PICOP Resources Inc vs. Base Metals Mineral Resources Corporation GR No. 163509

G.R. No.
163509
PICOP RESOURCES, INC.,petitioner,
- versus -
BASE METALS MINERAL RESOURCES CORPORATION and THE MINES

ADJUDICATION BOARD, respondents.
FACTS:
Central Mindanao Mining and Development Corporation (CMMCI for brevity) entered
into a Mines Operating Agreement (Agreement for brevity) with Banahaw Mining and
Development Corporation (Banahaw Mining for brevity) whereby the latter agreed to act
as Mine Operator for the exploration, development, and eventual commercial operation
of CMMCI’s eighteen (18) mining claims located in Agusan del Sur.
Pursuant to the terms of the Agreement, Banahaw Mining filed applications for Mining
Lease Contracts over the mining claims with the Bureau of Mines. So that Banahaw
Mining was issued a Mines Temporary Permit authorizing it to extract and dispose of
precious minerals found within its mining claims. Upon its expiration, the temporary
permit was subsequently renewed thrice by the Bureau of Mines, the last being on June
28, 1991.
Since a portion of Banahaw Mining’s mining claims was located in petitioner PICOP’s
logging concession in Agusan del Sur, Banahaw Mining and petitioner PICOP entered
into a Memorandum of Agreement, whereby, in mutual recognition of each other’s right
to the area concerned, petitioner PICOP allowed Banahaw Mining an access/right of
way to its mining claims. Banahaw Mining converted its mining claims to applications
for Mineral Production Sharing Agreements (MPSA for brevity).
While the MPSA were pending, Banahaw Mining, on December 18, 1996, decided to
sell/assign its rights and interests over thirty-seven (37) mining claims in favor of private
respondent Base Metals Mineral Resources Corporation (Base Metals for brevity). The
transfer included mining claims held by Banahaw Mining in its own right as claim owner,
as well as those covered by its mining operating agreement with CMMCI.
Upon being informed of the development, CMMCI, as claim owner, immediately

approved the assignment made by Banahaw Mining in favor of private respondent Base
Metals, thereby recognizing private respondent Base Metals as the new operator of its
claims.
On March 10, 1997, private respondent 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. Area clearances from
the DENR Regional Director and Superintendent of the Agusan Marsh and Wildlife
Sanctuary were submitted, as required.
On October 7, 1997, private respondent Base Metals’ amended MPSA applications

were published in accordance with the requirements of the Mining Act of 1995.
On November 18, 1997, petitioner PICOP filed with the Mines Geo-Sciences Bureau
(MGB), Caraga Regional Office No. XIII an Adverse Claim and/or Opposition to private
respondent Base Metals’ application. After the submission of their respective position
paper, the Panel Arbitrator issued an Order disapproving private respondent Base
Metals’ MPSA on the reasons that adverse claim was filed on time, that the granting of
the MPSA application on area subject of an IFMA or PTLA which is covered by a
Presidential Warranty, the panel believes it cannot, unless the grantee consents thereto,
without the grantee’s consent, the area is considered closed to mining location (sec. 19)
(b) (No. 2), DAO No. 96-40) and that the mining location in forest or timberland is
allowed only if such forest or timberland is not leased by the government to a qualified
person or entity and if it is leased the consent of the lessor is necessary, in addition to
the area clearance to be issued by the agency concerned before it is subjected to
mining operation.
Plantation is considered closed to mining locations because it is off tangent to mining.

Both are extremes. They can not exist at the same time. The other must necessarily
stop before the other operate.
Private respondent Base Metals filed a Notice of Appeal with public respondent MAB,
the latter rendered the assailed decision setting aside the Panel Arbitrator’s order. The
Court of Appeals upheld the decision of the MAB.
Hence this petition.
PICOP presents the following issues: (1) the 2,756 hectares subject of Base Metals’
MPSA are closed to mining operations except upon PICOP’s written consent pursuant
to existing laws, rules and regulations and by virtue of the Presidential Warranty; (2) its
Presidential Warranty is protected by the non-impairment clause of the Constitution; and
(3) it does not raise new issues in its petition.
PICOP 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 of then Gov. Gen. Dwight Davis. The area is allegedly also part of permanent forest
established under Republic Act No. 3092 (RA 3092), and overlaps the wilderness area
where mining applications are expressly prohibited under RA 7586. Hence, the area is
closed to mining operations under Sec. 19(f) of RA 7942.
ISSUE:
Whether or not the area covered by Base Metals’ MPSA is, by law, closed to mining
activities
Whether or not the Presidential Warranty is a contract protected by the non-impairment

clause of the 1987 Constitution.
HELD:
Anent the first issue, the Court ruled that the area covered by Base Metals’ MPSA
is, by law, not closed to mining activities.
There is no evidence in this case that the area covered by Base Metals’ MPSA has
been proclaimed as watershed forest reserves.
Even granting that the area covered by the MPSA is part of the Agusan-Davao-Surigao
Forest Reserve, such does not necessarily signify that the area is absolutely closed to
mining activities. Contrary to PICOP’s obvious misreading of our decision in Apex
Mining Co., Inc. v. Garcia, supra, to the effect that mineral agreements are not allowed
in the forest reserve established under Proclamation 369, the Court in that case actually
ruled that pursuant to PD 463 as amended by PD 1385, one can acquire mining rights
within forest reserves, such as the Agusan-Davao-Surigao Forest Reserve, by initially
applying for a permit to prospect with the Bureau of Forest and Development and
subsequently for a permit to explore with the Bureau of Mines and Geosciences.
Moreover, Sec. 18 RA 7942 allows mining even in timberland or forestty subject to

existing rights and reservations. Similarly, Sec. 47 of PD 705 permits mining operations
in forest lands which include the public forest, the permanent forest or forest reserves,
and forest reservations
With regard to the second issue, the Court do not subscribe to PICOP’s argument that
the Presidential Warranty dated September 25, 1968 is a contract protected by the non-
impairment clause of the 1987 Constitution. An examination of the Presidential
Warranty at once reveals that it simply reassures PICOP of the government’s
commitment to uphold the terms and conditions of its timber license and guarantees
PICOP’s peaceful and adequate possession and enjoyment of the areas which are the
basic sources of raw materials for its wood processing complex. The warranty covers
only the right to cut, collect, and remove timber in its concession area, and does not
extend to the utilization of other resources, such as mineral resources, occurring within
the concession.
The Presidential Warranty cannot be considered a contract distinct from PTLA

No. 47 and IFMA No. 35. It is merely a collateral undertaking which cannot amplify
PICOP’s rights under its timber license. Since timber licenses are not contracts, the
non-impairment clause cannot be invoked.

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G.R. No.

PICOP RESOURCES, INC.,petitioner,

BASE METALS MINERAL RESOURCES CORPORATION and THE MINES

Upon being informed of the development, CMMCI, as claim owner, immediately

On October 7, 1997, private respondent Base Metals’ amended MPSA applications

Plantation is considered closed to mining locations because it is off tangent to mining.

Hence this petition.

Whether or not the Presidential Warranty is a contract protected by the non-impairment

Moreover, Sec. 18 RA 7942 allows mining even in timberland or forestty subject to

The Presidential Warranty cannot be considered a contract distinct from PTLA

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