ASAPHIL CONSTRUCTION AND DEVELOPMENT CORPORATION V.

VICENTE
TUASON, JR.
G.R. NO. 134030 April 25, 2006

Austria-Martinez, J.:

First Division

Doctrine/s:

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.

Facts:

On March 24, 1975, respondent Vicente Tuason, Jr. entered into a Contract for Sale and
Purchase of Perlite Ore with Induplex, Inc. 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.Thereafter,
Tuason executed on May 29, 1976, an Agreement to Operate Mining Claims in favor of
petitioner Asaphil Construction and Development Corporation.

On November 9, 1990, Tuason filed with the Bureau of Mines, DENR, a complaint
against Asaphil and Induplex for declaration of nullity of the two contracts. Tuason alleged that
the stockholders of Induplex formed and organized Ibalon Mineral Resources, Inc. which is in
violation of the condition imposed by the Board of Investments 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.
 Asaphil filed its Answer, praying for the dismissal of the complaint on the ground that the
DENR has no jurisdiction over the case. Induplex filed a Motion to Dismiss the complaint, also
on ground of lack of jurisdiction.

Issue/s:

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.

Holding/s:

No. 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. 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.

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.

DIDIPIO EARTH-SAVERS’ MULTI-PURPOSE ASSOCIATION V. GOZUN

G.R. No. 157882 March 30, 2006

Chico-Nazario, J.:

First Division
Doctrine/s:

RA 7942 and DAO 96-40 vest in the government more than a sufficient degree of control
and supervision over the conduct of mining operations. The State definitely possesses the means
by which it can have the ultimate word in the operation of the enterprise, set directions and
objectives, and detect deviations and noncompliance by the contractor; likewise, it has the
capability to enforce compliance and to impose sanctions, should the occasion therefor arise.

Facts:

On 25 July 1987, then President Corazon C. Aquino promulgated Executive Order No.
279. On 3 March 1995, then President Fidel V. Ramos signed into law Rep. Act No. 7942
otherwise known as the Philippine Mining Act of 1995. On 15 August 1995, then DENR
Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No. 23, containing the
implementing guidelines of Rep. Act No. 7942. This was soon superseded by DAO No. 96-40, s.
1996. Previously, President Ramos executed an FTAA with AMC over a total land area of
37,000 hectares covering the provinces of Nueva Vizcaya and Quirino. Included in this area is
Barangay Dipidio, Kasibu, Nueva Vizcaya. Subsequently, AMC consolidated with Climax
Mining Limited to form a single company that now goes under the new name of Climax-Arimco
Mining Corporation (CAMC), the controlling 99% of stockholders of which are Australian
nationals.

On 7 September 2001, counsels for petitioners filed a demand letter addressed to then
DENR Secretary Heherson Alvarez, for the cancellation of the CAMC FTAA for the primary
reason that Rep. Act No. 7942 and its Implementing Rules and Regulations DAO 96-40 are
unconstitutional. Hence, the MGB rejected the demand of counsels for petitioners for the
cancellation of the CAMC FTAA.

Issue/s:

Whether or not the State, through Republic Act No. 7942 and the CAMC FTAA,
abdicated its primary responsibility to the full control and supervision over natural resources.

Holding/s:
 RA 7942 provides for the state’s control and supervision over mining operations. The
contractor must comply with the provisions pertaining to mine safety, health and environmental
protection. For violation of any of its terms and conditions, government may cancel an FTAA.
An FTAA contractor is obliged to open its books of accounts and records for inspection by the
government. An FTAA contractor has to dispose of the minerals and by-products at the highest
market price and register with the MGB a copy of the sales agreement. Overall, considering the
provisions of the statute and the regulations just discussed, we believe that the State definitely
possesses the means by which it can have the ultimate word in the operation of the enterprise, set
directions and objectives, and detect deviations and noncompliance by the contractor; likewise, it
has the capability to enforce compliance and to impose sanctions, should the occasion therefor
arise.

In other words, the FTAA contractor is not free to do whatever it pleases and get away
with it; on the contrary, it will have to follow the government line if it wants to stay in the
enterprise. Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a
sufficient degree of control and supervision over the conduct of mining operations.

REPUBLIC V. ROSEMOOR MINING AND DEVELOPMENT CORPORATION

G.R. No. 149927 March 30, 2004

Panganiban, J.

First Division

Doctrine/s:

A mining license that contravenes a mandatory provision of the law under which it is
granted is void. Being a mere privilege, a license does not vest absolute rights in the holder.
Thus, without offending the due process and the non-impairment clauses of the Constitution, it
can be revoked by the State in the public interest.

Facts:

The four (4) petitioners, namely, Dr. Lourdes S. Pascual, Dr. Pedro De la Concha,
Alejandro De La Concha, and Rufo De Guzman, after having been granted permission to
prospect for marble deposits in the mountains of Biak-na-Bato, San Miguel, Bulacan, succeeded
in discovering marble deposits of high quality and in commercial quantities in Mount Mabio
which forms part of the Biak-na-Bato mountain range. After compliance with numerous required
conditions given by Bureau of Mines, License No. 33 was issued by the Bureau of Mines in
favor of the herein petitioners.Shortly after Respondent Ernesto R. Maceda was appointed
Minister of the DENR, petitioners’ License No. 33 was cancelled. Because of the aforesaid
cancellation, the original petition was filed.

The trial court ruled that the privilege granted under respondents’ license had already
ripened into a property right, which was protected under the due process clause of the
Constitution. On appeal to the Court of Appeals sustaining the trial court in toto.

Issue/s:

Whether or not QLP No. 33 was issued in blatant contravention of Section 69, P.D. No.
463?

Holding/s:

The Petition has merit. Respondents contend that the Petition has no legal basis, because
PD 463 has already been repealed. With the shift of constitutional policy wherein it was declared
that the provisions of PD 463 as contrary to or violative of the express mandate of the 1987
Constitution. Hence, RA 7942 or the Philippine Mining Act of 1995 embodies the new
constitutional mandate. It has repealed or amended all laws, executive orders, presidential
decrees, rules and regulations -- or parts thereof -- that are inconsistent with any of its provisions.

The license in question, QLP No. 33, is, however, subject to the terms and conditions of
PD 463, the governing law at the time it was granted; as well as to the rules and regulations
promulgated thereunder. The language of PD 463 is clear. It states in categorical and mandatory
terms that a quarry license, like that of respondents, should cover a maximum of 100 hectares in
any given province. This law neither provides any exception nor makes any reference to the
number of applications for a license. Section 69 of PD 463 must be taken to mean exactly what it
says. Clearly, the intent of the law would be brazenly circumvented by ruling that a license may
cover an area exceeding the maximum by the mere expediency of filing several applications.
Such ruling would indirectly permit an act that is directly prohibited by the law.
 LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., VS. RAMOS
G.R. No. 127882; January 27, 2004

CARPIO-MORALES, J.

En Banc

Doctrine/s:

The management or operation of mining activities by foreign contractors, which is the

primary feature of service contracts, was precisely the evil that the drafters of the 1987
Constitution sought to eradicate.

