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Case Digests in re Mining Act (RA 7942) GR No. 127882La Bugal-BLaan Tribal Association, Inc. v.

Victor RamosJanuary 27, 2004 Facts President Cor azon Aqui no issued Executive Order (EO) 279, as par t of her interim legislative pow er w hich authorizes the D ENR Secre t a r y t o a c c e p t , c o n s i d e r a n d e v a l u a t e proposals from foreignowned corporations or foreign investors for contracts or agreementsinvolving either technical or financial assistance for large-scale exploration, development, andutilization of minerals, which, upon appropriate recommendation of the Secretary, the she mayexecute with the foreign proponent.P r e s i d e n t F i d e l R a m o s approved RA 7942 know n as the Mi ning Act to "govern t h e exploration, development, utilization and processing of all mineral resources. Shortly, after itseffectivity, the President entered into a Financial and Technical Assistance Agreement (FTAA)with W estern Mining Corporation Philippines (W MCP) which is owned b y W MC ResourcesInternational Pty., Ltd. (The latter is a wholly owned subsidiary of Western Mining CorporationH o l d i n g s L i m i t e d , a p u b l i c l y l i s t e d m a j o r A u s t r a l i a n m i n i n g a n d e x p l o r a t i o n c o m p a n y . ) , covering 99, 387 hectares of land in South Cotabato, Sultan Kuradat, Davao del Sur and NorthCotabato.Then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No.95-23, s. 1995, known as the Implementing Rules and Regulations of the said RA 7942 whichwas later repealed by DAO No. 96-40, s. 1996. Counsels for petitioners sent a letter to the DENR S e c r e t a r y d e m a n d i n g t h a t t h e D E N R s t o p t h e i m p l e m e n t a t i o n o f t h e s a i d l a w a n d i t s implem en ting rule s g iv ing the DENR f if teen d a ys f rom receip t to a c t t h e r e o n . T h e D E N R , however, has yet to respond or act on petitioners letter.The petitioners filed the present petition for prohibition and mandamus, with a prayer for a temporary restraining order alleging that at the time of the filing of the petition, 100 FTAA applications has already been filed, covering an area of 8.4 million hectares, 64 of the applicationa r e b y f u l l y f o r e i g n - o w n e d c o r p o r a t i o n s , a n d a t l e a s t o n e b y a f u l l y f o r e i g n - o w n e d m i n i n g company over offshore areas. They are questioning the effectivity of EO 279 which says that theeffectivity of the said presidential issuance is contrary to what is provided in EO 200 which sayslaws are effective after fifteen (15) days following its publication. Given this, the power of thati s s u a n c e h a s ceased to exist because prior to the l apse of the 15- day p e r i o d C o n g r e s s h a s convened making the powers to legislate by the President ceased to exist. The FTAA issued bythe President with WMC, the original company before it was called WMCP.They also claim

that the DENR Secretary acted without or in excess of jurisdiction on theg r o u n d o f t h e i s s u a n c e o f D A O N o . 9 6 4 0 r e g u l a t i o n s o f R A 7 9 4 2 , w h i c h t h e l a t t e r i s unconst itutional for it: a.) allows fully foreign-owned corporations to explore, develop, utilizeand exploit mineral resources in a manner contrary to Sec. 2, par. 4, Art. XII of the Constitution; b.) allows the taking of private property without the determination of public use and for justcompensation; c.) violates Sec. 1, Art. III of the Constitution; d.) allows enjoyment by foreigncitizens as well as fully foreign owned corporations of the nations marine wealth contrary toSec. 2, par. 2 of Art. XII of the Constitution; e.) allows priority to foreign and fully foreignowned corporations in the exploration, development and utilization of mineral resources contraryto Art. XII of the Constitution; f.) allows the inequitable sharing of wealth contrary to Sec. 1, par.1. and Sec. 2, par. 4 of Art. XII of the Constitution. Moreover, in recommending approval of andi m p l e m e n t i n g t h e F T A A b e t w e e n the President and W MCP because the sam e is illegal a n d unconstitutional.They pray that the Court issue an order: a.) permanently enjoining the respondents fromacting on any application for FTAAs; b.) declaring RA 7942 as unconstitutional and null andv o i d ; c . ) d e c l a r i n g t h e I R R c o n t a i n e d i n D A O 9 6 4 0 a n d a l l o t h e r s i m i l a r a d m i n i s t r a t i v e issuances as unconstitutional and null and void; and d.) cancelling the FTAA issued to WMCP asunconstitutional, illegal and null and void.Respondents argued that the EO 279 is constitutional according to the ruling in MinersAssociation of the Philippines vs. Factoran. They further argues that the first three requisites towarrant judicial review in this case are not present such as absence of actual controversy andlegal standing of the petitioners and the question is not raised at the earliest opportunity. On theissue of the constitutionality of the DAO 96-40, respondents insisted that agreements involving technical or financial assistance is just another term for service contracts as reflected in thedeliberations of the Constitutional Commission preparing the draft of the 1987 Constitution. Issues Procedural Issue1.Is there a violation on the rule of hierarchy of courts against the petitioners?Substantive Issue1.Is the petition a justiciable question given that the petition was raised after two yearsof the execution of the FTAA?2.W hen did EO 279 become effective, as provided in the presidential issuance itself or as provided in EO 200?3 . I s R A 7 9 4 2 c o n s t i t u t i o n a l ? 4 . I s D A O 9 6 - 4 0 v a l i d ? 5.Is the W MCP FTAA valid? Rulings According to the Cited Issues Procedural Issue1.Although the Supreme Court has concurrent jurisdiction with the RegionalTrial Courts and the Court of Appeals to issue writs of certiorari, prohibition, mandamus,q u o w a r r a n t o , habeas corpus and injunction, such concurrence does not

