Case Digests in re Mining Act (RA 7942)
GR No. 127882 La Bugal-B’Laan Tribal Association, Inc. v. Victor Ramos January 27, 2004
Facts President Corazon Aquino issued Executive Order (EO) 279, as part of her interim legisl legislati ative ve power power which which author authorize izess the DENR DENR Secret Secretary ary to accept accept,, consid consider er and evaluat evaluatee proposals proposals from foreign-owne foreign-owned d corporations corporations or foreign foreign investors investors for contracts contracts or agreements agreements involving either technical or financial assistance for large-scale exploration, development, and utilizati utilization on of minerals, which, upon appropriate appropriate recommendati recommendation on of the Secretary Secretary,, the she may execute with the foreign proponent. President Fidel Ramos approved RA 7942 known as the Mining Act to "govern the exploration, development, utilization and processing of all mineral resources. Shortly, after its effectivity, the President entered into a Financial and Technical Assistance Agreement (FTAA) with Western Mining Corporation Philippines (WMCP) which is owned by WMC Resources International Pty., Ltd. (The latter is a wholly owned subsidiary of Western Mining Corporation Holdin Holdings gs Limite Limited, d, a publicl publicly y listed listed major major Austra Australia lian n mining mining and explora explorati tion on compan company.) y.),, covering 99, 387 hectares of land in South Cotabato, Sultan Kuradat, Davao del Sur and North Cotabato. 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Order (DAO) No. 95-23, s. 1995, known as the Implementing Rules and Regulations of the said RA 7942 which was later repealed by DAO No. 96-40, 96 -40, s. 1996. Counsels for petitioners sent a letter to the DENR Secr Secret etar ary y dema demand ndin ing g that that the the DENR DENR stop stop the the impl implem emen enta tati tion on of the the said said law law and and its its implementing rules giving the DENR fifteen days from receipt to act thereon. The DENR, however, has yet to respond or act on petitioner’s 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 application are by fully foreign-owned corporations, and at least one by a fully foreign-owned mining company over offshore areas. They are questioning the effectivity of EO 279 which says that the effectivity of the said presidential issuance is contrary to what is provided in EO 200 which says laws are effective after fifteen (15) days following its publication. Given this, the power of that issuance has ceased to exist because prior to the lapse of the 15-day period Congress has convened convened making making the powers to legislate legislate by the President President ceased to exist. The FTAA issued issued by the 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 the groun ground d of the the issu issuanc ancee of DAO DAO No. No. 96-40 96-40 regu regula lati tions ons of RA 7942, 7942, whic which h the the latt latter er is unconstitutional for it: a.) allows fully foreign-owned corporations to explore, develop, utilize and 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 just compensation; c.) violates Sec. 1, Art. III of the Constitution; d.) allows enjoyment by foreign citizens as well as fully foreign owned corporations of the nation’s marine wealth contrary to Sec. 2, par. 2 of Art. XII of the Constitution; e.) allows priority to foreign and fully foreign owned corporations in the exploration, development and utilization of mineral resources contrary to Art. XII of the Constitution; f.) allows the inequitable sharing of w ealth contrary to Sec. 1, par. 1. and Sec. 2, par. 4 of Art. XII of the Constitution. Moreover, in recommending approval of and implementing the FTAA between the President and WMCP because the same is illegal and unconstitutional. They pray that the Court issue an order: a.) permanently enjoining the respondents from acting on any application for FTAAs; b.) declaring RA 7942 as unconstitutional and null and void; void; c.) declar declaring ing the IRR contain contained ed in DAO 96-40 96-40 and all other other simila similarr admini administr strati ative ve issuances as unconstitutional and null and void; and d.) cancelling the FTAA issued to WMCP as unconstitutional, illegal and null and void. Respondents argued that the EO 279 is constitutional according to the ruling in Miners Association of the Philippines Philippines vs. Factoran. They further argues that the first first three requisites to warrant judicial review in this case are not present such as absence of actual controversy and legal standing of the petitioners and the question is not raised at the earliest opportunity. On the issue of the constitutionality of the DAO 96-40, respondents insisted that “agreements involving
technical technical or financial financial assistance” assistance” is just another term for service service contracts contracts as reflected reflected in the deliberations of the Constitutional Commission preparing the draft of the 1987 Constitution.
