FIRST DIVISION
G.R. No. 202877, December 09, 2015
NARRA NICKEL MINING AND DEVELOPMENT CORPORATION, TESORO MINING AND DEVELOPMENT, INC., AND MCARTHUR MINING, INC., Petitioners, v. REDMONT CONSOLIDATED MINES CORPORATION, Respondent.
D E C I S I O N
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated February 23, 2012 and the Resolution3 dated July 27, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 120409, which affirmed the Decision4 dated April 6, 2011 and the Resolution5 dated July 6, 2011 of the Office of the President (OP) in O.P. Case No. 10-E-229 and, among others, ordered the cancellation and/or revocation of the Financial or Technical Assistance Agreement6 (FTAA) executed between the Republic of the Philippines (Republic) and herein petitioners Narra Nickel Mining and Development Corporation, Tesoro Mining and Development, Inc., and Me Arthur Mining, Inc.
Quasi-judicial or administrative adjudicatory power is the power of the administrative agency to adjudicate the rights of persons before it. The administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is essentially executive or administrative in nature, where the power to act in such manner is incidental to or reasonably necessary for the performance of the executive or administrative duty entrusted to it.40Rule 43
Appeals from the Court of Tax Appeals and Quasi-Judicial Agencies to the Court of Appeals
Section 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. (Emphases and underscoring supplied)
17.2 TerminationTo contextualize the exercise, a brief discussion on the nature and legal parameters of an FTAA is apropos.x x x x
- Grounds. This Agreement may be terminated, after due process, for any of the following causes:
iii. any intentional and materially false statement or omission of facts by a Party;44
Section 2. x x x.An FTAA is explicitly characterized as a contract in Section 3 (r) of RA 7942:
x x x x
The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources. (Emphases supplied)
Section 3. Definition of Terms. - As used in and for purposes of this Act, the following terms, whether in singular or plural, shall mean: :chanRoblesvirtualLawlibrarySince an FTAA is entered into by the President on the State's behalf, and it involves a matter of public concern in that it covers the large-scale exploration, development, and utilization of mineral resources, it is properly classified as a government or public contract, which is, according to jurisprudence, "generally subject to the same laws and regulations which govern the validity and sufficiency of contracts between private individuals."45 In Sargasso Construction & Development Corporation v. Philippine Ports Authority:46
x x x x
(r) "Financial or technical assistance agreement" means a contract involving financial or technical assistance for large-scale exploration, development, and utilization of mineral resources. (Emphasis and underscoring supplied)
A government or public contract has been defined as a contract entered into by state officers acting on behalf of the state, and in which the entire people of the state are directly interested. It relates wholly to matter of public concern, and affects private rights only so far as the statute confers such rights when its provisions are carried out by the officer to whom it is confided to perform.Similar to private contracts, an FTAA involves terms, conditions, and warranties to be followed by the contracting parties, which are expressly stated in Section 3548 of RA 7942. Likewise, Section 36 of RA 7942 provides that an FTAA goes through negotiation:
A government contract is essentially similar to a private contract contemplated under the Civil Code. The legal requisites of consent of the contracting parties, an object certain which is the subject matter, and cause or consideration of the obligation must likewise concur. Otherwise, there is no government contract to speak of.
