-à-vis the total expanse of the claim. 43
In the form it existed at the relevant time, the final section under this chapter on work obligations, or Section 27, provides for the requirement of submitting proof of performance, to wit:
Sec. 27. Proof of Annual Work Obligations. — The claim owner/lessee shall submit proof of compliance within the annual work obligations by filing a sworn statement with the Director with sixty (60) days from the end of the year in which the work obligation is required, in form to be prescribed by regulation. Failure of the claim owner to file such proof of compliance for two (2) consecutive years shall cause the forfeiture of all rights to his claim.
Section 27 has since been amended by Section 15 of P.D. No. 1385, Section 5 of P.D. 1677 and Section 2 of P.D. 1902, with the substantive qualification of the following clause:
Provided, That failure of the claim owner to comply therewith for two (2) consecutive years shall constitute automatic abandonment of the mining claim: Provided, further, That, if it is found upon field verification that no such work was actually done on the mining claim, the claim owner/lessee shall likewise automatically lose all his rights thereto notwithstanding submission of the aforesaid documents: Provided, finally, That the Director, in cases of unstable peace and order conditions and/or involvement in mining conflicts may grant further extensions.
The interpretation of Section 27 of P.D. 463, as amended, has been settled in Medrana v. Office of the President, which similarly involved a rejection of an application to avail of rights and privileges under a pre-existing mining claim on the basis of the applicant's failure to submit AAWOs. As early as this case, this Court has categorically rejected the view that the non-submission of the AAWOs cannot be considered an automatic abandonment of the mining claim for which the AAWOs were required. We quote with favor the relevant portions of our ruling, to wit:
Careful reading of the above-quoted Section 27 shows that abandonment of a mining claim or lease results from failure to comply with the annual work obligations on the area covered by a mining claim or lease for two (2) consecutive years. The precipitating event of the lapse of a mining claim or lease contemplated in Section 27 is the failure to carry out actual work on a mining claim or lease, and not simply the failure to submit in a timely manner the Affidavit of Annual Work Obligations. That Affidavit constitutes simply proof of compliance with the annual work obligations. Execution and submission of an Affidavit of Annual Work Obligations creates a presumption that the work obligation was indeed carried out. This presumption is by no means a conclusive one, but is, on the contrary, merely a prima facie one since Section 27 expressly prescribes that "if it is found upon field verification that no such work was actually done on the mining claims, the claim owner/lessee shall likewise lose his rights thereto notwithstanding submission of the aforesaid documents." It follows that, conversely, failure to submit the Affidavit of Annual Work Obligations raises the presumption that no work was actually done, but that this presumption too can be overturned by affirmative proof — e.g., by "field verification" — that the required annual work obligations had in fact been carried out on the mining claim or leased area. To hold that the mere failure to submit the Affidavits resulted in automatic abandonment of MLC No. V-754 notwithstanding the actual performance of work obligations, would not only run counter to the express language of Section 27, but would also be to exalt form over substance.
xxx xxx xxx
Thus, abandonment may be said to result where there is concurrence of two (2) elements: the first being the intent to abandon a right or claim and the second being the external act by which that intention is expressed and carried into effect. There must, moreover, be an actual, as distinguished from a merely projected, relinquishment of a claim or right; otherwise the right or claim is not vacated or waived so as to be susceptible of being appropriated by the next owner. These two (2) requirements are clearly lacking in the case at bar. The Director of Mines and public respondent Office of the President had found that, in point of fact, private respondent Supreme Aggregates had performed its annual work obligations. Supreme Aggregates could not therefore be said to have intended to abandon its mining claim or lease, notwithstanding the fact that it had failed to submit the normal documentary proof of performance of annual work obligations — that is, the Affidavit of Annual Work Obligations. We agree, therefore, with the conclusion of the Office of the President that in the instant case, there was no abandonment, whether automatic or voluntary, of MLC No. V-754. 44 (Emphasis in the original; citations omitted)
The early case of Medrana conclusively unbundled Section 27 of P.D. 463 by bifurcating the actual performance of the work obligations vis-à-vis the submission of proof of work, and clarified that the ground for abandonment of the mining claim or lease is the very failure to perform the actual work obligations within the period of two years, and not the mere failure to file proof of performance within the same period.
