TWIN PEAKS MINING ASSOCIATION, JOSE SANTIAGO, ROGELIO SANTIAGO, OSCAR S. TIONGCO AND BLITHAM WAGAYEN, PETITIONERS, VS. HON. PEDRO C. NAVARRO, PRESIDING JUDGE OF THE COURT OF FIR…

Twin Peaks Mining Association versus Navarro

The Case

This is a special civil action of certiorari and prohibition brought by the Twin Peaks Mining Association and its four partners against Judge Pedro C. Navarro, in his capacity as Presiding Judge of the Court of First Instance, and against Philex Mining Corporation. The petitioners ask the Supreme Court to stop the trial court from taking cognizance of a complaint for declaratory relief and damages concerning the enforceability of two mining agreements, on the ground that the matter falls within the original and exclusive jurisdiction of the Bureau of Mines under section 7(c) of Presidential Decree Number 1281. The case matters because it draws the boundary between judicial and administrative adjudication in mining disputes, and because it teaches that the form of an action cannot camouflage its ultimate objective.

Procedural History

Philex Mining Corporation filed a complaint in the Court of First Instance of Rizal, Pasig Branch II, against the Twin Peaks Mining Association and its four partners, praying for a judgment declaring as valid and binding the two agreements dated May 22, 1970 and June 25, 1971 for the exploration, operation and exploitation of two hundred ninety lode mineral claims in Tuba, Benguet. The firm and its partners moved to dismiss on the grounds of lack of jurisdiction and lack of cause of action. The trial court denied the motion to dismiss, sustaining the plaintiff's stand that the validity of the mining contracts is a justiciable question for the courts and that the complaint states a cause of action. After filing a verified answer denying the execution of the two agreements, Twin Peaks and its four partners filed the instant special civil actions of certiorari and prohibition assailing the order denying their motion to dismiss. The Supreme Court gave the petition due course and asked Vicente M. Conlu, officer-in-charge of the legal division of the Bureau of Mines, to appear as amicus curiae.

Facts

On September 1, 1978, Philex Mining Corporation filed its complaint in the Court of First Instance of Rizal, Pasig Branch II, against the Twin Peaks Mining Association and its four partners. Philex sought a declaration that the two agreements dated May 22, 1970 and June 25, 1971 for the exploration, operation and exploitation of two hundred ninety lode mineral claims in Tuba, Benguet were valid and binding on Twin Peaks. Those agreements had been entered into between Philex and the late geodetic engineer Andres K. Espiritu, who represented himself to be the general manager of Twin Peaks but who was not a partner thereof.

Twin Peaks and its partners moved to dismiss, arguing that the subject matter fell within the original and exclusive jurisdiction of the Bureau of Mines under section 7(c) of Presidential Decree Number 1281, which covers the enforcement of mining contracts due to the refusal of the claimowner to abide by their terms. They also argued that the complaint stated no cause of action, because Philex had submitted to the Bureau of Mines an application for availment of rights and privileges under Presidential Decree Number 463, and because the Bureau had refused to act favorably on that application since the firm did not recognize the binding force of the agreements. The trial court denied the motion.

Meanwhile, the Assistant Director of Mines, in an order dated August 16, 1978, rejected the applications of Philex for availment of rights and privileges under Presidential Decree Number 463 with respect to the mining claims involved in the two contracts, saying the mining claims had lapsed. The rejection rested on the grounds that Espiritu, who signed the contracts, was neither the general manager nor a partner of Twin Peaks, and that Philex failed to comply with the Bureau's demand to submit Espiritu's authority to sign the contracts and the authority to file the availment applications. Philex did not appeal from that rejection order, and the Director of Mines considered it final and executory.

Issues

• Whether or not the Court of First Instance has jurisdiction to entertain the complaint for declaratory relief and damages concerning the validity and enforcement of the two mining contracts.
• Whether or not the issue of the validity of the two mining contracts falls within the original and exclusive jurisdiction of the Bureau of Mines under section 7(c) of Presidential Decree Number 1281.