Facts:

On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern
the exploration, development, utilization and processing of all mineral resources." R.A. No. 7942
defines the modes of mineral agreements for mining operations, outlines the procedure for their
filing and approval, assignment/transfer and withdrawal, and fixes their terms. Similar provisions
govern financial or technical assistance agreements. Shortly before the effectivity of R.A. No.
7942, however, the President entered into an FTAA with WMCP covering 99,387 hectares of
land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. DENR Secretary
Victor O. Ramos issued DENR Administrative Order No. 95-23, s. 1995, otherwise known as the
Implementing Rules and Regulations of R.A. No. 7942 which was later repealed by DAO No.
96-40, s. 1996 which was adopted on December 20, 1996. Petitioners thus filed a petition for
prohibition and mandamus, with a prayer for a temporary restraining order. They allege that at
the time of the filing of the petition, 100 FTAA applications had already been filed, covering an
area of 8.4 million hectares, 64 of which applications are by fully foreign-owned corporations
covering a total of 5.8 million hectares, and at least one by a fully foreign-owned mining
company over offshore areas.

Issue/s:

Whether or not the Financial and Technical Assistance Agreement between the
Government of the Republic of the Philippines and WMC Philippines, Inc. is constitutional.
Holding/s:

The FTAA between he WMCP and the Philippine government is unconstitutional as the
agreement itself is a service contract. Section 1.3 of the WMCP FTAA grants WMCP "the
exclusive right to explore, exploit, utilize, process and dispose of all Minerals products and by-
products thereof that may be produced from the Contract Area." Pursuant to Section 1.2 of the
FTAA, WMCP provides all financing, technology, management and personnel necessary for the
Mining Operations.WMCP may make expansions, improvements and replacements of the
mining facilities and may add such new facilities as it considers necessary for the mining
operations.

These contractual stipulations, taken together, grant WMCP beneficial ownership over
natural resources that properly belong to the State and are intended for the benefit of its citizens.
These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the
fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the contract
from which they spring must be struck down.

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., VS. RAMOS

G.R. No. 127882 December 1, 2004
PANGANIBAN, J.

En Banc

Doctrine/s:

The Constitution allows the continued use of service contracts with foreign corporations -
- as contractors who would invest in and operate and manage extractive enterprises, subject to
the full control and supervision of the State -- sans the abuses of the past regime. The purpose is
clear: to develop and utilize our mineral, petroleum and other resources on a large scale for the
immediate and tangible benefit of the Filipino people.

Facts:

On January 27, 2004, the Court en banc promulgated its Decision granting the Petition
and declaring the unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well as of
the entire FTAA executed between the government and WMCP, mainly on the finding that
FTAAs are service contracts prohibited by the 1987 Constitution. After hearing the opposing
sides, the Court required the parties to submit their respective Memoranda in amplification of
their arguments. In a Resolution issued later the same day, June 29, 2004, the Court noted, inter
alia, the Manifestation and Motion filed by the Office of the Solicitor General (OSG) on behalf
of public respondents. The OSG said that it was not interposing any objection to the Motion for
Intervention filed by the Chamber of Mines of the Philippines, Inc. (CMP) and was in fact
joining and adopting the latter's Motion for Reconsideration.

Memoranda were accordingly filed by the intervenor as well as by petitioners, public

respondents, and private respondent, dwelling at length on the three issues discussed below.
Later, WMCP submitted its Reply Memorandum, while the OSG -- in obedience to an Order of
this Court -- filed a Compliance submitting copies of more FTAAs entered into by the
government.

Issue/s:

Whether or not RA 7942 vest the State supervision and control over the conduct of
mining activities.

Holding/s:

To repeat, the primacy of the principle of the State's sovereign ownership of all mineral
resources, and its full control and supervision over all aspects of exploration, development and
utilization of natural resources must be upheld. But "full control and supervision" cannot be
taken literally to mean that the State controls and supervises everything down to the minutest
details and makes all required actions, as this would render impossible the legitimate exercise by
the contractor of a reasonable degree of management prerogative and authority, indispensable to
the proper functioning of the mining enterprise. As discussed, the State's full control and
supervision over mining operations are ensured through the following provisions in RA 7942.
The government agencies concerned are empowered to approve or disapprove -- hence, in a
position to influence, direct, and change -- the various work programs and the corresponding
minimum expenditure commitments for each of the exploration, development and utilization
phases of the enterprise. The State may likewise compel compliance by the contractor with
mandatory requirements on mine safety, health and environmental protection, and the use of
anti-pollution technology and facilities. The contractor is also obligated to assist the development
of the mining community, and pay royalties to the indigenous peoples concerned. And violation
of any of the FTAA's terms and conditions, and/or non-compliance with statutes or regulations,
may be penalized by cancellation of the FTAA. Such sanction is significant to a contractor who
may have yet to recover the tens or hundreds of millions of dollars sunk into a mining project.

Overall, the State definitely has a pivotal say in the operation of the individual
enterprises, and can set directions and objectives, detect deviations and non-compliances by the
contractor, and enforce compliance and impose sanctions should the occasion arise. Hence, RA
7942 and DAO 96-40 vest in government more than a sufficient degree of control and
supervision over the conduct of mining operations.

LEPANTO CONSOLIDATED V. WMC

G.R. No. 162331; November 20, 2006

CHICO-NAZARIO,J.

First Division

Doctrine/s:

Prospective Application of the Philippine Mining Act of 1995

Facts:

The Philippine Government and WMC Philippines, the local wholly-owned subsidiary of
WMC Resources International Pty. Ltd. Executed a Financial and Technical Assistance
Agreement for the purpose of large scale exploration, development and commercial exploration
of possible mineral resources in an initial contract area of 99,387 hectares located in the
provinces of South Cotabato, Sultan Kadarat, Davao del Sur, and North Cotabato in accordance
with Executive Order No. 279 and Department Administrative Order No. 63, Series of 1991.
WMC Resources subsequently divested itself of its rights and interests in the Columbio FTAA,
and on 12 July 2000 executed a Sale and Purchase Agreement with petitioner Lepanto over its
entire shareholdings in WMC Philippines, subject to the exercise of the Tampakan Companies'
right of first refusal to purchase the subject shares. In an Agreement dated 6 October 2000,
however, the Tampakan Companies sought to exercise its right of first refusal. Thus, in a letter
dated 13 October 2000, petitioner assailed the Tampakan Companies' exercise of its right of first
refusal on 10 January 2001, WMC Resources and the Tampakan Companies executed another
Sale and Purchase Agreement, where Sagittarius Mines, Inc. was designated assignee and
corporate vehicle which would acquire the shareholdings and undertake the Columbio FTAA
activities. After due consideration and evaluation of the financial and technical qualifications of
Sagittarius Mines, Inc., the DENR Secretary approved the transfer of the Columbio FTAA from
WMC Philippines to Sagittarius Mines, Inc. in the assailed Order. Aggrieved by the transfer of
the Columbio FTAA in favor of Sagittarius Mines, Inc., petitioner filed a Petition for Review of
the Order of the DENR Secretary with the Office of the President

Issue/s:

Whether or not the Order of the DENR Secretary violates Section 40 if the Mining Act.

