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LA BUGAL B’LAAN TRIBAL ASSOCIATION INC vs RAMOS Case Digest
LA BUGAL B’LAAN TRIBAL ASSOCIATION INC., et. al. v. VICTOR O. RAMOS, Secretary Department of Environment and Natural Resources; HORACIO RAMOS, Director, Mines and Geosciences Bureau (MGB-DENR); RUBEN TORRES, Executive Secretary; and WMC (PHILIPPINES) INC. G.R. No. 127882, 27 January 2004, En Banc (Carpio-Morales, J.)
The cons tit titutiona utionall provis ion allow allowing ing the Pres ident to to enter enter into FTA A is a exc except eption ion to the rule that participation in the nation’s natural resources is reserved exclusively to
Fi lipinos. P rovis ion mus mus t be be cons trued s trictly ag ainst their their enjoyment enjoyment by non-Filipinos . FACTS: RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity of RA 7942, or on March 30, 1995, the President signed a Financial and Technical Assistance Agreementt (FTAA) with WMCP, a corporati Agreemen corporation on organiz organized ed under Philippin Philippine e laws, covering close to 100,000 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. On August 15, 1995, the Environment Secretary Victor Ramos issued DENR Administrative Administrativ e Order 95-23, which was later repealed by DENR Administrativ Administrative e Order 96-40, adopted on December 20, 1996. Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the government and WMCP be declared unconstitutional on ground that they allow fully foreign owned corporations like WMCP to exploit, explore and develop Philippine mineral resources in contravention of Article XII Section 2 paragraphs 2 and 4 of the Charter. In January 2001, WMC - a publicly listed Australian mining and exploration company - sold its whole stake in WMCP to Sagittarius Mines, 60% of which is owned by Filipinos while 40% of which is owned by Indophil Resources, an Australian company. DENR approved the transfer and registration of the FTAA in Sagittarius‘ name but Lepanto Consolidated assailed the same. The latter case is still pending before the Court of Appeals. EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to accept, consider and evaluate proposals from foreign owned corporations or foreign investors for contracts or agreements involving wither technical or financial assistance for large scale exploration, development and utilization of minerals which upon appropriate recommendation of the (DENR) Secretary, the President may execute with the foreign proponent. WMCP likewise contended that the annulment of the FTAA would violate a treaty between the Philippines and Australia which which provides provides for the protection of Australian Australian investments. investments. ISSUES: 1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-owned corporations to exploit the Philippine mineral resources. 2. Whether or not the FTAA between the government and WMCP is a ―service contract‖ that permits fully foreign owned companies to exploit the Philippine mineral resources. HELD: First Issue: RA 7942 is Unconstitutional RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign owned corporations to exploit the Philippine natural resources. Article XII Section 2 of the 1987 Constitution retaine retained d the Regalian Doctrine which states that ―All lands of the public domain, waters, minerals, coal, petroleum, and other minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State.‖ The same section also states that, ―the exploration and development and utilization of natural resources shall be under the full control and supervision of the State. Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution authorizing the State to grant licenses, concessions, or leases for the exploration, exploitation, development, or utilization of natural resources. By such omission, the utilization of inalienable
lands of the public domain through license, concession or lease is no longer allowed under the 1987 Constitution. Under the concession system, the concessionaire makes a direct equity investment for the purpose of exploiting a particular natural resource within a given area. The concession amounts to complete control by the concessionaire over the country‘s natural resource, for it is given exclusive and plenary rights to exploit a particular resource at the point of extraction. The 1987 Constitution, moreover, has dele ted the phrase ―management or other forms of assistance‖ in the 1973 Charter. The present Constitution now allows only ―technical and financial assistance.‖ The management and the operation of the mining activities by foreign contractors, the primary feature of the service contracts was precisely the evil the drafters of the 1987 Constitution sought to avoid. The constitutional provision allowing the President to enter into FTAAs is an exception to the rule that participation in the nation‘s natural resou rces is reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against their enjoyment by non-Filipinos. Therefore, RA 7942 is invalid insofar as the said act authorizes service contracts. Although the statute employs the phrase ―financial and technical agreements‖ in accordance with the 1987 Constitution, its pertinent provisions actually treat these agreements as service contracts that grant beneficial ownership to foreign contractors contrary to the fundamental law. The underlying assumption in the provisions of the law is that the foreign contractor manages the mineral resources just like the foreign contractor in a service contract. By allowing foreign contractors to manage or operate all the aspects of the mining operation, RA 7942 has, in effect, conveyed beneficial ownership over the nation‘s mineral resources to these contractors, leaving the State with nothing but bare title thereto. The same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally ordained 60-40% capitalization requirement for corporations or associations engaged in the exploitation, development and utilization of Philippine natural resources. When parts of a statute are so mutually dependent and connected as conditions, considerations, inducements or compensations for each other as to warrant a belief that the legislature intended them as a whole, then if some parts are unconstitutional, all provisions that are thus dependent, conditional or connected, must fail with them. Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited only to merely technical or financial assistance to the State for large scale exploration, development and utilization of minerals, petroleum and other mineral oils. Second Issue: RP Government-WMCP FTAA is a Service Contract The FTAA between he WMCP and the Philippine government is likewise unconstitutional since the agreement itself is a service contract. Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive right to explore, exploit, utilize and dispose of all minerals and by-products that may be produced from the contract area.‖ Section 1.2 of the same agreement provides that EMCP shall provide all financing, technology, management, and personnel necessary for the Mining Operations. These contractual stipulations and related provisions in the FTAA taken together, grant WMCP beneficial ownership over natural resources that properly belong to the State and are intended for the benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they spring must be struck down.
