Lepanto Consolidated Mining Co. v.

WMC Resources
G.R. No. 162331, November 20, 2006, 507 SCRA 315

Facts:
The Philippine Government and WMC Philippines executed a Financial and Technical Assistance
Agreement
(Columbio FTAA) for the purpose of large scale exploration, development, and commercial
exploration
of possible mineral resources in South Cotabato, Sultan Kudarat, Davao del Sur, and North Cotabato
in
accordance with EO No. 279 and DAO No. 63, Series of 1991.
The Columbio FTAA is covered in part by 156 mining claims held by the Tampakan Companies.
This was in accordance with the Option Agreement entered into by WMC Philippines and the
Tampakan
Companies. The Option Agreement granted the right of first refusal to the Tampakan Companies
should
WMC Philippines desire to dispose of its rights and interests in the said mining claims. Subsequently,
WMC Resources sold to Lepanto its entire shareholdings in WMC Philippines, subject to the right of
first
refusal of the Tampakan Companies.
Afterwards, Tampakan Companies sought to exercise its right of first refusal. Lepanto refused,
contending that Tampakan Companies failed to match the terms and conditions set forth in the
Agreement.

Another Sale and Purchase Agreement was executed between WMC Resources and Tampakan
Companies, wherein Sagittarius Mines was designated “assignee and corporate vehicle which would
acquire the shareholdings and undertake the Columbio FTAA activities.” WMC Resources also sold to
Sagittarius Mines its shares of stock. The DENR eventually approved the transfer of the Columbio
FTAA
from WMC Philippines to Sagittarius Mines.
“Aggrieved by the transfer of the Columbio FTAA in favor of Sagittarius Mines, [Lepanto] filed a
Petition for Review of the Order of the DENR Secretary with the Office of the President (OP).
Petitioner
assails the validity on the ground that: 1) it violates the constitutional right of Lepanto to due
process; 2)
it preempts the resolution of very crucial legal issues pending with the regular courts; and 3) it
blatantly
violates Section 40 of the Mining Act.” The OP dismissed the petition. The Court of Appeals also
dismissed
petitioner’s appeal. Hence, the instant petition with the SC.
Issue:
Whether Section 40 of the Philippine Mining Act of 1995, requiring the approval of the President of
the assignment or transfer of financial or technical assistance agreements, applies to the Columbio
FTAA.
Ruling:
No. Section 40 of the Philippine Mining Act does not apply to the Columbio FTAA. The Columbio
FTAA was entered into before the Philippine Mining Act took effect. A statute is construed to be
prospective in operation, unless the contrary is stated. The Philippine Mining Act is devoid of any
provision which states that it shall apply retroactively. Thus, it shall apply prospectively.
If the said provision, which requires the approval of the President with respect to assignment or
transfer of FTAAs, is made applicable retroactively to the Columbio FTAA, it would violate the
Constitutional
prohibition against the impairment of the obligations of contracts since it “would effectively restrict
the
right of the parties thereto to assign or transfer their interests in the said FTAA.”

The Supreme Court further held that, assuming that the said provision applies, “the lack of
presidential approval will not be fatal as to render the transfer illegal, especially since, as in the
instant case, the alleged lack of presidential approval has been remedied when petitioner appealed
the matter to the Office of the President which approved the Order of the DENR Secretary granting
the
application for transfer of the Columbio FTAA to Sagittarius Mines, Inc.” As held in the case of La
Bugal-
B’Laan Tribal Association, Inc. v. Ramos, “[W]hen the transferee of the FTAA happens to be a
Filipino
corporation, the need for such safeguard is not critical; hence, the lack of prior approval and
notification
may not be deemed fatal as to render the transfer invalid.”