G.R. No. L-75962. June 30, 1988.
GREENHILLS MINING COMPANY, petitioner, vs. OFFICE OF THE PRESIDENT, MINISTER OF NATURAL RESOURCES, DIRECTOR OF THE BUREAU OF MINES AND THE GEO-SCIENCES, AND GREEN VALLEY COMPANY, respondents.

FACTS

The case involves a conflict over mining rights within the Southern Zambales Forest Reserve. Petitioner Greenhills Mining Company relocated and registered 113 mining claims in 1970-1971, based on claims originally located in 1933-1934 under the Philippine Bill of 1902 but subsequently abandoned for failure to perform annual assessment work. The area was later established as a forest reserve by Presidential Proclamation No. 245 in 1956. Greenhills filed Lode Lease Applications and obtained a prospecting permit from the Bureau of Forest Development (BFD) in 1978. Private respondent Green Valley Company later applied for and was granted a prospecting permit (1979) and subsequently exploration permits (1979) by the Bureau of Mines and Geo-Sciences (BMGS) over overlapping areas.
Greenhills protested, asserting prior rights based on the relocated claims. Initially, both the BFD and BMGS Directors issued orders amending Green Valley’s permits to exclude areas covered by Greenhills’ claims. Green Valley appealed to the Ministry of Natural Resources (MNR), which reversed the orders, a decision affirmed by the Office of the President. The Office of the President declared all mining claims located within the forest reserve null and void, citing Section 28(a) of Commonwealth Act No. 137 , and granted Green Valley preferential rights due to its compliance with permit requirements under the law.

ISSUE

Whether the Office of the President erred in declaring Greenhills’ mining claims null and void and in upholding Green Valley’s exploration permits as superior.

RULING

The Supreme Court dismissed the petition and upheld the decision of the Office of the President. The Court deferred to the factual findings and statutory interpretation of the administrative agencies, which are accorded respect and finality when supported by substantial evidence. The legal logic centered on the application of mining laws to forest reserves and the concept of abandonment.
The Court ruled that the original 1933-1934 mining claims were deemed abandoned due to the claimants’ failure to perform mandatory annual assessment work as required by Section 36 of the Philippine Bill of 1902. Consequently, the areas reverted to the public domain. When President Magsaysay established the Southern Zambales Forest Reserve in 1956, the land, including the previously abandoned claim areas, was already part of the public domain and could be validly included in the reservation. Greenhills’ subsequent relocation in 1970-1971 did not constitute a revival or continuation of the old claims but was a new location attempt within a forest reserve already proclaimed closed to mining locations under Section 28(a) of Commonwealth Act No. 137 (later Section 13(a) of P.D. 463). This provision prohibits mining locations in such reserves except through a government-granted prospecting permit followed by an exploration permit. Greenhills failed to secure the requisite prospecting permit from the BFD prior to its location and registration, rendering its claims invalid. In contrast, Green Valley duly complied with the statutory sequence by securing a BFD prospecting permit and subsequently a BMGS exploration permit, thereby acquiring a superior right. The cases cited by Greenhills (McDaniel v. Apacible) were distinguished as they involved perfected mining claims existing prior to a reservation, a situation not present here due to the prior abandonment.