Holding/s:

The issue hinges on the applicability of Section 40 of RA 7942 or the Philippine Mining
Act of 1995, which took force on 14 April 1995, on the transfer of FTAA from WMC to the
Tampakan Companies, particularly the Sagittarius Mines, Inc. The said law provides: "Sec. 40.
Assignment/Transfer – A financial or technical assistance agreement may be assigned or
transferred, in whole or in part, to a qualified person subject to the prior approval of the
President: Provided, that the President shall notify Congress of every financial or technical
assistance agreement assigned or converted in accordance with this provision within thirty (30)
days from the date of approval." However, the above provision does not apply to the Columbio
FTAA which was entered into by and between the Philippine Government and WMCP on 22
March 1995, or prior to the effectivity of RA No. 7942. Section 14.1 of the Columbio FTAA,
under which the Tampakan Companies claim their rights to first refusal. At the outset, it bears
emphasis that quite contrary to the argument of petitioner Lepanto, the above Order of the DENR
Secretary is not violative of the Mining Law. Since the subject Columbio FTAA was granted in
accordance with the pertinent provisions of Executive Order No. 279 and Department
Administrative Order No. 63 on 22 March 1995, or prior to the effectivity of the Philippine
Mining Act of 1995, especially as it highlights the non-impairment of existing mining and/or
quarrying rights, under Section 14.1 (b) thereof, only the consent of DENR Secretary is required.
To hold otherwise would be to unduly impose a burden on transferor WMC and thereby restrict
its freedom to dispose of or alienate this property right without due process. Thus, under the
Revised Implementing Rules and Regulations of the Philippine Mining Act of 1995, Chapter
XXX thereof expressly echoes the guaranty: "Section 272. Non-Impairment of Existing
Mining/Quarrying Rights.- All valid and existing mining lease contracts, permits/licenses, leases
pending renewal, Mineral Production Sharing Agreements, FTAA granted under Executive
Order No. 279, at the date of the Act shall remain valid, shall not be impaired and shall be
recognized by the Government x x x Provided, finally, That this provision is applicable only to
all FTAA/MPSA applications filed under Department Administrative Order No. 63 prior to the
effectivity of the act and these implementing rules and regulations." As correctly stated by the
MGB Director and affirmed by the DENR Secretary, Section 14.1 of the Columbio FTAA
provides that the FTAA may be transferred provided that the Secretary consents to the same.
Pursuant to Section 112 of the Mining Act and Section 272 of DAO No. 96-40, as amended, on
non-impairment of existing mining rights, the subject application for transfer of the Columbio
FTAA to Sagittarius requires only the approval of the DENR Secretary.

It is engrained in jurisprudence that the constitutional prohibition on the impairment of

the obligation of contract does not prohibit every change in existing laws and to fall within the
prohibition, the change must not only impair the obligation of the existing contract, but the
impairment must be substantial. Section 40 of the Philippine Mining Act of 1995 requiring the
approval of the President with respect to assignment or transfer of FTAAs, if made applicable
retroactively to the Columbio FTAA, would be tantamount to an impairment of the obligations
under said contract as it would effectively restrict the right of the parties thereto to assign or
transfer their interests in the said FTAA.

BENGUET CORP. V. DENR

G.R. No. 163101; February 13,2008

VELASCO, JR., J

Second Division

Doctrine/s:
 An agreement to submit to voluntary arbitration must be complied with notwithstanding
the fact that the dispute involved, under the law, is also required to be submitted to compulsory
arbitration.

Facts:

On June 1, 1987, Benguet and J.G. Realty entered into a Royalty Agreement With Option
to Purchase (RAWOP), wherein J.G. Realty was acknowledged as the owner of four mining
claims respectively named as Bonito-I, Bonito-II, Bonito-III, and Bonito-IV, with a total area
of 288.8656 hectares, situated in Barangay Luklukam, Sitio Bagong Bayan, Municipality of Jose
Panganiban, Camarines Norte.

Thus, on August 9, 1989, the Executive Vice-President of Benguet, Antonio N.

Tachuling, issued a letter informing J.G. Realty of its intention to develop the mining claims.
However, on February 9, 1999, J.G. Realty, through its President, Johnny L. Tan, then sent a
letter to the President of Benguet informing the latter that it was terminating the RAWOP on the
following grounds:
a. The fact that your company has failed to perform the obligations set forth in the
RAWOP, i.e., to undertake development works within 2 years from the execution of the
Agreement;
b. Violation of the Contract by allowing high graders to operate on our claim.
c. No stipulation was provided with respect to the term limit of the RAWOP.
d. Non-payment of the royalties thereon as provided in the RAWOP.

On June 7, 2000, J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of

the RAWOP with the Legaspi City POA, Region V, docketed as DENR Case No. 2000-01 and
entitled J.G. Realty v. Benguet.
Issue/s:

(1) Should the controversy have first been submitted to arbitration before the POA took
cognizance of the case?;
(2) Was the cancellation of the RAWOP supported by evidence?; and
(3) Did the cancellation of the RAWOP amount to unjust enrichment of J.G. Realty at the
expense of Benguet?
Holding/s:

(1) YES, the case should have first been brought to voluntary arbitration before the POA.
Secs. 11.01 and 11.02 of the RAWOP pertinently provide: 11.01 Arbitration Any disputes,
differences or disagreements between BENGUET and the OWNER with reference to anything
whatsoever pertaining to this Agreement that cannot be amicably settled by them shall not be
cause of any action of any kind whatsoever in any court or administrative agency but shall, upon
notice of one party to the other, be referred to a Board of Arbitrators consisting of three (3)
members, one to be selected by BENGUET, another to be selected by the OWNER and the third
to be selected by the aforementioned two arbitrators so appointed. x x x 11.02, Court Action No
action shall be instituted in court as to any matter in dispute as hereinabove stated, except to
enforce the decision of the majority of the Arbitrators; A contractual stipulation that requires
prior resort to voluntary arbitration before the parties can go directly to court is not illegal and is
in fact promoted by the State. To reiterate, availment of voluntary arbitration before resort is
made to the courts or quasi-judicial agencies of the government is a valid contractual stipulation
that must be adhered to by the parties.

In other words, in the event a case that should properly be the subject of voluntary
arbitration is erroneously filed with the courts or quasi-judicial agencies, on motion of the
defendant, the court or quasi-judicial agency shall determine whether such contractual provision
for arbitration is sufficient and effective. If in affirmative, the court or quasi-judicial agency shall
then order the enforcement of said provision.
In sum, on the issue of whether POA should have referred the case to voluntary
arbitration, we find that, indeed, POA has no jurisdiction over the dispute which is governed by
RA 876, the arbitration law.
However, estoppel applies. the Court rules that the jurisdiction of POA and that of MAB
can no longer be questioned by Benguet at this late hour. What Benguet should have done was to
immediately challenge the POA's jurisdiction by a special civil action for certiorari when POA
ruled that it has jurisdiction over the dispute. To redo the proceedings fully participated in by the
parties after the lapse of seven years from date of institution of the original action with the POA
would be anathema to the speedy and efficient administration of justice.
(2) The cancellation of the RAWOP was supported by evidence.
 (3) There is no unjust enrichment in the instant case. There is no unjust enrichment when
the person who will benefit has a valid claim to such benefit.
The principle of unjust enrichment under Article 22 requires two conditions: (1) that a
person is benefited without a valid basis or justification, and (2) that such benefit is derived at
another's expense or damage.
Clearly, there is no unjust enrichment in the instant case as the cancellation of the
RAWOP, which left Benguet without any legal right to participate in further developing the
mining claims, was brought about by its violation of the RAWOP. Hence, Benguet has no one to
blame but itself for its predicament.

