Case Digest PNOC-ENERGY DEVELOPMENT CORPORATION (PNOC-EDC),vs.EMILIANO G. VENERACION, JR., G.R. No. 129820 November 30, 2006

PNOC-ENERGY DEVELOPMENT CORPORATION (PNOC-EDC),vs.EMILIANO G. VENERACION, JR.,

G.R. No. 129820             November 30, 2006

This case involves the conflicting claims of the petitioner Philippine National Oil Corporation-Energy Development Corporation and the respondent over the mining rights over Block 159 of the Malangas Coal Reservation, Alicia, Zamboanga del Sur.

On 31 January 1989, respondent applied with the Mines and Geo-Sciences Development Services, DENR, Region IX, Zamboanga City for a Declaration of Location (DOL) over Block 159 of the Malangas Coal Reservation, situated at Barangays Payongan and Kauswagan, Alicia, Zamboanga del Sur. On 18 May 1989, the Office of the Regional Executive Director (RED) of the DENR informed the respondent that his DOL cannot be registered since Block 159 was part of the Malangas Coal Reservation, as provided under Proclamation No. 284, issued by the President on 19 July 1938.² With the endorsement of the Office of Energy Affairs (OEA) and the DENR Secretary, the respondent petitioned the Office of the President for the withdrawal of Block 159 from the coal reservation and its conversion into a mineral reservation.³

The petitioner applied for a mineral prospecting permit over Block 159 (and Blocks 120 and 160) with the OEA, which the latter granted on 4 September 1989. The Malangas Coal Reservation was, at that time, under the administration of the OEA.⁴ When it had initially applied for a mineral prospecting permit over lands within the Malangas Coal Reservation, the OEA advised it to obtain the permission of the Bureau of Mines and Geo-Sciences (BMGS).⁵

On 18 October 1991, petitioner submitted to the DENR an application/proposal for a Mineral Production Sharing Agreement (MPSA) over Blocks 120, 159 and 160 of the Malangas Coal Reservation.⁶

On 21 February 1992, the Officer-In-Charge Regional Technical Director Dario R. Miñoza of the Mines and Geo-Sciences Developmental Service (MGDS) advised the petitioner to amend its application for MPSA by excluding Block 159 as the same is covered by the application of the respondent.⁷ Nevertheless, the petitioner did not exclude Block 159 from its MPSA. Records also show that it had not applied for nor was it able to obtain an Exploration Permit from the BMGS over Block 159.

The MAB noted that petitioner did not file for an exploration permit nor applied for the exclusion of Block 159. Moreover, petitioner filed a MPSA on 18 October 1991, or almost six (6) months prior to the issuance of Proclamation No. 890 excluding Block 159 from the Malangas Coal Reservation and allowing its disposition. Thus, the application for a MPSA over Block 159, while it was still part of a government reservation other than a mineral reservation, was erroneous and improper and could not have been legally accepted. And, since the records show that only one MPSA was filed after the issuance of Proclamation 890 – that of the respondent’s, the preferential right over Block 159 was acquired by the respondent. The MAB, nevertheless, pointed out that the said preferential right does not necessarily lead to the granting of the respondent’s MPSA, but merely consists of the right to have his application evaluated and the prohibition against accepting other mining applications over Block 159 pending the processing of his MPSA.

Issues

 (1) whether or not the petitioner has already lost its right to appeal the RED’s Order dated 12 April 1993;

This Court finds no merit in this Petition. Petitioner’s insistence that the 30-day reglementary period provided by Section 61 of Commonwealth Act No. 137, as amended, applies, cannot be sustained by this Court. By providing a five-day period within which to file an appeal on the decisions of the Director of Mines and Geo-Sciences, Presidential Decree No. 463 unquestionably repealed Section 61 of Commonwealth Act No. 137.

 In the instant case, petitioner failed to state any compelling reason for not filing its appeal within the mandated period. Instead, the records show that after failing to comply with the period within which to file their motion for reconsideration on time, they again failed to file their appeal before the Office of the DENR Secretary within the time provided by law.

 (2) whether or not the petitioner acquired a preferential right on mining rights over Block 159.

Even if petitioner had not lost its right to appeal, it cannot claim any mining rights over Block 159 for failure to comply with the legal requirements. Petitioner applied for an MPSA with the DENR on 18 October 1991, prior to the release of Block 159 from the Malangas Coal Reservation under Proclamation No. 890 on 13 April 1992. Thus, the provisions on the acquisition of mining rights within a government reservation other than a mineral reservation under Presidential Decree No. 463 and the Consolidated Mines Administrative Order (CMAO) should apply.

As a general rule, prospecting and exploration of minerals in a government reservation is prohibited under Section 13 of Presidential Decree No. 463. However, the same rule provides an exception involving instances when the government agency concerned allows it.

Section 13. Areas Closed to Mining Location. – No prospecting and exploration shall be allowed:

(a) In military, and other Government reservations except when authorized by the proper Government agency concerned.

