LEPANTO CONSOLIDATED MINING CO.,
- versus -
WMC RESOURCES INTL. PTY. LTD., WMC PHILIPPINES, INC. and SAGITTARIUS MINES, INC.,
G.R. No. 162331
CALLEJO, SR., and
November 20, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the Decision of the Court of Appeals in CA-G.R. SP No. 74161, dated 21 November 2003, which dismissed herein petitioners Petition for Review of the Decision of the Office of the President dated 23 July 2002 affirming in toto the Order of the Secretary of the Department of Environment and Natural Resources (DENR) dated 18 December 2001 approving the application for and the consequent registration of FTAA No. 02-95-XI from WMC Philippines to Sagittarius Mines, Inc.
On 22 March 1995, the Philippine Government and WMC Philippines, the local wholly-owned subsidiary of WMC Resources International Pty. Ltd. (WMC Resources) executed a Financial and Technical Assistance Agreement, denominated as the Columbio FTAA No. 02-95-XI (Columbio FTAA) 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 Kudarat, Davao del Sur, and North Cotabato in accordance with Executive Order No. 279 and Department Administrative Order No. 63, Series of 1991.
The Columbio FTAA is covered in part by 156 mining claims held under various Mineral Production Sharing Agreements (MPSA) by Southcot Mining Corporation, Tampakan Mining Corporation, and Sagittarius Mines, Inc. (collectively called the Tampakan Companies), in accordance with the Tampakan Option Agreement entered into by WMC Philippines and the Tampakan Companies on 25 April 1991, as amended by Amendatory Agreement dated 15 July 1994, for purposes of exploration of the mining claims in Tampakan, South Cotabato. The Option Agreement, among other things, provides for the grant of the right of first refusal to the Tampakan Companies in case WMC Philippines desires to dispose of its rights and interests in the mining claims covering the area subject of the agreement.
WMC Resources subsequently divested itself of its rights and interests in
the Columbio FTAA, and on
In an Agreement dated
Thereafter, petitioner filed a case for Injunction, Specific Performance, Annulment of Contracts and Contractual Interference with the Regional Trial Court of Makati, Branch 135, against WMC Resources, WMC Philippines, and the Tampakan Companies. WMC Philippines and the Tampakan Companies moved for the dismissal of said case. Said Motion to Dismiss having been denied, WMC Philippines challenged the order dismissing the Motion on appeal before the Court of Appeals which subsequently ordered the dismissal of the case on the ground of forum shopping in this wise:
Nevertheless, the Court finds that private respondent is guilty of forum-shopping. There is forum-shopping whenever, as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another. The principle applies not only with respect to suits filed in courts but also in connection with litigation commenced in the courts while an administrative processes and in anticipation of an unfavorable administrative ruling and a favorable court ruling.
In this case, petitioners argue that private respondent is guilty of forum shopping for having lodged the complain before respondent Court pending action by the Secretary of the DENR through the Mines and Geo-Sciences Bureau (MGB) on its approval of the Sale and Purchase Agreement dated July 12, 2000. Private respondent on the other hand, opposes the foregoing contention arguing that the MGB will be merely exercising its administrative not quasi-judicial power.
The action before respondent
court was filed by private respondent to compel petitioner WMC Resources to
convey its equity in WMC Phils. and Hillcrest to the former. Meanwhile, in the case before the MGB,
private respondent sought the approval of
With the denial of petitioners Motion for Reconsideration, the case
was elevated to this Court. In a
True, the questioned agreements of sale between petitioner and WMC on one hand and between WMC and the Tampakan Companies on the other pertain to transfer of shares of stock from one entity to another. But said shares of stock represent ownership of mining rights or interest in mining agreements. Hence, the power of the MGB to rule on the validity of the questioned agreements of sale, which was raised by petitioner before the DENR, is inextricably linked to the very nature of such agreements over which the MGB has jurisdiction under the law. Unavoidably, there is identity of reliefs that petitioner seeks from both the MGB and the RTC.
Forum shopping exists when both actions involve the same transactions, same essential facts and circumstances and raise identical causes of actions, subject matter, and issues. Such elements are evidently present in both the proceedings before the MGB and before the trial court. The case instituted with the RTC was thus correctly ordered dismissed by the appellate court on the ground of forum shopping. Besides, not only did petitioner commit forum shopping but it also failed to exhaust administrative remedies by opting to go ahead in seeking reliefs from the court even while those same reliefs were appropriately awaiting resolution by the MGB.
