Clarification on rule: Alfred Dunhill tourney

was watching Pablo martin playing in the Alfred Dunhill......I think its at 17th hole....his ball went bunker fm tee.

Heres the scenario:

He take 2nd shot....ball rocketed into the lip of the bunker....stuck there.

But here is the funny thing, he was given a free drop and proceeded to hit his 3 rd shot.

Question: Shouldnt that be his 4th shot with one penalty? Or is this again course rule?

Maybe local rule bah?

bunker in fairway? if not wrong lip is not considered hazard... so ball plugged gets free lift?

Likely local rule; at Laguna, some parts of the slopes of bunkers are strengthened with wooden sleepers. In 2005 Caltex Singapore Masters, Nick Dougherty was almost caught by Monty when he got a free drop outside of the bunker in which his drive landed. He drove into the far edge of a fairway bunker, and ever so slightly touching a wooden sleeper at the edge of the bunker. Had he not been given the drop, he would have had to hack the ball against the bunker wall and hope it land in a better place. Needless to say, the drop saved him and he won. Read this:

http://www.rightclub.co.uk/locker_room/reports_details.asp?id=501&PageNo=1

martin's ball was embedded in the soil above the bunker so he was entitled to a free drop as close to the original position as possible.
after dropping 3 times and rolling into the bunker, he was allowed to place his ball.
if his ball was embedded in the bunker, he would have to play as it lies or take a penalty drop.