Applicable Provisions

Section 7 of Presidential Decree Number 1281 provides:

Section 7. In addition to its regulatory and adjudicative functions over companies, partnerships or persons engaged in mining exploration, development and exploitation, the Bureau of Mines shall have original and exclusive jurisdiction to hear and decide cases involving: (a) a mining property subject of different agreements entered into by the claim holder thereof with several mining operators; (b) complaints from claimowners that the mining property subject of an operating agreement has not been placed into actual operations within the period stipulated therein; and (c) cancellation and or enforcement of mining contracts due to the refusal of the claimowner or operator to abide by the terms and conditions thereof. All actions and decisions of the Director of Mines on the above cases are subject to review, motu proprio or upon appeal by any person aggrieved thereby, by the Secretary of Natural Resources whose decision shall be final and executory after the lapse of thirty days from receipt by the aggrieved party of said decision, unless appealed to the President in accordance with the applicable provisions of Presidential Decree Number 309 and Letter of Instructions Numbers 119 and 135.

This provision is the basis for the Court's holding that the Bureau of Mines, and not the trial court, has original and exclusive jurisdiction over the enforcement of the disputed mining contracts.

Ruling

On the first issue, the Court held that the trial court has no jurisdiction over the case. The Court explained that Philex wanted a judicial declaration as to the validity of the agreements in order to enforce them against Twin Peaks notwithstanding the death of Espiritu, who had signed the agreements in behalf of Twin Peaks but who, according to the latter, was not authorized to do so. Instead of directly litigating in the Bureau of Mines the enforceability of its mining contracts with Twin Peaks, Philex filed a complaint for declaratory relief and damages. The Court ruled that the form of that action cannot camouflage the fact that the ultimate objective of Philex is to enforce the said contracts.

On the second issue, the Court held that the issue of whether the two contracts are valid falls within the exclusive competence of the Bureau of Mines as clearly indicated in section 7(c) of Presidential Decree Number 1281, which took effect on January 16, 1978. The Court noted that Philex's initial attempt to attain its objective failed when the Assistant Director of Mines rejected its applications for availment of rights, and that this application was an implied admission that the Bureau of Mines is the proper agency vested with adjudicatory jurisdiction for the enforcement of the disputed mining contracts. The Court also observed that the trend is to make the adjudication of mining cases a purely administrative matter, and that under the decrees issued since the onset of martial law, decisions of the Secretary, now Minister, in mining cases are appealable to the President of the Philippines under section 50 of the Mineral Resources Development Decree of 1974 and section 7 of Presidential Decree Number 1281 in relation to Presidential Decree Number 309.

Doctrine

The Bureau of Mines has original and exclusive jurisdiction to hear and decide cases involving the cancellation or enforcement of mining contracts due to the refusal of the claimowner or operator to abide by their terms and conditions, under section 7(c) of Presidential Decree Number 1281. A complaint for declaratory relief and damages that seeks a judicial declaration of the validity of mining contracts, in order to enforce them, falls within that exclusive administrative jurisdiction, because the form of the action cannot camouflage its ultimate objective. Where the Bureau of Mines has already acted on the matter, its decision is subject to review by the Secretary of Natural Resources, whose decision is final and executory after thirty days unless appealed to the President.

Disposition

The writ of prohibition was granted, the lower court's order denying the motion to dismiss was reversed and set aside, and the lower court was directed to dismiss the complaint for lack of jurisdiction, with no costs.

Remember This

The single line worth memorizing is that the form of an action cannot camouflage its ultimate objective, so a complaint for declaratory relief that in substance seeks enforcement of a mining contract belongs to the Bureau of Mines, not the courts. Examiners like to use this case to test jurisdiction over mining disputes and the doctrine that jurisdiction is determined by the substance of the pleading, not its label.