DIAMOND DRILLING CORPORATION OF THE PHILIPPINES VS. NEWMONT

PHILIPPINES
G.R. No. 183576, May 30, 2011

CARPIO, J.:

Second Division

Doctrine/s:

The requirement of DAO No. 63 that the MGB Regional Office concerned be furnished a
copy of the FTAA application is merely directory in character. The purpose of said requirement
is to notify the Regional Office concerned that an application for FTAA was filed with the
Central Office Technical Secretariat (COTS) of the MGB so that the Regional Office may verify
the area covered by the application and submit its recommendation concerning its availability. It
must be stressed that the Regional Office concerned only has the authority to recommend; hence,
its findings are not conclusive with COTS-MGB. It only performs an allied function to aid the
COTS-MGB in arriving at the decision to grant or deny the application for FTAA. The power to
grant or deny FTAA applications remain in the hands of the COTS-MGB. Accordingly, the "72-
hour requirement" must be construed as directory and not mandatory in nature.

Facts:
 Newmont Philippines Incorporated filed eight Financial or Technical Assistance (FTAA)
applications since they wanted to explore and develop large gold deposits in the Central
Cordillera comprising a maximum contract area of 100,000 hectares of land for each application.
Diamond Drilling Corporation of the Philippines likewise filed an application for Mineral
Production Sharing Agreement (MPSA) covering 4,860 hectares of land in the areas situated in
Benguet and Mountain Province. Upon verification, the Bureau found that Diamond Drilling’s
MPSA application was in conflict with a portion of one of Newmont’s FTAA applications.

On August 2, 1996, Diamond Drilling sought to annul the eight FTAA applications of
Newmont and asked that it be granted preferential right over areas covered by its MPSA
application. The Mines Adjudication Board (MAB) ruled in favor of Newmont’s. The Court of
Appeals then affirmed MAB’s decision.

Issue/s:

Whether or not the CA committed a reversible error in affirming the decision of the MAB
giving preferential right to Newmont’s FTAA applications over Diamond Drilling’s MPSA
application

Holding/s:

No. The Court of Appeals did not commit a reversible error in affirming the decision of
the MAB giving preferential right to Newmont’s FTAA applications over Diamond Drilling’s
MPSA application.

Newmont’s have already paid the fees on the same date of its FTAA applications. It is
clear from Section 8 DAO 63 that the MGB Central Office processes all FTAA applications after
payment of the requisite fees. However, for the Diamond Drilling, they have just paid their fees
two days after Newmont’s FTAA applications were registered with the MGB Central Office.
Section 8 of DAO 64 states that in the event there are two or more applicants over the same area,
priority shall be given to the applicant that first filed its application.

Newmont clearly satisfied the requirements for the acceptance and evaluation of its
FTAA applications with the MGB. Being the first to file its FTAA applications ahead of
Diamond Drilling’s MPSA application, and having furnished copies of its FTAA applications to
the MGB-CAR Regional Office within 72 hours from filing, Newmont must be given
preferential right to utilize the area included in its FTAA applications.

CARPIO VS. SULU RESOURCES DEVELOPMENT CORPORATION

G.R. No. 148267, August 8, 2002

PANGANIBAN, J.:

Third Division

Doctrine/s:

Appeals from decisions of the Mines Adjudication Board (MAB) shall be taken to the
Court of Appeals through petitions for review in accordance with the provisions of Rule 43 of
the 1997 Rules of Court.

Facts:

A petition was filed by Sulu Resources Development Corporation for Mines Production
Sharing Agreement (MPSA). Armando C. Carpio filed an opposition/adverse claim thereto,
alleging, inter alia, that his landholdings in Cupang and Antipolo, Rizal will be covered by
respondent’s claim, thus he enjoys a preferential right to explore and extract the quarry resources
on his properties.

The Panel of Arbitrators of the Mines and Geo-Sciences Bureau of the DENR rendered a
Resolution dated September 26, 1996, upholding Carpio’s opposition/adverse claim.

Sulu Resources Development Corporation appealed the foregoing Resolution to the

Mines Adjudication Board. Meanwhile, Carpio filed a motion to dismiss appeal on the ground of
respondent’s failure to comply with the requirements of the New Mining Act’s Implementing
Rules and Regulations. On June 20, 1997, the Mines Adjudication Board rendered the assailed
Order dismissing Carpio’s opposition/adverse claim. Carpio filed a motion for reconsideration of
said Order which was denied by the Board.

Carpio appealed to the CA. the CA relying in the case of Pearson v. Intermediate
Appellate Court ruled that it did not have jurisdiction to review the Decision of the Mines
Adjudication Board (MAB). The adjudication of conflicting mining claims is completely
administrative in nature.

Issue/s:

Whether or not appeals from the Decision or Final Orders of the Mines Adjudication
Board should be made directly to the Supreme Court as contended by the respondent and the
Court of Appeals, or such appeals be first made to the Court of Appeals as contended by Carpio

Holding/s:

Appeals from decisions of the Mines Adjudication Board (MAB) shall be taken to the
Court of Appeals through petitions for review in accordance with the provisions of Rule 43 of
the 1997 Rules of Court.

Factual controversies are usually involved in administrative actions; and the CA is

prepared to handle such issues because, unlike the Supreme Court, it is mandated to rule on
questions of fact. In Metro Construction, we observed that not only did the CA have appellate
jurisdiction over CIAC decisions and orders, but the review of such decisions included questions
of fact and law. At the very least when factual findings of the MAB are challenged or alleged to
have been made in grave abuse of discretion as in the present case, the CA may review them,
consistent with the constitutional duty of the judiciary.

To summarize, there are sufficient legal footings authorizing a review of the MAB
Decision under Rule 43 of the Rules of Court: First, Section 79 of RA No. 7942 provides that
decisions of the MAB may be reviewed by the Supreme Court on a "petition for review by
certiorari." Second, when the Supreme Court, in the exercise of its rule-making power, transfers
to the CA pending cases involving a review of a quasi-judicial body’s decisions, such transfer
relates only to procedure; hence, it does not impair the substantive and vested rights of the
parties. The aggrieved party’s right to appeal is preserved; what is changed is only the procedure
by which the appeal is to be made or decided. Third, the Revised Rules of Civil Procedure
included Rule 43 to provide a uniform rule on appeals from quasi-judicial agencies. Fourth,
under Batas Pambansa (BP) Blg. 129 as amended by RA No. 7902, factual controversies are
usually involved in decisions of quasi-judicial bodies; and the CA, which is likewise tasked to
resolve questions of fact, has more elbow room to resolve them. Fifth, the judicial policy of
observing the hierarchy of courts dictates that direct resort from administrative agencies to the
Supreme Court will not be entertained, unless the redress desired cannot be obtained from the
appropriate lower tribunals, or unless exceptional and compelling circumstances justify
availment of a remedy falling within and calling for the exercise of our primary jurisdiction.

GONZALES VS CLIMAX MINING LTD

512 SCRA 148

Tinga, J.

