MAGDALENA RULLAN, ET AL., PLAINTIFFS AND APPELLANTS, VS. BERNARDO O. VALDEZ, DEFENDANT AND APPELLEE.

BAUTISTA ANGELO, J.:

On November 24, 1961, Bernardo 0. Valdez filed with the Bureau of Mines an
application for the lease of certain public mineral lands comprising the amended
locations of the SILICA and SELECTA Placer Mining Claims which was ordered
published according to law. The first publication was made on December 3, 1961.

During the period of the publication of the application, Magdalena Rullan and
George Alabanza filed with the Bureau of Mines an opposition in the form of
adverse claim to the application alleging, among other things, the following:
Sometime in February, 1958, Bernardo O. Valdez and his associates executed
certain documents stating that they are the members of the Baguio-Loakan Placer
Mining Association the whole interest of which is divided into 10,000 units and
each unit being valued at P5.00.

The interest of Valdez is only 4,000 units. Sometime in 1957, the Association
located two placer mining claims, namely, morning glory containing an area of 45
hectares, and silica containing an area of 8 hectares. Then, sometime in January
or February, 1959, Magdalena Rullan bought 1,000 units of the Association, while
George Alabanza 300 units, thereby becoming members thereof.

After some associates had sold their participation in the Association to
third persons, Valdez, without the knowledge or consent of his associates,
reduced the area comprising the SILICA Placer Mining Claim from 8 to 6.1284
hectares by excluding therefrom the southeastern portion having an area of
1.8716 hectares which he added to the original area of 4 hectares that comprises
the SELECTA Placer Mining Claim which he located and the lease of which he
applied for with the Bureau of Mines. And pending consideration of their adverse
claims filed with the Bureau of Mines, Magdalena Rullan and George Alabanza
commenced the present action on January 10, 1962 before the Court of First
Instance of Baguio setting forth the foregoing facts and praying that their
rights and interests as co-lessees of the 8 hectares of public mineral land
originally comprising the SILICA Placer Mining Claim be declared and recognized
irrespective of the amended location made by defendant insofar as the SELECTA
Placer Mining Claim is concerned.

Defendant Valdez filed a motion to dismiss on the ground that, not hiving
alleged that they are locators, holders or owners of the mining claims in
question, plaintiffs cannot be considered adverse claimants within the purview
of Section 73 of Commonwealth Act No. 137, as amended.

To this motion plaintiffs filed their opposition. On February 13, 1962, the
court a quo denied the motion to dismiss. On February 21, 1962, defendant
filed a motion for reconsideration alleging that the court a quo had not
acquired jurisdiction over the case inasmuch as the Director of Mines had not
given due course to the adverse claim of plaintiffs for which reason they filed
a motion for reconsideration which at that time has not yet been acted upon. And
on February 26, 1962, the court a quo issued an order declaring itself
without jurisdiction considering that the Director of Mines had not yet acted on
the motion for reconsideration filed by the plaintiffs. And vi-en their motion
for reconsideration was denied, plain- tiffs interposed the present appeal.

The only issue to be determined is whether the court a quo has jurisdiction
to act on the case considering that action on the adverse claim herein involved
is still pending in the Office of the Bureau of Mines. It appears that the
Director of Mine has not yet acted one way or the other on the motion for
reconsideration filed by the plaintiffs. The law applicable to the issue before
us is Section 73 of Commonwealth Act No. 137. as amended by Republic Act No.
743, which we quote:

“SEC. 73. At any time during the period of application, any adverse oMm may
be filed wider oath with the Director of Mines. and shall state in full detail
the nature, boundaries, and extent of the adverse claim, and shall be
accompanied by all plans, documents, and agreements upon which such adverse
claim is based: * * * Upon the filing of any adverse claim all proceedings
except the making and filing of the affidavit in connection there- with, as
herein prescribed, shall be stayed until the controversy shall have been settled
or decided by a court of competent jurisdiction, or the adverse claim waived. It
shall be the duty of the adverse claimant, within thirty days after filing his
claim, to commenre proceedings in a court of competent jurisdiction to determine
the controversy and to prosecute the same with reasonable diligence to final
judgment, and a failure to do so shall be considered as a waiver of his adverse
claim.* * *”

The above statutory provision prescribes the method by which a person having
an adverse claim to a certain mineral and can have his day in court. If he fails
to file an adverse claim within the time therein provided for or fails to
commence the proceeding within the statutory period, his claim is deemed waived.
Any person who has an adverse interest in the whole or to a portion of the
surface of a mining claim for which a lease is applied for by another may file
an adverse claim which must state in full the nature, boundaries and extent
thereof, to be accompanied by the necessary plans, documents and agreements upon
which the same is based. The filing of said adverse claim produces the effect of
staving all the proceedings on the application filed with the Bureau of Mines,
except only in relation to the publication and proof of notice, until the
controversy shall have been decided by a court of competent jurisdiction. Since
then the functions of the Bureau of Mines are suspended to await the action of
the court.

This is the situation herein obtained. After plaintiffs bad filed their
adverse claim with the Bureau of Mines with regard to the lease application of
certain mining claims filled by defendant, they at the same time commenced the
present action wherein they squarely brought to the fore the issue of ownership
over the mining claim controverted. The question, therefore, comes well within
the jurisdiction of the court a quo regardless of whether the action of the
Director of Mines on the adverse claim filed in his office is still pending.
This is the reverse situation of a case involving .the ownership of a portion of
public land wherein exhaustion of administrative remedies is required, for here
the law is specific that the question of ownership affecting an adverse claim
must first be determined by the competent court before administrative action
could proceed to its termination. It is, therefore, error for the court a quo to
dismiss the complaint on the ground that plaintiffs have not exhausted their
administrative remedies before coming to court. The situation obtained herein is
just the contrary.

Wherefore, the order appealed from is set aside. This case should be remanded
to the court a quo for further proceedings. Costs against appellee.

Concepcion, Reyes, J. B. L., Paredes, Regala, Makalintal, Bengzon, J.
P. and Zaldivar, JJ. concur.