Case Digest SR METALS, INC v. REYES G.R. No. 179669 June 4, 2014

SR METALS, INC., SAN R MINING AND CONSTRUCTION CORP. and GALEO EQUIPMENT AND MINING COMPANY, INC., vs.

THE HONORABLE ANGELO T. REYES, in his capacity as Secretary of DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR)

G.R. No. 179669  June 4, 2014

Facts:  Petitioners was awarded a 2-year Small Scale Mining Permit⁴ (SSMP) by the Provincial Mining Regulatory Board of Agusan del Norte; they were allowed to extract Nickel and Cobalt (Ni-Co) in a 20-hectare mining site in Sitio Bugnang, Brgy. La Fraternidad, Tubay, Agusan del Norte. The mining corporations’ ECCs contain a restriction that the amount of NiCo ore they are allowed to extract annually should not exceed 50,000 MTs pursuant to Section 1 of PD 1899 which provides:

Section 1. Small-scale mining refers to any single unit mining operation having an annual production of not more than 50,000 metric tons of ore x x x.

Agusan del Norte Governor, Erlpe John M. Amante (Governor Amante), questioned the quantity of ore that had been mined and shipped by the mining corporations. In reply, the mining corporations denied having exceeded the extraction limit of 50,000 MTs.⁶

They explained that an extracted mass contains only a limited amount/percentage of Ni-Co as the latter is lumped with gangue, i.e., the unwanted rocks and minerals. And it is only after the Ni-Co is separated from the gangue by means of a scientific process should the amount of the Ni-Co be measured and considered as ‘ore.’ Meanwhile, the EMB sent the mining corporations a Notice of Violation⁸ informing them that they had exceeded the allowed annual volume of 150,000 MTs combined production as their stockpile inventory of Nickeliferous ore had already totaled 177,297 dry metric tons (DMT

Issues:

1)W/N Section 1, PD 1899 which, according to the mining corporations violates the equal protection clause?

Petitioners then construe the omission of the annual production limit in the later law in the sense that small-scale miners granted mining contracts under RA 7076 can now conduct mineral extraction as much as they can while the benefit of unlimited extraction is denied to those granted permits under PD 1899. According to them, such situation creates an invalid classification of small-scale miners under the two laws, hence the attack on Section 1 of PD 1899 as being violative of the equal protection clause.

We do not, however, subscribe to the mining corporations’ averment that the 50,000-MTs production limit does not apply to small-scale miners under RA 7076. Recognizing the DENR’s mandate to regulate the country’s natural resources under EO 192,²⁵ both PD 1899 and RA 7076 delegated to the DENR, thru its Secretary, the power to promulgate the necessary IRRs to give effect to the said laws.²⁶

Significantly, the DENR in the exercise of such power had just recently resolved the question on the production limit in small-scale mining.V. Maximum Annual Production

For metallic minerals, the maximum annual production under an SSMP/SSMC shall be 50,000 dry metric tons (DMT[s]) of ore, while for nonmetallic minerals, the maximum annual production shall be 50,000 DMT[s] of the material itself, e.g., 50,000 DMT[s] of limestone, 50,000 DMT[s] of silica, or 50,000 DMT[s] of perlite.

The maximum annual production above shall include low-grade and/or marginal ore, and/or minerals or rocks that are intended for sampling and/or metallurgical testing purpose/s."

With the 50,000-MT limit likewise imposed on small-scale miners under RA 7076, the issue raised on the violation of the equal protection clause is moot. The fact is, the DENR treats all small-scale miners equally as the production limit applies to all of them. There is therefore no more reason for the mining corporations to not recognize and comply with the said limitation. It must be stressed that the DENR is the government agency tasked with the duty of managing and conserving the country’s resources; it is also the agency vested with the authority to promulgate rules and regulations for the implementation of mining laws.

The DENR, being the agency mandated to protect the environment and the country’s natural resources, is authoritative on interpreting the 50,000-MT limit.

2) What is the correct interpretation of the 50,000-MT limit?

MAO No. MRD-41 specifies measuring the ‘run-of-mine ore,’ meaning the ore as it emerges from the mine, i.e., before treatment. the ore is weighed only in DMT, excluding the water or moisture content. Simply stated, included in the measurement are other materials lumped with the sought-after mineral.

This definition is congruent with RA7942 or The Philippine Mining Act of 1995. Said law defines "ore" as "naturally occurring substance or material from which a mineral or element can be mined and/or processed for profit." Clearly, the law refers to ore in its unprocessed form, i.e., before the valuable mineral is separated from the ore itself.

Also in Section V DMC-2007-07, the DENR clarified the 50,000-MT limit by differentiating the measurement of metallic minerals from nonmetallic ones. Noticeably, the metallic minerals are conservatively measured compared to nonmetallic or industrial minerals for a reason. Compared to metallic minerals, nonmetals are easily available when mined in their raw/natural state, like limestone.As non metallics are produced from natural aggregates, the production limit of 50,000 DMTs will be easily met. On the other hand, metallic minerals, like Ni-Co are not easily available in their pure form since they are sourced from ores which are mined. To extract these metals of economic value, the gangue lumped with them have to be removed by metallurgy. And in order to produce a ton of a metallic mineral sought for, big volumes of gangue will have to be removed. As indicated by the mining corporations’ Summary of Shipments,²⁹ it took 151,612 DMTs of ore to extract only 1,699.66 DMTs of Ni-Co. Thus, 149,912.34 DMTs of ore are considered waste. This means that if we are to subscribe to the mining corporations’ interpretation of how to measure mined ore by measuring only the Ni-Co and excluding the gangue, small-scale miners are virtually given the license to continuously collect large volumes of ore until the 50,000 DMTs of Ni-Co limit is met. It must be emphasized that mining, whether small or large-scale, raises environmental concerns. To allow such a scenario will further cause damage to the environment such as erosion and sedimentation, landslides, deforestation, acid rock drainage, etc.³⁰ extracting millions of DMTs of run-of-mine ore will mean irreversible degradation of the natural resources and possible landslides and flashfloods.  Hence, the DENR saw it proper to conservatively measure the production of metallic minerals apparently bearing in mind the more intense impact of such kind of mining to the environment.