Zambales Chromite Mining Co. vs. Court of Appeals

A public officer who decided a case in a subordinate capacity is disqualified from reviewing his own decision on appeal; the reviewing officer must perforce be a person other than the officer whose decision is under review, and his acting as reviewing authority over his own ruling constitutes grave abuse of discretion and deprives the aggrieved party of due process.

Zambales Chromite Mining Co., Inc. and the group of Gonzalo P. Nava were rival claimants against the groups of Gregorio E. Martinez and Pablo Pabilona over sixty-nine mining claims situated in Santa Cruz, Zambales. The governing statute was the Mining Law, Commonwealth Act No. 13-i, section 61 of which, as amended by Republic Act No. 746, lodged original jurisdiction over conflicts and disputes arising out of mining locations in the Director of Mines, with appeals from his decision or order to the Secretary of Agriculture and Natural Resources, and further recourse to a court of competent jurisdiction. The case therefore turned on the structural separation of the reviewing officer from the officer whose ruling was under review, a separation that the statutory scheme of administrative appeal presupposes.

Zambales Chromite Mining Co., Inc. and the group of Gonzalo P. Nava, on one side, and the groups of Gregorio E. Martinez and Pablo Pabilona, on the other, were rival claimants to sixty-nine mining claims located in Santa Cruz, Zambales. In Mines Administrative Case No. V-227, the Nava group sought to be declared the rightful and prior locators and possessors of the claims. Only the petitioners presented evidence; the private respondents filed a demurrer to the evidence, or motion to dismiss the protest, and offered no proof of their own. On October 5, 1960, Director of Mines Benjamin M. Gozon issued an order dismissing the protest, finding that the petitioners had neither discovered any mineral nor staked and located mining claims in accordance with law. In that same order, he ruled that the mining claims of the Martinez and Pabilona groups were duly located and registered.

The petitioners appealed from that order to the Secretary of Agriculture and Natural Resources. While the appeal was pending, Gozon was appointed Secretary of Agriculture and Natural Resources. Rather than inhibiting himself, he decided the appeal, DANR Case No. 2151, on August 16, 1963, as though he were adjudicating the case for the first time. He ruled that the petitioners had abandoned the disputed mining claims while the Martinez and Pabilona groups had validly located them, and accordingly dismissed the appeal from his own decision.

On September 20, 1963, the petitioners filed a complaint in the Court of First Instance of Zambales assailing Secretary Gozon's decision and praying that they be declared the prior locators and possessors of the sixty-nine mineral claims. Impleaded as defendants were the Secretary of Agriculture and Natural Resources, the Director of Mines, and the members of the Martinez and Pabilona groups. After hearing, the lower court sustained Secretary Gozon's decision and dismissed the case. It held that the rule disqualifying a judge from reviewing his own decision or ruling did not apply to administrative bodies; that no provision in the Mining Law disqualified the Secretary of Agriculture and Natural Resources from deciding an appeal from a case he had decided as Director of Mines; that delicadeza was not a ground for disqualification; that the petitioners had not seasonably sought to disqualify Secretary Gozon; and that there was no evidence the Secretary had acted arbitrarily or with bias, prejudice, animosity, or hostility toward the petitioners.

The petitioners appealed to the Court of Appeals. The Sixth Division, composed of Justices Pascual, Agcaoili and Climaco, in its decision dated February 15, 1978, reversed the judgment of the trial court and declared the petitioners the rightful locators and possessors of the sixty-nine mining claims, holding invalid the mining claims overlapping the same. That Division found that the Nava group had discovered minerals and had validly located the sixty-nine mining claims, and that there was no sufficient basis for Secretary Gozon's finding that the mining claims of the Martinez and Pabilona groups were validly located.

