INVALID.
One of the terms and conditions of EP 133 is: “That
Apex Mining Co., Inc. v. Southeast Mindanao Gold Mining Corp. (2006)
Facts:The case involves the “Diwalwal Gold Rush Area” (Diwalwal), a rich
tract of mineral landlocated inside the Agusan-Davao-Surigao Forest
Reserve in Davao del Norte and Davao Oriental. Sincethe early 1980s,
Diwalwal has been stormed by conflicts brought about by numerous mining
claims over it.On March 10, 1986, Marcopper Mining Corporation
(MMC) was granted an Exploration Permit (EP 133) by the Bureau of
Mines and Geo-Sciences (BMG). A long battle ensued between Apex
andMMC with the latter seeking the cancellation of the mining claims of
Apex on the ground that suchmining claims were within a forest reservation
(Agusan-Davao-Surigao Forest Reserve) and thus theacquisition on mining
rights should have been through an application for a permit to prospect
with theBFD and not through registration of a DOL with the BMG. When it
reached the SC in 1991, the Courtruled against Apex holding that the area is
a forest reserve and thus it should have applied for a permit to prospect
with the BFD.On February 16 1994,
MMC assigned all its rights to EP 133 to Southeast Mindanao GoldMining
Corporation (SEM)
, a domestic corporation which is alleged to be a 100%-owned subsidiary
of MMC. Subsequently, BMG registered SEM’s Mineral Production Sharing
Agreement (MPSA)application and the Deed of Assignment. Several
oppositions were filed. The Panel of Arbitrators created by the DENR upheld
the validity of EP 133.
During the pendency of the case, DENR AO No. 2002-18 was issued
declaring anemergency situation in the Diwalwal Gold Rush Area and
ordering the stoppage of all miningoperations therein.
Issues:1.
W/N EP 133 and its subsequent transfer to SEM is valid .2.
W/N the DENR Secretary has authority to issue DAO 66 declaring 729
hectares of the areascovered by the Agusan-Davao-Surigao Forest Reserve
as non-forest lands and open to small-scale mining purposes.3.
Who (among petitioners Apex and Balite) has priority right over
Diwalwal?Held/Ratio:1.
this permit shall be for the
exclusive use and benefit of the permittee or his duly authorized agents
and shall be used for mineral exploration purposes only and for no
other purpose.” While it may be true that SEM is a100% subsidiary
corporation of MMC, there is no showing that the former is the duly
authorizedagent of the latter. As such, the
assignment is null and void
as it directly contravenes the termsand conditions of the grant of
EP 133.a.
The Deed of Assignment was a total abdication of MMC’s rights over the
permit.
It is not amere grant of authority to SEM as agent. b.
Reason for the stipulation.
Exploration permits are strictly granted to entities or
individuals possessing the resources and capability to undertake mining ope
rations. Without such acondition, non-qualified entities or individuals could
circumvent the strict requirementsunder the law by the simple expediency
of acquiring the permit from the original permittee.c.
Separate personality.
The fact that SEM is a 100% subsidiary of MMC does
notautomatically make it an agent of MMC. A corporation is an artificial
being invested by lawwith a personality separate and distinct from persons
composing it as well as from that of anyother legal entity to which it may be
related. Absent any clear proof to the contrary, SEM is aseparate and
distinct entity from MMC.d.
Doctrine of piercing the corporate veil inapplicable.
Only in cases where the corporatefiction was used as a shield for fraud,
illegality or inequity may the veil be pierced andremoved. The doctrine of
piercing the corporate veil cannot therefore be used as a vehicle tocommit
prohibited acts. The assignment of the permit in favor of SEM is utilized
tocircumvent the condition of nontransferability of the exploration permit.
To allow SEM to
 Pursuant to Sec. 5 of RA 7942, the State can either: (1) directly undertake
avail itself of this doctrine and to approve the validity of the assignment is theexploration, development and utilization of the area or (2) opt to award
tantamount tosanctioning an illegal act which is what the doctrine precisely mining operations in themineral reservation to private entities including
seeks to forestall.e. petitioners Apex and Balite, if it wishes. Theexercise of this prerogative lies
with the Executive Department over which courts will notinterfere.
PD 463 requires approval of Secretary of DENR.
Also, PD 463 (Mineral Resources Development Decree), which is the
governing law when the assignment was executed,explicitly requires that
the transfer or assignment of mining rights, including the right toexplore a
mining area, must be with the prior approval of the Secretary of DENR. Such
is not present in this case.f.