Months later, we further clarified in the case of Santiago v. Deputy Executive Secretary, 45 that:
Contrary to petitioner's claim, there is no rule of automatic abandonment with respect to mining claims for failure to file AAWO. Under the Consolidated Mines Administrative Order (CMAO), implementing P.D. 463, as amended, the rule that has been consistently applied is that it is the failure to perform the required assessment work, not the failure to file the AAWO that gives rise to abandonment. x x x
Still further, in the most recent case of Asiga Mining Corporation v. Manila Mining Corporation, 46 this Court once more took the opportunity to quiet the debate as to the application of the requirement provided by Section 27 of P.D. 463. In a case comparably involving a mining claim, the rights over which were automatically divested by virtue of the claim owner's failure to submit the AAWO for two years, we ruled:
The notion of "automatic abandonment" being invoked by the respondents is provided for in Section 27 of the Mineral Resources Development Decree of 1974. And as early as 1990, the Court has already ruled on the proper interpretation of this provision in the case of Santiago v. Deputy Executive Secretary. In no uncertain terms, the Court has already established that there is no rule of automatic abandonment with respect to mining claims for failure to file the affidavit of annual work obligations.
xxx xxx xxx
The title of Section 27 was changed in the latest amendment from "Proof of Annual Work Obligations" as written in the Mineral Resources Development Decree of 1974, P.D. No. 1385, and P.D. No. 1677 to "Annual Work Obligations" under P.D. No. 1902. The latest version indicates that there is focus on the annual work obligations imposed upon claim owners or lessees, and not merely on the submission of proof to this requirement. Indeed, as ruled in Santiago, the essence of this provision is to exact compliance of the obligations imposed upon claim owners or lessees who are granted the privilege of exploring and/or exploiting the Philippines' natural resources.
Thus, when Section 27 included the phrase "failure of the claim owner to comply therewith," the phrase was referring to the actual work obligations required of the claim owners, and not merely the submission of the proof of the actual work obligations. This is the proper interpretation of this section. x x x 47
In the present case, while Farmont failed to file its AAWO for the years 1976, 1977 and 1979, 48 it was duly established, in point of fact, that Farmont actually performed mining operations continually in 1976, 1977, 1978 and 1979 as evidenced by its production report and payment of ad valorem tax in the amount of P29,837.12. 49 The Order of Rejection, therefore, erroneously found its basis on the mere failure to submit the AAWOs, critically overlooking the decisive jurisprudential guideline. To reiterate, the failure which serves as the impetus for the cancellation of the mining claim is not that which pertains to the submission of the pertinent probative affidavits, but the more important failure to carry out the work obligations, which the required affidavits themselves seek to evidence. Having no sound legal and factual bases to support it, the Order of Rejection is therefore null and void.
With respect to the negation of automaticity of cancellation of a mining claim or lease, we have held in the cases of Yinlu Bicol Mining Corporation v. Trans-Asia Oil and Energy Development Corporation50 and Santiago that the due process in abandonment upon non-compliance includes (1) a written notice of non-compliance to the claim owners and lessees and an ample opportunity to comply; and (2) in the event of the claim owner's failure to comply despite notice, a subsequent written notice effecting the cancellation of their mining claims. This is further consistent with the applicable procedure for cancellation as provided in Sections 230-232, Chapter XXIV of the DENR Administrative Order (DAO) No. 96-40. 51
The procedure of cancellation, more specifically the field verification, operationally refutes the asserted automaticity of the cancellation of the mining claim upon mere non-compliance, and fully contradicts the submission that the sole failure to submit the AAWOs effectively divested Farmont of its mining claim rights.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated February 28, 2012 of the Court of Appeals is AFFIRMEDin toto.
