G.R. No. 207942 , January 12, 2015
YINLU BICOL MINING CORPORATION, Petitioner, vs. TRANS-ASIA OIL AND ENERGY DEVELOPMENT CORPORATION, Respondent.

FACTS

This case involves 13 mining claims in Larap, Camarines Norte, a portion of which was owned and mined by Philippine Iron Mines, Inc. (PIMI). PIMI ceased operations in 1975, and its properties were sold in a foreclosure sale to banks, which were later acquired by petitioner Yinlu Bicol Mining Corporation. Respondent Trans-Asia Oil and Energy Development Corporation explored the area from 1986 onwards and, in 1997, filed an application for a Mineral Production Sharing Agreement (MPSA), which was granted in 2007. Yinlu informed the DENR that it had acquired PIMI’s mining patents, issued in 1930, and that the areas covered were within Trans-Asia’s MPSA. The DENR Secretary ruled in favor of Yinlu, ordering the amendment of Trans-Asia’s MPSA to exclude the areas covered by Yinlu’s mining patents. The Office of the President affirmed the DENR’s decision. The Court of Appeals reversed these rulings. The case was elevated to the Supreme Court.

ISSUE

The core issue is whether the mining patents issued under the Philippine Bill of 1902, and existing prior to November 15, 1935, constitute vested rights that are superior to a subsequently granted Mineral Production Sharing Agreement, and whether such patents remain valid and subsisting.

RULING

The Supreme Court ruled in favor of Yinlu Bicol Mining Corporation. It held that rights pertaining to mining patents issued pursuant to the Philippine Bill of 1902 and existing prior to November 15, 1935, are vested rights that cannot be impaired. The Court emphasized that under the Philippine Bill of 1902, a valid location of a mining claim segregated the area from the public domain, and the locator acquired a vested right to the patent and ownership of the minerals. This vested right is recognized as an exception to the constitutional rule that natural resources cannot be alienated. The Court found that Yinlu’s predecessors-in-interest had perfected their mining claims and obtained patents prior to the 1935 Constitution, and these rights were validly transferred to Yinlu. The failure to register the patents under a subsequent law (Presidential Decree No. 463) did not nullify these vested rights. Consequently, the MPSA granted to Trans-Asia could not impair Yinlu’s superior rights over the patented mining claims. The Supreme Court reversed the decision of the Court of Appeals and reinstated the rulings of the DENR Secretary and the Office of the President.