THIRD DIVISION [ G.R. No. 196892, December 05, 2018 ] NAREDICO, INC., PETITIONER, V. KROMINCO, INC., RESPONDENT.

There is no vested right to mining rights, save for patented mining claims that were granted under the Philippine Bill of 1902.

When the Philippines was still under Spanish rule, the Royal Decree of May 14, 1867, or the Spanish Mining Law, was the prevailing law for the exploration and use of our mineral lands. When the Americans took control of the Philippines, they governed our country through a series of organic acts which effectively acted as our Constitution from 1900 to 1935. Among these was the Philippine Bill of 1902, through which the United States Congress assumed control over the Philippines.^[120]

The Philippine Bill of 1902 declared all valuable mineral deposits in public lands to be open to "exploration, occupation[,] and purchase"^[121] by Americans and Filipinos. It required the locator of a mineral claim to record ^[122]it in the mining recorder of the district it was found in within 30 days, with no less than US$100.00 worth of labor or improvements of the same value each year.^[123]

Yinlu Bicol Mining Corp. v. Trans-Asia Oil and Energy Development Corp.^[124] explained:

Pursuant to the Philippine Bill of 1902, therefore, once a mining claim was made or a mining patent was issued over a parcel of land in accordance with the relative provisions of the Philippine Bill of 1902, such land was considered private property and no longer part of the public domain. The claimant or patent holder was the owner of both the surface of the land and of the minerals found underneath.^[125]

However, once the 1935 Constitution took effect, the alienation of mineral lands, among other natural resources of the State, was expressly prohibited:

Article XIII

Conservation and Utilization of Natural Resources

SECTION 1. All agricultural timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government established under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for another twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be the measure and limit of the grant.^[126] (Emphasis supplied)

Commonwealth Act No. 137 or the Mining Act, as amended,^[127] echoing the prohibition in the 1935 Constitution, granted only lease rights to mining claimants:

SECTION 5. Mineral Deposits Open to Location and Lease. Subject to any existing rights or reservations, all valuable mineral deposits in public land including timber or forest land as defined in Presidential Decree No. 389, otherwise known as the Forestry Reform Code or in private land not closed to mining location, and the land which they are found, shall be free and open to prospecting, occupation, location and lease.^[128]

Both the 1943 and 1973 Constitutions maintained the proscription on State alienation of mineral land while allowing qualified applicants to lease mineral land. The 1943 Constitution stated:

1943 Constitution

Article VIII

Conservation and Utilization of Natural Resources

SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all sources of potential energy, and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the government established under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for another twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be the measure and the limit of the grant.

The 1973 Constitution, in turn, read:

1973 Constitution

Article XIV

The National Economy and Patrimony of the Nation

SECTION 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential, and resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases, beneficial use may be the measure and the limit of the grant.

While the 1987 Constitution retained the prohibition on the sale of mineral lands, there was a conspicuous absence of the State's previous authority in the 1943 and 1973 Constitutions to administer inalienable natural resources through "license, concession or lease:"^[129]

1987 Constitution

Article XII National Economy and Patrimony

SECTION 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons.
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.
The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

Under the 1987 Constitution, the State is expected to take on a more hands-on approach or "a more dynamic role in the exploration, development[,] and utilization of the natural resources of the country"^[130] as a consequence of its full control and supervision over natural resources. It exercises control and supervision through the following modes:

1. The State may directly undertake such activities; or
   
2. The State may enter into co-production, joint venture or production-sharing agreements with Filipino citizens or qualified corporations;
   
3. Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens;
   
4. For the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils, the President may enter into agreements with foreign-owned corporations involving technical or financial assistance.^[131] (Emphasis in the original)

Instead of a first-in-time, first-in right approach toward applicants for mining claims and mining rights, the State decides what the most beneficial method is when it comes to exploring, developing, and utilizing minerals. It may choose to either directly undertake mining activities by itself or enter into co-production, joint venture, or production sharing agreements with qualified applicants.

The Court of Appeals erred in relying on a mere obiter dictum as its basis for proclaiming that this jurisdiction adheres to the first-in-time, first-in-­right principle.

In Apex Mining Co.,^[132] this Court did not rule on which between Apex and Balite had the better right or priority over the mining operations within the forest reserve in Monkayo, Davao Del Norte and Cateel, Davao Oriental. Apex Mining Co. stated that the issue had been overtaken by the issuance of Proclamation No. 297 on November 25, 2002, which declared 8,100 hectares in Monkayo, Compostela Valley, including the disputed area, as a mineral reservation. Apex Mining Co. explained that the mining operations within the mineral reservation was a purely executive function over which courts will not interfere.^[133]

In denying the motion for reconsideration for its earlier Decision, Apex Mining Co. reiterated its ruling that it cannot direct the Government to accept either Apex's or Halite's applications for exploration permits. The Executive Department has the prerogative to accept an exploration application or to develop the site on its own, and courts cannot meddle in a purely executive function.^[134]

Nonetheless, Chief Justice Bersamin in his Separate Opinion suggested that in order to prevent further litigation should the Government decide later on to accept an exploration application, this Court should already determine which between Apex and Balite had the priority right to mine the Diwalwal Gold Rush Area.^[135] He noted that under Philippine mining laws, the person who first locates and registers a mining claim, and later mines the area, has a valid and existing right:

Which between Apex and Balite has priority?
On the one hand, Apex rests its claim to priority on the precept of first-in-time, first-in-right, a principle that is explicitly recognized by Section 1 of Presidential Decree (P.D.) No. 99-A, which amended Commonwealth Act (C.A.) No. 137 (Mining Act), which provides:

Whenever there is a conflict between claim owners over a mining claim, whether mineral or non-mineral, the locator of the claim who first registered his claim with the proper mining registrar, notwithstanding any defect in form or technicality, shall have the exclusive right to possess, exploit, explore, develop and operate such mining claim.^[136] (Emphasis in the original)

Despite his noble intention of addressing a potential issue to prevent the parties from going through the whole judicial process again, Chief Justice Bersamin's statement was a separate opinion; thus, it was not and should not be treated as a binding precedent Further, his statement was obiter dictum. He simply expressed an opinion not directly related to the question raised before this Court.^[137]

All told, respondent's right over the contested area failed to hold since the boundaries of its Amended Survey Plan went against the clear provisions of its Operating Contract that only the area it actually occupied will be included in its final operating area. Additionally, the exclusions in petitioner's Agreement only pertained to vested contractual rights, which in this case were the actual areas occupied by respondent's structures in the contested area.