Case digest SOUTHEAST MINDANAO GOLD MINING CORPORATION vs. BALITE PORTAL MINING COOPERATIVE G.R. No. 135190 - April 3, 2002

SOUTHEAST MINDANAO GOLD MINING CORPORATION, Petitioner, vs. BALITE PORTAL MINING COOPERATIVE and others similarly situated; and THE HONORABLE ANTONIO CERILLES, in his capacity as Secretary of the Department of Environment and Natural Resources (DENR), PROVINCIAL MINING REGULATORY BOARD OF DAVAO (PMRB-Davao), respondents.

G.R. No. 135190 - April 3, 2002

-Davao-Surigao -"Diwalwal Gold Rush Area." Located at Mt. Diwata - the land has been embroiled in controversy since the mid-80's due to the scramble over gold deposits found within its bowels.

- Marcopper Mining Corporation (Marcopper) was granted Exploration Permit No. 133 (EP No. 133) over 4,491 hectares of land, which included the hotly-contested Diwalwal area.¹ 

Not long thereafter, Congress enacted - Republic Act No. 7076, or the People's Small-Scale Mining Act. The law established a People's Small-Scale Mining Program to be implemented by the Secretary of the DENR³ and created the Provincial Mining Regulatory Board (PMRB) under the DENR Secretary's direct supervision and control.⁴ The statute also authorized the PMRB to declare and set aside small-scale mining areas subject to review by the DENR Secretary⁵ and award mining contracts to small-scale miners under certain conditions.⁶

- DENR Secretary - Factoran - (DAO) No. 66, declaring 729 hectares of the Diwalwal area as non-forest land open to small-scale mining.⁷ -

-On April 1, 1997, Provincial Mining Regulatory Board of Davao passed Resolution No. 26, Series of 1997, authorizing the issuance of ore transport permits (OTPs) to small-scale miners operating in the Diwalwal mines.

On June 24, 1997, the DENR Secretary issued Memorandum Order No. 97-03¹⁰ which provided, among others, that:

1. The DENR shall study thoroughly and exhaustively the option of direct state utilization of the mineral resources in the Diwalwal Gold-Rush Area. Such study shall include, but shall not be limited to, studying and weighing the feasibility of entering into management agreements or operating agreements, or both, with the appropriate government instrumentalities or private entities, or both, in carrying out the declared policy of rationalizing the mining operations in the Diwalwal Gold Rush Area; such agreements shall include provisions for profit-sharing between the state and the said parties, including profit-sharing arrangements with small-scale miners, as well as the payment of royalties to indigenous cultural communities, among others. The Undersecretary for Field Operations, as well as the Undersecretary for Legal and Legislative Affairs and Attached Agencies, and the Director of the Mines and Geo-sciences Bureau are hereby ordered to undertake such studies. x x x¹¹

ISSUES:

I. WHETHER OR NOT ACTS OF RESPONDENT DENR SECRETARY  ARE IN VIOLATION OF MINING LAWS AND IN DEROGATION OF PETITIONER'S VESTED RIGHTS OVER THE AREA COVERED BY ITS EP NO. 133;

II. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN HOLDING THAT AN ACTION ON THE VALIDITY OF ORE TRANSPORT PERMIT (OTP) IS VESTED IN THE REGIONAL PANEL OF ARBITRATORS.¹⁵

Ruling: We are not persuaded. We agree with the Court of Appeals' ruling that the challenged MO 97-03 did not conclusively adopt "direct state utilization" as a policy in resolving the Diwalwal dispute. The terms of the memorandum clearly indicate that what was directed thereunder was merely a study of this option and nothing else. Contrary to petitioner's contention, it did not grant any management/operating or profit-sharing agreement to small-scale miners or to any party, for that matter, but simply instructed the DENR officials concerned to undertake studies to determine its feasibility. As the Court of Appeals extensively discussed in its decision:

x x x under the Memorandum Order, the State still had to study prudently and exhaustively the various options available to it in rationalizing the explosive and ever perilous situation in the area, the debilitating adverse effects of mining in the community and at the same time, preserve and enhance the safety of the mining operations and ensure revenues due to the government from the development of the mineral resources and the exploitation thereof. The government was still in earnest search of better options that would be fair and just to all parties concerned, including, notably, the Petitioner. The direct state utilization of the mineral resources in the area was only one of the options of the State. Indeed, it is too plain to see, x x x that before the State will settle on an option, x x x an extensive and intensive study of all the facets of a direct state exploitation was directed by the Public Respondent DENR Secretary.

Consequently, the petition was premature. no valid objection can be entertained against MO 97-03 on grounds which are purely speculative and anticipatory.¹⁸

With respect to the alleged "vested rights" claimed by petitioner, it must likewise be pointed out that under no 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 challenged decision, EP No. 133 merely evidences a privilege granted by the State, which may be amended, modified or rescinded when the national interest so requires. This is necessarily so since the exploration, development and utilization of the country's natural mineral resources are matters impressed with great public interest. Like timber permits, mining exploration permits do not vest in the grantee any permanent or irrevocable right within the purview of the non-impairment of contract and due process clauses of the Constitution,²¹ since the State, under its all-encompassing police power, may alter, modify or amend the same, in accordance with the demands of the general welfare.²²

Additionally, there can be no valid opposition raised against a mere study of an alternative which the State, through the DENR, is authorized to undertake in the first place. Worth noting is Article XII, Section 2, of the 1987 Constitution, which specifically provides:

Thus, the State may pursue the constitutional policy of full control and supervision of the exploration, development and utilization of the country's natural mineral resources, by either directly undertaking the same or by entering into agreements with qualified entities. The DENR Secretary acted within his authority when he ordered a study of the first option, which may be undertaken consistently in accordance with 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. the instant petition is DENIED.  decision of the Court of Appeals  is AFFIRMED.