PNOC-ENERGY DEVELOPMENT CORPORATION (PNOC-EDC),vs.EMILIANO G.

VENERACION,
JR.,
G.R. No. 129820 November 30, 2006
This case involves the conflicting claims of the petitioner Philippine National Oil Corporation-Energy
Development Corporation and the respondent over the mining rights over Block 159 of the Malangas
Coal Reservation, Alicia, Zamboanga del Sur.

On 31 January 1989, respondent applied with the Mines and Geo-Sciences Development Services,
DENR, Region IX, Zamboanga City for a Declaration of Location (DOL) over Block 159 of the
Malangas Coal Reservation, situated at Barangays Payongan and Kauswagan, Alicia, Zamboanga
del Sur. On 18 May 1989, the Office of the Regional Executive Director (RED) of the DENR informed
the respondent that his DOL cannot be registered since Block 159 was part of the Malangas Coal
Reservation, as provided under Proclamation No. 284, issued by the President on 19 July
1938.2 With the endorsement of the Office of Energy Affairs (OEA) and the DENR Secretary, the
respondent petitioned the Office of the President for the withdrawal of Block 159 from the coal
reservation and its conversion into a mineral reservation.3

The petitioner applied for a mineral prospecting permit over Block 159 (and Blocks 120 and 160)
with the OEA, which the latter granted on 4 September 1989. The Malangas Coal Reservation was,
at that time, under the administration of the OEA.4 When it had initially applied for a mineral
prospecting permit over lands within the Malangas Coal Reservation, the OEA advised it to obtain
the permission of the Bureau of Mines and Geo-Sciences (BMGS).5
On 18 October 1991, petitioner submitted to the DENR an application/proposal for a Mineral
Production Sharing Agreement (MPSA) over Blocks 120, 159 and 160 of the Malangas Coal
Reservation.6

On 21 February 1992, the Officer-In-Charge Regional Technical Director Dario R. Miñoza of the
Mines and Geo-Sciences Developmental Service (MGDS) advised the petitioner to amend its
application for MPSA by excluding Block 159 as the same is covered by the application of the
respondent.7 Nevertheless, the petitioner did not exclude Block 159 from its MPSA. Records also
show that it had not applied for nor was it able to obtain an Exploration Permit from the BMGS over
Block 159.

The MAB noted that petitioner did not file for an exploration permit nor applied for the exclusion of
Block 159. Moreover, petitioner filed a MPSA on 18 October 1991, or almost six (6) months prior to
the issuance of Proclamation No. 890 excluding Block 159 from the Malangas Coal Reservation and
allowing its disposition. Thus, the application for a MPSA over Block 159, while it was still part of a
government reservation other than a mineral reservation, was erroneous and improper and could not
have been legally accepted. And, since the records show that only one MPSA was filed after the
issuance of Proclamation 890 – that of the respondent’s, the preferential right over Block 159 was
acquired by the respondent. The MAB, nevertheless, pointed out that the said preferential right does
not necessarily lead to the granting of the respondent’s MPSA, but merely consists of the right to
have his application evaluated and the prohibition against accepting other mining applications over
Block 159 pending the processing of his MPSA.

Issues
(1) whether or not the petitioner has already lost its right to appeal the RED’s Order dated 12 April
1993;
Held
This Court finds no merit in this Petition. Petitioner’s insistence that the 30-day reglementary period
provided by Section 61 of Commonwealth Act No. 137, as amended, applies, cannot be sustained
by this Court. By providing a five-day period within which to file an appeal on the decisions of the
Director of Mines and Geo-Sciences, Presidential Decree No. 463 unquestionably repealed Section
61 of Commonwealth Act No. 137.

In the instant case, petitioner failed to state any compelling reason for not filing its appeal within the
mandated period. Instead, the records show that after failing to comply with the period within which
to file their motion for reconsideration on time, they again failed to file their appeal before the Office
of the DENR Secretary within the time provided by law.

