Case Digest ASAPHIL CONSTRUCTION AND DEVELOPMENT CORPORATION, vs. TUASON G.R. NO. 134030 April 25, 2006

ASAPHIL CONSTRUCTION AND DEVELOPMENT CORPORATION, vs.VICENTE TUASON, JR., INDUPLEX, INC. and MINESADJUDICATION BOARD,

G.R. NO. 134030             April 25, 2006

On March 24, 1975, respondent Vicente Tuason, Jr. ² (Tuason) entered into a Contract for Sale and Purchase of Perlite Ore with Induplex, Inc. (Induplex), wherein Induplex agreed to buy all the perlite ore that may be found and mined in Tuason’s mining claim located in Taysa, Daraga, Albay. In exchange, Induplex will assist Tuason in securing and perfecting his right over the mining claim.³

Thereafter, Tuason executed on May 29, 1976, an Agreement to Operate Mining Claims in favor of petitioner Asaphil Construction and Development Corporation (Asaphil).⁴

On November 9, 1990, Tuason filed with the Bureau of Mines, Department of Environment and Natural Resources (DENR), a complaint against Asaphil and Induplex for declaration of nullity of the two contracts, namely, the Contract for Sale and Purchase of Perlite Ore, and the Agreement to Operate Mining Claims. Tuason alleged in his complaint that the stockholders of Induplex formed and organized Ibalon Mineral Resources, Inc. (Ibalon), an entity whose purpose is to mine any and all kinds of minerals, and has in fact been mining, extracting and utilizing the perlite ore in Ibalon’s mining claim; that this is in violation of the condition imposed by the Board of Investments (BOI) on Induplex in its Joint Venture Agreement with Grefco, Inc. dated September 3, 1974, prohibiting Induplex from mining perlite ore, through an operating agreement or any other method; that Induplex acquired the majority stocks of Asaphil on January 14, 1989, and that 95% of Ibalon’s shares were also transferred to Virgilio R. Romero, who is a stockholder of Induplex, Asaphil and Ibalon. Tuason claimed that said acts adversely affected, not only his interest as claimowner, but the government’s interest as well.⁵

Issues:

1)     whether or not the DENR has jurisdiction over Tuason’s complaint for the annulment of the Contract for Sale and Purchase of Perlite Ore between Tuason and Induplex, and the Agreement to Operate Mining Claims between Tuason and Asaphil;

2)     whether or not the MAB erred in invalidating the Agreement to Operate Mining Claims.

The Court upholds the finding of the DENR Regional Executive Director that the DENR does not have jurisdiction over Tuason’s complaint.

At the time of the filing of the complaint, the jurisdiction of the DENR over mining disputes and controversies is governed by P.D. No. 1281, entitled "Revising Commonwealth Act No. 136, Creating the Bureau of Mines, and for Other Purposes."¹⁴ Particularly, P.D. No. 1281 vests the Bureau of Mines (now the Mines and Geo-Sciences Bureau) of the DENR with jurisdictional supervision and control over all holders of mining claims or applicants for and/or grantees of mining licenses, permits, leases and/or operators thereof, including mining service contracts and service contractors insofar as their mining activities are concerned.¹⁵ Under Section 7 of P.D. No. 1281, the Bureau of Mines also has quasi-judicial powers over cases involving the following:

(a) a mining property subject of different agreements entered into by the claim holder thereof with several mining operators;

(b) complaints from claimowners that the mining property subject of an operating agreement has not been placed into actual operations within the period stipulated therein; and

(c) cancellation and/or enforcement of mining contracts due to the refusal of the claimowner/operator to abide by the terms and conditions thereof.

In Pearson v. Intermediate Appellate Court,¹⁶ this Court observed that the trend has been to make the adjudication of mining cases a purely administrative matter, although it does not mean that administrative bodies have complete rein over mining disputes. In several cases on mining disputes, the Court recognized a distinction between (1) the primary powers granted by pertinent provisions of law to the then Secretary of Agriculture and Natural Resources (and the bureau directors) of an executive or administrative nature, such as granting of license, permits, lease and contracts, or approving, rejecting, reinstating or canceling applications, or deciding conflicting applications, and (2) controversies or disagreements of civil or contractual nature between litigants which are questions of a judicial nature that may be adjudicated only by the courts of justice.¹⁷

The allegations in Tuason’s complaint do not make out a case for a mining dispute or controversy within the jurisdiction of the DENR. While the Agreement to Operate Mining Claims is a mining contract, the ground upon which the contract is sought to be annulled is not due to Asaphil’s refusal to abide by the terms and conditions of the agreement, but due to Induplex’s alleged violation of the condition imposed by the BOI in its Joint Venture Agreement with Grefco, Inc.. Also, Tuason sought the nullity of the Contract for Sale and Purchase of Perlite Ore, based on the same alleged violation. Obviously, this raises a judicial question, which is proper for determination by the regular courts.¹⁸ A judicial question is raised when the determination of the question involves the exercise of a judicial function; that is, the question involves the determination of what the law is and what the legal rights of the parties are with respect to the matter in controversy.¹⁹

The DENR is not called upon to exercise its technical knowledge or expertise over any mining operations or dispute; rather, it is being asked to determine the validity of the agreements based on circumstances beyond the respective rights of the parties under the two contracts. In Gonzales v. Climax Mining Ltd.,²⁰ the Court ruled that:

x x x whether the case involves void or voidable contracts is still a judicial question. It may, in some instances, involve questions of fact especially with regard to the determination of the circumstances of the execution of the contracts. But the resolution of the validity or voidness of the contracts remains a legal or judicial question as it requires the exercise of judicial function. It requires the ascertainment of what laws are applicable to the dispute, the interpretation and application of those laws, and the rendering of a judgment based thereon. Clearly, the dispute is not a mining conflict. It is essentially judicial. The complaint was not merely for the determination of rights under the mining contracts since the very validity of those contracts is put in issue. (Emphasis supplied)

Thus, the DENR Regional Executive Director was correct in dismissing the complaint for lack of jurisdiction over Tuason’s complaint; consequently, the MAB committed an error in taking cognizance of the appeal, and in ruling upon the validity of the contracts.

Given the DENR’s lack of jurisdiction to take cognizance of Tuason’s complaint, the Court finds it unnecessary to rule on the issue of validity of the contracts, as this should have been brought before and resolved by the regular trial courts, to begin with.

WHEREFORE, the petition is GRANTED. The Decision of the Mines Adjudication Board dated August 18, 1997 is SET ASIDE, and the Decision dated December 11, 1991 of the Regional Executive Director, DENR-Region V, Legaspi City, dismissing the complaint for lack of jurisdiction, is REINSTATED.