x x x x
x x x. Contracts to which the government is a party are generally subject to the same laws and regulations which govern the validity and sufficiency of contracts between private individuals. A government contract, however, is perfected only upon approval by a competent authority, where such approval is required.47 (Emphasis and underscoring supplied)
Section 36. Negotiations. - A financial or technical assistance agreement shall be negotiated by the Department and executed and approved by the President. The President shall notify Congress of all financial or technical assistance agreements within thirty (30) days from execution and approval thereof.In La Bugal-Oposa Tribal Association, Inc. v. Ramos49 (La Bugal-Oposa), the Court differentiated an FTAA from a license. It pronounced that an FTAA involves contract or property rights, which merit protection by the due process clause of the Constitution; as such, it may not be revoked or cancelled in a blink of an eye, in contrast, say for instance, to a timber license, else the contractor be unduly deprived of its investments, which are ultimately intended to contribute to the general welfare of the people:
3. Citing Oposa v. Factoran[,] Jr. [G.R. No. 101083, July 30, 1993, 224 SCRA 792], Justice Morales claims that a service contract is not a contract or property right which merits protection by the due process clause of the Constitution, but merely a license or privilege which may be validly revoked, rescinded or withdrawn by executive action whenever dictated by public interest or public welfare.In La Bugal-B'laan, the financial interest of the contractor party to an FTAA was recognized by the Court as follows; hence, the need for its fair protection:
Oposa cites Tan v. Director of Forestry and Ysmael v. Deputy Executive Secretary [210 Phil. 244 (1983)] as authority. The latter cases dealt specifically with timber licenses only. Oposa allegedly reiterated that a license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority, federal, state or municipal, granting it and the person to whom it is granted; neither is it property or a property right, nor does it create a vested right; nor is it taxation. Thus this Court held that the granting of license does not create irrevocable rights, neither is it property or property rights.
Should Oposa be deemed applicable to the case at bar, on the argument that natural resources are also involved in this situation? We do not think so. A grantee of a timber license, permit or license agreement gets to cut the timber already growing on the surface; it need not dig up tons of earth to get at the logs. In a logging concession, the investment of the licensee is not as substantial as the investment of a large-scale mining contractor. If a timber license were revoked, the licensee packs up its gear and moves to a new area applied for, and starts over; what it leaves behind are mainly the trails leading to the logging site.
In contrast, the mining contractor will have sunk a great deal of money (tens of millions of dollars) into the ground, so to speak, for exploration activities, for development of the mine site and infrastructure, and for the actual excavation and extraction of minerals, including the extensive tunneling work to reach the ore body. The cancellation of the mining contract will utterly deprive the contractor of its investments (i.e., prevent recovery of investments), most of which cannot be pulled out.
To say that an FTAA is just like a mere timber license or permit and does not involve contract or property rights which merit protection by the due process clause of the Constitution, and may therefore be revoked or cancelled in the blink of an eye, is to adopt a well-nigh confiscatory stance; at the very least, it is downright dismissive of the property rights of businesspersons and corporate entities that have investments in the mining industry-! whose investments, operations and expenditures do contribute to the general welfare of the people, the coffers of government, and the strength of the economy. Such a pronouncement will surely discourage investments (local and foreign) which are critically needed to fuel the engine of economic growth and move this country out of the rut of poverty. In sum, Oposa is not applicable.50 (Emphases and underscoring supplied)
[T]he foreign contractor is in the game precisely to make money. In order to come anywhere near profitability, the contractor must first extract and sell the mineral ore. In order to do that, it must also develop and construct the mining facilities, set up its machineries and equipment and dig the tunnels to get to the deposit. The contractor is thus compelled to expend funds in order to make profits. If it decides to cut back on investments and expenditures, it will necessarily sacrifice the pace of development and utilization; it will necessarily sacrifice the amount of profits it can make from the mining operations. In fact, at certain less-than-optimal levels of operation, the stream of revenues generated may not even be enough to cover variable expenses, let alone overhead expenses; this is a dismal situation anyone would want to avoid. In order to make money, one has to spend money. This truism applies to the mining industry as well.51 (Underscoring supplied)Meanwhile, in Celestial Nickel Mining Exploration Corporation v. Macroasia Corporation52 (Celestial), the Court answered the question on who between the DENR Secretary, as one of the functionaries of the President under the Executive Department, and the POA had the authority to cancel mineral agreements. In Celestial, it was pronounced that the DENR Secretary, and not the POA, has the jurisdiction to cancel existing mineral lease contracts or mineral agreements. "The power of the DENR Secretary to cancel mineral agreements emanates from his administrative authority, supervision, management, and control over mineral resources under [Section 2,] Chapter I, Title XIV of Book IV of the Revised Administrative Code of 1987[:]"53
Section 2. Mandate. - (1) The Department of Environment and Natural Resources shall be primarily responsible for the implementation of the foregoing policy."[And] [d]erived from the broad and explicit powers of the DENR and its Secretary under the Administrative Code of 1987 is the power to approve mineral agreements and necessarily to cancel or cause to cancel said agreements."54(2) It shall, subject to law and higher authority, be in charge of carrying out the State's constitutional mandate to control and supervise the exploration, development, utilization, and conservation of the country's natural resources. (Emphasis supplied)
Section 8. Authority of the Department. - The Department shall be the primary government agency responsible for the conservation, management, development, and proper use of the State's 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.In this relation, the Court, in Celestial, elaborated that a petition for the cancellation of an existing mineral agreement covering an area applied for by an applicant based on the alleged violation of any of the terms thereof, is not a 'dispute' involving a mineral agreement under [Section] 77 (b) of RA 7942,55 which lists down the cases which fall within the jurisdiction of the POA:
Section 29. Filing and approval of Mineral Agreements. - x x x.
