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FOREIGN PERSON/ENTITY.
LA BUGAL BLAAN TRIBAL V. DENR (INITIAL DECISION)
o Second, the SIZE of the activities: Only LARGE-SCALE (very
FACTS:
capital-intensive activities) exploration, development and
Jul. 25, 1987: Pres. Aquino issued EO 279 authorizing the DENR utilization are now allowed.
Secretary to accept, consider and evaluate proposals from foreign-
o Third, NATURAL RESOURCES subject of the activities: restricted
owned corporations for contracts involving either technical or financial
to MINERALS, PETROLEUM and OTHER MINERAL OILS. This is to
assistance for large-scale exploration, development and utilization of
limit service contracts to areas where Filipino capital is
minerals. The President may execute with the foreign proponent,
insufficient.
upon recommendation of the Secretary.
o Fourth, the agreements must be IN ACCORDANCE WITH THE
Mar. 3, 1995: Pres. Ramos approved RA 7942 (Philippine Mining Act
1995) to govern the exploration, development, utilization, and TERMS AND CONDITIONS PROVIDED BY LAW.
processing of all mining resources. It took effect on Apr. 9, 1995. o Fifth, the agreement must be based on REAL CONTRIBUTIONS TO
Mar. 30, 1995: Pres. Ramos entered into a Financial and Technical ECONOMIC GROWTH AND GENERAL WELFARE of the country.
Assistance Agreement (FTAA) with WMCP covering 99,387 hectares of o Sixth, the agreement must contain rudimentary stipulations for
land in S. Cotabato, Sultan Kudarat, Davao del Sur and N. Cotabato. the PROMOTION OF THE DEVELOPMENT AND USE OF LOCAL
WMCP sold all its shares to Sagittarius Mines, Inc. (Sagittarius), a SCIENTIFIC AND TECHNICAL RESOURCES.
corporation organized under Philippine Laws with at least 60% of its o Seventh, the NOTIFICATION REQUIREMENT: the President shall
equity owned by Filipinos and/or Filipino owned corporations.
notify the Congress of every FTAA entered into within 30 days
By virtue of such sale and transfer, the DENR Secretary approved the from its execution.
transfer and registration of the FTAA from WMCP to Sagittarius. o Eighth, the SCOPE of the AGREEMENTS: AGREEMENTS involving
This was protested by Lepanto Consolidated Co. It alleges that the financial or technical assistance. In the 1973 Constitution, it
case has not been rendered moot either by the transfer and referred to SERVICE CONTRACTS for financial, technical,
registration of the FTAA to a Filipino-owned corporation. It alleges management or other forms of assistance. It bears noting that
that the transfer did not cure the FTAAs unconstitutionality. service contracts and management or other forms of
assistance have been omitted.
Petitioners allege that RA 7942 allows fully foreign owned
corporations to explore, develop, utilize and exploit mineral resources There are 4 modes that the State, being the owner of natural
contrary to Sec. 2, Par. 4, Art. 12. resources, can conduct exploration, development and utilization:
o It allows foreign-owned companies to extend more than mere o State may DIRECTLY UNDERTAKE such activities.
financial or technical assistance. It permits foreign owned
o State may enter into CO-PRODUCTION, JOINT VENTURE or
companies to OPERATE AND MANAGE mining activities.
PRODUCTION-SHARING AGREEMENTS with Filipino citizens or
o It allows foreign-owned companies to extend BOTH financial AND qualified corporations.
technical assistance instead of financial OR technical assistance.
o Congress, may by law, allows SMALL-SCALE utilization of natural
In the 1987 Constitution, Sec. 2, Art. 12 sanctions the participation of resources by Filipino citizens.
foreign-owned corporations in the exploration, development and
o For LARGE-SCALE exploration, development and utilization of
utilization of natural resources but imposes certain limitations:
minerals, petroleum and mineral oils, the President may enter
o First, the PARTIES to the FTAA: Only the PRESIDENT may enter into agreements with foreign-owned corporations involving
into agreements and only with CORPORATIONS. In the 1973 financial or technical assistance.
Constitution, a FILIPINO CITIZEN, CORPORATION OR
Pres. Aquino was still validly exercising legislative powers at the time Casus omisus pro omisso habendus est. The phrase
the law was enacted. The convening of Congress has no effect upon management or other forms of assistance in the 1973 Constitution
the validity of the laws she had already passed. was deleted in the 1987 Constitution, which allows only technical or
financial assistance. The omission was intentional and purposeful.
ISSUE 2: W/N RA 7942, the Philippine Mining Act is constitutional.
The phrase service contracts has likewise been deleted in the 1987
HELD: NO. It is unconstitutional insofar as it authorizes service Constitution. This omission is indicative of a difference in purpose.
contracts. Although the statute employs the phrase financial and The concept of technical or financial assistance agreements is not
technical agreements in accordance with the 1987 Constitution, it identical to that of service contracts. The drafters, as evidenced
actually treats these agreements as service contracts. from their deliberations, intended to do away with service contracts
It follows that the WMCP FTAA entered into under such Act is also which were used to circumvent the capitalization (60%-40%)
unconstitutional. requirement. It was intended to be a safeguard to prevent abuses.
Service contracts are not allowed.
All provisions of the DENR AO 96-40 not in conformity with the
Decision are also invalidated. The CONCOM took into consideration the Draft of the 1986 UP Law
Constitutional Project when it adopted the concept of agreements
RATIO: involving either technical or financial assistance.
Following the literal text of the Constitution, assistance accorded by o The UP Law draft proponents viewed service contracts under the
foreign-owned corporations in the large-scale exploration, 1973 Constitution as grants of beneficial ownership of the
development, and utilization of petroleum, minerals and mineral oils countrys natural resources to foreign owned corporations. While
should be limited to technical or financial assistance only. in theory, the State owns these natural resources and Filipino
Contrary to this, the WMCP FTAA allows WMCP, a fully-foreign-owned citizens, their beneficiaries service contracts actually vested
mining corporation, to extend more than mere financial or technical foreigners with the right to dispose, explore for, develop, exploit,
assistance to the State, for it permits WMCP to manage and operate and utilize the same. This is clearly incompatible with the
every aspect of the mining activity.