The private respondents moved for reconsideration, principally on the ground that the Court of Appeals should have respected the factual findings of the Director of Mines and the Secretary of Agriculture and Natural Resources, invoking Republic Act No. 4388 and several decisions. The petitioners opposed the motion, reiterating their contention that Secretary Gozon's decision was void and that its factual findings were therefore not binding on the courts. In its second decision of October 13, 1978, the same Sixth Division, this time composed of Justices Pascual, Agrava and Maco, set aside its first decision and granted the motion — not on the ground advanced by the movants, but on the ground raised in the petitioners' opposition, namely that Secretary Gozon's decision was void because he was disqualified from reviewing his own decision as Director of Mines. The case was remanded to the Minister of Natural Resources for another review of Director Gozon's decision, with the further statement that thereafter further proceedings would be taken in the trial court. Both sides moved for reconsideration, the petitioners praying for reinstatement of the first decision and the private respondents insisting on affirmance of the trial court's judgment; both motions were denied.

• Disqualification and Void Decision: Petitioners maintained that Secretary Gozon's decision was void because he was disqualified from reviewing his own decision as Director of Mines, and that the factual findings contained therein were therefore not binding on the courts.
• Relief Sought Before the Court of Appeals: In their appellants' brief in the Court of Appeals, petitioners prayed that Secretary Gozon's decision, alleged to be biased, be declared void and that the case be returned to the Secretary of Agriculture and Natural Resources for another review of Director Gozon's order.
• Changed Relief Before the Supreme Court: In their appellants' brief in the Supreme Court, petitioners abandoned that prayer and instead asked that the second decision of the Court of Appeals, referring the case to the Minister of Natural Resources for another review, be declared void and that its first decision be affirmed.

• Finality of Administrative Factual Findings: Private respondents moved for reconsideration principally on the ground that the Court of Appeals should have respected the factual findings of the Director of Mines and the Secretary of Agriculture and Natural Resources, on the theory that facts found in administrative decisions cannot be disturbed on appeal to the courts, citing Republic Act No. 4388 amending section 61 of the Mining Law effective June 19, 1965, and the cases of Pajo vs. Ago, Palanan Lumber & Plywood Co., Inc. vs. Arranz, Timbancaya vs. Vicente, and Ortua vs. Singson Encarnacion.
• Affirmance of the Trial Court's Judgment: Although they did not appeal from the second decision of the Court of Appeals, private respondents prayed before the Supreme Court for the affirmance of the trial court's judgment sustaining the decisions of the Director of Mines and the Secretary of Agriculture and Natural Resources.

• Disqualification of the Reviewing Officer / Due Process: Whether Secretary Gozon acted with grave abuse of discretion, and deprived petitioners of due process, when he reviewed as Secretary of Agriculture and Natural Resources his own decision as Director of Mines.
• Jurisdiction of the Trial Court After Remand: Whether the trial court retains jurisdiction over the case after it is remanded to the Minister of Natural Resources for another review.

• Disqualification of the Reviewing Officer / Due Process: Yes. Secretary Gozon acted with grave abuse of discretion in reviewing his own decision as Director of Mines, and the petitioners were thereby deprived of due process, since section 61 of the Mining Law contemplates that the reviewing Secretary be a person different from the Director of Mines.
• Jurisdiction of the Trial Court After Remand: No. The trial court does not retain any jurisdiction over the case once it is remanded to the Minister of Natural Resources, and the portion of the second decision providing for further proceedings in the trial court is unwarranted.

