Asia Business Law Journal | July 28, 2025

In Province of Occidental Mindoro v Agusan Petroleum and Mineral Corporation (January 2025), the Supreme Court ruled that while local government units (LGUs) enjoy local autonomy under the constitution, this is “limited and confined within the extent allowed by the national government” and national laws.

The ordinances at issue are the Municipal Ordinance No. 106-2008 and Provincial Ordinance No. 34-09 (ordinances). These ordinances were approved and adopted by the Provincial Council (Sangguniang Panlalawigan) of Occidental Mindoro in 2008 and 2009, respectively, and imposed a 25-year moratorium on all forms of large-scale mining within the municipality of Abra de Ilog and the entire province of Occidental Mindoro.

Meanwhile, Agusan Petroleum and Mineral Corporation (APMC) entered into a financial and technical assistance agreement with the national government through the then executive secretary, on behalf of the president. Under the agreement, APMC is granted the exclusive rights to explore, mine, utilise and market minerals that may be derived from a portion of land within Occidental Mindoro.

APMC challenged the validity and constitutionality of the ordinances, arguing that the province had exceeded its powers by enacting the blanket prohibition, which contravenes national mining policies and undermines the constitutionally mandated control of the state over mineral resources.

The ruling

The Supreme Court held that the LGUs cannot impose blanket prohibitions on all mining projects, as this would violate the Philippine Mining Act of 1995. The state’s mining policy cannot be overridden by local ordinances. Since local governments only derive their authority from congress, they also cannot regulate or prohibit activities that the state has already allowed.

However, the court clarified that the LGUs can deny approval on specific projects. The court cited sections 26 and 27 of the Local Government Code. Section 26 requires the national government to consult with local governments before implementing any environmentally critical project. On the other hand, section 27 requires the prior approval of the council (sanggunian) concerned to be obtained before any national project is implemented within a local government’s jurisdiction.

The court ruled that an LGU’s evaluation of a mining project is not limited to environmental considerations. Local governments may also assess whether a project is economically beneficial to their constituents, allowing for broader development assessments that include community welfare, employment impacts and long-term economic impact.

Implications for mining

This decision highlights the need for meaningful engagement between mining proponents and the LGUs. While the Supreme Court ruled that local governments cannot impose blanket prohibitions on all mining activities, it also affirmed their authority to approve or reject individual projects based on specific considerations.

The LGUs may assess whether a mining project aligns with their environmental, economic and development priorities, but they must do so on a case-by-case basis.

This framework places mutual responsibilities on both the project proponent and the LGU. Project proponents must go beyond securing national permits and meaningfully engage with each local government, tailoring consultations, conducting social acceptability assessments and proposing benefit-sharing arrangements that reflect local interests.

In turn, local authorities must keep their doors open to dialogue, exercising their discretion transparently and fairly. The decision reinforces that local consent cannot be withheld through sweeping bans, but must be the result of thoughtful and project-specific evaluation.

Genuine co-ordination between national agencies, LGUs, communities and the project proponents is essential for achieving both regulatory clarity and sustainable resource development.

Enrique V Dela Cruz Jr is a senior partner, Ciselie Marie T Gamo-Sisayan is a partner and Kristina Mae C Durana is an associate at DivinaLaw in Metro Manila.

Source: Asia Business Law Journal