Second Division

Doctrine/s:

Doctrine of separability

Facts:

This is a consolidation of two petitions rooted in the same disputed Addendum Contract
entered into by the parties. Respondents argue that the arbitration clause in the Addendum
Contract should be treated as an agreement independent of the other terms of the contract, and
that a claimed rescission of the main contract does not avoid the duty to arbitrate. The Court
earlier held that the DENR Panel of Arbitrators had no jurisdiction over the complaint for the
annulment of the Addendum Contract on grounds of fraud and unconstitutionality and that the
action should have been brought before the regular courts as it involved judicial issues. Gonzales
avers that the case involves a mining dispute that properly falls within the ambit of the Panels
authority. Respondents filed their Motion for Partial Reconsideration and/or Clarification
seeking reconsideration of that part of the Decision holding that the case should not be brought
for arbitration under R.A. No. 876. Pending judgment in such separate action, the Addendum
Contract remains valid and binding and so does the arbitration clause therein. Hence,
respondents submit that the courts holding that the case should not be brought under the ambit of
the Arbitration Law be understood or clarified as operative only where the challenge to the
arbitration agreement has been sustained by final judgment.

Issue/s:
 Whether or not it was proper for the RTC to order the parties to arbitrate under R.A. No.
876

Holding/s:

Yes. The doctrine of separability enunciates that an arbitration agreement is independent

of the main contract. The arbitration agreement is to be treated as a separate agreement and the
arbitration agreement does not automatically terminate when the contract of which it is part
comes to an end. This is significant to the determination of whether the invalidity of the main
contract also nullifies the arbitration clause. Hence, the Court held that the validity of the
contract containing the agreement to submit to arbitration does not affect the applicability of the
arbitration clause itself. A contrary ruling would suggest that a party’s mere repudiation of the
main contract is sufficient to avoid arbitration. That is exactly the situation that the separability
doctrine, as well as jurisprudence applying it, seeks to avoid. The proceeding in a petition for
arbitration under R.A. No. 876 is limited only to the resolution of the question of whether the
arbitration agreement exists. Second, the separability of the arbitration clause from the
Addendum Contract means that validity or invalidity of the Addendum Contract will not affect
the enforceability of the agreement to arbitrate. Thus, the instant petition for certiorari was
dismissed.

BONAVENTURE MINING CORPORATION V V.I.L MINES, INC.

G.R. No. 174918; August 13, 2008

Puno, C.J.

Second Division

Doctrine/s:

Grant of exploration permits

Facts:

This case involves a conflict over mining claims between parties over a mountainous
section that transcends the common boundaries of Quezon and Camarines Norte provinces. VLI
Mines, Inc. filed a petition for the cancellation of BMC's exploration permit application claiming
that it overlaps with its prior and existing application. The petition was later amended to include
the cancellation and confirmation of the nullity of St. Joe Mining Corporation's EPA-IVA-24.
The POA upheld the validity of VMI's exploration permit application and declared petitioners’
applications as null and void. The MAB, on the other hand, gave due course to BMC's
application for an exploration permit but allowed VMI's application to proceed, sans the areas
covered by BMC's application. Finally, the CA reversed and set aside the decision of the MAB
and reinstated the decision of the Panel of Arbitrators.

Issue/s:

Whether the court of appeals committed an error when it ruled that failure to comply with
DENR M.O. No. 97-07 would cause the cancellation of the application

Holding/s:

No.Section 12 of DMO 97-07 provides that all FTAA applications filed prior to the
effectivity of the Act which exceed the maximum contract area as set forth in Section 34 of the
Act and Section 51 of the IRR must conform to said maximum on or before September 15, 1997.
All applicants who have not otherwise relinquished or divested any areas held in excess of the
allowable maximum must relinquish/divest the areas on such date in favor of the Government.
The concerned applications shall be accordingly amended and areas relinquished/divested shall
be open for Mining Applications. Section 14 therein likewise states that no extensions of the
period may be granted.

The language of the memorandum order is plain, precise and unequivocal – the period
cannot be extended. The pending FTAA applications could no longer be officially acted upon as
they were deemed to have expired. DMO 97-07 could only be extended by another memorandum
order or law specifically amending the deadline set forth therein. No government officer or
employee can do so. DMO 97-07 was promulgated precisely to set a specific date for all FTAA
applicants within which to relinquish all areas in excess of the maximum prescribed by law.
Accordingly, the deadline cannot be extended or changed except by amending DMO 97-07.
Hence, the OIC-Regional Director had no authority to extend the deadline set by DMO 97-07.
 PICOP RESOURCES, INC., V. BASE METALS MINERAL RESOURCES
CORPORATION, AND THE MINES ADJUDICATION BOARD
GR. No. 163509

Tinga, J.

Third Division

Doctrine/s:

All areas or islands in the Philippines proclaimed, designated or set aside, pursuant to a
law, presidential decree, presidential proclamation or executive order as a national park, game
refuge, bird and wildlife sanctuary, wilderness area, strict nature reserve, watershed, mangrove
reserve, fish sanctuary natural and historical landmark, protected and managed
landscape/seascape as well as identified virgin forests before the effectivity of R.A. 7586 are
hereby designated as initial components of the System of the NIPAS.

Facts:

The Central Mindanao Mining and Development Corporation (CMMCI) entered into a
Mines Operating Agreement with Banahaw Mining and Development Corporation whereby the
latter agreed to act as Mine Operator for the exploration, development, and eventual commercial
operation of CMMCI’s mining claims located in Agusan del Sur. Banahaw Mining was issued a
Mines Temporary Permit authorizing it to extract and dispose of precious minerals found within
its mining claims. Since a portion of Banahaw Mining’s mining claims located in petitioner
PICOP’s logging concession, they entered into a Memorandum Agreement, whereby, in mutual
recognition of each other’s right to the area concerned, the latter allowed the latter an
access/right of way to its mining claim. Banahaw Mining converted its mining claims to
applications for Mineral Production Sharing Agreements (MPSA). While the MPSA were
pending, Banahaw Mining, decided to sell/assign its rights and interests in favor of private
respondent Base Metals Mineral Resources Corporation. Base Metals amended Banahaw
Mining’s pending MPSA applications with the Bureau of Mines to substitute itself as applicant
and to submit additional documents in support of the application. PICOP filed with the Mines
Geo-Sciences Bureau (MGB), an Adverse Claim and/or Opposition to Base Metals’ application
asserts that its concession areas are closed to mining operations as these are within the Agusan-
Surigao-Davao forest reserve established under Proclamation No. 369. The area is also allegedly
part of permanent forest established under Republic Act No. 3092, and overlaps the wilderness
area where mining applications are expressly prohibited under R.A. 7586. Hence, the area is
closed to mining operations under Sec. 19(f) of R.A. 794.

Issue/s:

Is the area covered by the Base Metals’ MPSA closed to mining activities?

Holding/s:

No. PICOP failed to present any evidence that the area covered by the MPSA is a
protected wilderness area designated as an initial component of the NIPAS pursuant to law,
presidential decree, presidential proclamation or executive order as required. Although the
above-cited area status and clearances, particularly those pertaining to MPSA Nos. 012 and 013,
state that portions thereof are within the wilderness area of PICOP, there is no showing that this
supposed wilderness area has been proclaimed, designated or set aside as such, pursuant to a law,
presidential decree, presidential proclamation or executive order. It should be emphasized that it
is only when this area has been so designated that Sec. 20 of R.A. 7586, which prohibits mineral
locating within protected areas, becomes operational. From the foregoing, there is clearly no
merit to PICOP’s contention that the area covered by the Base Metals’ MPSA is, by law, closed
to mining activities.