EP 133 expired by non-renewal.

Although EP 133 was extended for 12 months until July 6,1994, MMC never
renewed its permit prior and after its expiration.With the expiration of
EP 133 on July 6, 1994, MMC lost any right to the Diwalwal
Gold RushArea. 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. Hence, both
MMC and SEM have not acquired any vested rightover the area
covered by EP 133.2.

NO. The DENR Secretary has no power to convert forest reserves into non-
forest reserves. Such power is
vested with the President. The DENR Secretary may only recommend to the
Presidentwhich forest reservations are to be withdrawn from the coverage
thereof. Thus, DAO No. 66 isnull and void for having been issued in excess of
the DENR Secretary’s authority.3.

(Since it’s been held that neither MMC nor SEM has any right over Diwalwal,
it is thusnecessary to make a
determination
of the existing right of the remaining claimants,
petitioners Apex and Balite, in the dispute.)

The issue on who has priority right over Diwalwal is deemedovertaken by

the issuance of Proclamation 297 and DAO No. 2002-18, both
beingconstitutionally-sanctioned acts of the Executive Branch
. Mining operations in the DiwalwalMineral Reservation are
now, therefore, within the f ull control of the State through
theexecutive branch.
Chavez v. Pea and Amari
Facts:
In 1973, the Comissioner on Public Highways entered into a contract to
reclaim areasof Manila Bay with the Construction and Development
Corportion of the Philippines(CDCP).PEA (Public Estates Authority) was
created by President Marcos under P.D. 1084,tasked with developing and
leasing reclaimed lands. These lands were transferred tothe care of PEA
under P.D. 1085 as part of the Manila Cavite Road and ReclamationProject
(MCRRP). CDCP and PEA entered into an agreement that all future
projectsunder the MCRRP would be funded and owned by PEA.By 1988,
President Aquino issued Special Patent No. 3517 transferring lands to PEA.It
was followed by the transfer of three Titles (7309, 7311 and 7312) by the
Register of Deeds of Paranaque to PEA covering the three reclaimed islands
known as theFREEDOM ISLANDS.Subsquently, PEA entered into a joint
venture agreement (JVA) with AMARI, a Thai-Philippine corporation to
develop the Freedom Islands. Along with another 250hectares, PEA and
AMARI entered the JVA which would later transfer said lands toAMARI. This
caused a stir especially when Sen. Maceda assailed the agreement,claiming
that such lands were part of public domain (famously known as the
“mother of all scams”).Peitioner Frank J. Chavez filed case as a taxpayer
praying for mandamus, a writ of preliminary injunction and a TRO against
the sale of reclaimed lands by PEA toAMARI and from implementing the
JVA. Following these events, under President Estrada’s admin, PEA and
AMARI entered into an Amended JVA and Mr. Chaves claim that the
contract is null and void.
Issue: WON the stipulations in the amended joint venture agreement for the
transfer to AMARI of certain lands, reclaimed and still to be reclaimed,
violate the 1987constitution.
The 157.84 has.of reclaimed lands comprising the Freedom Islands, now
covered bycertificates of title in the name of PEA, are alienable lands of the
public domain. PEAmay lease these lands to private corporations but may
not sell or transfer ownership of these lands to private corporations. PEA
may only sell these lands to Philippinecitizens, subject to ownership
limitations in the 1987 Constitution and existing laws.The 592.15 has.of
submerged areas of Manila Bay remain inalienable natural resourcesof the
public domain and outside the commerce of man until classified as alienable
or disposable lands open to disposition and declared no longer needed for
public service.The government can make such classification and declaration
only after PEA hasreclaimed these submerged areas. Only then can these
lands qualify as agriculturallands of the public domain, which are the only
natural resources the government canalienateSince the Amended JVA seeks
to transfer to AMARI, a private corporation, ownershipof 77.34 has.of the
Freedom Islands, such transfer is void for being contrary to Section3, Article
12 of the 1987 Constitution which prohibits private corporations
fromacquiring any kind of alienable land of the public domainSince the
Amended JVA also seeks to transfer to AMARI ownership of 290.156
has.of still submerged areas of Manila Bay, such transfer is void for being
contrary to Section2, Article 12 of the 1987 Constitution which prohibits the
alienation of naturalresources other than agricultural lands of the public
domain. PEA may reclaim thesesubmerged areas. Thereafter, the
