ASIGA MINING CORPORATION, PETITIONER, VS. MANILA MINING CORPORATION AND BASIANA MINING EXPLORATION CORPORATION, RESPONDENTS.

Asiga Mining versus Manila Mining and Basiana Mining Exploration

The Case

This is a petition for review on certiorari brought by Asiga Mining Corporation against Manila Mining Corporation and Basiana Mining Exploration Corporation. Asiga held old mining claims, known as MIRADOR and CICAFE, in Santiago, Agusan del Norte, and it sought to convert them into a Mineral Production Sharing Agreement under the Mining Act of 1995. It discovered that its claims overlapped with the earlier applications of the two respondents, and when it filed an adverse claim, the respondents moved to dismiss on the ground that Asiga had abandoned its claims. The case matters because it settles what abandonment under the mining law really means: not the mere failure to file the annual affidavit, but the actual failure to do the work, and even then only after due process.

Procedural History

Asiga filed an adverse claim with a petition for preliminary injunction before the Panel of Arbitrators of the Mines and Geosciences Bureau Regional Office in Caraga. The Panel of Arbitrators ruled in favor of Asiga, holding that the respondents' applications should be amended to exclude the areas covered by Asiga's valid and existing claims. The respondents appealed to the Mines Adjudication Board of the Department of Environment and Natural Resources. The Board reversed and set aside the Panel's decision and ordered the Regional Director to give due course to the respondents' applications. Asiga then filed a petition for review under Rule 43 before the Court of Appeals, which dismissed the petition and affirmed the Board in full. After its motion for reconsideration was denied, Asiga came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Asiga was the holder of mining claims over land in Santiago, Agusan del Norte, granted under the Mining Act of 1936 and known as MIRADOR and CICAFE. When the Mineral Resources Decree of 1974 took effect, Asiga registered its claims and they were recognized under the new law. Two decades later, the Mining Act of 1995 superseded the decree, and Asiga was again required to register so that its claims could be recognized anew.

On March 31, 1997, Asiga applied with the Mines and Geosciences Bureau to convert its claims into a Mineral Production Sharing Agreement. During that process it discovered that its claims overlapped with the application of Manila Mining Corporation by about 1,661 hectares, and with that of Basiana Mining Exploration Corporation by 214 hectares. Both respondents had filed their own applications much earlier: Manila Mining as early as November 26, 1992, and Basiana as early as October 3, 1995. Both had published and posted their notices of application.

Asiga filed an adverse claim, asserting a vested right over its claims since 1975 and a preferential right to enter into a mineral agreement. The respondents moved to dismiss, arguing that the adverse claim was filed out of time, that the encroachment was not substantiated, and that Asiga had abandoned its claims by failing to file its Affidavit of Annual Work Obligation for more than two consecutive years. The Panel of Arbitrators found for Asiga, but the Mines Adjudication Board reversed, and the Court of Appeals affirmed, holding that Asiga's claims were deemed abandoned by operation of law.

Issues

• Whether or not Asiga may be considered to have abandoned its mining claims on the basis of its non-submission of the affidavit of annual work obligations.
• Whether or not Asiga may be considered to have abandoned its mining claims on the basis of its non-payment of occupation fees.

Applicable Provisions

Section 27 of the Mineral Resources Development Decree of 1974, as amended by Presidential Decree Number 1902, provides:

SECTION. 27. Annual Work Obligations. — The claimowner/lessee shall submit proof of compliance with the annual work obligations by filing an affidavit therefor and the statement of expenditures and technical report in the prescribed form in support thereof with the Mines Regional Officer concerned within one hundred and twenty (120) days from the end of the year in which the work obligation is required: Provided, That failure of the claimowner to comply therewith for two (2) consecutive years shall constitute automatic abandonment of the mining claim: Provided, further, That, if it is found upon field verification that no such work was actually done on the mining claim, the claimowner/lessee shall likewise automatically lose all his rights thereto notwithstanding submission of the aforesaid documents: Provided, finally, That the Director, in cases of unstable peace and order conditions and/or involvement in mining conflicts may grant further extensions.

This is the provision the respondents invoke, and the Court must decide whether the failure it punishes is the failure to file proof or the failure to do the work.