SOUTHEAST MINDANAO GOLD MINING CORPORATION V. BALITE PORTAL

MINING COOPERATIVE
G.R. No. 135190

Ynares-Santiago, J.

First Division

Doctrine/s:
 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.

Facts:

The instant case involves a rich tract of mineral land situated in the Agusan-Davao-
Surigao Forest Reserve known as the "Diwalwal Gold Rush Area." Located at Mt. Diwata in the
municipalities of Monkayo and Cateel in Davao Del Norte, the land has been embroiled in
controversy since the mid-80's due to the scramble over gold deposits found within its bowels.
On March 10, 1988, Marcopper was granted an Exploration Permit No. 133 (EP No. 133) over
4,491 hectares of land, which included the hotly-contested Diwalwal area. This acquisition of
mining rights by Marcopper was challenged by Apex Mining Corporation (Apex). However, the
Court found out that Apex did not comply with the procedural requisites of acquiring mining
rights within forest reserves.

Subsequently, Congress enacted R.A. 7076 or the Peoples Small-Scale Mining Act where
DENR issued an Order declaring 729 hectares of Diwalwal area as non-forest land open to
small-scale mining. Later on, a petition for cancellation of EP No. 133 was filed before DENR
and while the case is pending, Marcopper assigned its EP No. 133 to petitioner Southeast
Mindanao Gold Mining Corporation.

On March 3, 1995, R.A. 7942 or the Philippine Mining Act was enacted which later on
allow, through Provincial Mining Regulatory Board of Davo, issuance of one transport permits
(OTPs) to small-scale miners operating in Diwalwal mines. With this, petitioner file a complaint
contending that the illegal issuance of OTPs allowed extraction and hauling of P60,000.00 worth
of gold. On June 24, 1997, Memorandum 97-03 was issued by the DENR secretary providing for
a direct state utilization.

Issue/s:

Is the Memorandum 97-03 issued by the DENR secretary divested the petitioner’s right
to gold rush area under EP No. 133?

Holding/s:
 No. The challenged Memorandum 97-03 did not conclusively adopt direct state
utilization as policy in resolving Diwalwal dispute. The terms of Memorandum clearly indicate
that what was directed thereunder was merely a study of this option and nothing else. It did not
grant any management/operating profit-sharing agreement to small-scale miners or to any party
but it simply instructed DENR office concerned to undertake studies to determine its feasibility.

CALANZA V. PICOP
Gr No. 146622 April 24, 2009

Concepcion, C.J.

Third Division

Doctrine/s:

The settlement of a boundary dispute involving municipalities or component cities of

different provinces shall be jointly referred for settlement to the respective Sanggunians or the
provincial boards of the different provinces involved.

A governor is without legal authority to issue a mining permits

Facts:

Petitioners having their applications for small-scale mining permits approved and allowed
by the Governor of Davao Oriental negotiated entry to the mining site with the PICOP. The
problem arose when PICOP prohibited them to enter into the mining area on the grounds that it
has exclusive right of occupation, possession and control over the area being a logging
concessionaire and the mining permits were defective since the mining area is situated in Surigao
del Sur.

Petitioners filed a complaint against PICOP before the RTC praying that it or its agent be
enjoined from preventing and prohibiting the petitioners from entering into the mining site. The
RTC rule in favor of the petitioners ruling that the mining area is within the territory of the
province of Davao thus the governor is vested with the power to issue the small-scale permits.
The CA however reversed the decision of the RTC. The governor has no power to issue small-
scale mining permits since such authority under Section 9 of Republic Act No. 7076 is vested
with the Provincial Mining Regulatory Board.

Issue/s:

WON the small-scale mining permits are valid.

Holding/s:

No, the governor has no authority to issue mining permits pursuant to the prevailing
statute of RA 7076. Petitioners’ small-scale mining permits are legally questionable. Under
Presidential Decree No. 1899, applications of small-scale miners are processed with the Director
of the Mines and Geo-Sciences Bureau. Pursuant to Republic Act No. 7076, approval of the
applications for mining permits and for mining contracts is vested in the Provincial/City Mining
Regulatory Board. Composed of the DENR representative, a representative from the small-scale
mining sector, a representative from the big-scale mining industry and a representative from an
environmental group, this body is tasked to approve small-scale mining permits and contracts.

In the case under consideration, petitioners filed their small-scale mining permits on 23
August 1991, making them bound by the procedures provided for under the applicable and
prevailing statute, Republic Act No. 7076. Instead of processing and obtaining their permits from
the Provincial Mining Regulatory Board, petitioners were able to get the same from the governor
of Davao del Norte. Considering that the governor is without legal authority to issue said mining
permits, the same permits are null and void.

SPOUSES CALO VS. SPOUSES TAN

G.R. No. 151266 November 29, 2005

Tinga, J.

Second Division

Doctrine/s:
 The rule prohibiting forum-hopping was designed to promote and facilitate the orderly
administration of justice. It should not be interpreted with absolute literalness as to defeat its
ultimate objective which is to achieve substantial justice as expeditiously as possible.

Facts:

On 9 September 1986, respondent Lydia Tan entered into a Joint Venture Agreement1
with petitioner Raymundo Calo, and four other persons regarding a small scale mining business.
It was agreed that respondent Lydia Tan would act as the financier and procure all the equipment
needed for the business while Raymundo Calo would be an industrial partner, managing and
overseeing the activities of the venture.

Sometime in December 1986, petitioner Raymundo Calo applied for a loan of around
₱500,000.00 with the Development Bank of the Philippines (DBP), Butuan Branch, using as
collateral several pieces of equipment allegedly purchased by respondent Lydia Tan for the
mining business, which properties Raymundo Calo represented as his own. This was supposedly
without the knowledge of Lydia Tan. The loan application was granted and a chattel mortgage
constituted over the mining equipment. Raymundo Calo later failed to pay the obligation and the
chattel mortgage was subsequently foreclosed. The mining equipment was sold at public auction
with DBP as the highest bidder.

Issue/s:

WON the RTC of Cagayan de Oro City erred in disregarding the grounds of
forumshopping, litis pendentia, and splitting of cause of action which they raised.

Holding/s:

It should be noted that this final argument was never raised before the Court of Appeals.
The principles of litis pendentia, res judicata and forum-shopping are all based on the policy
against multiplicity of suits. The case for replevin and damages was clearly dismissible on the
ground of forum-shopping. However, that the case for replevin should have been dismissed
because it was filed subsequent to the case for injunction does not always hold true. In the case
for replevin and damages, respondent spouses seek the return of the possession of the property
auctioned off to DBP as the highest bidder, claiming that they were rightful owners of the
property.

We cannot simply dismiss the case for replevin and damages on the ground of forum-
shopping and leave it at that, for such modality would not be in keeping with the demands of
judicial policy as well as equity. The rule prohibiting forum-shopping was designed to promote
and facilitate the orderly administration of justice.