SO ORDERED."Carandang, J., on leave.
Very truly yours,
(SGD.) LIBRADA C. BUENADivision Clerk of Court
Footnotes
1.Rollo, pp. 9-32.
2.Id. at 51-59; penned by Associate Justice Antonio Villamor, with concurrence of Associate Justices Rosalinda Asuncion-Vicente and Ramon A. Cruz.
3.Id. at 188-195; penned by Chairman Jose L. Atienza, with the concurrence of members Eleazar P. Quinto and Horacio C. Ramos.
4.Id. at 164.
5.Id.
6.Id. at 62.
7.Id. at 61-63.
8.Id. at 96-99.
9.Id. at 52.
10.Id. at 136-144.
11.Id. at 188-189. The Order of Rejection provided:
It appearing that the applicant has not submitted the requirements called for by Section 178 of the Consolidated Mines Administrative Order relative to his/its application to avail of the rights and privileges under Presidential Decree No. 463, pursuant to Section 100 thereof, despite our call up letters dated April 21, 1976, April 14, 1978, May 7, 1979 and June 11, 1979, the last of which was sent to him on June 14, 1979, as evidenced by Registry Receipt No. 74251 dated June 14, 1979, and after considering his/its non-submittal of the requirements contained therein, in spite of the lapse of time since the last letter was sent to him/it, the said application should be, as hereby it is, REJECTED.
SO ORDERED.
xxx xxx xxx
12.Id. at 52.
13.Id. at 147-148.
14.Id. at 53.
15.Id. at 152-160.
16.Id. at 160.
17.Id. at 161-163.
18.Id. at 164-168.
19. Providing for a Modernized System of Administration and Disposition of Mineral Lands and to Promote and Encourage the Development and Exploitation Therof.
20. G.R. No. 85904, August 21, 1990, 188 SCRA 818.
21. G.R. No. 78163, December 10, 1990, 192 SCRA 199.
22.Rollo, p. 166.
23.Id. at 54.
24.Supra note 3.
25.Rollo, p. 193.
26.Id. at 194.
27.Id.
28.Id. at 196.
29.Id. at 206-215.
30.Id. at 210.
31.Id. at 55-56.
32. Id. at 56.
33. Id. at 57, citing Medrana v. Office of the President, supra note 20.
34. Id. at 58.
35. Id. at 21.
36. Supra note 20.
37. G.R. No. 169080, December 19, 2007, 541 SCRA 166.
38. Rollo, p. 24.
39. Id. at 28.
40. Sec. 24. Expenditure Required. — A claim owner under this Decree and under the Mining Act (Commonwealth Act No. 137) as amended, shall perform annual work obligations on his mining claim, the value of which shall not be less than the following amounts:
Before the lease contract is granted, per hectare per calendar year P20.00
After the lease contract is granted, per hectare per calendar year P100.00
A holder of a patentable claim shall before the grant of the patent applied for, perform annual work obligations on his mining claim, the value of which shall not be less than two hundred fifty pesos (P250.00) per hectare per calendar year.
xxx xxx xxx
41. Sec. 24. Expenditure Required. — x x x
xxx xxx xxx
The annual work obligations for each mining claim shall start with the calendar year immediately following the date of recording of such mining claim, and in the case of patentable and other claims the annual work obligations shall start with the calendar year following the date of the approval of this Decree.
42. Sec. 26. Legitimate Expenditure for Work Obligations. — Expenses for prospecting, exploration, and development work, including the cost of labor, materials and equipment used, and the fees and charges paid for geodetic, geological, geophysical, geochemical and other related surveys and for laboratory and pilot plant testing shall be considered legitimate expenditures for work obligations. The cost of buildings, machinery, equipment, roadways or other works shall be considered expenditures for work obligations if it is clearly shown that they are essential to the exploration and development of, or will facilitate the extraction of minerals and from, mining claims.