Section 9 of Department Administrative Order Number 97-07 provides:

SECTION 9. Occupational Fees and Work Obligations — In case of any deficiency in the payment of occupation fees and/or minimum work obligations required, no Mineral Agreement applications by holders of valid and existing mining claims and lease/quarry applications shall be accepted without proof of full payment of such deficiency or a Letter-Commitment to pay such amount within thirty days from the date of filing of the Mineral Agreement Application. Failure to present proof of full payment upon the filing of the Mineral Agreement application or within thirty days from filing of said Letter-Commitment shall result in the denial of the application, after which the area covered thereby shall be open for Mining Applications.

This provision fixes the duty to pay occupation fees, which the Court of Appeals held Asiga had breached.

Section 8 of the same administrative order provides:

Section. 8. Claimants/Applicants Required to File Mineral Agreement ApplicationsOnly holders of mining claims and lease/quarry applications filed prior to the effectivity of the Act which are valid and existing as defined in Section 5 hereof who have not filed any Mineral Agreement Applications over areas covered by such mining claims and lease/quarry applications are required to file Mineral Agreement applications pursuant to Section 273 of the IRR on or before September 15, 1997; Provided, that the holder of such a mining claim or lease/quarry application involved in a mining dispute/case shall instead file on or before said deadline a Letter of Intent to file the necessary Mineral Agreement application; Provided, further, That if the mining claim or lease/quarry application is not determined to be invalid in the dispute/case, the claimant or applicant shall have thirty (30) days from the final resolution of the dispute/case to file the necessary Mineral Agreement application; Provided, finally, that failure by the claimant or applicant to file the necessary Mineral Agreement application within said thirty (30)-day period shall result in the abandonment of such claim or application, after which, any area covered by the same shall be opened for Mining Applications.

This provision supplies the grace period for a claim holder caught in a mining dispute, which the Court of Appeals overlooked.

Ruling

On the first issue, the Court ruled that Asiga did not abandon its claims. The phrase in Section 27, failure of the claimowner to comply therewith, refers to the actual work obligations, not merely the submission of proof. The Court noted that the title of the provision was changed from Proof of Annual Work Obligations to Annual Work Obligations, showing that the focus is on the work itself. It relied on its earlier ruling in Santiago versus Deputy Executive Secretary, where it held that it is the failure to perform the required assessment work, not the failure to file the affidavit, that gives rise to abandonment. The Court also held that even actual non-compliance does not cancel a claim automatically. Due process requires, first, a written notice of non-compliance with ample opportunity to comply, and second, if compliance still fails, a written notice of cancellation. No such notices were sent to Asiga.

On the second issue, the Court ruled that Asiga had not abandoned its claims for non-payment of occupation fees. Section 9 requires full payment or a letter of commitment within thirty days from filing of the mineral agreement application. But Section 8 provides that a claim holder involved in a mining dispute files only a letter of intent, and the actual application within thirty days from the final resolution of the dispute. The thirty-day period to pay therefore begins only upon the filing of the actual application. Since this case is that very dispute, Asiga has thirty days from the finality of the decision to pay in full.

Doctrine

Under Section 27 of the Mineral Resources Development Decree of 1974, as amended, abandonment of a mining claim arises from the actual failure to perform the annual work obligations, not from the mere failure to file the affidavit of annual work obligation. Even then, no automatic abandonment may be declared without due process: the claim holder must be given written notice of non-compliance and an opportunity to comply, and, failing that, a written notice of cancellation. Under Sections 8 and 9 of Department Administrative Order Number 97-07, a claim holder involved in a mining dispute files only a letter of intent, and the period to file the mineral agreement application and to pay occupation fees runs only from the final resolution of the dispute.

Disposition

The Court granted the petition, set aside the rulings of the Court of Appeals and the Mines Adjudication Board, and ordered the exclusion from the respondents' applications of the areas overlapping Asiga's valid and existing mining claims.

Remember This

Memorize this line: it is the failure to perform the work, not the failure to file the affidavit, that constitutes abandonment, and never without due process. Examiners use this case to test automatic abandonment of mining claims and the interplay of Sections 8 and 9 of Department Administrative Order Number 97-07 on the thirty-day periods.