government can classify the reclaimed lands asalienable or disposable, and
further declare them no longer needed for public services.Still, the transfer
of such reclaimed alienable lands of the public domain to AMARIwill be void
in view of Section 3, Article 12 that prohibits private corporations
fromacquiring any kind of alienable land of the public domain.Reasoning:
CA 141 of the Philippine National Assembly empowers the president to
classify lands of the public domain into alienable or disposable (Sec. 6).The
President, upon recommendation of the Secretary of Agriculture and
Commerce, shall from time to time classify the lands of the public domain
into
—
(a) Alienable of disposable, (b) timber, and (c) mineral lands.The President
must first officially classify these lands as alienable or disposable, and then
declare them open to disposition or concession.Sec. 59
states that the lands disposable under this title shall be classified as follows:
(a)Lands reclaimed by the Government by dredging, filling, or other means;
(b)Foreshore; (c) Marshy lands (d) Lands not included in any of the
foregoing classes.
Sec. 61
states that the lands comprised in classes (a), (b) and (c) of section 59 shall
bedisposed f to private parties by lease only and not otherwiseAfter the
effectivity of the 1935 Constitution, government reclaimed and
marshydisposable lands of the public domain continued to be only leased
and not sold to
private parties. These lands remained suis generic as the only alienable
or disposablelands of the public domain the government could not sell to
private parties. The onlyway that the government can sell to private parties
government reclaimed and marshydisposable lands of the public domain is
for the legislature to pass a law authorizingsuch sale.
PD No. 1085, coupled with President Aquino’s actual issuance of a special
patent
covering the Freedom Islands, is equivalent to an official proclamation
classifying theFreedom Islands as alienable or disposable lands of the public
domain. PD No. 1085
and President Aquino’s issuance of a land patent also constitute a
declaration that the
Freedom Islands are no longer needed for public service. The Freedom
Islands arethus alienable or disposable lands of the public domain, open to
disposition or concession to qualified parties.in case of sale or lease of
disposable lands of the public domain, a public bidding isrequired1987
Constitution declares that all natural resources are owned by the State.
With theexception of agricultural lands, all other natural resources shall not
be alienated.Article 12, Sec. 3 states that alienable lands of the public
domain shall be limited toagricultural lands. Private corporations or
associations may not hold such alienablelands of the public domain except
by lease, for a period not exceeding 25 years,renewable for not more than
25 years, and not to exceed 1,000 has.in area.ration behind the ban on
corporations from acquiring except through lease is not wellunderstood. If
the purpose is to equitably diffuse lands ownership then the
Consti couldhave simply limited the size of alienable lands of the public
domain that corporations
could acquire. If the intent were to encourage “owner
-
cultivatorship” and the economic
family-size farm and to prevent a recurrence of cases like the instant case,
then placingthe land in the name of a corporation would be more effective
in preventing the break-up of farmlands. If the farmland were registered in
the name of a corporation, upon thedeath of the owner, his heirs would
inherit shares in the corporation instead of subdivided parcels of the
farmland. This would prevent the continuing break-up of farmlands into
smaller and smaller plots from one generation to the next.
In actual practice then, this ban strengthens the consti limitation on
individuals from acquiring more than the allowed area of alienable lands of
the public domain
.Without the ban, individuals who already acquired the maximum area of
alienablelands of the public domain could easily set up corporations to
acquire more alienable public lands. An individual could own as many
corporations as his means would allowhim. He could even hide his
ownership of a corporation by putting his nominees asstockholders of the
corporation.In the instant case, the only patent and certificates of title
issued are those in the nameof PEA, a wholly government owned
corporation performing public as well as proprietary functions. No patent
or certificate of title has been issued to any private
party. No one is asking the Director of Lands to cancel PEA’s patent Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters
or certificates of notcovered by PD No. 1084. Secti

