Diamond Drilling Corp. v. Crescent Mining Corp.
NEW DOCTRINEFacts
The Antecedents: Crescent Mining and Development Corporation (Crescent) and Pacific Falkon Resources Corporation (PFRC) entered into a Joint Venture Agreement (JVA) for copper and gold mining operations. Subsequently, the Department of Environment and Natural Resources (DENR) awarded Mineral Production Sharing Agreement (MPSA) No. 057-96-CAR to Crescent. PFRC acquired a 40% stake in the Guinaoang Project through a Letter-Agreement amending the JVA, which was recorded with the Mines and Geosciences Bureau (MGB). Diamond Drilling Corporation of the Philippines (DDCP), PFRC's contractor, filed a collection case against PFRC and obtained a writ of preliminary attachment on PFRC's 40% share in the Guinaoang Project. After PFRC was declared in default, a decision was rendered holding PFRC liable to DDCP. A writ of execution was issued, and PFRC's 40% interest was levied, auctioned, and purchased by DDCP as the highest bidder, making DDCP the equitable owner. Procedural History: DDCP requested the MGB to record its 40% interest, which was denied. DDCP then filed a motion with the Regional Trial Court (RTC) directing the DENR Secretary to amend the MPSA to include DDCP as a joint contractor. The RTC granted the motion. The DENR and Crescent filed separate petitions for certiorari with the Court of Appeals (CA). The CA's 17th Division annulled the RTC order, ruling that the trial court lost jurisdiction as the motion was an execution of judgment filed beyond the five-year period. Conversely, the CA's 2nd Division upheld the RTC order, finding that the assignment of PFRC's share was deemed automatically approved due to DENR's inaction and that the acquired interest was subject to levy and execution. The Petition: The DENR and DDCP filed separate petitions for review with the Supreme Court, seeking to resolve the conflicting CA decisions.
Issue(s)
Whether the Court of Appeals gravely erred when it ruled that the Regional Trial Court acted in excess of its jurisdiction, or with grave abuse of discretion, in granting DDCP's motion to direct the DENR/MGB to amend the MPSA. Whether Crescent had other plain, speedy, and adequate remedies in the ordinary course of law that it failed to avail of; and whether the Court should entertain issues not raised in lower courts. Whether the DENR can be bound by the terms of the trial court's decision in Civil Case No. 00-055 without being a party thereto. Whether the terms of a final and executory decision can be modified during its execution stage; and whether the judgment in favor of DDCP should be deemed fully satisfied at the time it filed the motion to amend the MPSA. Whether the order of the trial court directing the amendment of the MPSA to include DDCP as a new joint contractor contravened the provisions of the Philippine Mining Act of 1995, its implementing rules and regulations, and the terms of MPSA No. 057-96-CAR; and whether the amendment of the MPSA to include a new co-contractor without the DENR's approval is valid. Whether the amendment of the MPSA is a discretionary function on the part of the DENR, whose performance cannot be directed by judicial order; and the nature of the DENR Secretary's power regarding transfers of mineral agreements. Whether the acquisition by DDCP of PFRC's 40% interest in the Guinaoang Project covered by MPSA No. 057-96-CAR constitutes a conveyance by assignment under R.A. No. 7942; and the validity of the transfer of the 40% interest to PFRC.
Ruling
The Supreme Court granted the petition in G.R. No. 207360 (DENR's petition) and denied the petition in G.R. No. 201785 (DDCP's petition). It reversed and set aside the decision of the Court of Appeals in CA-G.R. SP No. 124038 and affirmed the decision of the Court of Appeals in CA-G.R. SP No. 121603. The assailed RTC Order dated August 31, 2011, was declared void.
Ratio Decidendi
On the Propriety of Resort to Certiorari: The Court noted that DDCP did not raise the issue of the propriety of Crescent's resort to certiorari before the appellate court. It reiterated the well-settled rule that no question will be entertained on appeal unless it has been raised in the proceedings below, citing fairness and due process considerations. Parties are bound by the theory they adopt and cannot change it on appeal. Therefore, this issue was not entertained. On the Propriety of Resort to Certiorari and Other Remedies: The Court addressed the issue of whether Crescent had other remedies and combined it with the procedural bar of raising issues for the first time on appeal, as both relate to the propriety of the chosen legal avenue. On the DENR being bound by the Trial Court's Decision: No specific ratio decidendi was provided that directly addresses whether the DENR can be bound by the trial court's decision without being a party. This point is implicitly addressed in the discussion of State control over mining agreements. On the Propriety of Execution by Motion and Satisfaction of Judgment: The Court held that the judgment in favor of DDCP should be deemed fully satisfied at the time it filed the motion to amend the MPSA. The trial court had lost jurisdiction by the time it issued the assailed order because DDCP's acquisition of PFRC's 40% interest through judicial sale constituted property of the judgment debtor which stands as payment for the judgment debt. The Court clarified that while a valid levy made during the writ's lifetime can be enforced by a sale thereafter, the acquisition of the property itself satisfies the debt, terminating the execution stage. DDCP's assertion that the order was a mere continuation of execution proceedings was unavailing, as the acquired rights constituted property that could stand as payment. The remedy for DDCP regarding the MPSA amendment lay with the DENR Secretary, not the trial court. On the Amendment of the MPSA and Contravention of the Mining Act: The Court sustained the government's position that an MPSA cannot be amended to include a new co-contractor without the DENR's approval and compliance with legal requirements, as this is tantamount to a transfer of mineral agreement rights. Citing Article XII, Section 2 of the Constitution and Republic Act (R.A.) No. 7942 (Philippine Mining Act of 1995), the Court emphasized that mineral resources are owned by the State and their exploration, development, and utilization are under its full control and supervision. On the Principle of State Control Over Mining Agreements and the Nature of the DENR Secretary's Power: The Mining Act vests in the DENR Secretary the power to approve assignments or transfers of mineral agreements. The Court found that the Letter-Agreement between Crescent and PFRC was not compliant with the requisites for a valid transfer under Section 46 of the Mining Act's IRR. The automatic approval clause in Section 30 of the Mining Act applies only to applications that satisfy all requisites, not to those that are non-compliant. The DENR Secretary's power to approve transfers is discretionary, involving an evaluation of the transferee's qualifications and the transferor's compliance with the agreement and the law. On the Acquisition of Interest and Conveyance by Assignment: Since the transfer of the 40% interest to PFRC was invalid, the subsequent levy and sale to DDCP did not transfer any valid right in the MPSA. Therefore, the DENR was justified in asserting that the assailed order could not be executed against it.
Main Doctrine
The acquisition of a contractor's interest in a Mineral Production Sharing Agreement (MPSA) through judicial sale does not automatically entitle the buyer to be recognized as a co-contractor. Such transfer requires the prior approval of the Secretary of the Department of Environment and Natural Resources (DENR) and compliance with the requisites under the Philippine Mining Act of 1995 and its implementing rules and regulations, upholding the principle of state control over natural resources.