In the interim, on 10 January 2001, contending that the 12 July Agreement
between petitioner and WMC Philippines had expired due to failure to meet the
necessary preconditions for its validity, 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.
P250 million. Subsequently, WMC Resources and Sagittarius
Mines, Inc. executed a Deed of Absolute Sale of Shares of Stocks on
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. According to said Order, pursuant to Section 66 of Department Administrative Order No. 96-40, as amended, Sagittarius Mines, Inc. meets the qualification requirements as Contractor-Transferee of FTAA No. 02-95-XI, and that the application for transfer of said FTAA went thru the procedure and other requirements set forth under the law.
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. Petitioner assails the validity of the
In a Decision dated
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.
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.
Moreover, there is no merit in petitioner Lepantos argument that the DENR Secretary and consequently, this Office, has no jurisdiction over the subject matter in issue. The assailed Order of the DENR Secretary was pursuant to the latters exercise of the well-entrenched doctrine of primary jurisdiction of administrative agencies.
By virtue of the operation of
the doctrine of primary jurisdiction, courts cannot and will not determine a
controversy involving a question which is within the jurisdiction of an
administrative tribunal, especially where the question demands the exercise of
sound administrative discretion requiring the special knowledge, experience and
services of the tribunal to determine technical and intricate matters of fact
and where a uniformity of ruling is essential to comply with the purposes
regulatory statute administered. (
Section 4, Chapter 1, Title XIV, Book IV of the Administrative Code of 1987 specifies the powers and functions of the DENR. Also, the Philippine Mining Act of 1995 provides that the DENR shall be the primary government agency responsible for the conservation, management, development, and proper use of the States mineral resources including those in reservations, watershed areas, and lands of the public domain. The Secretary shall have the authority to enter into mineral agreements on behalf of the Government upon the recommendation of the Director, promulgate such rules and regulations as may be necessary to implement the intent and provisions of this Act. (Chapter II, Section 8). Since an FTAA is a contract involving financial or technical assistance for large-scale exploration, development and utilization of mineral resources (Ibid., Chapter 1, Section 3 [r]), any issue affecting the same is indubitably within the primary jurisdiction of the DENR, as in fact, the government enters into FTAAs through the DENR (Ibid., Chapter VI, Section 33).
There is no dispute that the instant case involves and requires the special technical knowledge and expertise of the DENR. In the determination by the DENR of a qualified person pursuant to the Philippine Mining Act of 1995, such person must possess the technical and financial capability to undertake mineral resources development. (Chapter I, Section 3 [aq]) Obviously, this determination peculiarly lies within the expertise of the DENR.
The validity of the successive transfers is not a civil issue, contrary to the allegation of petitioner Lepanto, because validity of transfer depends on technical qualifications of the transferee and compliance with the DENR requirements on qualifications, all of which require administrative expertise. Notably, petitioner Lepanto is estopped from assailing the primary jurisdiction of the DENR since petitioner Lepanto itself anchored its Petition (cf. pp. 4-5) on the contention that, allegedly, the Tampakan Companies failed to match the terms and conditions of the July 12 Agreement with petitioner Lepanto in that they did not possess the financial and technical qualifications under the Mining Act and its Implementing Rules. Petitioner Lepantos objections therefore go into the very qualifications of a transferee which is a technical issue.
This contention is a recognition by petitioner Lepanto itself of the fact that the crucial and determinative issue in the instant case is grounded on the financial and technical qualifications of a transferee, which issue, indisputably, is within the exclusive domain and expertise of the DENR and not of the courts.
x x x x
Moreover, petitioner Lepanto, by its conduct, is again estopped from assailing the DENRs jurisdiction after actively participating in the proceedings therein and seeking affirmative relief. A party who invoked the jurisdiction [of] a tribunal and actively participated in the proceedings therein cannot impugn such jurisdiction when faced with an adverse decision. (cf. Briad Agro Development Corporation v. dela Serna, 174 SCRA 524 ). [Emphasis ours]
With the denial of its Motion for Reconsideration, petitioner lodged an appeal before the Court of Appeals which was consequently dismissed by the appellate court in the herein assailed Decision. According to the Court of Appeals:
Petitioner forcefully argues
that the DENR Secretary had usurped the power of the President of the
The argument does not wash.