title. In fact, the thrust of the instant petition is that P on 60 of CA No. 141 prohibits, “except whenauthorized by Congress,” the
sale of alienable lands of the public domain that are
EA’s certificates of title should
transferred to government units or entities. Section 60 of CA No.
remain with PEA, and the land covered by these certificates, being alienable 141 constitutes,
lands of the public domain, should not be sold to a
private corporation.Registration of land under Act No. 496 or PD No. 1529 under Section 44 of PD No. 1529, a “statutory lien affecting title” of the
does not vest in the registered
registrant private or public ownership of the land. Registration is not a mod
e of acquiringownership but is merely evidence of ownership previously land even if not annotated on the certificate of title.iii[104] Alienable lands
conferred by any of therecognized modes of of the public domain held by government
acquiring ownership. Registration does not give the registrant a better right entities under Section 60 of CA No. 141 remain public lands because they
than what the registrant had prior to the registration.i[102] The cannot be alienated or encumbered unless Congress passes alaw
registrationof lands of the public domain under the Torrens system, by authorizing their disposition. Congress, however, cannot authorize the sale
itself, cannot convert public lands into private lands.ii[103]Jurisprudence to private corporations of reclaimed alienable lands of the public domain
holding that upon the grant of the patent or issuance of the certificate because of theconstitutional ban. Only individuals can benefit from such
of title the alienable land of the public domain automatically becomes law.
private land cannotapply to government units and entities like PEA. The The grant of legislative authority to sell public lands in accordance
transfer of the Freedom Islandsto PEA was made subject to the provisions of with Section 60 of CA No. 141 does not automatically convert alienable
CA No. 141 as expressly stated inSpecial Patent No. 3517 issued by then lands of the public domain into private or patrimonial lands. The alienable
President Aquino, to wit: lands of the public domain must be transferred to qualified private parties,
or to government entities not tasked to dispose of public lands, before
“NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the
these lands can become private or patrimonial lands.Otherwise,
Philippines and in conformity with the provisions of Presidential Decree No. the constitutional ban will become illusory if Congress can declare lands of
1084,supplemented by Commonwealth Act No. 141, as amended, there are the public domain as private or patrimonial lands in the hands of a
hereby grantedand conveyed unto the Public Estates Authority the government agency tasked to dispose of public lands. This will allow private
aforesaid tracts of land containinga total area of one million nine hundred corporations to acquire directly from government agencies limitless areas of
fifteen thousand eight hundred ninety four (1,915,894) square meters; the lands which, prior to such law, are concededly public lands
technical description of which are hereto attached and

made an integral part hereof.” (Emphasis supplied)

