G.R. No. 244063 , June 21, 2022
LONE CONGRESSIONAL DISTRICT OF BENGUET PROVINCE, REPRESENTED BY HON. RONALD M. COSALAN, REPRESENTATIVE, PETITIONER, VS. LEPANTO CONSOLIDATED MINING COMPANY AND FAR SOUTHEAST GOLD RESOURCES, INC., RESPONDENTS.

[G.R. No. 244216]
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE MINES AND GEOSCIENCES BUREAU OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (MGB-DENR), PETITIONER, VS. LEPANTO CONSOLIDATED MINING COMPANY AND FAR SOUTHEAST GOLD RESOURCES, INC., RESPONDENTS.

FACTS

On March 3, 1990, the Republic of the Philippines, through the DENR, entered into Mineral Production Sharing Agreement No. 001-90 (MPSA No. 001-90) with respondents Lepanto Consolidated Mining Company and Far Southeast Gold Resources, Inc. The agreement allowed mining operations on land in Mankayan, Benguet, which is part of an ancestral domain. On May 22, 2014, respondents sought to renew the MPSA, invoking a clause providing for a 25-year renewal. The Mines and Geosciences Bureau informed them that their application required endorsement to the National Commission on Indigenous Peoples to comply with the certification precondition under the Indigenous Peoples’ Rights Act of 1997, including obtaining Free and Prior Informed Consent (FPIC) from affected indigenous peoples. Respondents contested this, arguing it impaired their vested right to renewal, and initiated arbitration. The arbitral tribunal issued a Final Award ruling that respondents need not comply with the certification precondition for renewal, holding that such requirements were unfavorable future legislation. The Republic successfully petitioned the Regional Trial Court to vacate the Final Award for violating public policy. On respondents’ appeal, the Court of Appeals reversed the RTC and reinstated the arbitral award. It also denied a Motion for Leave to Intervene filed by the Lone Congressional District of Benguet Province. Two petitions were subsequently filed before the Supreme Court.

ISSUE

1. Whether the Court of Appeals correctly denied the Motion for Leave to Intervene filed by the Lone Congressional District of Benguet Province.
2. Whether the arbitral tribunal’s Final Award, which exempted respondents from complying with the certification precondition (including FPIC) under the Indigenous Peoples’ Rights Act for the renewal of MPSA No. 001-90, should be vacated for violating public policy.

RULING

On the first issue (Intervention): The concurring and dissenting opinion disagrees with the ponencia‘s affirmation of the Court of Appeals’ denial of the Motion for Leave to Intervene. While arbitration proceedings themselves are contractual and consensual and do not permit the involuntary inclusion of third parties, the proceeding before the Court of Appeals was a civil action governed by the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules) and the Rules of Court. Rule 1.1 of the Special ADR Rules enumerates the proceedings to which it applies, and this list does not include proceedings before the Court of Appeals. Therefore, the Rules of Court, including the remedy of intervention, may apply. The opinion concludes that the Congressional District of Benguet should have been allowed to intervene at the appellate stage.
On the second issue (Vacation of the Arbitral Award): The concurring and dissenting opinion concurs with the ponencia that the Final Award must be vacated. The certification precondition, particularly the requirement to obtain FPIC, is a fundamental State policy under the Indigenous Peoples’ Rights Act designed to protect the rights of indigenous peoples over their ancestral domains. This public policy must be strictly complied with, and agreements affecting natural resources within ancestral domains must be construed with utmost scrutiny. The right to renew the MPSA is not a vested right that can negate this statutory and constitutional safeguard. The arbitral award, by exempting respondents from this requirement, violated this established public policy.