Yinlu vs. Trans-Asia

Rights pertaining to mining patents issued pursuant to the Philippine Bill of 1902 and existing prior to November 15, 1935 are vested rights that cannot be impaired, even by subsequent constitutional provisions or legislation, because a valid location of a mining claim under the laws existing at that time segregated the area from the public domain and rendered the land private property.

The case involves 13 mining claims over an area in Barrio Larap, Municipality of Jose Panganiban, Camarines Norte, a portion of which was owned and mined by Philippine Iron Mines, Inc. (PIMI), which ceased operations in 1975 due to financial losses. PIMI's portion, known as the PIMI Larap Mines, was sold in a foreclosure sale to the Manila Banking Corporation (MBC) and Philippine Commercial and Industrial Bank (PCIB, later Banco De Oro or BDO). The legal framework governing the dispute includes the Philippine Bill of 1902 (Act of Congress of July 1, 1902), which allowed citizens of the United States and the Philippine Islands to explore, occupy, and purchase mineral lands, and the Regalian doctrine, under which the State owned all natural resources, which was adopted only by the 1935, 1973, and 1987 Constitutions.

The case involves 13 mining claims over an area in Barrio Larap, Municipality of Jose Panganiban, Camarines Norte, a portion of which was owned and mined by Philippine Iron Mines, Inc. (PIMI), which ceased operations in 1975 due to financial losses. PIMI's portion, known as the PIMI Larap Mines, was sold in a foreclosure sale to the Manila Banking Corporation (MBC) and Philippine Commercial and Industrial Bank (PCIB, later Banco De Oro or BDO). In 1976, the Bureau of Mines prepared a Technical Feasibility Study on the possible re-opening of the PIMI Larap Mines, and the Government opened the area for exploration. In November 1978, the Benguet Corporation-Getty Oil Consortium began exploration for uranium under an Exploration Permit but withdrew in 1982 after four years of exploration.

Trans-Asia Oil and Energy Development Corporation (Trans-Asia) explored the area from 1986 onwards. In 1996, it entered into an operating agreement with Philex Mining Corporation over the area, duly registered with the Department of Environment and Natural Resources (DENR). In 1997, Trans-Asia filed an application for the approval of a Mineral Production Sharing Agreement (MPSA) over the area, which was amended in 1999 and granted on July 28, 2007 under MPSA No. 252-2007-V, giving Trans-Asia the exclusive right to explore, develop, and utilize the mineral deposits in the portion of the mineral lands.

On August 31, 2007, Yinlu Bicol Mining Corporation (Yinlu) informed the DENR by letter that it had acquired the mining patents of PIMI from MBC/BDO by way of a deed of absolute sale, stating that the areas covered by its mining patents were within the areas of Trans-Asia's MPSA. Based on the documents submitted by Yinlu, four of the six transfer certificates of title (TCTs) it held covered four mining claims under Patent Nos. 15, 16, 17, and 18, respectively named as Busser, Superior, Bussamer, and Rescue Placer Claims, with an aggregate area of 192 hectares, occupying more than half of the MPSA area of Trans-Asia. On September 14, 2007, Trans-Asia informed Yinlu that it would commence exploration works in Yinlu's areas pursuant to the MPSA, but Yinlu replied on September 23, 2007 that Trans-Asia could proceed with its exploration works on its own private property in the Calambayungan area, not in the areas covered by its mining patents.