Issues Procedural Issue 1. Is there there a violation violation on the rule rule of hierarchy hierarchy of courts courts agains againstt the petitione petitioners? rs?
Substantive Issue 1. Is the petition petition a justiciabl justiciablee question question given that the petitio petition n was raised after after two years years of the execution of the FTAA? 2. When did EO EO 279 become become effective, effective, as provided provided in in the presidenti presidential al issuance issuance itself itself or as provided in EO 200? 3. Is RA RA 7942 7942 cons consti titu tuti tiona onal? l? 4. Is DAO DAO 9696-40 40 vali valid? d? 5. Is the the WMC WMCP P FTA FTAA A vali valid? d?
Rulings According to the Cited Issues Procedural Issue 1. Although Although the Supreme Supreme Court Court has has concurrent concurrent jurisdicti jurisdiction on with the the Regional Regional Trial Courts and the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give a party unrestricted freedom of choice of court forum. It is allowed to directly file the petition in the Supreme Court where the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify such invocation as held in People vs. Cuaresma. The issues issues raised raised constitut constitutee exceptional exceptional and compelling compelling circumsta circumstances nces to justify justify the direct petition. The Court has the discretion to take cognizance of a suit which does not satisfy the requirements of an actual or legal standing when paramount importance to the public public intere interest st is involv involved. ed. Thus, Thus, the Court Court may brush aside aside techni technical caliti ities es of procedure.
Substantive Issues 1. The issue issue is justiciabl justiciablee on the ground that that this requisi requisite te should should not be taken to mean mean that the question of constitutionality must be raised immediately after the execution of the state action complained of. That the question of constitutionality has not been raised before is not a valid va lid reason for refusing to allow it to be raised later. A co contrary ntrary rule rule woul would d mean mean that that a law, law, othe otherw rwis isee unco uncons nsti titu tuti tion onal al,, woul would d laps lapsee into into constitutionality by the mere failure of the proper party to promptly file a case to challenge the same. 2. Nothin Nothing g in EO 200 which prevent preventss a law from taking taking effect effectss on a date date other thanthaneven before- the 15-day period after its publication. Where a law provides for its own date of effectivity, such date prevails over that prescribed by said issuance. It is the very essence of the phrase “unless it is otherwise provided” Sec. 1 of EO 200, 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 the law for without such notice and publication, there would be no basis for the application of the maxim “ignorantia legis n[eminem] excusat” It is clear that EO 279 was published published in the Official Official Gazette on August 3, 1987. The said effectivity effectivity took place after the convening of the first Congress is irrelevant. At the time President Aquino issued EO 279 on July 25, 1987, she was still validly exercising legislative powers under the Provisional Constitution. The ruling in Miners Association of the Phili Philippi ppines nes is not applicab applicable le since since the question question raised raised in the said case case was the unconstitutionality of the DAO 57 and 82 which were pursuant to EO 279. 3. As to the third, third, fourth fourth and last last issues, issues, the ruling ruling are are consolidated consolidated given given the relation relation of the said issuances. issuances. The national national patrimony or our natural resources are exclusively exclusively reserved reserved
for the Filip Filipino ino people. people. No alien alien must be allowed allowed to enjoy, enjoy, exploit exploit and
develop our natural resources. As a matter of fact, that principle proceeds from the fact 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 The phra phrase se “mana “manage geme ment nt or othe otherr form formss of assi assist stan ance ce”” in the the 1973 1973 Constitution was deleted in the 1987 Constitution, which allows only “technical or financial financial assistance assistance.” .” Casus omisus omisus pro omisso habendus habendus est. A person, object object or thing omitted from an enumeration must be held to have been omitted intentionally. The management or operation of o f mining activities by foreign contractors, which is the primary feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate. To uphold respondents' theory would reduce the latter to a mere euphemism for the former and render the change in phraseology meani meaning ngles less. s. It is appa appare rent nt that that serv servic icee cont contra ract ctss are are not not allo allowe wed d in the the 1987 1987 Constitution. There can be little doubt that the WMCP FTAA itself is a service contract. Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploi exploit, t, utiliz utilizee [,] proces processs and dispos disposee of all Minera Minerals ls product productss and by-pro by-produc ducts ts thereof thereof that may be produced produced from the Contract Contract Area." While While WMCP invokes invokes the Agreement on the Promotion and Protection of Investments between the Philippine and 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 d eclares unconstitutional and void: (1) (1)
The The foll follow owin ing g prov provis isio ions ns of of Repu Republ blic ic Act Act No. No. 794 7942: 2:
(a )
The pr proviso in in Section 3 (aq),
(b)
Section 23,
(c )
Section 33 to 41,
(d)
Section 56,
(e) (e)
The The sec secon ond d and and thir third d par parag agra raph phss of of Sec Secti tion on 81, 81, and and
(f)
Section 90.
