G.R. No. 244063 - Concurring and Dissenting Opinion

G.R. No. 244063, June 21, 2022,
♦ Decision, Inting, [J]
♦ Concurring and Dissenting Opinion, Leonen, [J]
♦ Concurring Opinion, Caguioa, [J]
♦ Concurrence, Lazaro-Javier, [J]
♦ Separate Concurring Opinion, Dimaampao, [J]

LONE CONGRESSIONAL DISTRICT OF BENGUET PROVINCE, REPRESENTED BY HON. RONALD M. COSALAN, REPRESENTATIVE, PETITIONER, VS. LEPANTO CONSOLIDATED MINING COMPANY AND FAR SOUTHEAST GOLD RESOURCES, INC., RESPONDENTS.

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE MINES AND GEOSCIENCES BUREAU OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (MGB-DENR), PETITIONER, VS. LEPANTO CONSOLIDATED MINING COMPANY AND FAR SOUTHEAST GOLD RESOURCES, INC., RESPONDENTS.

Following the State policy of recognizing and promoting the rights of indigenous peoples,1 the Indigenous Peoples' Rights Act introduced measures to guarantee that their rights over their ancestral lands, including the resources found in them, are protected. These protections include a certification precondition before any license, concession, lease, or production sharing agreement involving the exploitation of natural resources may be granted or renewed.

Furthermore, to ensure that the State policy is followed, such agreements must be construed with the utmost scrutiny, for they affect not only the nature of the property rights they vest, but also all other extractive natural resource rights that potentially negate the constitutionally protected rights of indigenous cultural communities.

The certification precondition, which includes obtaining free and prior informed and written consent (FPIC) from the affected indigenous peoples,2 must be strictly complied with before such agreements may be renewed. Parties cannot just circumvent this requirement on the mistaken notion that they still have vested rights, even after the force of their agreement has ceased to exist.

I therefore concur with the ponencia insofar as it ordered the Final Award issued in favor of respondents Lepanto Consolidated Mining Company and Far Southeast Gold Resources, Inc. to be vacated for violating the State's declared policy. However, it should have granted the Motion for Leave to Intervene filed by the Lone Congressional District of Benguet Province (Congressional District of Benguet).

On March 3, 1990—before Republic Act No. 8371, or the Indigenous Peoples' Rights Act of 1997, took effect—the Republic of the Philippines (Republic), through the Department of Environment and Natural Resources, entered into Mineral Production Sharing Agreement No. 001-90 (MPSA No. 001-90 or the Agreement) with respondents. It allowed them to conduct mining operations on a tract of land in Mankayan, Benguet, which covered part of the Mankayan Indigenous Peoples' ancestral domain.3

On May 22, 2014, respondents wrote the Mines and Geosciences Bureau-Cordillera Administrative Region, expressing their intention to renew the Agreement. Respondents relied on Section 3.1 of MPSA No. 001-90, which states that the Agreement's term shall be for 25 years, "renewable for another period of 25 years upon such terms and conditions as may be mutually agreed upon by the parties or as may be provided by law[.]"4

The Bureau informed respondents that while the requirements for MPSA No. 001-90's renewal had been substantially complied with, the application shall be endorsed to the National Commission on Indigenous Peoples to examine if they have met the certification precondition under Section 59 of the Indigenous Peoples' Rights Act, which included the requirements of obtaining FPIC from the affected indigenous peoples.5

Respondents challenged the endorsement, contending that their vested right to renew the Agreement would be impaired should they be required to comply with these preconditions.6 They served a Demand for Arbitration on the Republic, and the dispute was then referred to arbitration.7

The arbitral tribunal issued a Final Award holding, among others, that respondents need not comply with the certification precondition before MPSA No. 001-90 may be renewed.8 It decreed that the requirements were unfavorable future legislation violating Section 14.2 of the Agreement and Section 56 of the Indigenous Peoples' Rights Act. It ruled that respondents had a vested right for the renewal of the Agreement under its original terms and conditions.9

The Republic filed a Petition, which the Regional Trial Court granted. It vacated the Final Award and decreed that noncompliance with the certification precondition infringed on the public policy that the Indigenous Peoples' Rights Act sought to promote.10

Respondents filed a Petition for Review before the Court of Appeals. As the case was pending, the Congressional District of Benguet filed a Motion for Leave to Intervene.11 On appeal, however, the Court of Appeals set aside the trial court's ruling and affirmed that of the arbitral tribunal. It likewise denied the Motion for Leave to Intervene.12

Again, while I disagree with the ponencia in that petitioner Congressional District of Benguet should have been allowed to intervene, I ultimately agree that the Final Award should be vacated. The Petitions, therefore, should be granted.