Trans-Asia sought the assistance of the MGB Regional Office V, and the matter was ultimately referred to the DENR Secretary, who directed the MGB to verify the validity of Yinlu's mining patents. On November 29, 2007, the MGB Regional Office V informed the Office of the DENR Secretary that there was no record on file showing the existence of the mining patents of Yinlu. The records show that TCT Nos. 93, 94, 95, 96, 97, and 98 involved six parcels of land with an area of 248.342 hectares situated in Barrio Larap and Santa Elena, Municipality of Jose Panganiban, Camarines Norte. The TCTs were transferred to MBC and PCIB after PIMI's properties were sold in the foreclosure sale conducted on December 20, 1975, and new TCTs were issued to them. MBC and BDO subsequently sold the lands to Yinlu by virtue of a Deed of Absolute Sale, and TCT Nos. 72336, 72337, 72338, 72339, 72340, and 72341 were issued to Yinlu. TCT Nos. 94, 95, 96, and 97 covered mining lands with an aggregate area of 192 hectares, originally registered in 1925, with the TCTs issued to PIMI in 1930. TCT No. 94 was issued pursuant to Patent No. 15 under the Busser Placer Claim; TCT No. 95, Patent No. 16 under the Superior Placer Claim; TCT No. 96, Patent No. 17 under the Bussemer Placer Claim; and TCT No. 97, Patent No. 18 under the Rescue Placer Claim.

• Tardiness of Appeal: Yinlu contended that the CA should have outrightly dismissed Trans-Asia's appeal for being taken beyond the required period for appealing, and that Trans-Asia's filing of the second motion for reconsideration was improper inasmuch as the motion did not cite any exceptional circumstances or reasons as required by Section 7 of the OP's Administrative Order No. 18 Series of 1987.
• Vested Rights: Yinlu claimed that its mining patents, being evidenced by its TCTs registered pursuant to Act No. 496 in relation to the Philippine Bill of 1902, were valid, existing, and indefeasible; that it was the absolute owner of the lands the TCTs covered; that Section 21 of the Philippine Bill of 1902 allowed citizens to explore, occupy, and purchase mineral lands; that the owner of the claim and of the mineral patents was entitled to all the minerals found in the area; and that its substantive rights over mineral claims perfected under the Philippine Bill of 1902 subsisted despite changes in the Philippine Constitution and mining laws.
• Nature of Titles: Yinlu asserted that the titles issued to it were mining patents, not homestead patents, stressing that the TCTs from which it derived its own TCTs were issued pursuant to Patents 15, 16, 17, and 18, and that under the Philippine Bill of 1902, there was no mineral patent separate from the original certificate of title issued pursuant thereto.
• Non-impairment of Vested Rights: Yinlu argued that Section 100 and Section 101 of PD No. 463 would impair its vested rights under its mineral patents if applied to it, and that Section 99 of PD No. 463 expressly prohibited the application of Sections 100 and 101 to vested rights.

• Non-registration under PD No. 463: Trans-Asia argued that Yinlu's patents had no effect and were deemed abandoned because Yinlu had failed to register them pursuant to Section 101 of Presidential Decree No. 463, as amended.
• Continuing Requirement for Improvements: Trans-Asia contended that there was a continuing requirement under the Philippine Bill of 1902 for the mining patent holder to undertake improvements in order to have the patents subsist, and that Yinlu failed to perform its obligation to register and to undertake the improvement.
• Abandonment and Laches: Trans-Asia argued in its first motion for reconsideration before the OP that the OP erred in resurrecting Yinlu's mining patents despite failure to comply with PD No. 463, in holding that Yinlu's predecessors-in-interest had continued to assert their rights, and in not holding that the mining patent had been abandoned due to laches.

• Tardiness of Appeal: Whether the petition for certiorari filed before the Court of Appeals was filed beyond the reglementary period.
• Validity of Mining Patents: Whether petitioner Yinlu's mining patents are valid, existing, and impervious to the Mineral Production Sharing Agreement subsequently granted to respondent Trans-Asia.
• Nature of Titles: Whether petitioner Yinlu's titles based on "patents" were mining patents or some other patent.
• Purchase of Minerals: Whether petitioner Yinlu's purchase of its titles included purchase of the minerals found therein.
• Due Process / Just Compensation: Whether the Court of Appeals disregarded petitioner Yinlu's constitutional right that its private property shall not be taken for public use without just compensation.
• Laches: Whether the principle of laches applies to titled property.
• Share of the Republic: Whether the share of the Republic of the Philippines in its natural resources was affected by the mining patents of petitioner Yinlu.