g i v e a p a r t y unrestricted freedom of choice of court forum. It is allowed to directly file the petition inthe Supreme Court where the redress desired cannot be obtained in the appropriate courtsor where exceptional and compelling circumstances justify such invocation as held inPeople vs. Cuaresma.The issues raised constitute exceptional and compelling circumstances to justifythe direct petition. The Court has the discretion to take cognizance of a suit which doesnot satisfy the requirements of an actual or legal standing when paramount importance tot h e p u b l i c i n t e r e s t i s i n v o l v e d . T h u s , t h e C o u r t m a y b r u s h a s i d e t e c h n i c a l i t i e s o f procedure. Substantive Issues 1.The issue is justiciable on the ground that this requisite should not be taken to meanthat the question of constitutionality must be raised immediately after the execution of the state action complained of. That the question of constitutionality has not beenraised before is not a valid reason for refusing to allow it to be raised later. A contraryr u l e w o u l d m e a n t h a t a l a w , o t h e r w i s e u n c o n s t i t u t i o n a l , w o u l d l a p s e i n t o constitutionality by the mere failure of the proper party to promptly file a case tochallenge the same. 2.Nothi ng in EO 200 w hich prevents a law from taking e f f e c t s o n a d a t e o t h e r t h a n - even before- the 15-day period after its publication. Where a law provides for its owndate of effectivity, such date prevails over that prescribed by said issuance. It is thev e r y essence of the phrase unless it is otherw ise provided S e c . 1 o f E O 2 0 0 , therefore, applies only when a statute does not provide for its own date of effectivity.What is mandatory under EO 200 and what due process requires is the publication of t h e l a w f o r w i t h o u t such notice and publication, ther e w ould be no basis for t h e application of the maxim ignorantia legis n[eminem] excusat It is clear that EO 279was published in the Official Gazette on August 3, 1987. The said effectivity took place after the convening of the first Congress is irrelevant. At the time PresidentAquino issued EO 279 on July 25, 1987, she was still validly exercising legislative powers under the Provisional Constitution. The ruling in Miners Association of theP h i l i p p i n e s i s n o t applicable si nce the q uestion rai sed i n the sai d case w as

t h e unconstitutionality of the DAO 57 and 82 which were pursuant to EO 279. 3.As to the third, fourth and last issues, the ruling are consolidated given the relation of the said issuances. The national patrimony or our natural resources are exclusivelyreserved for the Filipino people. No alien must be allowed to enjoy, exploit anddevelop our natural resources. As a matter of fact, that principle proceeds from thefact that our natural resources are gifts from God to the Filipino people and it would be a breach of that special blessing from God if we will allow aliens to exploit our natural resources. The phrase management or other forms of assistan c e i n t h e 1 9 7 3 Constitution was deleted in the 1987 Constitution, which allows only technical or financial assistance. Casus omisus pro omisso habendus est. A person, object or thing omitted from an enumeration must be held to have been omitted intentionally.The management or operation of mining activities by foreign contractors, which is the primary feature of service contracts, was precisely the evil that the drafters of the1987 Constitution sought to eradicate. To uphold respondents' theory would reducethe latter to a mere euphemism for the former and render the change in phraseolog ym e a n i n g l e s s . I t i s a p p a r e n t t h a t s e r v i c e c o n t r a c t s a r e n o t a l l o w e d i n t h e 1 9 8 7 Constitution.There can be little doubt that the WMCP FTAA itself is a service con-tract. Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore,e x p l o i t , u t i l i z e [ , ] p r o c e s s a n d d i s p o s e o f a l l M i n e r a l s p r o d u c t s a n d b y - p r o d u c t s thereof that may be produced from the Contract Area." W hile W MCP invokes theAgreement on the Promotion and Protection of Investments between the Philippineand Australian Governments, the annulment of the FTAA would not be a violation of the principle pacta sunt servanda since the decision forms part of the legal system of the Philippines. Disposition WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutionaland void: (1)The following provisions of No. 7942: ( a ) T h e p r ov i s o i n S ec t i o n 3 ( b ) S e c t i o n 2 3 , ( c ) S e c t i o n 3 3 t o 4 1 , ( d ) S e c t i o n 5 6 , Republic ( aq ) , Act