The issue hinges on the
applicability of Section 40 of RA 7942 or the Philippine Mining Act of 1995,
which took force on
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
The Contractor may assign, transfer, convey or otherwise dispose of all or any part of its interest in the Agreement provided that such assignment, transfer, conveyance or disposition does not infringe any Philippine law applicable to foreign ownership:
(a) to an Affiliate provided that it gives notice of such assignment to the Secretary within 30 days after such assignment; or
(b) to any third party provided that the Secretary consents to the same, which consent shall not be unreasonably withheld.
Section 10, Article III of the Philippine Constitution enjoins Congress from passing a law impairing the obligation of contracts. It is axiomatic that a law that impairs an obligation of contract also violates the due process clause. The obligation of an existing contract is impaired when its terms and conditions are changed by law, ordinance, or any issuance having the force of law, thereby weakening the position or diminishing the rights of a party to the contract. The extent of the change is not material. It is not a question of degree or manner or cause, but of encroaching in any respect on its obligations or dispensing with any part of its force. Impairment has also been predicated on laws which, without destroying contracts, derogate from substantial contractual rights.
The condition of RA No. 7942 requiring the further approval of the President, if made to apply retroactively to the Columbio FTAA, would impair the obligation of contracts simply because it constitutes a restriction on the right of the contractor to assign or transfer its interest in an FTAA. In other words, it diminished the vested rights of the contractor to assign or transfer its interests on mere approval of the DENR Secretary. The restriction is therefore substantive, and not merely procedural, contrary to the contention of petitioner.
x x x x
Likewise militating against the petitioners side is the doctrine that statutes are to be construed as having only a prospective operation unless the purpose and intention of the Legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used. In case of doubt, the doubt must be resolved against the retrospective effect. At any rate, even if RA No. 7942 be accorded a retroactive effect, this does not ipso facto permit the application of the requirement of securing a prior presidential consent to the transfer of FTAA, for, to iterate, this would impair the obligation of contract. In such a case, the correct application of RA No. 7942 is for the provisions to [be] made to apply on existing FTAAs only if the same would not result in impairment of obligation of contracts.
This is as it should be. To hold otherwise would be to unduly impose a burden on transferor WMC and thereby restrict its freedom to dispose of or alienate its property right without due process. It constitutes impairment of obligation of contracts, which the Fundamental Law enjoins, and contravenes the doctrine of prospective application of laws.
Hence, the instant Petition.
The pivotal issue to be resolved herein involves the propriety of the application to the Columbio FTAA of Republic Act No. 7942 or the Philippine Mining Act of 1995, particularly Section 40 thereof requiring the approval of the President of the assignment or transfer of financial or technical assistance agreements. Petitioner maintains that respondents failed to comprehend the express language of Section 40 of the Philippine Mining Act of 1995 requiring the approval of the President on the transfer or assignment of a financial or technical assistance agreement.
To resolve this matter, it is imperative at this point to
stress the fact that the Columbio FTAA was entered into
by the Philippine Government and WMC Philippines on
This posture of petitioner would clearly contradict the established legal doctrine that statutes are to be construed as having only a prospective operation unless the contrary is expressly stated or necessarily implied from the language used in the law. As reiterated in the case of Segovia v. Noel, a sound cannon of statutory construction is that a statute operates prospectively only and never retroactively, unless the legislative intent to the contrary is made manifest either by the express terms of the statute or by necessary implication.
Article 4 of the Civil Code provides that: Laws shall not have a retroactive effect unless therein otherwise provided. According to this provision of law, in order that a law may have retroactive effect it is necessary that an express provision to this effect be made in the law, otherwise nothing should be understood which is not embodied in the law. Furthermore, it must be borne in mind that a law is a rule established to guide our actions without no binding effect until it is enacted, wherefore, it has no application to past times but only to future time, and that is why it is said that the law looks to the future only and has no retroactive effect unless the legislator may have formally given that effect to some legal provisions.
In the case at bar, there is an absence of either an express declaration or an implication in the Philippine Mining Act of 1995 that the provisions of said law shall be made to apply retroactively, therefore, any section of said law must be made to apply only prospectively, in view of the rule that a statute ought not to receive a construction making it act retroactively, unless the words used are so clear, strong, and imperative that no other meaning can be annexed to them, or unless the intention of the legislature cannot be otherwise satisfied.