• Tardiness of Appeal: Yes. The petition for review was filed way beyond the prescribed 15-day period under Section 4, Rule 43 of the Rules of Court. Trans-Asia received the OP resolution denying its first motion for reconsideration on July 14, 2010, and had until July 29, 2010 to appeal, but filed the petition for review only on May 11, 2011, or nearly 10 months later.
• Validity of Mining Patents: Yes. Yinlu's mining patents, issued pursuant to the Philippine Bill of 1902 and subsisting prior to the effectivity of the 1935 Constitution, constituted vested rights that could not be impaired even by the Government, notwithstanding failure to comply with the registration and annual work obligations under PD No. 463.
• Nature of Titles: Yes. The TCTs of PIMI constituted mining patents and mining claims of the lands they covered, issued pursuant to Patent Nos. 15, 16, 17, and 18 under the Busser, Superior, Bussemer, and Rescue Placer Claims, respectively.
• Purchase of Minerals: Yes. As owner and holder of the mining patents, Yinlu was entitled not only to whatever was on the surface but also to the minerals found underneath the surface, since the lands and minerals covered by its mining patents are private properties.
• Due Process / Just Compensation: Yes. The tenets of due process required that Yinlu and its predecessors-in-interest be given written notice of their non-compliance with PD No. 463 and the ample opportunity to comply before their patents could be cancelled, and no such notice was shown.
• Laches: Yes. The principle of laches does not apply to titled property, and the failure of Yinlu's predecessors-in-interest to register and perform annual work obligations did not automatically mean abandonment of their mining rights.
• Share of the Republic: Yes. The mining patents of Yinlu, being vested rights acquired prior to the 1935 Constitution, segregated the lands from the public domain, and the Government could not alienate or dispose of the lands or minerals through the MPSA granted to Trans-Asia.

