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 land located
inside the Agusan-Davao-Surigao Forest Reserve in Davao del Norte and Davao Oriental. Since the early1980s,
Diwalwal has been stormed by conflicts brought about by numerous mining claims over it. On March10, 1986,
Marcopper Mining Corporation (MMC) was granted an Exploration Permit(EP 133) by the Bureauof Mines and GeoSciences (BMG). A long battle ensued between Apex and MMC with the latter seeking the cancellation of the mining
claims of Apex on the ground that such mining claims were within a forest reservation (Agusan-Davao-Surigao
Forest Reserve) and thus the acquisition on mining rights should have been through an application for
a permit to prospect with the BFD and not through registration of a DOL with the BMG. When it reached
the SC in 1991, the Court ruled 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 Gold Mining Corporation (SEM), a domestic corporation which is alleged to be a 100%owned subsidiary of MMC. Subsequently, BMG registered SEMs 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 an emergency situation in the Diwalwal Gold Rush Area and ordering the stoppage of all mining
operations 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 areas covered 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. INVALID. One of the terms and conditions of EP 133 is: That 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% su bsidiary corporation of
MMC, there is no showing that the former is the duly authorized agent of the latter. As such, the
assignment is null and void as it directly contravenes the terms and conditions of the grant of EP 133.
a. The Deed of Assignment was a total abdication of MMCs rights over the permit. It is not a mere 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 operations. Without such a condition, non-qualified
entities or individuals could circumvent the strict requirements under 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 not automatically make it an
agent of MMC. A corporation is an artificial being invested by law with a personality separate and distinct from
persons composing it as well as from that of another legal entity to which it may be related. Absent any
clear proof to the contrary, SEM is a separate and distinct entity from MMC.
d. Doctrine of piercing the corporate veil inapplicable. Only in cases where the corporate fiction was used
as a shield for fraud, illegality or inequity may the veil be pierced and removed. The doctrine of piercing
the corporate veil cannot therefore be used as a vehicle to commit prohibited acts. The assignment of the
permit in favor of SEM is utilized to circumvent the condition of non transferability of the exploration permit. To allow
SEM to avail itself of this doctrine and to approve the validity of the assignment is tantamount to sanctioning an illegal
act which is what the doctrine precisely seeks to forestall.
e. 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 to explore 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 right over the
area covered by EP 133.2. NO. The DENR Secretary has no power to convert forest reserves into nonforest reserves. Such power is vested with the President. The DENR Secretary may only recommend to the
President which forest reservations are to be withdrawn from the coverage thereof. Thus, DAO No. 66 is null and void
for having been issued in excess of the DENR Secretarys authority.

3. (Since its been held that neither MMC nor SEM has any right over Diwalwal, it is thus necessary 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 deemed overtaken by the issuance of Proclamation
297and DAO No. 2002-18, both being constitutionally-sanctioned acts of the Executive Branch. Mining operations in
the Diwalwal Mineral Reservation are now, therefore, within the full control of the State through the executive
branch. Pursuant to Sec. 5 of RA 7942, the State can either: (1) directly undertake the exploration,
development and utilization of the area or (2) opt to award mining operations in the mineral reservation to private
entities including petitioners Apex and Balite, if it wishes. The exercise of this prerogative lies with the
Executive Department over which courts will not interfere.
2. ORIENT AIR SERVICES v. CA
Facts: American Air, an air carrier offering passenger and air cargo transportation, entered into a General
Sales Agency Agreement with Orient Air, authorizing the latter to act as its exclusive general sales
agent for the sale of air passenger transportation. Orient air failed to remit the net proceeds of sales for
several months prompting American Air to undertook the collection of the proceeds of tickets sold
originally by Orient Air and terminating their agreement. American air instituted suit against Orient Air
for the settlement of past outstanding funds in possession of the latter. Orient Air contended that because of the
unpaid overriding commissions it retained the sales proceeds before remitting the balance to American
Air. American Air contended that the sale must be made by Orient Air and the sale must be done with the
use of American Air's ticket stocks in order for it to be entitled to the overriding commission. On the other
hand, Orient Air contends that the contractual stipulation of a 3% overriding commission covers the total
revenue of American Air and not merely that derived from ticketed sales undertaken by Orient Air because
it was an exclusive General Sales Agent. CA held that Orient Air is entitled to commissions and ordered
American Air to reinstate Orient Air as its General Sales Agent.
Issue: Whether or not Orient Air is entitled to commissions.
Whether CA is correct in ordering reinstatement of Orient Air as an agent.