Due to the exceptional characteristics of arbitration proceedings, the ponencia affirmed the Court of Appeals' denial of the Motion for Leave to Intervene. The ponencia holds that intervention is not permitted in an arbitration case, which is contractual and consensual nature.13

While I agree with the ponencia that the remedy of intervention does not apply to arbitration cases, the limitation does not extend to proceedings before the Court of Appeals.

In Fruehauf Electronics Philippines Corporation v. Technology Electronics Assembly and Management Pacific Corporation,14 this Court said that since arbitral proceedings are contractual in nature, the parties may agree on the rules to be observed by the arbitrators:

Here, petitioner Congressional District of Benguet filed its Motion for Leave to Intervene while the main case was pending in the Court of Appeals, well after the arbitral tribunal had rendered its Final Award. The proceeding before the Court of Appeals is civil in nature, governed not by the parties' arbitral agreement, but by the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules)16 and the Rules of Court.

The ponencia suggests that the Special ADR Rules preclude the Rules of Court's application even in a suppletory manner.17 It cites Rule 22.1 of the Special ADR Rules, which states that the Rules of Court provisions "applicable to the proceedings enumerated in Rule 1.1 of [the] Special ADR Rules have either been included and incorporated in [the] Special ADR Rules or specifically referred to [therein]."18

Yet, the proceedings enumerated in Rule 1.1 exclude proceedings before the Court of Appeals. It provides:

The exclusion of Court of Appeals proceedings in the list means that the parties may resort to Rules of Court provisions, including the remedy of intervention.

The ponencia goes on to cite Rule 1.13 of the Special ADR Rules to say that "[i]n situations where no specific rule is provided under the Special ADR Rules, the court shall resolve such matter summarily and be guided by the spirit and intent of the Special ADR Rules and the ADR Laws."19

It is true that Republic Act No. 9285, or the Alternative Dispute Resolution Act of 2004, encourages the use of alternative dispute resolution as a means to achieve speedy and impartial justice. But the law does not stop litigants from seeking redress from regular courts. This interpretation is reinforced by Fruehauf, where this Court held that since the arbitral tribunal is a contractual and consensual body, it lacks inherent powers over the parties and acquires jurisdiction over them only through stipulation. Save for certain exceptions, its powers and authority over the parties cease upon the rendition of a final award:

The Rules of Court, therefore, may suppletorily apply. On that score, petitioner Congressional District of Benguet may be allowed to intervene.

"Intervention is a remedy by which a third party, not originally impleaded in the proceedings, becomes a litigant therein for a certain purpose: to enable the third party to protect or preserve a right or interest that may be affected by those proceedings."21 Rule 19, Section 1 of the Rules of Court provides the requisites for one to successfully intervene:

In Executive Secretary v. Northeast Freight Forwarders, Inc.,22 this Court discussed the conditions for intervention and clarified that the determination of whether a motion to intervene may be allowed is a matter addressed to the court's discretion:

Applying this, petitioner's Motion for Leave to Intervene should have been granted.

One of the declared policies of the Indigenous Peoples' Rights Act is to ensure that the Indigenous Cultural Communities/Indigenous Peoples' (ICCs/IPs) rights to their ancestral domains are recognized, and that the State shall recognize the applicability of their customary laws to determine the extent of their ownership and ancestral domains.24 The Implementing Rules and Regulations of the law mandate that contracts to exploit natural resources within the ancestral domains shall not be renewed unless the "free and prior informed consent" of the affected indigenous community members is first obtained.25

Ronald M. Cosalan (Cosalan), as an indigenous tribe member, and as representative of ICCs/IPs, has a clear legal interest to ensure that the State respects and protects the ICCs/IPs' rights over their ancestral domain.26 Therefore, petitioner Congressional District of Benguet, as represented by Cosalan, has the legal interest to guarantee that the ICCs/IPs within its territory benefit from the rights and opportunities under the law.

Nonetheless, I join the majority that the arbitral tribunal's Final Award should be vacated for violating the State's declared policy and being injurious to the interests of society.

"As a rule, the award of an arbitrator cannot be set aside for mere errors of judgment either as to the law or as to the facts. Courts are without power to amend or overrule merely because of disagreement with matters of law or facts determined by the arbitrators."27 This is based on "the State's policy of upholding the autonomy of arbitration proceedings and their corresponding arbitral awards."28

The rule, however, is not absolute. Section 41 of the Alternative Dispute Resolution Act of 2004 states:

Under the law and rules, a regional trial court may set aside an arbitral award if it is found to go against public policy. As pointed out by Chief Justice Alexander Gesmundo during our deliberations, an arbitral award is against public policy if "its enforcement would be (1) against our State's fundamental tenets of justice and morality or (2) blatantly be injurious to the public or the interests of the society[.]"29

In Vda. de Ongsiako v. Gamboa,30 this Court elucidated on what it means for an agreement to be against public policy: "if it is injurious to the interests of the public, contravenes some established interest of society, . . . or, as it is sometimes put, if it is at war with the interests of society and is in conflict with the morals of the time."31

In my separate concurring opinion in Sama v. People,32 I explained that there has been a shift of attitude toward ICCs/IPs from simply integration to recognition and protection:

Indeed, our present legal framework vows to recognize and promote the rights of ICCs/IPs, at the forefront of which is our very own Constitution. Article II, Section 22 states:

SECTION 22. The State recognizes and promotes the rights of indigenous cultural communities within the framework of national unity and development.