• Tardiness of Appeal: Section 1, Rule 43 of the Rules of Court provides that a judgment rendered by the OP in the exercise of its quasi-judicial function is appealable to the CA, and Section 4 of the Rule states that the appeal must be taken within 15 days from notice of the award, judgment, final order, or resolution, or of the denial of petitioner's motion for new trial or reconsideration. Section 4 specifically allows only one motion for reconsideration to an appealing party; as such, the reckoning is from the date of notice of the denial of the first motion for reconsideration. Although Section 7 of Administrative Order No. 18 of the OP Rules on Appeal authorizes the filing of a second motion for reconsideration, that authority is conditioned upon the second motion being upon a highly meritorious ground, and the determination of whether the ground raised was exceptionally meritorious lies solely with the OP. The OP found and declared Trans-Asia's second motion for reconsideration "clearly unmeritorious," so the filing of the second motion did not stop the running of the appeal period. The decision of the OP became final and immutable by July 29, 2010. An appeal is a mere statutory privilege, and procedural rules prescribing the time within which certain acts must be done are indispensable to the prevention of needless delays and to the orderly and speedy discharge of judicial business. The consequence of failure to perfect an appeal within the limited time allowed is to preclude the appellate court from acquiring jurisdiction over the case.
• Validity of Mining Patents: During the American occupation, the fundamental law on mining was incorporated in the Philippine Bill of 1902, whose Section 21 declared that all valuable mineral deposits in public lands in the Philippine Islands were free and open to exploration, occupation, and purchase by citizens of the United States or of said Islands, and whose Section 27 provided that a holder of the mineral claim so located was entitled to all the minerals that lie within his claim. Pursuant to the Philippine Bill of 1902, once a mining claim was made or a mining patent was issued over a parcel of land in accordance with its provisions, such land was considered private property and no longer part of the public domain. Under the 1935 Constitution, which took effect on November 15, 1935, the alienation of natural resources, with the exception of public agricultural land, was expressly prohibited, but this prohibition did not apply to mineral lands that at the time the 1935 Constitution took effect no longer formed part of the public domain. In McDaniel vs. Apacible, the Court ruled that a perfected, valid appropriation of public mineral lands operates as a withdrawal of the tract from the body of the public domain, and so long as such appropriation remains valid and subsisting, the land covered thereby is deemed private property. In Gold Creek Mining Corporation vs. Rodriguez, the Court held that a valid location of a mining claim segregated the area from the public domain and granted to the locator the beneficial ownership of the claim and the right to a patent therefor. Although Sections 100 and 101 of PD No. 463 require registration and annual work obligations, Section 99 of PD No. 463 expressly provides that the provisions of PD No. 463 shall not apply if their application will impair vested rights under other mining laws. The concept of a vested right was discussed in Ayog vs. Cusi Jr., where the Court held that a right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest, and that the due process clause prohibits the annihilation of vested rights. In Republic vs. Court of Appeals, the Court stated that mining rights acquired under the Philippine Bill of 1902 and prior to the effectivity of the 1935 Constitution were vested rights that could not be impaired even by the Government. The DENR itself declared that it had not issued any specific order cancelling the mining patents, and the tenets of due process required that Yinlu and its predecessors-in-interest be given written notice of their non-compliance with PD No. 463 and the ample opportunity to comply.
• Nature of Titles: The records show that TCT No. 94 was issued pursuant to Patent No. 15 under the Busser Placer Claim; TCT No. 95, Patent No. 16 under the Superior Placer Claim; TCT No. 96, Patent No. 17 under the Bussemer Placer Claim; and TCT No. 97, Patent No. 18 under the Rescue Placer Claim. These TCTs of PIMI constituted mining patents and mining claims of the lands they covered, and were validly transferred to Yinlu by virtue of the deed of absolute sale.
• Purchase of Minerals: Considering that the TCTs were validly transferred to Yinlu by virtue of the deed of absolute sale, and with the consequent issuance of new TCTs in its name, Yinlu was the owner and holder of the mining patents entitled not only to whatever was on the surface but also to the minerals found underneath the surface. The lands and minerals covered by Yinlu's mining patents are private properties, and the Government, whether through the DENR or the MGB, could not alienate or dispose of the lands or minerals through the MPSA granted to Trans-Asia or any other person or entity.
• Due Process / Just Compensation: The failure of Yinlu's predecessors-in-interest to register and perform annual work obligations did not automatically mean that they had already abandoned their mining rights, and that such rights had already lapsed. The tenets of due process required that Yinlu and its predecessors-in-interest be given written notice of their non-compliance with PD No. 463 and the ample opportunity to comply. In the absence of any showing that the DENR had provided the written notice and opportunity to that effect, it would be inequitable to consider them to have abandoned their patents, or to consider the patents as having lapsed. As held in McDaniel and Gold Creek, a mining patent obtained under the Philippine Bill of 1902 was a protected private property, and no less than Section 1, Article III of the 1987 Constitution decrees that no person shall be deprived of property without due process of law.
• Laches: The failure of Yinlu's predecessors-in-interest to register and perform annual work obligations did not automatically mean that they had already abandoned their mining rights. The DENR itself declared that it had not issued any specific order cancelling the mining patents, and the tenets of due process required written notice and opportunity to comply before cancellation could be effected.
• Share of the Republic: The mining patents of Yinlu were issued pursuant to the Philippine Bill of 1902 and were subsisting prior to the effectivity of the 1935 Constitution. Consequently, Yinlu and its predecessors-in-interest had acquired vested rights in the disputed mineral lands that could not and should not be impaired even in light of their past failure to comply with the requirement of registration and annual work obligations. The Government could not alienate or dispose of the lands or minerals through the MPSA granted to Trans-Asia.

