LA BUGAL BULAAN RESOLUTION
it unconstitutional.
TIME LINE:
1. On January 27, 2004 the court en ban promulgated its
decision granting the petition and declaring the
unconstitutionality of certain provisions of RA 7942 and
DAO 96-40 as well as the entire FTAA Executed between
the government and WMCP mainly on the finding that
FTAA Are service contracts prohibited by the 1987
constitution.
2. Criticism of service contract as vesting exclusive
management and control of the enteriprise incliningg
operation of the filed in the event petroleum was discovered.
ISSUES :
1. Has the case been rendered moot by the sale of WMC shares
in WMVP to Saguitarius (60% saguitarious and 40%
INDOPHIL) AND BY Subsequent transfer and registration
of FTAA from WMCP to Saguitarius
2. Assuming that the case has been rendered moot , would it
still be proper to resolve the constitutionality of the assailed
provisions of the mining law and the FTAA agreement
3. What is the proper interpretation of the phrase Agreements
involving either technical or financial assistancde contained
in par 4 of Section 2 article XII of the constitution
Moot and Academic issue: at the time it entered into FTAA
happened to be wholly owned by WMC resources.
The nullity of the FTA agreement was because the corporation was a
fully foreign entity where it be a Filipino entity there would be no
problem. In the present case, the corporation had already been a
Filipino entity and that it is no longer possible for the court to declare
3rd issue : 1. The alleged invalidity of the transfer of WMCP share to
Saguittarius violates the fourth paragprah of sec 2, that it is contrary
to the provision of FTAA itself, and that the sale of the shares is
suspect ans could therefore be litigated.
SUBISSUES
1. PARAGRAPH 4 SECTION 2 OF ARTICLE XII permits
the government to enter into FTAA only with foreign
onwed corporation, and that it merely limits the
participation of Filipino corporation in the exploration,
development and utilization of natural resoruces to only
three species of contracts
a. Production sharing
b. Co production
c. Joint venture - to the exclusion of all other arrangement
and variations thereof.
Upon examining the provision, NOWHERE is there any express
limitation or restriction insofar as arrangement other thatn the three
aforementioned contractual schemes are concerned In doing so, this
would cause an unreasonable curtailment of property rights without
due process of law and would ensue.
- FTAA IS not intended merely for foreign corporation-
DOES NOT NECESSARILY IMPLY THAT THE wmcp
ftaa agreement CANNOT BE TRANSFERRED AND
ASSUMED BY A Filipino CORPORATION
2. There is no need for a separate litigation of the sale of
shares.
a. When the transferee of the FTAA happens to be a
Filipino corp the need for such safeguard is not
 critical hence the lack of prior approval and
notification is not deem fatal .
3. Ftaa is not void thus transferrable.
1. The decision of the court has not been deem to be in
finality
2. The ftaa does not best the foreign corporation full
control and supervision without the control of the
government
3. The FTAA being now held by a Filipino corporation ca
no longer be assailed the objective of the constitutional
provision to keep the exploration, utilization of our
national resoruces has now been served.
4. Can the court still decide the case even though it be
moot?
Yes the court mustrecognize the exceptional character of
the situation and the paramount public interest involved
as necessarily of a ruling. The subject FTAA and the
future FTAA and the need to avert is evident and strong
reason of public policy demands urgent resolution
5. The proper interpretation of the constitutional
agreeements involving either technical or financial
assistance.
Exploration, development and utilization the state may undertake
such EDU activities by itself or in tandem with Filipino or Filipino
corporation except in two instance
1. Small scale utilization of natural resources which the
Filipinos may be allowed by law to undertake
2. Large scale EDU of minerals petroleum and mineral oils
which may be undertaken by the state with agreement wth
foreign owned corporation involving technical or financial
assistance as provided by law.
Interpretation must not be restricted- Involivng either technical
or financial appearance, does not indicate the intent to exclude
other modes of assistance. ( they could have used for)
The possibility that matters other than those explicitly mentioned
could be made part of the agreement.
DELETION OF SERVICE CONTRACTS TO AVOID
PITFALLS of the previous constitutun is not a ban to service
contracts per se.
-1. The interpration would discourage foreign entry into a large
scale exploration.. The concept of control must be taken to mean
less than dictatorial, all encompassing control but nevertheless
sufficient to give the state the power to direct, restrain regulate
and govern the affairs of the extractive purpose;
Ppermitting the foreing contractor sufficient and reasonable
management authority over the enterprise it invested in order to
ensure that it is operating efficiently and progitably to protect
investment and to enable it to succeed
The FTAA CONTRACTOR is not free to do whatever it
pleases and get away wth it on the contrary it will have to follow
the government line if it wants to stay on the enterprise. RA
7942 AND DAO 96-04 vest in the governmet sufficient control
and supervision over the conduct of mining