Held:1. Yes. Orient Air was entitled to an overriding commission based on total flown revenue. American Air's
perception that Orient Air was remiss or in default of its obligations under the Agreement was, in fact, a
situation where the latter acted in accordance with the Agreementthat of retaining from the sales proceeds its
accrued commissions before remitting the balance to American Air. Since the latter was still obligated to
Orient Air by way of such commissions. Orient Air was clearly justified in retaining and refusing to remit the sums
claimed by American Air. The latter's termination of the Agreement was, therefore, without cause and basis,
for which it should be held liable to Orient Air.
2. No. CA in effect compels American Air to extend its personality to Orient Air. Such would be violative of
the principles and essence of agency, defined by law as a contract whereby "a person binds himself to render some
service or to do something in representation or on behalf of another, WITH THE CONSENTOR
AUTHORITY OF THE LATTER. In an agent-principal relationship, the personality of the principal is
extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to
perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the
principal, which must not, in any way, be compelled by law or by any court.
Laureano T. Angeles vs. Philippine National Railways (PNR) and Rodolfo Flores
August 31, 2006 G.R. No. 150128
Facts: Respondent Philippine National Railways (PNR) informed a certain Gaudencio Romualdez (Romualdez,
hereinafter) that it has accepted the latters offer to buy the PNRs scrap/unserviceable rails located in Del
Carmen and Lubao, Pampanga at P1,300.00 andP2,100.00 per metric ton, respectively, for the total amount of
P96,600.00. Romualdez paid the purchase price and addressed a letter to Atty. Cipriano Dizon, PNRs Acting
Purchasing Agent. The letter authorized LIZETTE R. WIJANCO to be his (Romualdez) lawful representative in
the withdrawal of the scrap/unserviceable rails awarded to him. Furthermore, the original copy of the award which
indicates the waiver of rights, interest and participation in favor of Lizette R.Wijanco was also given. The
Lizette R. Wijanco was petitioner's now deceased wife. That very same day, Lizette requested the PNR to
transfer the location of withdrawal for the reason that the scrap/unserviceable rails located in Del Carmen

and Lubao, Pampanga were not ready for hauling. The PNR granted said request and allowed Lizette to withdraw
scrap/unserviceable rails in Murcia, Capas and San Miguel, Tarlac instead. However, PNR subsequently suspended
the withdrawal in view of what it considered as documentary discrepancies coupled by reported pilferages of over
P500,000.00 worth of PNR scrap properties in Tarlac. Consequently, the spouses Angeles demanded the refund of
the amount of P96,000.00. The PNR, however, refused to pay, alleging that as per delivery receipt duly signed by
Lizette,54.658 metric tons of unserviceable rails had already been withdrawn. The spouses Angeles filed
suit against the PNR for specific performance and damages before the Regional Trial Court. Lizette
W. Angeles passed away and was substituted by her heirs, among whom is her husband,
herein petitioner Laureno T. Angeles. The trial court, on the postulate that the spouses Angeles are not
the real parties-in-interest, rendered judgment dismissing their complaint for lack of cause of action. As
held by the court, Lizette was merely a representative of Romualdez in the withdrawal of scrap or
unserviceable rails awarded to him and not an assignee to the latter's rights with respect to the award.
Petitioner appealed with the Court of Appeals which dismissed the appeal and affirmed that of the trial
court.
Issue: Whether or not the CA erred in affirming the trial court's holding that petitioner and his spouse, as plaintiffs a
quo, had no cause of action as they were not the real parties-in-interest in this case.
Held: No. The CAs conclusion, affirmatory of that of the trial court, is that Lizette was not an assignee, but
merely an agent whose authority was limited to the withdrawal of the scrap rails, hence, without personality to sue.
Where agency exists, the third party's (in this case, PNR's) liability on a contract is to the principal and not
to the agent and the relationship of the third party to the principal is the same as that in a contract in which there
is no agent. Normally, the agent has neither rights nor liabilities as against the third party. He cannot thus
sue or be sued on the contract. Since a contract may be violated only by the parties thereto as against each other,
the real party-in-interest, either as plaintiff or defendant in an action upon that contract must, generally, be
a contracting party. The legal situation is, however, different where an agent is constituted as an assignee.
In such a case, the agent may, in his own behalf, sue on a contract made for his principal, as an assignee of
such contract. The rule requiring every action to be prosecuted in the name of the real party-in-interest
recognizes the assignment of rights of action and also recognizes that when one has a right assigned to
him, he is then the real party-in-interest and may maintain an action upon such claim or right. WHEREFORE
, the petition is DENIED and the assailed decision of the CA is AFFIRMED. Costs against the petitioner.
