View full case

DIAMOND DRILLING CORPORATION v. DIAMOND DRILLING CORPORATION

FACTS:

The case involves the question of whether the Department of Environment and Natural Resources (DENR) can be compelled to amend a Mineral Production Sharing Agreement (MPSA) through a court order. The dispute arose from a Joint Venture Agreement (JVA) between Crescent Mining and Development Corporation (Crescent) and Pacific Falkon Resources Corporation (PFRC) for mining operations in Benguet. PFRC later acquired a 40% stake in the project. Diamond Drilling Corporation of the Philippines (DDCP), PFRC's drilling contractor, filed a complaint against PFRC, resulting in PFRC's 40% interest in the project being attached and levied upon. DDCP then emerged as the highest bidder in the auction of PFRC's levied interest. DDCP sought to have its 40% interest in the project recorded by the DENR, but the DENR denied the request. DDCP filed a motion seeking a court order to amend the MPSA, which was eventually granted by the trial court.

Another excerpt states that the DENR filed a motion to amend an MPSA regarding a mining project. The trial court granted the motion, but Crescent Mining and Development Corporation filed a motion for reconsideration. The motion for reconsideration was denied, and Crescent filed a petition for certiorari with the Court of Appeals (CA), arguing that the trial court no longer had jurisdiction. The CA agreed with Crescent and annulled the trial court's order. The DENR and DDCP separately filed petitions for certiorari with the CA, but only DDCP was granted relief. Both the DENR and DDCP filed motions for reconsideration, but they were denied. They then filed separate petitions for review with the Supreme Court.

Lastly, the case involves the propriety of execution by motion and the time period for conducting a sale at public auction after the issuance of a writ of execution. The court states that after a judgment has been fully satisfied, the case is considered terminated. However, if the judgment has not yet been fully satisfied, the court has supervisory control over the execution process. The court refers to previous cases where enforcement of liability and determination of the amount owing to judgment creditors were allowed because the judgment was not fully satisfied. The court also notes that there is no specific time period prescribed for conducting a sale after the issuance of a writ of execution as long as a valid execution was issued and levy made during the lifetime of the writ.

ISSUES:

  1. Whether or not the judgment in favor of DDCP should be deemed fully satisfied at the time it filed the motion to amend the Mineral Production Sharing Agreement (MPSA).

  2. Whether or not mining projects are considered state projects and cannot be purely private endeavors.

  3. Whether or not the Department of Environment and Natural Resources (DENR) has the power to enter into mineral agreements and enforce related laws.

  4. Whether or not the Mines and Geosciences Bureau (MGB) has the authority to administer and dispose of mineral lands and resources.

  5. Whether or not an MPSA is a contract where the State grants the exclusive right to conduct mining operations to a private party in exchange for a share in the proceeds.

  6. Whether or not DDCP can be considered a co-contractor in the Guinaoang Project.

  7. Whether or not the Letter-Agreement between Crescent and PFRC can transfer rights under the MPSA No. 057-96-CAR.

  8. Whether or not the automatic approval clause in Section 30 of the Mining Act applies to the Letter-Agreement.

  9. Whether or not the transfer of the 40% interest in the mineral agreement was valid and whether it entitles the buyer to an amendment of the agreement.

RULING:

  1. The Supreme Court held that the judgment in favor of DDCP should be deemed fully satisfied at the time it filed the motion to amend the MPSA. The trial court had already lost jurisdiction by the time it issued the assailed order. DDCP had already acquired property of its judgment debtor through the acquisition of PFRC's 40% interest in the Guinaoang Project, which stood as payment for the judgment debt.

  2. Mining projects are considered state projects and cannot be purely private endeavors.

  3. The DENR has the power to enter into mineral agreements and enforce related laws.

  4. The MGB has the authority to administer and dispose of mineral lands and resources.

  5. An MPSA is a contract where the State grants the exclusive right to conduct mining operations to a private party in exchange for a share in the proceeds.

  6. DDCP cannot be considered a co-contractor in the Guinaoang Project because it failed to comply with the requirements set forth in the Mining Act and its implementing rules and regulations. The addition of a new contractor to an MPSA by virtue of a transfer of mineral agreement rights must be made with the consent of the government, as manifested by the approval of the DENR Secretary, and DDCP failed to prove compliance with this requisite.

  7. The Letter-Agreement between Crescent and PFRC cannot transfer rights under the MPSA No. 057-96-CAR because it is not compliant with Section 46 of the Mining Act's implementing rules and regulations.

  8. The automatic approval clause in Section 30 of the Mining Act does not apply to the Letter-Agreement because it is not compliant with Section 46 of the Mining Act's implementing rules and regulations. The automatic approval clause applies only to applications that satisfy all the requisites laid down in Section 46.

  9. The transfer of the 40% interest in the mineral agreement was invalid, and therefore, the buyer is not entitled to an amendment of the agreement.

PRINCIPLES:

  • The court which rendered the judgment has supervisory control over the execution proceedings, including the determination of every question of fact and law involved.

  • A valid execution and levy made during the lifetime of the writ of execution may be enforced by a sale made even beyond the lifetime of the writ, as long as it is made within ten (10) years from the entry of judgment.

  • The right to demand the amendment of the MPSA to reflect the 40% interest is one of the rights acquired by the judgment creditor in the execution sale, which constitutes property that can stand as payment for the judgment debt.

  • The approval of an amendment to an MPSA to reflect a transfer or assignment of rights is a power and function of the DENR Secretary.

  • Mineral resources are owned by the State and its exploration, development, utilization, and processing shall be under its full control and supervision.

  • The State may enter into mineral agreements with private parties, but the projects remain as State projects and can never be purely private endeavors.

  • The DENR has the primary responsibility for the conservation, management, development, and proper use of the State's mineral resources.

  • The DENR has the power to enter into mineral agreements on behalf of the Government and enforce applicable related laws.

  • The MGB has direct charge in the administration and disposition of mineral lands and mineral resources.

  • An MPSA is a contract where the State grants the exclusive right to conduct mining operations to a private party in exchange for a share in the proceeds. The private party provides necessary financing, technology, management, and personnel to conduct the mining operations.

  • The addition of a new contractor to a Mineral Production Sharing Agreement (MPSA) by virtue of a transfer of mineral agreement rights must be made with the consent of the government, as manifested by the approval of the DENR Secretary, and in compliance with the requirements set forth by the Mining Act and its implementing rules and regulations.

  • Transfers of rights in an MPSA are governed by Section 30 of the Mining Act and Section 46 of its implementing rules and regulations, which require compliance with specific requisites such as payment of application fees, submission of a Deed of Assignment, proof of compliance with terms and conditions of the Agreement and the Mining Act, and approval of the DENR Secretary.

  • The automatic approval clause in Section 30 of the Mining Act applies only to applications that satisfy all the requisites laid down in Section 46 of its implementing rules and regulations. The DENR Secretary's power to approve transfers and assignments of mineral agreements and mineral agreement rights is discretionary in nature.

  • The buyer in an execution sale only acquires the right of the judgment debtor.

  • The right to be included in a mineral agreement as a co-contractor is not among the rights that can be acquired through an execution sale.