(2) (2)
All All prov provis isio ions ns of of Depa Depart rtme ment nt of Envi Enviro ronm nment ent and and Nat Natur ural al Reso Resour urce cess
Administrative Order 96-40, s. 1996 which are n ot in conformity with this Decision, and
(3) (3)
The The Finan Financi cial al and and Techni Technica call Assis Assista tanc ncee Agreem Agreemen entt betwe between en the the Gover Governm nmen entt of
the Republic of the Philippines and WMC Philippines, Inc.
GR No. 127882 La Bugal-B’Laan Tribal Association, Inc. v. Victor Ramos December 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 mentioned in the first case. But since the Court found new issues, there is a need to reiterate the said facts. The Court decided that RA 7942, DAO 96-40, and the WMCP FTAA as unconstitutional on the ground that service contracts are prohibited in the 1987 Constitution (Section 2, Article XII) in favor of the rights of the Filipinos to enjoy the n ational patrimony. Subsequently, the respondents filed a motion for reconsideration. After which petitioners were required required to comment comment on the matter and then the oral argument argument was set. Hence, new issues were found out by the Court after hearing the arguments of the parties involved.
Issues 1. The constit constitution utionality ality of RA 7942, DAO DAO 96-40, 96-40, and and the WMCP WMCP FTAA FTAA 2. Has the case case been rendered rendered moot moot by the the sale of WMC WMC shares shares in WMCP WMCP to Sagitta Sagittarius rius (60 percent percent of Sagitt Sagittari arius’ us’ equity equity is owned owned by Filipi Filipinos nos and/or and/or Filipi Filipino-o no-owne wned d corporations while 40 percent is owned by Indophil Resources NL, an Australian company) and by the subsequent transfer and registration of the FTAA from WMCP to Sagittarius? 3. Assuming Assuming that the the case has been been rendered rendered moot, would would it still still be proper proper to resolve resolve the the constitutionality of the assailed provisions of the Mining Law, DAO 96-40 and the WMCP FTAA?
4. What What is the the prop proper er inte interp rpre reta tati tion on of the the phra phrase se Agre Agreem emen ents ts Invo Involv lvin ing g Eith Either er Technical or Financial Assistance contained in paragraph 4 of Section 2 of the Article XII of the 1987 Constitution?
