G.R. No. 88550 April 18, 1990
INDUSTRIAL ENTERPRISES, INC., petitioner,
vs.
THE HON. COURT OF APPEALS, MARINDUQUE MINING & INDUSTRIAL CORPORATION, THE HON. GERONIMO VELASCO in his capacity as Minister of Energy and PHILIPPINE NATIONAL BANK, respondents.
Manuel M. Antonio and Dante Cortez for petitioner.
Pelaez, Adriano & Gregorio for respondent MMIC.
The Chief Legal Counsel for respondent PNB.
MELENCIO-HERRERA, J.:
This petition seeks the review and reversal of the Decision of respondent Court of Appeals in CA-G.R. CV No. 12660, 1 which ruled adversely against petitioner herein.
Petitioner Industrial Enterprises Inc. (IEI) was
granted a coal operating contract by the Government through the Bureau
of Energy Development (BED) for the exploration of two coal blocks in
Eastern Samar. Subsequently, IEI also applied with the then Ministry of
Energy for another coal operating contract for the exploration of three
additional coal blocks which, together with the original two blocks,
comprised the so-called "Giporlos Area."
IEI was later on advised that in line with the
objective of rationalizing the country's over-all coal supply-demand
balance . . . the logical coal operator in the area should be the
Marinduque Mining and Industrial Corporation (MMIC), which was already
developing the coal deposit in another area (Bagacay Area) and that the
Bagacay and Giporlos Areas should be awarded to MMIC (Rollo, p.
37). Thus, IEI and MMIC executed a Memorandum of Agreement whereby IEI
assigned and transferred to MMIC all its rights and interests in the two
coal blocks which are the subject of IEI's coal operating contract.
Subsequently,
however, IEI filed an action for rescission of the Memorandum of
Agreement with damages against MMIC and the then Minister of Energy
Geronimo Velasco before the Regional Trial Court of Makati, Branch 150, 2
alleging that MMIC took possession of the subject coal blocks even
before the Memorandum of Agreement was finalized and approved by the
BED; that MMIC discontinued work thereon; that MMIC failed to apply for a
coal operating contract for the adjacent coal blocks; and that MMIC
failed and refused to pay the reimbursements agreed upon and to assume
IEI's loan obligation as provided in the Memorandum of Agreement (Rollo,
p. 38). IEI also prayed that the Energy Minister be ordered to approve
the return of the coal operating contract from MMIC to petitioner, with a
written confirmation that said contract is valid and effective, and, in
due course, to convert said contract from an exploration agreement to a
development/production or exploitation contract in IEI's favor.
Respondent, Philippine National Bank (PNB), was later
impleaded as co-defendant in an Amended Complaint when the latter with
the Development Bank of the Philippines effected extra-judicial
foreclosures on certain mortgages, particularly the Mortgage Trust
Agreement, dated 13 July 1981, constituted in its favor by MMIC after
the latter defaulted in its obligation totalling around P22 million as
of 15 July 1984. The Court of Appeals eventually dismissed the case
against the PNB (Resolution, 21 September 1989).
Strangely enough, Mr. Jesus S. Cabarrus is the President of both IEI and MMIC.
In a summary judgment, the Trial Court ordered the
rescission of the Memorandum of Agreement, declared the continued
efficacy of the coal operating contract in favor of IEI; ordered the
reversion of the two coal blocks covered by the coal operating contract;
ordered BED to issue its written affirmation of the coal operating
contract and to expeditiously cause the conversion thereof from
exploration to development in favor of IEI; directed BED to give due
course to IEI's application for a coal operating contract; directed BED
to give due course to IEI's application for three more coal blocks; and
ordered the payment of damages and rehabilitation expenses (Rollo, pp. 9-10).
In reversing the Trial Court, the Court of Appeals
held that the rendition of the summary judgment was not proper since
there were genuine issues in controversy between the parties, and more
importantly, that the Trial Court had no jurisdiction over the action
considering that, under Presidential Decree No. 1206, it is the BED that
has the power to decide controversies relative to the exploration,
exploitation and development of coal blocks (Rollo, pp. 43-44).
Hence, this petition, to which we resolved to give due course and to decide.
Incidentally, the records disclose that during the
pendency of the appeal before the Appellate Court, the suit against the
then Minister of Energy was dismissed and that, in the meantime, IEI had
applied with the BED for the development of certain coal blocks.
The decisive issue in this case is whether or not the
civil court has jurisdiction to hear and decide the suit for rescission
of the Memorandum of Agreement concerning a coal operating contract
over coal blocks. A corollary question is whether or not respondent
Court of Appeals erred in holding that it is the Bureau of Energy
Development (BED) which has jurisdiction over said action and not the
civil court.
While the action filed by IEI sought the rescission
of what appears to be an ordinary civil contract cognizable by a civil
court, the fact is that the Memorandum of Agreement sought to be
rescinded is derived from a coal-operating contract and is inextricably
tied up with the right to develop coal-bearing lands and the
determination of whether or not the reversion of the coal operating
contract over the subject coal blocks to IEI would be in line with the
integrated national program for coal-development and with the objective
of rationalizing the country's over-all coal-supply-demand balance,
IEI's cause of action was not merely the rescission of a contract but
the reversion or return to it of the operation of the coal blocks. Thus
it was that in its Decision ordering the rescission of the Agreement,
the Trial Court, inter alia, declared the continued efficacy of
the coal-operating contract in IEI's favor and directed the BED to give
due course to IEI's application for three (3) IEI more coal blocks.