EDWARD C. ONG vs. THE COURT OF APPEALS AND THE PEOPLE OFTHE PHILIPPINES,respondents.,
G.R. No. 119858. April 29, 2003
Facts:
Petitioner, representing ARMAGRI, applied for a letter of credit for P2,532,500.00 with SOLID BANK
Corporation to finance the purchase of differential assemblies from Metropole Industrial Sales. On 6
July1990, petitioner, representing ARMAGRI, executed a trust receipt acknowledging receipt from the
Bank of the goods valued at P2,532,500.00. On 12 July 1990, petitioner and Benito Ong, representing
ARMAGRI, applied for another letter of credit for P2,050,000.00 to finance the purchase of merchandise
from Fertiphil Corporation. The Bank approved the application, opened the letter of credit and paid to Fertiphil
Corporation the amount of P2,050,000.00. On 23 July 1990, petitioner, signing for ARMAGRI, executed
another trust receipt in favor of the Bank acknowledging receipt of the merchandise. Both trust receipts
contained the same stipulations. Under the trust receipts, ARMAGRI undertook to account for the goods
held in trust for the Bank, or if the goods are sold, to turn over the proceeds to the Bank. ARMAGRI also
undertook the obligation to keep the proceeds in the form of money, bills or receivables as the separate property
of the Bank or to return the goods upon demand by the Bank, if not sold. When the trust receipts became due
and demandable, ARMAGRI failed to pay or deliver the goods to the Bank despite several demand letters.
Consequently, as of 31 May 1991, the unpaid account under the first trust receipt amounted to P1,527,180.66,
while the unpaid account under the second trust receipt amounted to P1,449,395.71 Assistant City
Prosecutor Dina P. Teves of the City of Manila charged petitioner and Benito Ong with two counts of
estafa.
Issue:
WON Ong may be held liable for estafa as he was only acting as agent.

Held: The Trust Receipts Law is violated whenever the entrustee fails to: (1) turn over the proceeds of
thesale of the goods, or (2) return the goods covered by the trust receipts if the goods are not sold. The
merefailure to account or return gives rise to the crime which is malum prohibitum. There is no
requirement to prove intent to defraud.
The Trust Receipts Law recognizes the impossibility of imposing the penalty of imprisonment on a
corporation. Hence, if the entrustee is a corporation, the law makes the officers or employees or
other persons responsible for the offense liable to suffer the penalty of imprisonment. The reason is obvio
us: corporations, partnerships, associations and other juridical entities cannot be put to jail. Hence,
the criminal liability falls on the human agent responsible for the violation of the Trust Receipts Law. In the
instant case, the Bank was the entruster while ARMAGRI was the entrustee. Being the entrustee,
ARMAGRI was the one responsible to account for the goods or its proceeds in case of sale. However, the
criminal liability for violation of the Trust Receipts Law falls on the human agent responsible for the
violation. Petitioner, who admits being the agent of ARMAGRI, is the person responsible for the offense
for two reasons. First, petitioner is the signatory to the trust receipts, the loan applications and the letters
of credit. Second, despite being the signatory to the trust receipts and the other documents, petitioner did
not explain or show why he is not responsible for the failure to turn over the proceeds of the sale or
account for the goods covered by the trust receipts. The Bank released the goods to ARMAGRI upon execution
of the trust receipts and as part of the loan transactions of ARMAGRI. The Bank had a right to demand from
ARMAGRI payment or at least a return of the goods. ARMAGRI failed to pay or return the goods despite
repeated demands by the Bank.It is a well-settled doctrine long before the enactment of the Trust
Receipts Law, that the failure to account, upon demand, for funds or property held in trust is evidence of
conversion or misappropriation. Under the law, mere failure by the entrustee to account for the goods
received in trust constitutes estafa. The Trust Receipts Law punishes dishonesty and abuse of confidence in the
handling of money or goods to the prejudice of public order. The mere failure to deliver the proceeds of the
sale or the goods if not sold constitutes a criminal offense that causes prejudice not only to the creditor,
but also to the public interest. Evidently, the Bank suffered prejudice for neither money nor the goods
were turned over to the Bank.
The Trust Receipts Law expressly makes the corporations officers or employees or other persons therein
responsible for the offense liable to suffer the penalty of imprisonment. In the instant case, petitioner
signed the two trust receipts on behalf of ARMAGRI as the latter could only act through its agents.
When petitioner signed the trust receipts, he acknowledged receipt of the goods covered by the trust
receipts. In addition, petitioner was fully aware of the terms and conditions stated in the trust receipts,
including the obligation to turn over the proceeds of the sale or return the goods to the Bank. True, petitioner
acted on behalf of ARMAGRI. However, i t i s a w e l l - s e t t l e d r u l e t h a t t h e l a w
of agency governing civil cases has no application in criminal
c a s e s . When a person participates in the commission of a crime, he cannot escape punishment on the ground
that he simply acted as an agent of another party. In the instant case, the Bank accepted the trust receipts
signed by petitioner based on petitioners representations. It is the fact of being the signatory to the
two trust receipts, and thus a direct participant to the crime, which makes petitioner a person responsible
for the offense.