Be that as it may, assuming for the sake of argument that We are to apply the Philippine Mining Act of 1995 retrospectively to the Columbio FTAA, the lack of presidential approval will not be fatal as to render the transfer illegal, especially since, as in the instant case, the alleged lack of presidential approval has been remedied when petitioner appealed the matter to the Office of the President which approved the Order of the DENR Secretary granting the application for transfer of the Columbio FTAA to Sagittarius Mines, Inc. As expounded by the Court in the Resolution of the Motion for Reconsideration in the La Bugal-BLaan Tribal Association, Inc. v. Ramos case, involving the same FTAA subject of the instant case:
x x x Moreover, when the transferee of an FTAA is another foreign corporation, there is a logical application of the requirement of prior approval by the President of the Republic and notification to Congress in the event of assignment or transfer of an FTAA. In this situation, such approval and notification are appropriate safeguards, considering that the new contractor is the subject of a foreign government.
On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need for such safeguard is not critical; hence, the lack of prior approval and notification may not be deemed fatal as to render the transfer invalid. Besides, it is not as if approval by the President is entirely absent in this instance. x x x That case involved the review of the Decision of the Court of Appeals dated November 21, 2003 in CA G.R. SP No. 74161, which affirmed the DENR Order dated December 31, 2001 and the Decision of the Office of the President dated July 23, 2002, both approving the assignment of the WMCP FTAA to Sagittarius. (Emphasis ours.)
Furthermore, if petitioner was indeed of the mind that Section 40 of the Philippine Mining Act of 1995 is applicable to the Columbio FTAA, thus necessitating the approval of the President for the validity of its transfer or assignment, it would seem contradictory that petitioner sought the approval of the DENR Secretary, and not that of the President, of its 12 July 2000 Sale and Purchase Agreement with WMC Resources. Hence, it may be glimpsed from the very act of petitioner that it recognized that the provision of the Columbio FTAA regarding the consent of the DENR Secretary with respect to the transfer of said FTAA must be upheld.
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. Substantial impairment as conceived in relation to impairment of contracts has been explained in the case of Clemons v. Nolting, which stated that: a law which changes the terms of a legal contract between parties, either in the time or mode of performance, or imposes new conditions, or dispenses with those expressed, or authorizes for its satisfaction something different from that provided in its terms, is law which impairs the obligation of a contract and is therefore null and void. 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.
By imposing a new condition apart from those already contained in the agreement, before the parties to the Columbio FTAA may assign or transfer its rights and interest in the said agreement, Section 40 of the Philippine Mining Act of 1995, if made to apply to the Columbio FTAA,
will effectively modify the terms of the original contract and thus impair the obligations of the parties thereto and restrict the exercise of their vested rights under the original agreement. Such modification to the Columbio FTAA, particularly in the conditions imposed for its valid transfer is equivalent to an impairment of said contract violative of the Constitution.
WHEREFORE, premises considered, the instant petition is
hereby DENIED. The Decision of the Court
of Appeals in CA G.R. SP No. 74161 dated
MINITA V. CHICO-NAZARIO
Associate Justice Associate Justice
ROMEO J. CALLEJO, SR.
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
ARTEMIO V. PANGANIBAN
 Penned by Associate Justice Romeo A. Brawner, with Associate Justices Jose L. Sabio, Jr. and Jose C. Reyes, Jr., concurring. Rollo, pp. 55-68.
 O.P. Case No. 02-A-023; id. at 379-391.
 Re: Transfer of the Financial and Technical Assistance Agreement Denominated as FTAA No. 02- 95-XI; id. at 312-314.
 Docketed as Civil Case No. 01-87.
 CA G.R. SP No. 65496.
 Rollo, pp. 320-322.
 Lepanto Consolidated Mining Co. v. WMC
Resources Intl. Pty Ltd., G.R. Nos. 153885 & 156214,
 OP Decision pp. 4-6, 11-12; rollo, pp. 382-384, 389-390.
 CA Decision, pp. 6-9; rollo, pp. 60-63.
 47 Phil. 543 (1925).
 Balatbat v. Court of Appeals, G.R. No. 36378,
 Supra note 9.
 Phil. Rural Electric Coop. Assoc.Inc. v. Department of Interior and Local Government Secretary, 451 Phil. 683, 699 (2003).
 42 Phil. 702, 717 (1922).