The filing of a proposal for a mineral agreement shall give the proponent the prior right to areas covered by the same. The proposed mineral agreement will be approved by the Secretary and copies thereof shall be submitted to the President. Thereafter, the President shall provide a list to Congress of every approved mineral agreement within thirty (30) days from its approval by the Secretary. (Emphases supplied)
Section. 77. Panel of Arbitrators. - x x x. Within thirty (30) working days, after the submission of the case by the parties for decision, the panel shall have exclusive and original jurisdiction to hear and decide on the following:This is because such matter "does not pertain to a violation by a party of the right of another. The applicant [who seeks cancellation] is not a real party-in-interest as he does not have a material or substantial interest in the mineral agreement but only a prospective or expectant right or interest in the mining area. He has no legal right to such mining claim and hence no dispute can arise between the applicant and the parties to the mineral agreement."56 "[R]A 7942 x x x confers exclusive and primary jurisdiction on the DENR Secretary to approve mineral agreements, which is purely an administrative function within the scope of his powers and authority."57
(a) Disputes involving rights to mining areas; (b) Disputes involving mineral agreements or permits; (c) Disputes involving surface owners, occupants and claimholders/concessionaires; and (d) Disputes pending before the Bureau and the Department at the date of the effectivity of this Act.
Article 1308. The contracts must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.At this juncture, the Court finds it fitting to clarify that Redmont's participation in these proceedings does not, by and of itself, make the OP's cancellation/revocation quasi-judicial. Strangely enough, Redmont's May 7, 2010 Petition was, in fact, taken cognizance by the OP albeit having been filed outside the existing state of procedure on FTAA conversion and cancellation. A brief run-through of these procedures would prove instructive.
Section. 77. Panel of Arbitrators. - x x x. Within thirty (30) working days, after the submission of the case by the parties for decision, the panel shall have exclusive and original jurisdiction to hear and decide on the following:In Gonzales v. Climax Mining Ltd. (Gonzales),59 it was clarified that "a mining dispute is a dispute involving (a) rights to mining areas, (b) mineral agreements, FTAAs, or permits, and (c) surface owners, occupants and claimholders/concessionaires."60 Note that "the [POA's] jurisdiction is limited only to those mining disputes which raise questions of fact or matters requiring the application of technological knowledge and experience."61 Thus, the Court, in Gonzales, ruled that the POA is bereft of any jurisdiction over a complaint for declaration of nullity and/or termination of the subject contracts on the ground of fraud, oppression and violation of the Constitution, viz.:
(a) Disputes involving rights to mining areas; (b) Disputes involving mineral agreements or permits; (c) Disputes involving surface owners, occupants and claimholders/concessionaires; and (d) Disputes pending before the Bureau and the Department at the date of the effectivity of this Act.
