G.R. No. 152613 , G.R. No. 152628, G.R. No. 152619-20, G.R. No. 152870-71; June 23, 2006
Case Parties/Title:

APEX MINING CO., INC., petitioner, vs. SOUTHEAST MINDANAO GOLD MINING CORP., et al., Respondents. ( G.R. No. 152613 & No. 152628)
BALITE COMMUNAL PORTAL MINING COOPERATIVE, petitioner, vs. SOUTHEAST MINDANAO GOLD MINING CORPORATION, APEX MINING CO., INC., et al., Respondents. (G.R. No. 152619-20)
THE MINES ADJUDICATION BOARD AND ITS MEMBERS, petitioners, vs. SOUTHEAST MINDANAO GOLD MINING CORPORATION, Respondent. (G.R. No. 152870-71)

FACTS

The case involves a dispute over a 4,941.6759-hectare mineral land within the Agusan-Davao-Surigao Forest Reserve (established by Proclamation No. 369 in 1931), known as the “Diwalwal Gold Rush Area.” Key events:
1. In 1983, Camilo Banad and his group filed a Declaration of Location (DOL) for mining claims and later organized the Balite Communal Portal Mining Cooperative (Balite). Apex Mining Co., Inc. (Apex) entered into operating agreements with them.
2. In 1984, Marcopper Mining Corporation (MMC) filed mining claims but later abandoned them after discovering the area was a forest reserve. MMC instead applied for and obtained a Prospecting Permit from the Bureau of Forest Development (BFD) in 1985, and subsequently an Exploration Permit (EP 133) from the Bureau of Mines and Geo-Sciences (BMG) in 1986.
3. MMC petitioned for the cancellation of Apex’s mining claims, arguing that mining rights within a forest reserve must be acquired through a BFD permit, not a DOL. The BMG initially dismissed MMC’s petition, but the DENR reversed this, declaring EP 133 valid. The Office of the President affirmed the DENR. In G.R. No. 92605 (Apex Mining Co., Inc. v. Garcia, 1991), the Supreme Court upheld that the area was a forest reserve and that the proper procedure was to apply for a permit to prospect with the BFD.
4. In 1991, DENR Secretary Factoran issued DAO No. 66, declaring 729 hectares of the forest reserve as non-forest land open to small-scale mining.
5. In 1994, MMC assigned EP 133 to its alleged subsidiary, Southeast Mindanao Gold Mining Corporation (SEM). SEM filed a Mineral Production Sharing Agreement (MPSA) application (MPSAA 128). Multiple adverse claims and oppositions were filed by various parties including Balite, Davao United Miners Cooperative (DUMC), and others.
6. A Panel of Arbitrators (PA) was constituted. On 13 June 1997, the PA resolved that EP 133 was valid and subsisting based on the prior Supreme Court ruling. It also declared that all mining claims, including those of Apex and the small-scale miners, were deemed abandoned for failure to file the required MPSA applications under DENR Administrative Order No. 57, series of 1989.
7. The Mines Adjudication Board (MAB) affirmed the PA’s ruling. The Court of Appeals, however, reversed the MAB, reinstating the PA’s resolution but modifying it to state that SEM’s MPSAA 128 should be given due course, and that SEM had the exclusive right to possess and develop the contested area.

ISSUE

The core legal issue is whether the Court of Appeals erred in ruling that Southeast Mindanao Gold Mining Corporation (SEM) has the exclusive right to possess and develop the disputed Diwalwal gold rush area, thereby affirming the validity of its Exploration Permit (EP 133) and its MPSA application, and declaring the mining claims of other parties (including Apex and the small-scale miners) abandoned.

RULING

The Supreme Court REVERSED the decision of the Court of Appeals and REINSTATED the Resolution of the Mines Adjudication Board (MAB) dated 29 October 1998, with modifications.
1. Validity of EP 133 and SEM’s Rights: The Court held that the prior ruling in Apex Mining Co., Inc. v. Garcia ( G.R. No. 92605 , 1991) had conclusively established that the disputed area is within a forest reserve. Under Presidential Decree No. 463, the proper mode of acquiring mining rights in a forest reserve is by applying for a permit to prospect with the BFD, not by filing a DOL with the BMG. Therefore, Apex’s mining claims, acquired via DOL, were void from the beginning. Consequently, MMC’s EP 133, acquired through the proper procedure, was valid. SEM, as MMC’s assignee, succeeded to the rights under EP 133.
2. Abandonment of Mining Claims: The Court upheld the PA and MAB’s finding that all other mining claims and applications (including those of Apex, Balite, and the small-scale miners) were deemed abandoned. This was due to their failure to file the required Manifestation of Intent to file a MPSA application and the MPSA application itself within the prescribed period under DENR Administrative Order No. 57, series of 1989. The Court rejected arguments that DAO No. 57 was invalid, noting it was issued pursuant to the DENR Secretary’s rule-making power under P.D. No. 463.
3. SEM’s Exclusive Right: However, the Court clarified that while SEM’s EP 133 was valid and the opposing claims were abandoned, this did not automatically grant SEM an exclusive right to the entire area or entitle its MPSA application to approval. The MPSA application (MPSAA 128) must still undergo the prescribed evaluation and approval process by the concerned government agency. The Court of Appeals erred in granting SEM exclusive rights prematurely. The area remains subject to existing laws and regulations governing mineral resources.
4. Corporate Identity of SEM: The Court addressed the argument that SEM was a mere alter ego of MMC. It found that SEM was a duly incorporated entity with a separate juridical personality. The assignment of EP 133 from MMC to SEM was a valid transfer of rights between two distinct corporations.
Dispositive Portion: The petitions in G.R. Nos. 152613, 152628, 152619-20, and 152870-71 were GRANTED. The Court of Appeals’ decision was REVERSED and SET ASIDE. The MAB Resolution dated 29 October 1998 was REINSTATED with the MODIFICATION that the Panel of Arbitrators’ Resolution dated 13 June 1997 is affirmed, subject to the qualification that the recognition of SEM’s rights and the abandonment of other claims are without prejudice to the outcome of the processing of SEM’s MPSA application in accordance with law.