• Disqualification of the Reviewing Officer / Due Process: Section 61 of the Mining Law, Commonwealth Act No. 13-i, as amended by Republic Act No. 746, provides that conflicts and disputes arising out of mining locations shall be submitted to the Director of Mines for decision, that the decision or order of the Director of Mines may be appealed to the Secretary of Agriculture and Natural Resources within thirty days from receipt, and that a party disagreeing from the decision or order of the Director of Mines or of the Secretary may take the matter to a court of competent jurisdiction within thirty days from receipt, failing which the decision or order becomes final and binding. The provision that the decision of the Director of Mines may be appealed to the Secretary of Agriculture and Natural Resources contemplates that the Secretary should be a person different from the Director of Mines. In order that the review of the decision of a subordinate officer might not turn out to be a farce, the reviewing officer must perforce be other than the officer whose decision is under review; otherwise there could be no different view, and there would be no real review of the case. The decision of the reviewing officer would be a biased view and inevitably the same view, since being human he would not admit that he was mistaken in his first view of the case. This is the obvious, elementary reason behind the disqualification of a trial judge, who is promoted to the appellate court, to sit in any case wherein his decision or ruling is the subject of review, as provided in section 1 of Rule 137 of the Rules of Court and sections 9 and 27 of the Judiciary Law. The palpably flagrant anomaly of a Secretary of Agriculture and Natural Resources reviewing his own decision as Director of Mines is a mockery of administrative justice; a sense of proportion and consideration for the fitness of things should have deterred Secretary Gozon from reviewing his own decision, and he should have asked his undersecretary to undertake the review. The petitioners were consequently deprived of due process, meaning fundamental fairness, when Secretary Gozon reviewed his own decision as Director of Mines.
• Jurisdiction of the Trial Court After Remand: The second decision of the Court of Appeals, returning the case to the Minister of Natural Resources for another review of Director Gozon's decision, was affirmed, with the directive that the petitioners' appeal to the Minister be resolved de novo with the least delay as provided for in Presidential Decree No. 309. The portion of that second decision stating that "thereafter, further proceedings will be taken in the trial court" was reversed as unwarranted, because the trial court does not retain any jurisdiction over the case once it is remanded to the Minister of Natural Resources.

• Disqualification of a Reviewing Officer Who Rendered the Decision Under Review — A statutory scheme of administrative appeal presupposes that the reviewing officer is a person distinct from the officer whose decision is under review. Where the Mining Law provides that the decision of the Director of Mines may be appealed to the Secretary of Agriculture and Natural Resources, the Secretary must be a person different from the Director; otherwise the review becomes a farce, since the reviewing officer would render a biased view and inevitably the same view, being human and unwilling to admit that he was mistaken in his first view. In this case, Secretary Gozon, who had decided the mining dispute as Director of Mines, reviewed and affirmed that same decision on appeal, and the Court held that he acted with grave abuse of discretion.
• Due Process as Fundamental Fairness in Administrative Proceedings — The anomaly of a Secretary of Agriculture and Natural Resources reviewing his own decision as Director of Mines is a mockery of administrative justice. A party whose case is resolved on appeal by the very officer who rendered the ruling under review is deprived of due process, meaning fundamental fairness. The Court applied this principle to set aside the order of August 16, 1963, notwithstanding that the trial court had affirmed it.
• Effect of Remand to an Administrative Body on the Trial Court's Jurisdiction — Once a case is remanded by the appellate court to the administrative body vested with authority to resolve it, the trial court does not retain any jurisdiction over the case. The Court accordingly reversed the portion of the Court of Appeals' second decision that provided for further proceedings in the trial court after the remand to the Minister of Natural Resources.

• "We hold that Secretary Gozon acted with grave abuse of discretion in reviewing his decision as Director of Mines. The palpably flagrant anomaly of a Secretary of Agriculture and Natural Resources reviewing his own decision as Director of Mines is a mockery of administrative justice." — This passage states the ratio decidendi of the decision, characterizing the self-review as grave abuse of discretion and as an affront to administrative justice.
• "In order that the review of the decision of a subordinate officer might not turn out to be a farce the reviewing officer must perforce be other than the officer whose decision is under review; otherwise, there could be no different view or there would be no real review of the case. The decision of the reviewing officer would be a biased view; inevitably, it would be the same view since being human, he would not admit that he was mistaken in his first view of the case." — This is the canonical formulation of the disqualification rule applied to reviewing officers, explaining why the statutory scheme of appeal presupposes two distinct officers.
• "Petitioners-appellants were deprived of due process, meaning fundamental fairness, when Secretary Gozon reviewed his own decision as Director of Mines." — This passage anchors the ruling in the due process guarantee, defining due process in administrative adjudication as fundamental fairness.
• "A sense of proportion and consideration for the fitness of things should have deterred Secretary Gozon from reviewing his own decision as Director of Mines. He should have asked his undersecretary to undertake the review." — This passage identifies the alternative course the Court considered proper, namely delegation of the review to the undersecretary.