43. Sec. 25. Group Development. — The claim owner or lessee may concentrate all the annual work obligations on any one or more of several contiguous or geologically related mining claims in one province, if it can be shown to the Director that such concentration of work will be most advantageous and beneficial in the development and operation of said mining claims: Provided, That any expenditure in any calendar year in excess of the minimum amount required for work obligations per hectare may be carried forward and credited to the work obligations of the group claims for the succeeding year or years: Provided, further, That, if the expenditure incurred for any claim in less than that required in any year, the difference shall be paid to the Bureau of Mines which shall accrue to its Mines Special Fund.
44. Supra note 20 at 824-826.
45. Supra note 21.
46. G.R. No. 199081, 24 January 2018.
47. Id.
48. Rollo, p. 56.
49. Id.
50. G.R. No. 207942, January 12, 2015, 745 SCRA 154.
51. Sec. 230. Grounds. —
The following are the grounds for cancellation, revocation and termination of a Mining Permit/Mineral Agreement/FTAA:
a. Violation of any of the terms and conditions of the Permits or Agreements;
b. Non-payment of taxes and fees due the Government for two (2) consecutive years; and
c. Falsehood or omission of facts in the application for Exploration Permit, Mineral Agreement, FTAA or other permits which may alter, change or affect substantially the facts set forth in said statements.
Sec. 231. Suspension or Cancellation of Tax Incentives and Credits. —
a. Grounds for cancellation/suspension — The Bureau may suspend or cancel wholly or partially any incentive granted under the rules and regulations for any cause including the following:
1. Any violation of the Act, rules and regulations implementing the same or of the terms and conditions in the Mineral Agreement or FTAA;
2. Any material misrepresentation or false statements made to the Bureau at any time before or after the approval/conclusion of its Mineral Agreement or FTAA;
3. Whenever the project ceases to be viable and its continued operation would require additional costs to the economy. In this case, the Bureau shall evaluate the status of the project and shall decide if suspension/cancellation shall be imposed;
b. Withdrawal from the Mineral Agreement or FTAA — Whenever a Contractor decides to withdraw from business or suspend its operations covered by the Agreement, written notice thereof shall be sent to the Director before decision is implemented. Withdrawal from business operations shall automatically cancel the Mineral Agreement or FTAA. Upon such withdrawal, the Contractor shall cease to be entitled to the incentives. The effect of withdrawal from business or suspension of operations covered by the Agreement shall, in each particular instance, be determined by the Bureau, taking into account the reasons therefor; or
c. Refund and penalties — In case of cancellation of the Mineral Agreement or FTAA, the Bureau may in appropriate cases, recommend to other incentive-dispensing agencies the cancellation of registration without prejudice to the imposition of the corresponding penalties and refund of incentives availed of, pursuant to the Act and these implementing rules and regulations and under EO 226, laws creating export processing zones and other laws.
Sec. 232. Effect of Expiration and Cancellation of a Permit and Mineral Agreement/FTAA. —
Upon the expiration of a Mining Permit/Mineral Agreement/FTAA, the mining operations may be undertaken by the Government through one of its agencies or through a qualified independent Contractor. In the latter case, the contract shall be awarded to the highest bidder in a public bidding held after due publication of the notice thereof. The Contractor/Permit Holder shall have the right to equal the highest bid upon reimbursement of all reasonable expenses of the highest bidder.
Upon cancellation of a Mining Permit/Mineral Agreement/FTAA, the Director shall cause the same to be entered in the registration book and a notice thereof shall be posted on the bulletin board of the Bureau and Regional Office and the mining area covered thereby shall thereupon be open to new applicants.
Non-payment of taxes and fees causing for the cancellation of a Mining Permit/Mineral Agreement/FTAA shall have also the effect of re-opening the mining area to new applicants.