(e)The second Section 81, and ( f ) S e c t i o

and third n 9 0 .

paragraphs

of

(2)All provisions of Department of Environment and N a t u r a l R e s o u r c e s Administrative Order 96-40, s. 1996 which are not in conformity with this Decision, and

(3)The Financial and Technical Assistance A g r e e m e n t b e t w e e n t h e G o v e r n m e n t o f the Republic of the Philippines and WMC Philippines, Inc. GR No. 127882La Bugal-BLaan Tribal Association, Inc. v. Victor RamosDecember 01, 2004 Facts This case is in continuation of the petition already decided by the Court last January 27,2004. The established facts are already m entioned in the first case. But since the Court foundnew issues, there is a need to reiterate the said facts.The Court decided that RA 7942, DAO 96-40, and the WMCP FTAA as unconstitutionalon the ground that service contracts are prohibited in the 1987 Constitution (Section 2, ArticleXII) in favor of the rights of the Filipinos to enjoy the national patrimony.Subsequently, the respondents filed a motion for reconsideration. After which petitionerswere required to comment on the matter and then the oral argument was set. Hence, new issueswere found out by the Court after hearing the arguments of the parties involved. Issues 1.The constitutionality of RA 7942, DAO 96-40, and the W MCP FTAA 2.Has the case been rendered moot b y the sale of W MC shares in W MCP to Sagittarius( 6 0 p e r c e n t o f S a g i t t a r i u s e q u i t y i s o w n e d b y F i l i p i n o s a n d / o r F i l i p i n o - o w n e d corporations while 40 percent is owned by Indophil Resources NL, an Australiancompany) and by the subsequent transfer and registration of the FTAA from WMCPto Sagittarius? 3.Assuming that the case has been rendered moot, would it still be proper to resolve theconstitutionality of the assailed provisions of the Mining Law, DAO 96-40 and theWMCP FTAA? 4.W hat is the proper interpretation of the phra s e A g r e e m e n t s I n v o l v i n g E i t h e r Technical or Financial Assistance contained in paragraph 4 of Section 2 of the ArticleXII of the 1987 Constitution? Ruling

1. In sum, there is a complete reversal of the previous decision of the Court. To upholdthe unconstitutionality of RA 7942, DAO 96-40, and the WMCP FTAA would lead to astagnant and under-develop mineral, petroleum, and other resources of the State. If therelarge scale exploration, development, and utilization run by foreign corporations, therewould be immediate and tangible benefit for the Filipino people. Foreign corporations or enterprises would contribute to the economic development and general welfare of thec o u n t r y , c o n s e r v e t h e e n v i r o n m e n t , a n d u p l i f t t h e w e l l b e i n g o f t h e a f f e c t e d l o c a l communities. Though the State permits the foreign contractor sufficient and reasonablem a n a g e m e n t authority over the enterprise i t i nvested, in or der to ensur e t h a t i t i s operating efficiently and profitably, to protect its investments and to enable it to succeed,still the former has control over the latter for the Constitution laid down the safeguards ass t a t e d in Secti on 2, Articl e XII. N ow here does it requir e the g o v e r n m e n t t o h o l d a l l exploration permits and similar authorizations. In fact, there is no prohibition at allagainst foreign or local corporations or contractors holding exploration permits.P u r s u a n t t o Section 20 of RA 7942, an explor ati on perm it m erely g r a n t s t o a qualified person the right to conduct exploration for all minerals in specified areas. Sucha p e r m i t d o e s n o t a m o u n t to an authorization to extract and carry off the m i n e r a l resources that may be discovered. This phase involves nothing but expenditures for exploring the contract area and locating the mineral bodies. As no extraction is involved,t h e r e a r e n o r e v e n u e s o r incom es to speak of. In short, the exploration perm it is a n authorization for the grantee to spend its own funds on exploration programs that are pre-approved by the government, without any right to recover anything should no minerals inc o m m e r c i a l q u a n t i t i e s b e d i s c o v e r e d . T h e S t a t e r i s k s n o t h i n g a n d l o s e s n o t h i n g b y granting these permits to local or foreign firms; in fact, it stands to gain in the form of data generated by the exploration activities. The exploration permit serves a practical and legitimate purpose in that it protects the interests a n d p r e s e r v e s t h e r i g h t s o f t h e exploration permit grantee (the would-be contractor) -- foreign or local -- during the period of time that it is spending heavily on exploration works, without yet being able toearn revenues to recoup any of its investments and expenditures. Minus this permit andthe protection it affords, the exploration works and expenditures may end up benefitingonly claim-jumpers. Such a possibility tends to discourage investors and contractors.Thus, Section 3(aq) of RA 7942 may not be deemed unconstitutional. A careful perusalof the statute itself and its implementing rules reveals that neither RA 7942 nor DAO 99-56 can be said to convey beneficial ownership of any mineral resource or product to