Notably, Article XII, Section 2 of the Constitution provides for the State's ownership over minerals and natural resources:

The State's ownership of these natural resources is, however, qualified by the ICCs/IPs' rights over their ancestral lands and domains. In Sama, I discussed the extent of the State's ownership and control over these natural resources in relation to the indigenous concept of ownership. Citing Cariño v. Insular Government34 and Reavis v. Fianza,35 I clarified that the constitutionally protected titles of ICCs/IPs cover not only their ancestral lands and domain, but also the natural resources found in them:

In relation to this, among the laws that regulate the use of the natural resources in ancestral domains are Republic Act No. 7942, or the Philippine Mining Act of 1995, and the Indigenous Peoples' Rights Act.

Section 16 of the Philippine Mining Act requires the prior consent of the affected indigenous cultural community before ancestral lands may be opened for mining operations:

Meanwhile, the Indigenous Peoples' Rights Act is considered as 'the principal piece of legislation that would govern with respect to most of the demands of indigenous peoples through their various organizations."'37 The law not only recognizes the "general concept of indigenous property right and granting title thereto[,]" but likewise identifies "the civil and political rights of all members of indigenous cultural communities or indigenous peoples, regardless of their relation to ancestral lands or domains[.]"38

Section 59 of Indigenous Peoples' Rights Act requires compliance with the certification precondition before any license or production sharing agreement may be issued or renewed:

This certification precondition is one of the means by which the State "protect[s] the rights of ICCs/IPs to their ancestral domains[.]"39

Here, the Final Award considered respondents free from having to comply with the certification precondition under the Indigenous Peoples' Rights Act before MPSA No. 001-90 may be renewed, as this would violate the Agreement and respondents' vested rights.

This is blatantly contrary to public policy. Respondents should comply with the certification precondition before MPSA No. 001-90 may be renewed. Otherwise, the protection that the Constitution and the Indigenous Peoples' Rights Act seek to afford ICCs/IPs would be pointless should the Final Award be enforced.

Finally, I wish to emphasize that respondents have no vested rights for the renewal of MPSA No. 001-90.1a⍵⍴h!1

Notwithstanding the recognition of the ICCs/IPs' rights, these rights are subject to Section 56 of the Indigenous Peoples' Rights Act:

SECTION 56. Existing Property Rights Regimes. — Property rights within the ancestral domains already existing and/or vested upon effectivity of this Act, shall be recognized and respected.

The property rights contemplated in Section 56 "include those whose ownership [is] evidenced by a Certificate of Title under the Property Registration Decree, those whose rights have vested but [who] have not yet acquired a title[,] and arguably even those who do not possess title but who have been granted rights to use, exploit[,] and develop resources."40

Retired Justice Santiago M. Kapunan, in his separate opinion in the landmark case of Cruz v. Secretary of Environment and Natural Resources,41 characterized the property rights under Section 56 as follows:

The "property rights" referred to in Section 56 belong to those acquired by individuals, whether indigenous or non-indigenous peoples. Said provision makes no distinction as to the ethnic origins of the ownership of these "property rights." The IPRA thus recognizes and respects "vested rights" regardless of whether they pertain to indigenous or non-indigenous peoples. Where the law does not distinguish, the courts should not distinguish. What IPRA only requires is that these "property rights" already exist and/or vested upon its effectivity.42 (Citation omitted)

Accordingly, despite the Indigenous Peoples' Rights Act's enactment, respondents' property rights acquired through MPSA No. 001-90 would have been recognized and respected.

However, respondents' property rights existed only during the term of the Agreement. These rights ceased to exist when the Agreement expired. This is consistent with the nature of a mining production sharing agreement, "where the [g]overnment grants to the contractor the exclusive right to conduct mining operations within a contract area and shares in the gross output."43

To some extent, mining production sharing agreements are like timber licenses in that they "are the principal instruments by which the State regulates the utilization and disposition of forest resources to the end that public welfare is promoted."44 They "evidence a privilege granted by the State to qualified entities, and do not vest in the latter a permanent or irrevocable right to the particular concession area and the forest products therein."45

Further, Benguet Consolidated Mining Company v. Pineda46 defines a vested right as follows:

The Indigenous Peoples' Rights Act requires that concessions, licenses, leases, or production sharing agreements shall not be renewed without prior compliance with the certification precondition under Section 59 of the law. This requirement applies to contracts or agreements existing at the time of the law's enactment, including MPSA No. 001-90.48