Ruling 1. In sum, there is a complete reversal of the previous decision of the Court. To uphold the unconstitutionality of RA 7942, DAO 96-40, and the WMCP FTAA would lead to a stagnant and under-develop mineral, petroleum, and other resources of the State. If there large scale exploration, development, and utilization run by foreign corporations, there would be immediate and tangible benefit for the Filipino people. Foreign corporations or enterprises would contribute to the economic development and general welfare of the country country,, conser conserve ve the enviro environme nment, nt, and uplif upliftt the well-b well-bein eing g of the affect affected ed local local communities communities.. Though the State State permits permits the foreign contractor contractor sufficient sufficient and reasonable reasonable manage management ment authorit authority y over over the enterp enterpri rise se it invest invested, ed, in order order to ensure ensure that that it is 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 as stated stated in Sectio Section n 2, Articl Articlee XII. XII. Nowher Nowheree does it requir requiree the governmen governmentt to hold hold all exploration permits and similar authorizations. In fact, there is no prohibition at all against foreign or local corporations or contractors holding exp loration permits. Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person the right to conduct exploration for all minerals in specified areas. Such a permit permit does not amount to an author authoriza izati tion on to extrac extractt and carry carry off the mineral mineral 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, there are no revenues or incomes to speak of. In short, the exploration permit is an authorization for the grantee to spend its own funds on exploration programs that are preapproved by the government, without any right to recover anything should no minerals in commer commercia ciall quantit quantities ies be discov discovere ered. d. The State State risks risks nothin nothing g and loses loses nothin nothing g by 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
legi legiti tima mate te purp purpos osee in that that it prot protec ects ts the the inte intere rest stss and and pres preser erve vess the the righ rights ts of the the 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 to earn revenues to recoup any of its investments and expenditures. Minus this permit and the protection protection it affords, the exploration exploration works and expenditures expenditures may end up benefiting only 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 perusal of the statute itself and its implementing rules reveals that neither RA 7942 nor DAO 9956 can be said to convey beneficial ownership of any mineral resource or product to any foreign FTAA contractor. WMCP FTAA uncovers no indication that it confers upon WMCP ownership, beneficial or otherwise, of the mining property it is to develop, the minerals to be produced, or the proceeds of their sale, which can be legally asserted and enforced as against the State. 2. No. The basis for declaring the FTAA void still has to be revisited, reexamined, and reconsidered. It not per se defective or unconstitutional. It was questioned only because it had been issued to an allegedly allegedly non-qualified, non-qualified, foreign-owned foreign-owned corporation. corporation. The decision has yet to become final, to all intents and purposes, the FTAA must be deemed valid and constitutional.
3. The Court must recognize the exceptional character of the situation and the paramount public interest involved, as well as the necessity for a ruling to put an end to the 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 provision in question was intended to refer to agreements agreements other than those for mere mere financ financial ial or techni technical cal assist assistance ance.. It should should be interp interpret reted ed as allowi allowing ng foreig foreign n corporations to do large-scale exploration within the State, for the former is in reality not capable of doing it given the lump sum of money needed and the risk of the undertaking. It is given given that that even even the the basi basicc serv servic ices es natu natura rall lly y shoul shoulde dere red d by the the Stat Statee are are not not adequately provided to the people. The inclusion of “technical or financial assistance”
recognizes the fact that foreign business entities and multinational corporations are the ones with the resources and know-how 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 management authority 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 sovereignty over natural resources and full control over the enterprise undertaking the exploration, development and utilization activities remain firmly in the State. In relation to this, the Court Court agreed agreed that that the framer framerss were were going going to permit permit servic servicee contrac contracts ts with with foreig foreign n corporations as contractors, but with safety measures to prevent abuses, as an exception to the general norm established in paragraph 1, Section 2, Article XII. This provision reserves or limits to Filipino citizens—and corporations at least sixty (60) percent of which is owned by such citizens—t citizens—the he EDU of natural resources. resources. This prompted prompted by the insufficiency 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, techno technolog logy y and techni technical cal know-h know-how, ow, and manage manageria riall experti expertise se in the creati creation on and operation of large-scale mining/extractive enterprises; and the government, through its agencie agenciess (DENR (DENR,, MGB), MGB), active actively ly exercis exercises es contro controll and superv supervisi ision on over over the entire entire operation. Also, may be entered into only with respect to minerals, petroleum, and other mineral oils. Disposition WHEREFORE, the Court RESOLVES to GRANT the respondents' and the intervenors' Motions Motions for Reconsiderat Reconsideration; ion; to REVERSE and SET ASIDE this this Court' Court'ss Januar January y 27, 2004 Deci Decisi sion; on;
to DISMISS the
Petition;
and
to
issue
this his
new
judgme gment
decla claring
CONSTITUTIONAL (1) (1) Repu Republ blic ic Act Act No. No. 7942 7942 (the (the Phil Philip ippi pine ne Mini Mining ng Law) Law),, (2) (2) its its 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 paragraph 4 of Section 2 of Article XII of the Constitution; and (3) the Financial and Technical Assistance Agreement (FTAA) dated March 30, 1995 executed by the government and Western Mining Corporation Corporation Philippines Philippines Inc. (WMCP), (WMCP), except Sections 7.8 and 7.9 of the subject subject FTAA which
are are here hereby by INVA INVALI LIDA DATE TED D for for being being cont contra rary ry to publi publicc polic policy y and for for bein being g gros grossl sly y disadvantageous to the government.