anyforeign FTAA contractor. W MCP FTAA uncovers no indication that it confers uponW MCP ownership, beneficial or otherwise, of the mining property it is to develop, theminerals to be produced, or the proceeds of their sale, which can be legally asserted andenforced as against the State. 2. No. The basis for declaring the FTAA void still has to be revisited, reexamined, andreconsidered. It not per se defective or unconstitutional. It was questioned only because ithad been issued to an allegedly non-qualified, foreign-owned corporation. The decisionhas yet to become final, to all intents and purposes, the FTAA must be deemed valid andconstitutional. 3. The Court must recognize the exceptional character of the situation and the paramount p u b l i c i n t e r e s t i n v o l v e d , a s w e l l a s t h e n e c e s s i t y f o r a r u l i n g t o p u t a n e n d t o t h e uncertainties plaguing the mining industry and the affected communities as a result of future FTAAs, and the need to avert a multiplicity of suits. Strong reasons of public policy demand that the constitutionality issue be resolved now. 4. The provision in question was intended to refer to agreements other than those for m e r e f i n a n c i a l o r t e c h n i c a l a s s i s t a n c e . I t s h o u l d b e i n t e r p r e t e d a s a l l o w i n g f o r e i g n corporations to do large-scale exploration within the State, for the former is in reality notcapable of doing it given the lump sum of money needed and the risk of the undertaking.I t i s g i v e n t h a t e v e n t h e b a s i c s e r v i c e s n a t u r a l l y s h o u l d e r e d b y t h e S t a t e a r e n o t adequately provided to the people. The inclusion of technical or financial assistance recognizes the fact that foreign business entities and multinational corporations are theones with the resources and knowhow to provide technical and/or financial assistance of the magnitude and type required for large-scale exploration, development and utilization(EDU) of these resources. The drafters agreed that these agreements include managementauthority with respect to the day-to-day operations of the enterprise and measures for the protection of the interests of the foreign corporation, provided that Philippine sovereigntyover natural resources and full control over the enterprise undertaking the exploration,development and utilization activities remain firmly in the State. In relation to this, theC o u r t a g r e e d t h a t t h e f r a m e r s w e r e g o i n g t o p e r m i t s e r v i c e c o n t r a c t s w i t h f o r e i g n corporations as contractors, but with safety measures to prevent abuses, as an exceptionto the general norm established in paragraph 1, Section 2, Article XII. This

provisionreserves or limits to Filipino citizensand corporations at least sixty (60) percent of which is owned by such citizensthe EDU of natural resources. This prompted by theinsufficiency of Filipino capital and the felt need for foreign investments in the EDU of natural resources. This new service contracts, the foreign contractors provide capital,t e c h n o l o g y a n d t e c h n i c a l k n o w h o w , a n d m a n a g e r i a l e x p e r t i s e i n t h e c r e a t i o n a n d operation of large-scale mining/extractive enterprises; and the government, through itsa g e n c i e s ( D E N R , M G B ) , a c t i v e l y e x e r c i s e s c o n t r o l a n d s u p e r v i s i o n o v e r t h e e n t i r e operation. Also, may be entered into only with respect to minerals, petroleum, and other mineral oils. Disposition W HEREFORE, the Court RESOLVES to GRANT the respondents' and the intervenors'Motions for Reconsideration; to REVERSE and SET ASIDE this C our t's Januar y 27, 2004D e c i s i o n ; t o DISMISS t h e P e t i t i o n ; a n d t o i s s u e t h i s n ew j u d g m e n t d e c l a r i ng CONSTITUTIONAL (1) Republic Act No. 7942 (the Philippine Mini ng Law), ( 2 ) i t s Implementing Rules and Regulations contained in DENR Administrative Order (DAO) No. 9640-- insofar as they relate to financial and technical assistance agreements referred to in paragraph4 of Section 2 of Article XII of the Constitution; and (3) the Financial and Technical AssistanceAgreement (FTAA) dated March 30, 1995 executed b y the government and W estern MiningCorporation Philippines Inc. (W MCP), except Sections 7.8 and 7.9 of the subject FTAA which are hereby INVALIDATED for being contrary to publi c p o l i c y a n d f o r b e i n g g r o s s l y disadvantageous to the government.

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