• Vested Rights Doctrine — A right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest; it is the privilege to enjoy property legally vested, to enforce contracts, and enjoy the rights of property conferred by existing law. The due process clause prohibits the annihilation of vested rights, and a state may not impair vested rights by legislative enactment, by the enactment or subsequent repeal of a municipal ordinance, or by a change in the constitution of the State, except in a legitimate exercise of the police power. The Court applied this doctrine to hold that mining rights acquired under the Philippine Bill of 1902 and prior to the effectivity of the 1935 Constitution were vested rights that could not be impaired even by the Government.
• Regalian Doctrine Exception for Pre-1935 Mining Claims — Under the Regalian doctrine, minerals belonged to the State wherever they could be found, whether in public or private lands. However, the 1935 Constitution's prohibition against the alienation of natural resources did not apply to mineral lands which at the time the provision took effect no longer formed part of the public domain. A valid location of a mining claim under the Philippine Bill of 1902, perfected prior to November 15, 1935, segregated the area from the public domain and granted to the locator the beneficial ownership of the claim and the right to a patent therefor.
• Perfected Mining Claim as Private Property — A perfected, valid appropriation of public mineral lands operates as a withdrawal of the tract from the body of the public domain, and so long as such appropriation remains valid and subsisting, the land covered thereby is deemed private property. A mining claim perfected under the law is property in the highest sense, which may be sold and conveyed and will pass by descent, and the owner is entitled to the exclusive possession and enjoyment against everyone, including the Government itself.
• Only One Motion for Reconsideration — Under Section 4, Rule 43 of the Rules of Court, only one motion for reconsideration shall be allowed, and the reckoning of the 15-day period to perfect an appeal starts from the receipt of the resolution denying the motion for reconsideration. Although Section 7 of Administrative Order No. 18 of the OP Rules on Appeal authorizes the filing of a second motion for reconsideration, that authority is conditioned upon the second motion being upon a highly meritorious ground, and the determination of whether the ground raised was exceptionally meritorious lies solely with the OP.

• "Rights pertaining to mining patents issued pursuant to the Philippine Bill of 1902 and existing prior to November 15, 1935 are vested rights that cannot be impaired." — This is the opening statement of the decision and articulates the core ratio decidendi of the case, establishing the controlling principle that pre-1935 mining patents are protected vested rights.
• "The general rule is that a perfected, valid appropriation of public mineral lands operates as a withdrawal of the tract from the body of the public domain, and so long as such appropriation remains valid and subsisting, the land covered thereby is deemed private property. A mining claim perfected under the law is property in the highest sense, which may be sold and conveyed and will pass by descent." — Quoted from McDaniel v. Apacible, this passage defines the legal effect of a perfected mining claim and was adopted by the Court as the basis for holding that Yinlu's mining patents segregated the lands from the public domain.
• "It is clear that the foregoing constitutional provision prohibits the alienation of natural resources, with the exception of public agricultural land. It seems likewise clear that the term 'natural resources,' as used therein, includes mineral lands of the public domain, but not mineral lands which at the time the provision took effect no longer formed part of the public domain." — Quoted from Gold Creek Mining Corporation v. Rodriguez, this passage establishes the exception to the 1935 Constitution's prohibition on alienation of natural resources for mineral lands that were already private property before the Constitution took effect.
• "A right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest." — Quoted from Ayog v. Cusi Jr., this passage defines the concept of a vested right and was applied to hold that Yinlu's mining patents constituted vested rights that could not be impaired.