We now come to the meat of the case which revolves mainly around the question of jurisdiction by the Panel of Arbitrators: Does the Panel of Arbitrators have jurisdiction over the complaint for declaration of nullity and/or termination of the subject contracts on the ground of fraud, oppression and violation of the Constitution? This issue may be distilled into the more basic question of whether the Complaint raises a mining dispute or a judicial question.The Court added that although mining rights may be raised as corollary issues, the POA still has no jurisdiction to resolve cases which mainly involve a determination of a contract's validity. Neither too would the mere involvement of an FTAA turn a case into a mining dispute that would fall under the POA's jurisdiction:
A judicial question is a question that is proper for determination by the courts, as opposed to a moot question or one properly decided by the executive or legislative branch. A judicial question is raised when the determination of the question involves the exercise of a judicial function; that is, the question involves the determination of what the law is and what the legal rights of the parties are with respect to the matter in controversy.
x x x x
x x x. Whether the case involves void or voidable contracts is still a judicial question. It may, in some instances, involve questions of fact especially with regard to the determination of the circumstances of the execution of the contracts. But the resolution of the validity or voidness of the contracts remains a legal or judicial question as it requires the exercise of judicial function. It requires the ascertainment of what laws are applicable to the dispute, the interpretation and application of those laws, and the rendering of a judgment based thereon. Clearly, the dispute is not a mining conflict. It is essentially judicial. The complaint was not merely for the determination of rights under the mining contracts since the very validity of those contracts is put in issue.62ChanRoblesVirtualawlibrary
The Complaint is not about a dispute involving rights to mining areas, nor is it a dispute involving claimholders or concessionaires. The main question raised was the validity of the Addendum Contract, the FTAA and the subsequent contracts. The question as to the rights of petitioner or respondents to the mining area pursuant to these contracts, as well as the question of whether or not petitioner had ceded his mining claims in favor of respondents by way of execution of the questioned contracts, is merely corollary to the main issue, and may not be resolved without first determining the main issue.In this case, the OP cancelled/revoked the subject FTAA based on its finding that petitioners misrepresented, inter alia, that they were Filipino corporations qualified to engage in mining activities. Again, this is obviously an administrative exercise of a contractual right under paragraph a (iii), Section 17.2 of the FTAA, which finds legal basis in Section 99 of RA 7942 that states: "[a]ll statements made in the exploration permit, mining agreement and financial or technical assistance shall be considered as conditions and essential parts thereof x x x." A material misrepresentation, if so found by ordinary courts of law as enunciated in Gonzales upon a case duly instituted therefor, would then constitute a breach of a contractual condition that would entitle the aggrieved party to cancel/revoke the agreement.64
The Complaint is also not what is contemplated by [RA] 7942 when it says the dispute should involve FTAAs. The Complaint is not exclusively within the jurisdiction of the Panel of Arbitrators just because, or for as -long as, the dispute involves an FTAA. The Complaint raised the issue of the constitutionality of the FTAA, which is definitely a judicial question. The question of constitutionality is exclusively within the jurisdiction of the courts to resolve as this would clearly involve the exercise of judicial power. The Panel of Arbitrators does not have jurisdiction over such an issue since it does not involve the application of technical knowledge and expertise relating to mining. x x x.63ChanRoblesVirtualawlibrary
Endnotes:
1Rollo, pp. 44-87.
2 Id. at 19-30. Penned by Associate Justice Samuel H. Gaerlan with Associate Justices Amelita G. Tolentino and Ramon R. Garcia concurring.
3 Id. at 32-34.
4 Id. at 452-469. Penned by Executive Secretary Paquito N. Ochoa, Jr.
5 CA rollo, Vol. I, pp. 90-93. See also rollo, p. 45.
6Rollo, pp. 271-324.
7 CArollo, Vol. I, pp. 252-253.
8Rollo, pp. 50, 156, 162, and 168.
9 Id. at 452.
10 Id. at 162 and 453. See also id. at 332.
11 Id. at 332 and 452.
12 CA rollo, Vol. 1, pp. 327-329.
13Rollo, pp. 271-324.