NATIONAL POWER CORPORATION V. PROVINCIAL GOVERNMENT OF

BATAAN, SANGGUNIANG PANLALAWIGAN OF BATAAN, PASTOR B. VICHUACO
(IN HIS OFFICIAL CAPACITY AS PROVINCIAL TREASURER OF BATAAN) AND
THE REGISTER OF DEEDS OF THE PROVINCE OF BATAAN
G.R. No. 180654 April 21, 2014

ABAD, J.

THIRD DIVISION

Doctrine/s:

EPIRA created the National Transmission Company (TRANSCO) which assumes the
electrical transmission function of the NPC and thus have the power and functions granted to it.
It also created Power Sector Assets and Liabilities Management Corporation (PSALM Corp.)
and transferred to it all of the NPC's "generation assets". Consequently, all related liabilities of
NPC was transferred to and assumed by the PSALM Corp.

Facts:

On March 28, 2003 petitioner National Power Corporation (NPC) received a notice of
franchise tax delinquency from the respondent Provincial Government of Bataan (the Province)
for ₱45.9 million covering the years 2001, 2002, and 2003. The Province based its assessment on
the NPC’s sale of electricity that it generated from two power plants in Bataan. The NPC
reserved its right to contest the computation pending a decision of the Supreme Court, thus, on
May 12 and 14, 2003 the Province again sent notices of tax due to the NPC. The NPC replied,
however, that it had ceased to be liable for the payment of that tax after Congress enacted
Republic Act (R.A.) 9136, also known as the Electric Power Industry Reform Act (EPIRA) that
took effect on June 26, 2001. Ignoring the NPC’s view, the Province issued a "Warrant of Levy"
on 14 real properties that it used to own in Limay, Bataan. In March 2004 the Province caused
their sale at public auction with itself as the winning bidder. On July 7, 2004 the NPC filed with
the Regional Trial Court (RTC) of Mariveles, Bataan, a petition for declaration of nullity of the
foreclosure sale. The NPC alleged that the foreclosure had no legal basis since R.A. 7160 had
been modified by the EPIRA. The latter law provided that power generation is not a public utility
operation requiring a franchise, hence, not taxable. What remains subject to such tax is the
business of transmission and distribution of electricity which requires a national franchise. Also,
NPC had ceased by operation of the EPIRA in 2001 to engage in power transmission, given that
all its facilities for this function, including its nationwide franchise, had been transferred to the
National Transmission Corporation (TRANSCO).

Issue/s:

Is NPC no longer the owner or operator of the business subject to local franchise tax and
that the Province cannot execute on former NPC properties that had been taken from it and
transferred to other government corporations?

Holding/s:

Under Section 8 of EPIRA, National Transmission Company (TRANSCO) is created

which assumes the electrical transmission function of the NPC and have the power and functions
granted. Within 6 months from the effectivity of such, the facilities and all other assets of NPC
shall be transferred to TRANSCO. The TRANSCO shall be wholly owned by the Power Sector
Assets and Liabilities Management Corporation (PSALM Corp.). All transmission and sub
transmission related liabilities of NPC shall be transferred to and assumed by the PSALM Corp.
NPC’s electrical transmission function was transferred to TRANSCO with effect on June 26,
2001. The NPC, therefore, ceased to operate that business in Bataan by operation of law. Since
the local franchise tax is imposed on the privilege of operating a franchise, not a tax on the
ownership of the transmission facilities, it is clear that such tax is not a liability of the NPC.
Also, Section 49 of EPIRA created the PSALM Corp. and transferred to it all of the NPC's
"generation assets" which would include the Bataan Thermal Plant. Clearly, the NPC had ceased
running its former power transmission and distribution business in Bataan by operation of law
from June 26, 2001. It is, therefore, not the proper party subject to the local franchise tax for
operating that business. Parenthetically, Section 49 also transferred "all existing xx x liabilities"
of the NPC to PSALM Corp., presumably including its unpaid liability for local franchise tax
from January 1 to June 25, 2001. Consequently, such tax is collectible solely from PSALM Corp.

BF HOMES, INC. AND THE PHILIPPINE WATERWORKS AND CONSTRUCTION

CORP. V. MANILA ELECTRIC COMPANY
G.R. No. 171624 December 6, 2010

LEONARDO-DE CASTRO, J.

FIRST DIVISION
Doctrine/s:

ERC has original and exclusive jurisdiction under Rule 43(u) of the EPIRA over all cases
contesting rates, fees, fines, and penalties imposed by the ERC in the exercise of its powers,
functions and responsibilities, and over all cases involving disputes between and among
participants or players in the energy sector.

Facts:

MERALCO is a corporation duly organized and existing under Philippine laws engaged
in the distribution and sale of electric power in Metro Manila. On the other hand, BF Homes and
PWCC are owners and operators of waterworks systems delivering water to over 12,000
households and commercial buildings in BF Homes subdivisions in Parañaque City, Las Piñas
City, Caloocan City, and Quezon City. The water distributed in the waterworks systems owned
and operated by BF Homes and PWCC is drawn from deep wells using pumps run by electricity
supplied by MERALCO. In June 2003, MERALCO demanded P4.7M for unpaid bills, but
petitioners refused invoking their right to refund based on the 2002 SC ruling in Republic v.
Manila Electric Company ordering MERALCO to refund its customers. When its repeated
demands remained unheeded, MERALCO, on 4 June 2003, threatened to cut off electric power
to all petitioners’ pumps if bills remained unpaid by 20 June 2003. Thus on 23 June 2003,
petitioners filed a petition in RTC Las Piñas with prayer for issuance of writ of injunction and
restraining order against MERALCO alleging that it refused to set off the P4.7M unpaid bills
against the P11.8M amount refundable to petitioners based on the cited ruling. The RTC granted
the the writ of preliminary injunction. MERALCO thus appealed to CA. The CA reversed and
set aside RTC’s ruling thus the writ of injunction against MERALCO was dissolved. Thus,
petitioners on 7 February 2006 filed the present petition for review on certiorari.

Issue/s:

Does ERC have jurisdiction over the subject matter?

Holding/s:

On June 8, 2001, Republic Act No. 9136, known as the Electric Power Industry Reform
Act of 2001 (EPIRA), was enacted, providing a framework for restructuring the electric power
industry. One of the avowed purposes of the EPIRA is to establish a strong and purely
independent regulatory body. The Energy Regulatory Board (ERB) was abolished and its powers
and functions not inconsistent with the provision of the EPIRA were expressly transferred to the
ERC by virtue of Sections 44 and 80 of the EPIRA. Presently, the ERC has original and
exclusive jurisdiction under Rule 43(u) of the EPIRA over all cases contesting rates, fees, fines,
and penalties imposed by the ERC in the exercise of its powers, functions and responsibilities,
and over all cases involving disputes between and among participants or players in the energy
sector. Indubitably, the ERC is the regulatory agency of the government having the authority and
supervision over MERALCO. Thus, the task to approve the guidelines, schedules, and details of
the refund by MERALCO to its consumers, to implement the judgment of this Court in the
MERALCO Refund cases, also falls upon the ERC. By filing their Petition before the RTC, BF
Homes and PWCC intend to collect their refund without submitting to the approved schedule of
the ERC, and in effect, enjoy preferential right over the other equally situated MERALCO
consumers. Administrative agencies, like the ERC, are tribunals of limited jurisdiction and, as
such, could wield only such as are specifically granted to them by the enabling statutes. In
relation thereto is the doctrine of primary jurisdiction involving matters that demand the special
competence of administrative agencies even if the question involved is also judicial in nature.
Courts cannot and will not resolve a controversy involving a question within the jurisdiction of
an administrative tribunal, especially when the question demands the sound exercise of
administrative discretion requiring special knowledge, experience and services of the
administrative tribunal to determine technical and intricate matters of fact. The court cannot
arrogate into itself the authority to resolve a controversy, the jurisdiction of which is initially
lodged with the administrative body of special competence.