• McDaniel vs. Apacible, 42 Phil. 749 (1922) — Controlling precedent establishing that a perfected, valid appropriation of public mineral lands operates as a withdrawal of the tract from the body of the public domain, and that the owner of a perfected valid appropriation is entitled to exclusive possession and enjoyment against everyone, including the Government itself.
• Gold Creek Mining Corporation vs. Rodriguez, 66 Phil. 259 (1938) — Controlling precedent holding that a valid location of a mining claim perfected prior to November 15, 1935 segregated the area from the public domain and granted the locator the beneficial ownership of the claim and the right to a patent therefor, unaffected by the prohibition against alienation of natural resources in the 1935 Constitution.
• Ayog vs. Cusi Jr., No. L-46729, November 19, 1982, 118 SCRA 492 — Followed for the definition of a vested right and the principle that the due process clause prohibits the annihilation of vested rights.
• Republic vs. Court of Appeals, Nos. L-43938, L-44081, L-44092, April 15, 1988, 160 SCRA 228 — Followed for the proposition that mining rights acquired under the Philippine Bill of 1902 and prior to the effectivity of the 1935 Constitution were vested rights that could not be impaired even by the Government.
• Salacot Mining Company vs. Rodriguez, 67 Phil. 97 (1939) — Cited as applying and following the rulings in McDaniel and Gold Creek.
• Atok-Big Wedge Mining Co., Inc. vs. Court of Appeals, G.R. No. 88883, January 18, 1991, 193 SCRA 71 — Cited as applying and following the rulings in McDaniel and Gold Creek.
• Securities and Exchange Commission vs. PICOP Resources, Inc., G.R. No. 164314, September 26, 2008, 566 SCRA 451 — Followed for the rule that the determination of whether a ground raised in a second motion for reconsideration is exceptionally meritorious lies solely with the OP.
• Air France Philippines vs. Leachon, G.R. No. 134113, October 12, 2005, 472 SCRA 439 — Cited for the principle that procedural rules prescribing the time within which certain acts must be done are indispensable to the prevention of needless delays and to the orderly and speedy discharge of judicial business.

• Section 21, Philippine Bill of 1902 — Declared that all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and unsurveyed, are free and open to exploration, occupation, and purchase, and the land in which they are found to occupation and purchase, by citizens of the United States or of said Islands. Applied to establish that the mining patents were validly issued under this law.
• Section 27, Philippine Bill of 1902 — Provided that a holder of the mineral claim so located was entitled to all the minerals that lie within his claim, but could not mine outside the boundary lines of his claim. Applied to establish that Yinlu, as holder of the mining patents, was entitled to the minerals found within the claims.
• Section 1, Article XII, 1935 Constitution — Prohibited the alienation of natural resources, with the exception of public agricultural land. Interpreted to apply only to mineral lands of the public domain, not to mineral lands which at the time the provision took effect no longer formed part of the public domain.
• Sections 99, 100, and 101, Presidential Decree No. 463 — Section 99 provides that changes made and new provisions laid down by the Decree which may prejudice or impair vested or acquired rights in accordance with other mining laws previously in force shall have no retroactive effect. Sections 100 and 101 require registration of old mining rights and recognition of subsisting mining claims. Applied to hold that the registration requirements could not impair Yinlu's vested rights.
• Section 1, Rule 43, Rules of Court — Provides that the Rule applies to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders, or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions, including the Office of the President. Applied to establish the appealability of the OP decision to the CA.
• Section 4, Rule 43, Rules of Court — Provides that the appeal shall be taken within 15 days from notice of the award, judgment, final order, or resolution, or of the denial of petitioner's motion for new trial or reconsideration, and that only one motion for reconsideration shall be allowed. Applied to determine that Trans-Asia's appeal was filed beyond the reglementary period.
• Section 7, Administrative Order No. 18, OP Rules on Appeal — Provides that only one motion for reconsideration by any one party shall be allowed and entertained, save in exceptionally meritorious cases. Applied to hold that the OP's determination that the second motion was "clearly unmeritorious" meant the motion did not stop the running of the appeal period.
• Section 1, Article III, 1987 Constitution — Provides that no person shall be deprived of life, liberty, or property without due process of law. Applied to hold that Yinlu and its predecessors-in-interest were entitled to written notice and opportunity to comply before their mining patents could be cancelled.
• Section 13, Article VIII, 1987 Constitution — Cited in the certification that the conclusions in the decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

Chief Justice Maria Lourdes P.A. Sereno, Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Jose Portugal Perez, and Associate Justice Estela M. Perlas-Bernabe concurred in the decision.