Section 8 of Presidential Decree No. 463 reiterates the rule and clarifies it further by stating that prospecting, exploration and exploitation of minerals on reserved lands other than mineral reservations may be undertaken by the proper government agency. As an exception to this rule, qualified persons may undertake the said prospecting, exploration and exploitation when the said agencies cannot undertake them.

Section 8. Prospecting, Exploration and Exploitation of Minerals in Reserved Lands. – Prospecting, exploration and exploitation of minerals in reserved lands other than mineral reservations may be undertaken by the proper government agency. In the event that the said agencies cannot undertake the prospecting, exploration and exploitation of minerals in reserved lands, qualified persons may be permitted to undertake such prospecting, exploration and exploitation in accordance with the rules and regulations promulgated by the Secretary [Minister]. The right to exploit the minerals found therein shall be awarded by the President under such terms and conditions as recommended by the Director and approved by the Secretary [Minister]: Provided, That the party who undertook prospecting, exploration and exploitation of said are shall be given priority.

Notwithstanding the provisions of the preceding paragraph, a special permit may be issued by the Director to the exploration permitee to extract, remove and dispose of minerals in limited quantities as verified by the Bureau of Mines [Director of Mines and Geo-Sciences].

Section 15 of the CMAO is more straightforward when it states that government reserved lands are open for prospecting, subject to the rules and regulations provided therein.

SEC. 15. Government Reserved Land. – Lands reserved by the Government for purposes other than mining are open to prospecting. Any interested party may file an application therefore with the head of the agency administering said land, subject always to compliance with pertinent laws and rules and regulations covering such reserved land. Such application shall be acted upon within thirty (30) days. In such cases, the compensation due the surface owner shall accrue equally to the agency administering the reserved land and the Bureau of Mines.

The law enumerates the following requirements: (1) a prospecting permit from the agency that has jurisdiction over the area, in this case, the OEA;³¹ (2) an exploration permit from the BMGS;³² (3) if the exploration reveals the presence of commercial deposit, the permitee applies before the BMGS for the exclusion of the area from the reservation;³³ (4) granting by the president of the application to exclude the area from the reservation;³⁴ and (5) a mining agreement approved by the DENR Secretary.

In this case, petitioner complied with the first requirement and obtained a prospecting permit from the OEA.1âwphi1 In its correspondence with the petitioner, the OEA, however, advised the petitioner on two separate occasions to obtain a "prospecting permit" from the BMGS, although the OEA was probably referring to an exploration permit.³⁵ The petitioner did not apply for an exploration permit with the BMGS, nor would the BMGS have granted petitioner an exploration permit because when petitioner wrote to the BMGS informing the latter of its intention to enter into an MPSA with the DENR over Block 159, the BMGS informed the petitioner that the respondent’s claim over Block 159 had already preceded that of the petitioner.³⁶ The advice given by the BMGS was justified since at that time, the respondent already had a pending application for the exclusion of Block 159 from the Malangas Coal Reservation. Thereafter, the petitioner filed his MPSA application, without complying with the second, third and fourth requisites. Since it ignored the sound advice of the OEA and the BMGS, the government agencies concerned, and stubbornly insisted on its incorrect procedure, petitioner cannot complain now that its MPSA was revoked for failure to comply with the legal requirements.

In contrast, the respondent applied for a DOL as early as 30 January 1989. The DENR Regional Office refused to register the respondent’s DOL since Block 159 was still part of the Malangas Coal Reservation and advised the respondent to apply for the exclusion of the area from the reservation. The respondent followed this advice. The BMGS then treated the respondent’s application for a DOL as an application for an exploration permit and caused a verification report of the area applied for, as provided under Section 99 of the CMAO.³⁷ Upon the application of the respondent, the OEA and thereafter the DENR Secretary endorsed the respondent’s application for the exclusion of the area from the reservation.³⁸ This application was granted by the President, through Proclamation No. 890, which provided that the mining rights to Block 159 will be disposed of in accordance with Executive Order No. 279. On 30 July 1992, respondent filed his MPSA.³⁹ On 12 April 1993, the RED of Zamboanga City ordered that the respondent’s MPSA be given due course.⁴⁰ Although the respondent’s applications may not follow the strict letter of the law, there was substantial compliance with the requirements of the law. Hence, the respondent was able to acquire a preferential right on the mining claims over Block 159, as provided under Section 101 of the CMAO.

Even if it were to be assumed that the respondent failed to comply with these requirements, this would not be fatal to his cause since he filed his MPSA on 31 July 1992, after the issuance of Proclamation No. 890; therefore, the provisions on the application of mining rights over government reservations would no longer apply to him because Block 159 was already converted into a mineral reservation, wherein a different set of rules would apply. The only effect of his failure to comply with the requirements CMAO on government reservations is that he loses the preferential right over the area involved. In this case, the respondent was the only applicant to the mining rights over Block 159, apart from the petitioner who was not qualified for failure to comply with the legal requirements. Proclamation No. 890 specifically provides that Executive Order No. 279 should be applied. Records indicate that the provisions of Executive Order No. 279 have been complied with.⁴¹

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision of the Mines Adjudication Board is hereby AFFIRMED. No costs.