• Amos Treat & Co. vs. Securities and Exchange Commission, 306 F. 2nd 260, 267 — Cited in support of the holding that the petitioners were deprived of due process when Secretary Gozon reviewed his own decision as Director of Mines.
• Pajo vs. Ago, 108 Phil. 905 — Cited by the private respondents in support of their contention that factual findings in administrative decisions cannot be disturbed on appeal to the courts.
• Palanan Lumber & Plywood Co., Inc. vs. Arranz, 65 O.G. 8473 — Cited by the private respondents for the same proposition regarding the finality of administrative factual findings.
• Timbancaya vs. Vicente, 119 Phil. 169 — Cited by the private respondents for the same proposition regarding the finality of administrative factual findings.
• Ortua vs. Singson Encarnacion, 59 Phil. 440 — Cited by the private respondents for the same proposition regarding the finality of administrative factual findings.

• Section 61, Commonwealth Act No. 13-i (Mining Law), as amended by Republic Act No. 746 (approved June 18, 1952) — Provides that conflicts and disputes arising out of mining locations shall be submitted to the Director of Mines for decision; that the decision or order of the Director of Mines may be appealed to the Secretary of Agriculture and Natural Resources within thirty days from receipt; and that a party disagreeing from the decision or order of the Director of Mines or of the Secretary may take the matter to a court of competent jurisdiction within thirty days from receipt, otherwise the decision or order shall be final and binding. The Court construed this provision as contemplating that the reviewing Secretary be a person different from the Director of Mines.
• Section 1, Rule 137, Rules of Court — Cited as embodying the disqualification of a trial judge, who is promoted to the appellate court, to sit in any case wherein his decision or ruling is the subject of review; the Court described this as the obvious, elementary reason behind the disqualification applied to Secretary Gozon.
• Sections 9 and 27, Judiciary Law — Cited alongside section 1 of Rule 137 as the statutory basis for the disqualification of a judge from reviewing his own decision or ruling on appeal.
• Republic Act No. 4388 (effective June 19, 1965) — Amended section 61 of the Mining Law by changing "court of competent jurisdiction" to "Court of Appeals or the Supreme Court, as the case may be," and by providing that findings of fact in the decision or order of the Director of Mines, when affirmed by the Secretary of Agriculture and Natural Resources, shall be final and conclusive, with review by the Supreme Court limited to questions of law. Cited by the private respondents in their motion for reconsideration; the Court noted it in a footnote as a subsequent amendment.
• Presidential Decree No. 309 (dated October 10, 1973) — Establishes rules and procedures for the speedy disposition or settlement of conflicting mining claims; the Court directed that the petitioners' appeal to the Minister of Natural Resources be resolved de novo with the least delay as provided for in this decree, and cited sections 3, 4 and 5 in a footnote on the existing procedure for review.
• Presidential Decree No. 463 (dated May 17, 1974), sections 48 to 50 — The Mineral Resources Development Decree of 1974, cited in a footnote regarding protests, adverse claims and appeals involving the right to possession, lease, exploration or exploitation of any mining claim.
• Presidential Decree No. 1281 (dated January 16, 1978), section 7 — Cited in a footnote regarding review of the decisions of the Director of Mines in cases involving mining agreements or contracts.

Justices Antonio, Santos and Abad Santos concurred in the decision. Justice Concepcion, Jr. took no part. Justice Barredo filed a separate concurring opinion, in which he concurred but added that the reason the undersecretary could act is that when the Secretary is disqualified, he should be deemed absent or incapacitated to act, and the undersecretary should correspondingly be deemed the Secretary for purposes of the case in question; the undersecretary should act in such a way as to avoid any indication that he has been dictated upon by the Secretary.