(2) whether or not the petitioner acquired a preferential right on mining rights over Block 159.
Even if petitioner had not lost its right to appeal, it cannot claim any mining rights over Block 159 for
failure to comply with the legal requirements. Petitioner applied for an MPSA with the DENR on 18
October 1991, prior to the release of Block 159 from the Malangas Coal Reservation under
Proclamation No. 890 on 13 April 1992. Thus, the provisions on the acquisition of mining rights
within a government reservation other than a mineral reservation under Presidential Decree No. 463
and the Consolidated Mines Administrative Order (CMAO) should apply.
As a general rule, prospecting and exploration of minerals in a government reservation is prohibited
under Section 13 of Presidential Decree No. 463. However, the same rule provides an exception
involving instances when the government agency concerned allows it.
Section 13. Areas Closed to Mining Location. – No prospecting and exploration shall be allowed:
(a) In military, and other Government reservations except when authorized by the proper
Government agency concerned.
Section 8 of Presidential Decree No. 463 reiterates the rule and clarifies it further by stating that
prospecting, exploration and exploitation of minerals on reserved lands other than mineral
reservations may be undertaken by the proper government agency. As an exception to this rule,
qualified persons may undertake the said prospecting, exploration and exploitation when the said
agencies cannot undertake them.
Section 8. Prospecting, Exploration and Exploitation of Minerals in Reserved Lands. – Prospecting,
exploration and exploitation of minerals in reserved lands other than mineral reservations may be
undertaken by the proper government agency. In the event that the said agencies cannot undertake
the prospecting, exploration and exploitation of minerals in reserved lands, qualified persons may be
permitted to undertake such prospecting, exploration and exploitation in accordance with the rules
and regulations promulgated by the Secretary [Minister]. The right to exploit the minerals found
therein shall be awarded by the President under such terms and conditions as recommended by the
Director and approved by the Secretary [Minister]: Provided, That the party who undertook
prospecting, exploration and exploitation of said are shall be given priority.
Notwithstanding the provisions of the preceding paragraph, a special permit may be issued by the
Director to the exploration permitee to extract, remove and dispose of minerals in limited quantities
as verified by the Bureau of Mines [Director of Mines and Geo-Sciences].
Section 15 of the CMAO is more straightforward when it states that government reserved lands are
open for prospecting, subject to the rules and regulations provided therein.
SEC. 15. Government Reserved Land. – Lands reserved by the Government for purposes other than
mining are open to prospecting. Any interested party may file an application therefore with the head
of the agency administering said land, subject always to compliance with pertinent laws and rules
and regulations covering such reserved land. Such application shall be acted upon within thirty (30)
days. In such cases, the compensation due the surface owner shall accrue equally to the agency
administering the reserved land and the Bureau of Mines.
The law enumerates the following requirements: (1) a prospecting permit from the agency that has
jurisdiction over the area, in this case, the OEA;31 (2) an exploration permit from the BMGS;32 (3) if
the exploration reveals the presence of commercial deposit, the permitee applies before the BMGS
for the exclusion of the area from the reservation;33 (4) granting by the president of the application to
exclude the area from the reservation;34 and (5) a mining agreement approved by the DENR
Secretary.
In this case, petitioner complied with the first requirement and obtained a prospecting permit from
the OEA.1âwphi1 In its correspondence with the petitioner, the OEA, however, advised the petitioner
on two separate occasions to obtain a "prospecting permit" from the BMGS, although the OEA was
probably referring to an exploration permit.35 The petitioner did not apply for an exploration permit
with the BMGS, nor would the BMGS have granted petitioner an exploration permit because when
petitioner wrote to the BMGS informing the latter of its intention to enter into an MPSA with the
DENR over Block 159, the BMGS informed the petitioner that the respondent’s claim over Block 159
had already preceded that of the petitioner.36 The advice given by the BMGS was justified since at
that time, the respondent already had a pending application for the exclusion of Block 159 from the
Malangas Coal Reservation. Thereafter, the petitioner filed his MPSA application, without complying
with the second, third and fourth requisites. Since it ignored the sound advice of the OEA and the
BMGS, the government agencies concerned, and stubbornly insisted on its incorrect procedure,
petitioner cannot complain now that its MPSA was revoked for failure to comply with the legal
requirements.
In contrast, the respondent applied for a DOL as early as 30 January 1989. The DENR Regional
Office refused to register the respondent’s DOL since Block 159 was still part of the Malangas Coal
Reservation and advised the respondent to apply for the exclusion of the area from the reservation.
The respondent followed this advice. The BMGS then treated the respondent’s application for a DOL
as an application for an exploration permit and caused a verification report of the area applied for, as
provided under Section 99 of the CMAO.37 Upon the application of the respondent, the OEA and
thereafter the DENR Secretary endorsed the respondent’s application for the exclusion of the area
from the reservation.38 This application was granted by the President, through Proclamation No. 890,
which provided that the mining rights to Block 159 will be disposed of in accordance with Executive
Order No. 279. On 30 July 1992, respondent filed his MPSA.39 On 12 April 1993, the RED of
Zamboanga City ordered that the respondent’s MPSA be given due course.40 Although the
respondent’s applications may not follow the strict letter of the law, there was substantial compliance
with the requirements of the law. Hence, the respondent was able to acquire a preferential right on
the mining claims over Block 159, as provided under Section 101 of the CMAO.
Even if it were to be assumed that the respondent failed to comply with these requirements, this
would not be fatal to his cause since he filed his MPSA on 31 July 1992, after the issuance of
Proclamation No. 890; therefore, the provisions on the application of mining rights over government
reservations would no longer apply to him because Block 159 was already converted into a mineral
reservation, wherein a different set of rules would apply. The only effect of his failure to comply with
the requirements CMAO on government reservations is that he loses the preferential right over the
area involved. In this case, the respondent was the only applicant to the mining rights over Block
159, apart from the petitioner who was not qualified for failure to comply with the legal requirements.
Proclamation No. 890 specifically provides that Executive Order No. 279 should be applied. Records
indicate that the provisions of Executive Order No. 279 have been complied with.41

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision of the Mines
Adjudication Board is hereby AFFIRMED. No costs.