Awayan v. Sulu Resources Development Corporation
REITERATIONFacts
The Antecedents: The Republic of the Philippines entered into a Mineral Production Sharing Agreement (Agreement) with Sulu Resources Development Corporation (Sulu Resources) on April 7, 1998, for the development and utilization of mineral resources in Antipolo, Rizal. Sulu Resources was required to submit quarterly and annual reports. Due to alleged force majeure (roadblock and checkpoint manned by a security force under Armando Carpio, demanding exorbitant rates for right-of-way, and contested ownership), Sulu Resources failed to submit reports for certain periods and a Declaration of Mining Project Feasibility. Field investigations by the Mines and Geosciences Bureau (MGB) initially found the force majeure claim justified and recommended arbitration for the surface owner dispute. Subsequent Environment Secretaries (Gozun and Defensor) affirmed that Sulu Resources had not violated the Agreement. However, in 2003, technical personnel reported continued failure to submit reports due to force majeure. Sulu Resources submitted geological data and a quarterly report for 2008, and obtained an Environmental Compliance Certificate. Procedural History: On February 16, 2009, Maximo Awayan, a surface owner, filed a petition to cancel the Agreement, alleging non-operation, inclusion of private property without consent, non-performance of work, failure to submit reports and Declaration of Mining Project Feasibility, over-extension of the exploration period, and that Sulu Resources was not a "Qualified Person" due to insufficient paid-up capital. On September 19, 2009, DENR Secretary Jose L. Atienza, Jr. ordered the cancellation of the Agreement, citing violations such as failure to renew the exploration period, failure to submit a Declaration of Mining Project Feasibility, and failure to submit required reports. Sulu Resources' motion for reconsideration was denied. The Office of the President affirmed the DENR Secretary's order. However, the Court of Appeals reversed the Office of the President's decision, ruling that the cancellation was tainted with grave abuse of discretion for disregarding due process and for disregarding the prior findings of force majeure by DENR officials. The Court of Appeals also held that the MGB Director's recommendation was required for cancellation. The Petition: Maximo Awayan filed a Petition for Review on Certiorari before the Supreme Court, assailing the Court of Appeals' decision. He argued that he has legal standing as a surface owner, that the Court of Appeals committed grave abuse of discretion, that its findings were conflicting, and that its findings contradicted those of the DENR. He contended that the MGB Director's recommendation is not necessary for the Environment Secretary's cancellation of a mineral agreement and that Secretary Atienza did not gravely abuse his discretion. He also argued that the Court of Appeals erred in finding the cancellation without regard to due process and that the dispute with surface owners did not constitute force majeure.
Issue(s)
Whether or not questions of fact may be resolved in a Petition for Review on Certiorari. Whether or not petitioner Maximo Awayan has the legal standing to assail the Agreement. Whether or not the Court of Appeals erred in finding that the Agreement's cancellation is proper. Whether or not the Mines and Geosciences Bureau's recommendation is necessary for the Environment Secretary's cancellation of a mineral agreement. Whether or not Secretary Atienza gravely abused his discretion in ordering the cancellation of the Agreement. Whether or not the previous findings of the former Secretaries bind Secretary Atienza.
Ruling
The Supreme Court granted the Petition for Review on Certiorari, reversed the Court of Appeals' decision, and affirmed the cancellation of the Mineral Production Sharing Agreement. Dispositive Portion: WHEREFORE, the Petition for Review on Certiorari is GRANTED. The August 6, 2011 Decision and February 2, 2012 Resolution in CA-G.R. SP No. 114553 are REVERSED.
Ratio Decidendi
On the issue of whether questions of fact may be resolved in a Petition for Review on Certiorari: The Court reiterated that generally, only questions of law may be raised in a Rule 45 petition, as the Supreme Court is not a trier of facts. However, exceptions exist, including when there is grave abuse of discretion, conflicting findings of fact, or when the findings of the Court of Appeals are contrary to those of the administrative agency. In this case, the Court found that the petitioner sufficiently established that the Court of Appeals' findings were contrary to those of the Department of Environment and Natural Resources (DENR), thus allowing cognizance of the Petition. On the issue of whether petitioner Maximo Awayan has legal standing: The Court held that petitioner is a real party in interest. As a surface owner, he has a direct, substantial, and material interest in the Agreement's compliance with government safeguards and would be injured by its continued implementation if noncompliant. He invoked his right to protect his property and the full enjoyment of his ownership rights, thus possessing the legal standing to file the Petition. On the issue of whether the Court of Appeals erred in finding the cancellation improper: The Court ruled that the Secretary of the Department of Environment and Natural Resources (DENR) has the statutory authority to cancel mineral agreements even without a prior recommendation from the Mines and Geosciences Bureau (MGB) Director. Historical development of mining laws shows the DENR Secretary's original authority to cancel agreements upon failure to comply with terms, which was not qualified by such a recommendation. While Section 7(e) of Administrative Order No. 40-96 authorizes the MGB to cancel or recommend cancellation, it does not prohibit the DENR Secretary from making their own determination and ordering cancellation. On the necessity of the MGB Director's recommendation: The Court ruled that the Secretary of the Department of Environment and Natural Resources (DENR) has the statutory authority to cancel mineral agreements even without a prior recommendation from the Mines and Geosciences Bureau (MGB) Director. Historical development of mining laws shows the DENR Secretary's original authority to cancel agreements upon failure to comply with terms, which was not qualified by such a recommendation. While Section 7(e) of Administrative Order No. 40-96 authorizes the MGB to cancel or recommend cancellation, it does not prohibit the DENR Secretary from making their own determination and ordering cancellation. On whether Secretary Atienza gravely abused his discretion: The Court found that Secretary Atienza's cancellation of the Agreement was not tainted with grave abuse of discretion. His order and finding of violations were supported by substantial evidence, including the failure to renew the exploration period, submit a Declaration of Mining Project Feasibility, and submit required reports. The Court found that the respondent's claim of force majeure was untenable because it failed to avail of available remedies to resolve its dispute with surface owners, such as posting a bond or submitting the dispute to the Panel of Arbitrators, thereby contributing to the aggravation of the situation. On whether previous findings of former Secretaries bind Secretary Atienza: The Court held that the principle of non-estoppel of the government applies, meaning the State cannot be estopped by the mistakes or errors of its officials. While the government should not deal dishonorably, the previous finding of force majeure by then Secretary Gozun was correctly overturned by Secretary Atienza because the respondent's inaction contributed to the persistence of the dispute. Secretary Atienza acted within his authority and without arbitrariness, and the Court will not interfere with the DENR's exercise of judgment absent grave abuse of discretion.
Main Doctrine
The Secretary of the Department of Environment and Natural Resources has the authority to cancel a mineral production sharing agreement upon showing that the licensee failed to comply with the terms of such agreement. This authority is not contingent on a prior recommendation from the Mines and Geosciences Bureau Director.