14 CA rollo. Vol. I, pp. 105-159. See also rollo, p. 20.
15 Filed on January 2, 2007. Rollo, pp. 155-172.
16 In particular, Petition for Denial of MPSA and EP Applications of McArthur (see id. at 167-172).
17 In particular, Petition for Denial of MPSA Application of Tesoro (see id. at 161-166).
18 In particular, Petition for Denial of MPSA Application of Narra Nickel (see id. at 155-160).
19 Id. at 453.
20 Entitled "Narra Nickel Mining and Development Corporation, Tesoro Mining and Development, Inc., and McArthur Mining, Inc. v. Redmont Consolidated Mines Corporation."
21 See Narra Nickel Mining and Development Corporation v. Redmont Consolidated Mines Corporation, G.R. No. 195580, April 21, 2014, 722 SCRA 382.
22Rollo, pp. 423-450.
23 See Supplemental Petition with Motion to Admit; CA rollo, Vol. I, pp. 338-373.
24Rollo, p. 459.
25 Id. at 452-469.
26 Entitled "AN ACT INSTITUTING A NEW SYSTEM OF MINERAL RESOURCES EXPLORATION, DEVELOPMENT, UTILIZATION, AND CONSERVATION" (approved on March 3, 1995).
27Rollo, pp. 461-462.
28 Id. 466.
29 Id. at 468-469.
30 See Petition for Review [with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction] dated July 26, 2011; id. at 470-518.
31 Id. at 19-30.
32 Id. at 24-25.
33 Id. at 311-312.
34 Id. at 25.
35 Id. at 27.
36 Id. at 571-603.
37 Id. at 32-34.
38Alcala v. Villar, 461 Phil. 617, 624 (2003).
39Zamora v. CA, 262 Phil. 298, 309 (1990).
40 See Bedol v. Commission on Elections, 621 Phil. 498, 511 (2009).
41Republic v. Tramunion Corporation, G.R. No. 191590, April 21, 2014, 722 SCRA 273, 283-284, citing Cariño v. Commission on Human Rights, G.R. No. 96681, December 2, 1991, 204 SCRA 483, 496.
42 Id.
43 See Section 2, Article XII of the 1987 Constitution.
44Rollo, p. 311.
45Sargasso Construction & Development Corporation v. Philippine Ports Authority, 637 Phil. 259, 277 (2010).
46 Id.
47 Id. at 274-277.
48 See Section 35, Terms and Conditions, of RA 7942.
49 486 Phil. 754 (2004).
50 Id. at 894-895.
51 Id. at 897-898.
52 565 Phil. 466 (2007).
53 Id. at 492.
54 Id. at 493.
55 See id. at 499-502.
56 Id. at 503.
57 Id. at 508 (emphasis and underscoring supplied).
58 Under Section 78 of RA 7942 and Section 206 of the RIRR, decisions rendered by POA may be appealed to the MAB within fifteen (15) days from receipt of notice of said decision; otherwise, the POA decision will become final and executory. In turn, Section 79 of RA 7942 and Section 211 of the RIRR uniformly provide that a decision of the MAB may be reviewed by filing a petition for review on certiorari before the Supreme Court within thirty (30) days from receipt of the MAB decision.
59 492 Phil. 682 (2005).
60 Id. at 692; Emphasis supplied.
61 Id at 693.
62 Id. at 692 and 695.
63 Id. at 695-696.
64 See id. at 694.
65 Section 77 of RA 7942 states:chanRoblesvirtualLawlibrary
Section 77. Panel of Arbitrators. - There shall be a panel of arbitrators in the regional office of the Department composed of three (3) members, two (2) of whom must be members of the Philippine Bar in good standing and one a licensed mining engineer or a professional in a related field, and duly designated by the Secretary as recommended by the Mines and Geosciences Bureau Director. Those designated as members of the panel shall serve as such in addition to their work in the Department without receiving any additional compensation x x x.