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APEX MINING Co. v South Mindanao Gold Mining Corp.

- 1983: Camilo Banad and his group filed a Declaration of Location (DOL) for six mining
claims in the Diwalwal Gold Rush Area
o Banad and other natives organized the Balite Communal Portal Mining Cooperative
- APEX entered into operating agreements with Banad and his group
- 1984: Marcopper Mining Corporation (MMC) filed 16 DOLs for areas adjacent to the area
covered by the DOL of Banad and his group
o However, the area encompassed by its mining claims is a forest reserve within the
coverage of Proclamation 369 which established the Agusan-Davao-Surigao Forest
o Thus, MMC abandoned it and applied for a prospecting permit with the Bureau of Forest
Development (BFD)
- 1985: BFD issued a Prospecting Permit to MMC covering an area of 4,941.6759 hectares
traversing an area within the forest reserve under Proclamation 369
o The Prospecting Permit included the areas claimed by Ape and other mining claimants
- MMC filed an application for an Exploration Permit with the Bureau of Mines and Geo-
Sciences (BMG)
o BMG issued the exploration permit 133 (EP 133)
- However, after discovering the mining claims and the proliferation of small-scale miners in
the area covered by EP 133, MMC filed a Petition for the Cancellation of the Mining Claims
of Apex and Small Scale Mining before the BMG
o MMC alleged that the areas covered by its EP 133 and the mining claims of Apex were
within an established and existing forest reservation (Agusan-Davao-Surigao Forest
Reserve) and that the acquisition of mining rights within a forest reserve is through the
application for a permit to prospect with the BFD and not through registration of a DOL
with the BMG
- BMG dismissed MMC’s petition because the area covered by APEX’ mining claims and
MMC’s permit to explore was not a forest reservation
o Furthermore, BMG declared null and void MMC’s EP 133 and sustained the validity of
Apex mining claims over the disputed area
o MMC appealed to DENR, which reversed BMG’s decision
- Apex filed a motion for reconsideration and appeal to the president which were both
o Thus, Apex filed a petition for certiorari with the SC, who ultimately decided against Apex
– the area is a forest reserve, thus the proper procedure in acquiring mining rights is
through a permit to prospect with the BFD
- Subsequently, DENR Sec. Factoran issued Department Administrative Order (DAO 66)
declaring 729 hectares of the areas covered by the Agusan-Davao-Surigao Forest Reserve
as non-forest lands and open to small-scale mining purposes
- Monkayo Integrated Small Scale Miners Association (MISSMA) filed an application for a
Mineral Production Sharing Agreement (MPSA)
o Denied by BMG on the grounds that the area applied for is within the area covered by
MMC EP 133 and that the MISSMA was not qualified to apply for an MPSA under DAO
- Rosendo Villaflor and his group filed a petition for Cancellation of MMC’s EP 133 and for the
admission of their MPSA Application before the BMG
- MMC assigned EP 133 to Southeast Mindanao Gold Mining Corporation (SEM), a domestic
corporation which is alleged to be a 100% -owned subsidiary of MMC
- SEM filed an MPSA application for the entire 4,941.6759 hectares under EP 133 – denied
because of the pendency of the case filed by Villaflor
o A year after, SEM filed another MPSA application, which BMG accepted and it registered
SEM’s MPSA application and the Deed of Assignment over EP 133 executed in its favor
by MMC
o The application was opposed by other claimants, thus DENR constituted a Panel of
Arbiters (PA) to resolve the claims
- PA’s decision: denied the adverse claims because they weren’t filed in accordance with
existing rules and regulations and they were only mere occupants conducting illegal mining
activities at the con
o The adverse claimants appealed to the Mines Adjudication Board (MAB) who opined that
EP 133 has expired due to its non-renewal and MMC has already relinquished its right
over to SEM
o MAB also treated SEM’s MPSA application over the disputed area as an entirely new
and distinct application, which it approved, but excluding the area segregated by DAO
- The adverse claimants appealed the PA’s decision to the SC, but were remanded to the CA
pursuant to Rule 43
o The CA affirmed the PA’s decision banking on the premise that SEM is the agent of
MMC by virtue of its assignment of EP 133 in favor of SEM and the purported fact that
SEM is a 100% subsidiary of MMC