As the central implementing agency tasked to undertake reclamation
projectsnationwide, with authority to sell reclaimed lands, PEA took the
place of DENR as thegovernment agency charged with leasing or selling
reclaimed lands of the publicdomain. The reclaimed lands being leased or
sold by PEA are not private lands, in thesame manner that DENR, when it
disposes of other alienable lands, does not dispose of private
lands but alienable lands of the public domain. Only when qualified
private parties acquire these lands will the lands become private lands. In th
e hands of thegovernment agency tasked and authorized to dispose of
alienable of disposable landsof the public domain, these lands are still
public, not private lands.
Furthermore, PEA’s charter expressly states that PEA “shall hold lands of the
publicdomain” as well as “any and all kinds of lands.” PEA can hold both
lands of the public
domain and private lands. Thus, the mere fact that alienable lands of the
publicdomain like the Freedom Islands are transferred to PEA and issued
land patents or
certificates of title in PEA’s name does not automatically make such lands
private.
The Regalian doctrine is deeply implanted in our legal system. Foreshore
and submerged areas form part of the public domain and are
inalienable. Lands reclaimed from foreshore and submerged areas also form
part of the public domain and are also inalienable, unless converted
pursuant to law into alienable or disposable lands of the public
domain. Historically, lands reclaimed by the government
are sui generis, not available for sale to private parties unlike other alienable
public lands. Reclaimed lands retain their inherent potential as areas
for public use or public service. Alienable lands of the public domain, increa
singly becoming scarce natural resources, are to be distributed equitably am
ong our ever-growing population
. To insure such equitable distribution, the 1973 and 1987 Constitutions
have barred private corporations from acquiring any kind of alienable land
of the public domain
. Those who attempt to dispose of inalienable naturalresources of the State,
or seek to circumvent the constitutional ban on alienation of lands of the
public domain to private corporations, do so at their own risk.We can now
summarize our conclusions as
follows:1. The 157.84 hectares of reclaimed lands comprising the Freedom I
slands, nowcovered by certificates of title in the name of PEA, are alienable
lands of the publicdomain. PEA may lease these lands to private
corporations but may not sell or transfer ownership of these lands to
private corporations. PEA may only sell these lands toPhilippine citizens,
subject to the ownership limitations in the 1987 Constitution andexisting
laws.2. The 592.15 hectares of submerged areas of Manila Bay remain inalie
nablenatural resources of the public domain until classified as alienable or
disposable landsopen to disposition and declared no longer needed for
public service. The governmentcan make such classification and declaration
only after PEA has reclaimed thesesubmerged areas. Only then can these
lands qualify as agricultural lands of the publicdomain, which are the only
natural resources the government can alienate. In their present
state, the 592.15 hectares of submerged areas are inalienable and
outside thecommerce of
man.3. Since the Amended JVA seeks to transfer to AMARI, a private corpor
ation,ownership of 77.34 hectaresiv[110] of the Freedom Islands, such
transfer is void
for being contrary to Section 3, Article XII of the 1987 Constitution which pr
ohibits private corporations from acquiring any kind of alienable land of the
public
domain.4. Since the Amended JVA also seeks to transfer to AMARI ownershi
p of 290.156 hectaresv[111] of still submerged areas of Manila Bay, such
transfer is voidfor being contrary to Section 2, Article XII of the 1987
Constitution which prohibitsthe alienation of natural resources other than
agricultural lands of the public domain.PEA may reclaim these submerged
areas. Thereafter, the government can classify thereclaimed lands as
alienable or disposable, and further declare them no longer neededfor
public service. Still, the transfer of such reclaimed alienable lands of the
publicdomain to AMARI will be void in view of Section 3, Article XII of the
1987Constitution which prohibits private corporations from acquiring any
kind of alienableland of the public domain.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of
the 1987 Constitution. Under Article 1409vi[112] of the Civil
Code, contracts whose

“object or purpose is contrary to law,” or whose “object is outside the

commerce of men,” are “inexistent and void from the beginning.” The
Court must perform its

duty to defend and uphold the Constitution, and therefore declares the
Amended JVA null and void ab initio