GR. No. 98332 Miners Association of the Philippines vs. Factoran January 16, 1995
Facts Former President Corazon Aquino issued Executive Order Nos. 211 and 279 as par to her interim legislative powers. Executive Order No. 211 prescribes the interim procedures in the processing processing and approval approval of applications applications for the exploration exploration,, development development and utilizati utilization on of minerals pursuant to Section 2, Article XII of the 1987 Constitution. Executive Order No. 279 authorizes the Department of Natural Resources (DENR) Secretary to negotiate and conclude joint venture, co-production or production-sharing agreements for the exploration, development, and utilization of mineral resources. Petiti Petitione onerr is an organi organizat zation ion compos composed ed of mining mining prospe prospecto ctors rs and claimo claimowner wnerss or claimholders questions the constitutionality of the two administrative orders (DAO) issued by then Secretary of DENR Fulgencio Factoran Jr. pursuant to the abovementioned executive issuanc issuances. es. Depart Departmen mentt Admini Administr strati ative ve Order Order No. 57 declare declaress “all “all existi existing ng mining mining lease lease or agreements which are granted after the effectivity of the 1987 Constitution…shall be converted into production-sharing agreements within one (1) year from the effectivity of these guidelines.” In relation to this, DAO No. 82 provides that a failure to submit Letter of Intent (LOI) and Mineral Mineral Production Production-Shar -Sharing ing Agreement Agreement (MPSA) (MPSA) within within from the effectivit effectivity y of Department Department Administrative Order No. 57 shall cause the abandonment of mining, quarry, and sand and gravel claims. Furthe Furthermo rmore, re, it claims claims that the DAOs DAOs are issue issued d in excess excess of jurisd jurisdict iction ion and are inconsistent with the executive orders. Also, DAO No. 57 violates the non-impairment clause of the 1987 Constitution for the unduly pre-termination of the existing mining leases and other mining mining agreem agreement entss and automa automatic tic convers conversion ion of said said agreem agreement entss into into product production ion-sh -shari aring ng agreements within one (1) year from its effectivity.
The Court, acting on petitioner's urgent ex-parte petition for issuance of a restraining order/preliminary injunction, issued a Temporary Restraining Order, upon posting of a P500, 000.00 bond, enjoining the enforcement and implementation of DENR Administrative Order Nos. 57 and 82, as amended, Series of 1989 and 1990, respectively.
Issues 1. Did the DENR DENR Secretary Secretary act act with grave grave abuse of discr discretion etion in the the issuance issuance of the two two DAOs? 2. Are Are the the two two DAO DAOss val valid id??
Ruling 1. It cannot cannot be establish established ed that the the Secretary Secretary went went beyond beyond what is is prescribed prescribed by the EO 279. Section 6 of the said issuance specifically authorizes him to promulgate such supplementary rules and regulations as may be necessary to effectively implement the provisions provisions thereof. thereof. Also, the DAOs and the EOs are related in order to carry out the mandate of Article XII, Section 2 of the 1987 Constitution. 2. The two are reason reasonabl ably y directed directed to the accompl accomplish ishmen mentt of the purpos purposes es of the law under which they were issued and were intended to secure the paramount interest of the public, public, their their econom economic ic growth growth and welfar welfare. e. Their Their consti constitut tution ionali ality ty must must be sustained and their force and effect upheld for they were part of the legitimate exercise of the police power of the State. The non-impairment clause guaranteed by the 1987 Constitution should not prevail over the legitimate exercise of police power since it has been ruled by the Court that such power is not absolute. Thus, it is a valid exercise.
Disposition WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued on July 2, 1991 is hereby LIFTED.