These are matters properly falling within the domain of the BED.
For the BED, as the successor to the Energy
Development Board (abolished by Sec. 11, P.D. No. 1206, dated 6 October
1977) is tasked with the function of establishing a comprehensive and
integrated national program for the exploration, exploitation, and
development and extraction of fossil fuels, such as the country's coal
resources; adopting a coal development program; regulating all
activities relative thereto; and undertaking by itself or through
service contracts such exploitation and development, all in the interest
of an effective and coordinated development of extracted resources.
Thus, the pertinent sections of P.D. No. 1206 provide:
Sec. 6. Bureau of Energy Development.
There is created in the Department a Bureau of Energy Development,
hereinafter referred to in this Section as the Bureau, which shall have
the following powers and functions, among others:
a. Administer a national program for the encouragement, guidance, and whenever necessary, regulation of such business activity relative to the exploration, exploitation, development, and extraction of fossil fuels such as petroleum, coal, . . .
The decisions, orders, resolutions or actions of the
Bureau may be appealed to the Secretary whose decisions are final and
executory unless appealed to the President. (Emphasis supplied.)
That law
further provides that the powers and functions of the defunct Energy
Development Board relative to the implementation of P.D. No. 972 on coal
exploration and development have been transferred to the BED, provided
that coal operating contracts including the transfer or assignment of
interest in said contracts, shall require the approval of the Secretary
(Minister) of Energy (Sec. 12, P.D. No. 1206).
Sec. 12. . . . the powers and functions transferred to the Bureau of Energy Development are:
xxx xxx xxx
ii. The following powers and functions of the Energy Development Board under PD No. 910 . . .
(1) Undertake by itself or through other
arrangements, such as service contracts, the active exploration,
exploitation, development, and extraction of energy resources . . .
(2) Regulate all activities relative to the exploration, exploitation, development, and extraction of fossil and nuclear fuels . . .
(P.D. No. 1206) (Emphasis supplied.)
P.D. No. 972 also provides:
Sec. 8. Each coal operating contract herein authorized shall . . . be executed by the Energy Development Board.
Considering
the foregoing statutory provisions, the jurisdiction of the BED, in the
first instance, to pass upon any question involving the Memorandum of
Agreement between IEI and MMIC, revolving as its does around a coal
operating contract, should be sustained.
In recent years, it has been the jurisprudential
trend to apply the doctrine of primary jurisdiction in many cases
involving matters that demand the special competence of administrative
agencies. It may occur that the Court has jurisdiction to take
cognizance of a particular case, which means that the matter involved is
also judicial in character. However, if the case is such that its
determination requires the expertise, specialized skills and knowledge
of the proper administrative bodies because technical matters or
intricate questions of facts are involved, then relief must first be
obtained in an administrative proceeding before a remedy will be
supplied by the courts even though the matter is within the proper
jurisdiction of a court. This is the doctrine of primary jurisdiction.
It applies "where a claim is originally cognizable in the courts,
and comes into play whenever enforcement of the claim requires the
resolution of issues which, under a regulatory scheme, have been placed
within the special competence of an administrative body, in such case the judicial process is suspended pending referral of such issues to the administrative body for its view" (United States v. Western Pacific Railroad Co., 352 U.S. 59, Emphasis supplied).
Clearly, the doctrine of primary jurisdiction finds
application in this case since the question of what coal areas should be
exploited and developed and which entity should be granted coal
operating contracts over said areas involves a technical determination
by the BED as the administrative agency in possession of the specialized
expertise to act on the matter. The Trial Court does not have the
competence to decide matters concerning activities relative to the
exploration, exploitation, development and extraction of mineral
resources like coal. These issues preclude an initial judicial
determination. It behooves the courts to stand aside even when
apparently they have statutory power to proceed in recognition of the
primary jurisdiction of an administrative agency.
One
thrust of the multiplication of administrative agencies is that the
interpretation of contracts and the determination of private rights
thereunder is no longer a uniquely judicial function, exercisable only
by our regular courts (Antipolo Realty Corp. vs. National Housing
Authority, 153 SCRA 399, at 407).
The
application of the doctrine of primary jurisdiction, however, does not
call for the dismissal of the case below. It need only be suspended
until after the matters within the competence of the BED are threshed
out and determined. Thereby, the principal purpose behind the doctrine
of primary jurisdiction is salutarily served.
Uniformity
and consistency in the regulation of business entrusted to an
administrative agency are secured, and the limited function of review by
the judiciary are more rationally exercised, by preliminary resort, for
ascertaining and interpreting the circumstances underlying legal
issues, to agencies that are better equipped than courts by
specialization, by insight gained through experience, and by more
flexible procedure (Far East Conference v. United States, 342 U.S. 570).
With the
foregoing conclusion arrived at, the question as to the propriety of the
summary judgment rendered by the Trial Court becomes unnecessary to
resolve.
WHEREFORE, the Court Resolved to DENY the petition. No costs.
SO ORDERED.
Paras, Padilla, Sarmiento and Regalado, JJ., concur.
Footnotes
2 Judge Benigno M. Puno, Presiding.
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