Province of Occidental Mindoro vs. Agusan Petroleum and Mineral Corporation

Local government units cannot enact ordinances that impose a total ban on large-scale mining activities, as such measures contravene the national policy established by the Philippine Mining Act (RA 7942) and exceed the scope of their delegated legislative and police powers.

The case arose from a conflict between local autonomy and national law. The Province of Occidental Mindoro and the Municipality of Abra de Ilog enacted ordinances and resolutions declaring a 25-year moratorium on all large-scale mining activities, citing environmental protection and the general welfare of their constituents. This directly conflicted with the FTAA granted by the national government to Agusan Petroleum, which authorized large-scale mining exploration in areas including Occidental Mindoro.

• Filed in the RTC (Branch 44, Mamburao, Occidental Mindoro) as a Petition for Declaratory Relief by Agusan Petroleum.
• The RTC granted Agusan Petroleum's Motion for Summary Judgment and declared the ordinances and resolutions unconstitutional and contrary to law.
• The Province and Municipality filed a Motion for Reconsideration, which was denied by the RTC.
• The Province of Occidental Mindoro elevated the case to the SC via a Petition for Review on Certiorari (Rule 45).
• The SC denied the petition and affirmed the RTC's order.

• In 2008-2009, the Sangguniang Bayan of Abra de Ilog and the Sangguniang Panlalawigan of Occidental Mindoro passed ordinances and resolutions imposing a 25-year moratorium on all large-scale mining activities.
• In 2008, Agusan Petroleum entered into an FTAA with the Republic of the Philippines, granting it exclusive rights to explore and mine minerals in areas including Occidental Mindoro.
• In 2014, Agusan Petroleum filed a Petition for Declaratory Relief before the RTC, arguing the local measures impaired its FTAA, contravened national law, and were an invalid exercise of police power.
• The Office of the Solicitor General (OSG), in its Comment, sided with the local government units, arguing the ordinances were a valid exercise of police power and that prior consultations required by the Local Government Code were not complied with for the FTAA.

• The ordinances are a valid exercise of police power under the general welfare clause (Sec. 16, RA 7160) to protect the environment and public health.
• Local government units have the power to regulate resources within their territories, and any doubt should be resolved in favor of devolution of powers.
• The term "areas expressly prohibited by law" in Sec. 19 of RA 7942 includes local ordinances.
• The ordinances enjoy a presumption of constitutionality.
• The non-impairment clause must yield to police power, and the ordinances predate the FTAA.

• The provincial legal officer lacked authority to represent the Province before the SC without OSG deputation.
• The ordinances are not mere regulations but a complete prohibition of a legitimate business activity allowed by the Constitution and RA 7942.
• They violate the State's full control and supervision over mineral resources (Art. XII, Sec. 2, Constitution) and the non-impairment clause.
• The ordinances are unreasonable and oppressive, as RA 7942 already provides stringent environmental safeguards.
• The word "law" in Sec. 19(d) of RA 7942 refers to national statutes, not local ordinances.

• Procedural Issues: Whether the Petition should be dismissed for lack of authority of the provincial legal officer to represent the Province before the SC absent OSG deputation.
• Substantive Issues:
  1. Whether the assailed ordinances and resolutions constitute a valid exercise of police power.
  2. Whether they violate Article XII, Section 2 of the Constitution and RA 7942 on the State's ownership and control over mineral resources.
  3. Whether they violate the constitutional guarantee on non-impairment of contracts.

• Procedural: The SC relaxed the rules on representation due to the novelty and importance of the substantive issues. It noted the OSG, in its Comment, confirmed the provincial legal officer's authority and agreed with the petitioner's substantive position.
• Substantive:
  1. Police Power: The ordinances are an invalid exercise of police power. They are overly broad, imposing a total ban rather than reasonable regulation. The power to regulate does not include the power to prohibit altogether a legally permissible activity.
  2. State Control over Minerals & RA 7942: The ordinances contravene the Constitution and RA 7942. The State, through the DENR, exercises full control over mining. RA 7942 provides a comprehensive regulatory framework, including environmental safeguards. Local government units cannot defy the national legislature's will by banning what it expressly allows. The term "law" in Sec. 19(d) of RA 7942 does not include local ordinances.
  3. Non-Impairment: Given the ruling on the first two substantive issues, the SC found it unnecessary to extensively discuss the non-impairment clause.

• Hierarchy of Laws / Subordination of Ordinances to Statutes — Local ordinances are inferior in status and subordinate to national statutes. An ordinance that contravenes a state law is invalid. The delegate (LGU) cannot be superior to the principal (Congress).
• Police Power – Limitations on LGUs — While LGUs possess delegated police power, its exercise must be reasonable and not overly broad. The power to regulate does not include the power to totally prohibit a lawful trade or business. The means employed must be reasonably necessary for the objective and not unduly oppressive.
• Local Autonomy is Not Sovereignty — Local autonomy is administrative, not political. LGUs are not imperia in imperio; they remain agents of the national government and cannot defy the will of Congress.
• Principle of Verba Legis — When the law is clear, it must be applied literally. The word "law" in Sec. 19(d) of RA 7942, which enumerates areas closed to mining, refers to national statutes, not local ordinances.

• "What the national legislature expressly allows, the local government units may not disallow by ordinance or resolution."
• "The delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local government units can undo the acts of Congress, from which they have derived their power in the first place, and negate by mere ordinance the mandate of the statute." (Citing Magtajas v. Pryce Properties)
• "The power to regulate is not synonymous with 'suppress' or 'prohibit.'" (Citing Justice Lazaro-Javier's concurrence and City of Manila v. Laguio)

• Magtajas v. Pryce Properties Corp., Inc. — Cited to establish the fundamental principle that municipal governments are mere agents of the national government and cannot undo acts of Congress.
• Batangas CATV, Inc. v. Court of Appeals — Applied to show that an LGU resolution contravening a national law (vesting rate regulation in the NTC) is invalid.
• City of Manila v. Laguio, Jr. — Cited for the doctrine that the power to regulate does not include the power to prohibit, and for the test of a valid ordinance.
• Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc. — Invoked to illustrate that an ordinance, even if effective, is unconstitutional if the means employed are overly broad and not reasonably necessary.

• 1987 Constitution, Article XII, Section 2 — Vests in the State ownership of all natural resources and full control over their exploration, development, and utilization.
• Republic Act No. 7160 (Local Government Code), Section 16 (General Welfare Clause) — Grants LGUs police power for the general welfare, including environmental protection.
• Republic Act No. 7160, Sections 26 & 27 — Require prior consultation with and approval from LGUs for national projects with environmental impact. The SC clarified this gives LGUs a project-specific veto, not a blanket ban authority.
• Republic Act No. 7942 (Philippine Mining Act of 1995), Section 2 — Declares the state policy to promote rational mining development while safeguarding the environment.
• Republic Act No. 7942, Section 19(d) — Lists "areas expressly prohibited by law" as closed to mining applications. The SC ruled "law" means national statutes, not ordinances.

• Justice Amy C. Lazaro-Javier (Concurring) — Emphasized that the ordinances failed the test for a valid ordinance and police power. They were overly broad, prohibiting a legally permissible activity rather than regulating it. The power to regulate does not mean to suppress. The LGU's recourse is to rigorously evaluate specific mining projects during the required consultation process.