o Since SEM is an agent of MMC, the assignment of EP 133 did not violate the condition
prohibiting its transfer except to MMC’s duly designated agent
o Thus, despite the non-renewal of EP 133, it is still valid because MMC’s mining rights
were validly transferred to SEM prior to its expiration
W/N the transfer of EP 133 to SEM is valid because SEM is MMC’s agent - NO
- Apex’ argument: MMC failed to comply with the terms and conditions in its exploration
permit, thus MMC and its successor-in-interest SEM lost their rights in the Diwalwal Gold
Rush Area. It violated 4 conditions namely: 1. MMC failed to comply with the mandatory
work program, to complete exploration work, and to declare a mining feasibility; 2. it reneged
on its duty to submit an Environmental Compliance Certificate; 3. it failed to comply with the
reportorial requirements; 4. it violated the terms of EP 133 when it assigned said permit to
SEM despite the explicit proscription against its transfer, unless it is made to its authorized
o Moreover, since EP 133 expired prior to its assignment to SEM, SEM’s MPSA
application should have been evaluated on its own merit
- Adverse claimants’ argument: SEM cannot be considered as MMC’s duly designated agent
as there is no proof on record authorizing SEM to represent MMC in its business dealings or
undertakings, and neither did SEM pursue its interest in the permit as an agent of MMC
o The assignment by MMC of EP 133 in favor of SEM did not make the latter the duly
authorized agent of MMC since the concept of an agent under EP 133 is not equivalent
to the concept of assignee
- SC: there is no evidence showing that SEM is the duly authorized agent of MMC even
though it is the latter’s assignee and is a 100% subsidiary corporation of it
- The contract of agency requires that the principal consents that the other party, the agent,
shall act on its behalf, and the agent consents so as to act
- Yu Eng Cho v Pan American: 4 elements of agency - (1) consent, express or implied, of the
parties to establish the relationship; (2) the object is the execution of a juridical act in relation
to a third person; (3) the agent acts as a representative and not for himself; (4) the agent
acts within the scope of his authority.
o The burden of proving agency is on the party who alleges it
- In this case, MMC or SEM failed to prove that a contract of agency actually exists between
them so as to allow SEM to use and benefit from EP 133 as the agent of MMC
o SEM did not claim nor submit proof that it is the designated agent of MMC to represent
the latter in its business dealings or undertakings. SEM cannot, therefore, use EP 133
and benefit from it.
o Also, the assignment or transfer of the permit in favor of SEM is null and void as it
directly contravenes the terms and conditions of the grant of EP 133
- Moreover, assignment is different from agency in such a way that in the latter, the agent acts
not on his own behalf but on behalf of his principal and in the former, there is total transfer or
relinquishment of right by the assignor to the assignee
o The assignee takes the place of the assignor and is no longer bound to the latter
- The assignment by MMC of EP 133 in favor of SEM did not make the latter the former’s
agent because the MMC already ceded whatever rights or interest it has in EP 133 to SEM
and SEM is no long bound to MMC
o It is not a mere grant of authority to SEM, as an agent of MMC, to use the permit. It is a
total abdication of MMC’s rights over the permit.
W/N the doctrine of piercing the corporate veil applies – NO
- The said doctrine only applies in cases where the corporate fiction was misused to such an
extent that injustice, fraud or crime was committed against another, in disregard of its rights
may the veil be pierced and removed
- The assignment of the permit in favor of SEM is utilized to circumvent the condition of non-
transferability of the exploration permit, thus to allow SEM to avail itself of this doctrine and
to approve the validity of the assignment is tantamount to sanctioning illegal act which is
what the doctrine precisely seeks to forestall.
- Moreover, under PD 463 (governing law when assignment was executed), the approval of
the Secretary of DENR is required for a valid assignment
o Absent the prior approval of the Secretary of DENR, the assignment of EP 133, was
without legal effect
- With the expiration of EP 133 on 6 July 1994, MMC lost any right to the Diwalwal Gold Rush
Area. SEM, on the other hand, has not acquired any right to the said area because the
transfer of EP 133 in its favor is invalid