BETOY V. THE BOARD OF DIRECTORS, NATIONAL POWER CORPORATION

GR No. 156556-57; October 4, 2011

PERALTA, J

EN BANC:

Doctrine/s:

It has long been established that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts, or where exceptional and
compelling circumstances justify availment of a remedy within and call for the exercise of our
primary jurisdiction. Thus, herein petition should already be dismissed at the outset; however,
since similar petitions have already been resolved by this Court tackling the validity of NPB
Resolutions No. 2002-124 and No. 2002-125, as well as the constitutionality of certain
provisions of the EPIRA, this Court shall disregard the procedural defect.

Facts:

The pertinent facts of the case are Petitioner filed a special civil action for certiorari and
supplemental petition for mandamus, specifically assailing National Power Board Resolutions
No. 2002-124 and No. 2002-125, as well as Sections 11, 34, 38, 48, 52 and 63 of Republic Act
(R.A.) No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA).
Also assailed is Rule 33 of the Implementing Rules and Regulations (IRR) of the EPIRA. On
June 8, 2001, the EPIRA was enacted by Congress with the goal of restructuring the electric
power industry and privatization of the assets of the National Power Corporation (NPC). On
November 18, 2002, pursuant to Section 63 of the EPIRA and Rule 33 of the IRR, the NPB
passed NPB Resolution No. 2002-124 which, among others, resolved that all NPC personnel
shall be legally terminated on January 31, 2003and shall be entitled to separation benefits. As a
result of the foregoing NPB Resolutions, petitioner Enrique U. Betoy, together with thousands of
his co-employees from the NPC was terminated. However, amongst the petitions raised – it is
noteworthy that petitioners argued that Section 11, Section 48 and Section 52 of RA 9136
(EPIRA) for being violative of Section 13, Article VII of the 1987 Constitution and, therefore,
unconstitutional.

Issue/s:

Is the designation of the secretaries as Board of Directors valid?

Holding/s:

Yes. The delegation of the said official to the respective Board of Directors was
designation by Congress of additional functions and duties to the officials concerned, i.e., they
were designated as members of the Board of Directors.

Designation connotes an imposition of additional duties, usually by law, upon a person

already in the public service by virtue of an earlier appointment. Designation does not entail
payment of additional benefits or grant upon the person so designated the right to claim the
salary attached to the position. Without an appointment, a designation does not entitle the officer
to receive the salary of the position. The legal basis of an employee’s right to claim the salary
attached thereto is a duly issued and approved appointment to the position, and not a mere
designation.

This Court, therefore, finds the designation of the respective members of the Cabinet, as
ex-officio members of the NPB, valid.

CHAMBER OF REAL ESTATE AND BUILDERS’ ASSOCIATION, INC. V. ENERGY

REGULATIONS COMMISSION
GR No. 174697; July 8, 2010

Brion, J

EN BANC

Doctrine/s:

Petitioner cannot come before the Supreme Court using an incorrect remedy and claim
that it was oppressed, or that its rights to due process and equal protection have been violated by
an administrative issuance that does not even affect its rights and obligations. The writ of
certiorari is an extraordinary remedy that the Court issues only under closely defined grounds
and procedures that litigants and their lawyers must scrupulously observe. They cannot seek
refuge under the umbrella of this remedy on the basis of an undemonstrated claim that they raise
issues of transcendental importance, while at the same time flouting the basic ground rules for
the remedy’s grant.

Facts:

Pursuant to its rule-making powers under the EPIRA, the ERC promulgated the Magna
Carta for Residential Electricity Consumers (Magna Carta), which establishes residential
consumers’ rights to have access to electricity and electric service, subject to the requirements
set by local government units and distribution utilities.

When a developer initially paid the cost of the extension of lines to provide electric
service to a specific property and incorporated these expenses in the cost thereof, and that
property was purchased and transferred in the name of the registered customer, the latter shall be
entitled to the refund of the cost of the extension of lines, and exercise the options for refund
provided in this article. On January 18, 2006, the ERC modified this provision when it issued the
DSOAR. Section 2.6.1 reiterates the old rule requiring consumers located beyond 30 meters from
existing lines to advance the costs of the requested lines and facilities. Section 2.6.2 likewise
provides that the costs advanced by consumers may be refunded at the rate of 25% of the annual
gross distribution revenue derived from all customers connected to the line extension. However,
Section 2.6.2 amends Article 14 of the Magna Carta by limiting the period for the refund to five
years, whether or not the amount advanced by the consumer is fully paid. Section 2.6 of the
DSOAR decrees that: 2.6. MODIFICATIONS AND NEW PHYSICAL CONNECTIONS:
RESIDENTIAL; 2.6.1 RIGHT TO EXTENSION OF LINES AND FACILITIES – In accordance
with the Magna Carta, a residential End-user located within thirty (30) meters from the
distribution utilities’ existing secondary low voltage lines has the right to an extension of lines or
installation of additional facilities, other than a service drop, at the expense of the utility.
However, if a prospective customer is beyond the said distance, the customer shall advance the
amounts necessary to cover the expenditures on the facilities beyond thirty (30) meters.; 2.6.2
REFUND—To recover the aforementioned advanced payment, the customer may either demand
the issuance of a notes payable from the distribution utility or a refund at the rate of twenty-five
(25) percent of the gross distribution revenue derived from all customers connected to the line
extension for the calendar year until such amounts are fully refunded or for five (5) years
whichever period is shorter, or, if available, the purchase of preferred shares. Revenue derived
from additional customers tapped directly to the poles and facilities so extended shall be
considered in determining the revenues derived from the extension of facilities.

Issue/s:

Whether Section 2.6 of the Rules violates R.A. No. 9136?

Holding/s:

The court resolves to dismiss the petition for its serious procedural and technical defect.
We do not see the petitioner as an entity with the required standing to assail the validity of
Section 2.6 of the DSOAR.

The petitioner expressly enumerates its members to be the following: developers,

brokers, appraisers, contractors, manufacturers, suppliers, engineers, architects, and other
persons or entities engaged in the housing and real estate business.21 It does not question the
challenged DSOAR provision as a residential end-user and it cannot because the challenged
provision only refers to the rights and obligations of DUs and residential end-users; neither the
petitioner nor its members are residential end-users. In fact, the DSOAR has separate provisions
for the extension of lines or installation of additional facilities for non-residential end-users,
under its Section 2.7 entitled "Modifications and New Connections: Non-Residential." Thus,
neither the petitioner nor its members can claim any injury, as residential end-users, arising from
the challenged Section 2.6 of the DSOAR, nor cite any benefit accruing to them as residential
end-users that would result from the invalidation of the assailed provision.