 RA 7942- DEFINES the mode of mineral agreement for
mining operations outlines the procedures for their
CONSTITUTIONALITY
1. Republic Act 7942- Philippine Mining Act
2. Implementing Rules and Regulations pursuant thereto
3. DENR Administrative Order 96-40 and
4. Financial and Technical Assistance Agreement entered
into on March 30, 1995 by RP and WMCP a
corporation duly authorized by Philippine laws
Time line:
1. On July 25, 1987 President Corazon Aquino issued EO
279 Authorizing DENR secretary to accept, consider
and evaluate proposals from foreign owned
corporations or foreign investors for contracts or
agreements involving either TECHNICAL or financial
assistance for large scale exploration, development, and
utilization of minerals which upon appropriate
recommendation by the secretary the president may
execute with the foreign proponent.
 The president may execute consider the real
contribution to the economic growth and general
welfare of the country that will be realized as well as
the development and use of local scientific and
technical resource.
 On march 3, 1995, President Fidel Ramos APPROVED
ra 7942 TO GOVERN the exploration, development
utilization and processing of mineral resource.
filing and approval
 Shortly before the effectivity of ra 7942 THE
PRESIDENT entered into an FTAA with WMCP
covering 99,387 hectars of land in sultan kudarat.
 August 15, 1995 the DENR sec isused implementing
rules and regulation of ra 7942
 January 10, 1997 counsels for the petitioner sent a letter
to DENR demanding to stop DAO 96-40 AND
implementing 7942
Petitioner’s Arguments
1. At the time of filing of this petition, 100 FTAA
Applications had already been filed covering an area of
8.4 Million hectars 64 of which applications are fully
ownerd corporations covering a total of 5.8 hectars
2. DENR Acted with excess jurisdiction in implementing
rules and regulation RA 7942 the latter being
unconstitutional that it allows fully foreing owned
corporation to explore, develop and utilize and exploit
mineral resources in a manner contrary to sec 2 par 4
article xii of consti
3. In signing of DAR order to allows the taking of private
property without the determination of public use for just
compensation
4. Violation of Section 1 art 3 of the constitution
5. Violation of section 2 par 2 article xi of the constitution
6. Violation of Art xii of the constitution
 7. Violation of par 1 and sec 2 par 4 of Article XII of the
constitution
 Declare the following laws to be void .
ISSUES:
a. Section 2 article xii of the constitution. The
petitioners argue that FTAA which was entered into
violates section 2 article XII of the constitution for it
allows foreign owned companies to extend more than
mere financial or technical assistance to the state in the
exploitation development and utilization of minerals,
petroleum and other mineral oils
b. It allows foreign owned companies to extend both
technical and financial assistance instead of
TECHNICAL AND financial
Section 2. All lands of the public domain, waters,
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. With the exception of agricultural
lands, all other natural resources shall not be alienated.
- Like the past constitution, prohibition of the alienation
of natural resources except Agricultural lands
The exploration, development, and utilization of
natural resources shall be under the full control and
supervision of the State.
- there is an omission the utilization of inalienable lands
of public domain thru license concessions or lease is no
longer allowed under the 1987 constitution.
The State may directly undertake such activities, or it
may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of
whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-
five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation,
water supply fisheries, or industrial uses other than the
development of water power, beneficial use may be the
measure and limit of the grant.
c. The State shall protect the nation’s marine wealth in its
archipelagic waters, territorial sea, and exclusive
economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.
d. The Congress may, by law, allow small-scale utilization
of natural resources by Filipino citizens, as well as
cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays, and
lagoons.
e. The President may enter into agreements with foreign-
owned corporations involving either technical or
financial assistance for large-scale exploration,
 development, and utilization of minerals, petroleum,
and other mineral oils according to the general terms
and conditions provided by law, based on real
contributions to the economic growth and general
welfare of the country. In such agreements, the State
shall promote the development and use of local
scientific and technical resources.
f. The President shall notify the Congress of every
contract entered into in accordance with this provision,
within thirty days from its execution
Full Supervision and control over natural resources. Two
options
#2 and #3 – MERELY LIMITED only TO Filipino citizens or
in case of the former to corporations or association at least 60%
of the capital owned by the Fil
#4- allows the participation of foreign owned corpiration
1. The state may directly undertake the activities by itself
2. It may enter into co production, joint venture or
production sharing agreements with Filipino citizens
or entities at least 60% of whose capital is owned by
such citizens.
3. The Congress may, by law, allow small-scale
utilization of natural resources by Filipino citizens,
as well as cooperative fish farming, with priority to
subsistence fishermen and fishworkers in rivers,
lakes, bays, and lagoons.
4. The President may enter into agreements with foreign-
owned corporations involving either technical or
financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum,
and other mineral oils according to the general terms
and conditions provided by law, based on real
contributions to the economic growth and general
welfare of the country. In such agreements, the State
shall promote the development and use of local
scientific and technical resources.
5. The President shall notify the Congress of every
contract entered into in accordance with this provision,
within thirty days from its execution
LIMITATION OF THE PARTICIPATION OF
FOREIGN OWNED ENTITY.
1. The parties to FTAA only the president in behalf of the
state may enter into these agreement and only with the
corporation
2. Only large scale exploration development and
utilization is allowed
3. Restricted to minerals. Petroleum and other mineral oils
the intent being to limit the service contracts to those
areas where Filipino capital is not sufficient
 4. In accordance with the law
5. The agreements must be based on real contributions to
economic growth and general welfare of the country
6. Agreements must contain stipulation for the promotion
and development and use of local scientific and
technical resource
7. The president shall notify the congress of every
financial or technical agreement
8. Agreements- involving either financial or technical
assistance management or othe forms of assistance..
The state bewing the owner of Natural resources is accorded
the primary power and responsibility in the exploration,
development and utilization thereof, As such it may undertake
these activities through the four modes.
1. The state may enter into co production and joint venture
production sharing agreement with Filipino citizens or
qualified corporation
2. Congress may by law allow small scale utilization of
natural resources by Filipino citizens
3. For the large scale exploration, development and
utilization of minerals, petroleum and other mineral oils
the president may enter into agreements with foreign
owned corporation involing technical ro financial
assistance .
4. The President may enter into agreements with foreign-
owned corporations involving either technical or
financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum,
and other mineral oils according to the general terms
and conditions provided by law, based on real
contributions to the economic growth and general
welfare of the country. In such agreements, the State
shall promote the development and use of local
scientific and technical resources.
5.
Joint Venture Agreement- All mineral agreement grant the
respective contractors the exclusive right to conduct mining
operation. A QUALIFIED person is any citizens of the
Phlippines with the capacity to contract or a corproaton
partnership association organized purpose of mining at least
60& owned by Ph * size of the surface area.
Fourth mode- ftaa – A CONTACT INVOLVING FINANCIAL
or technical assistance for large scale exploration, development
and utilization of resources. Any qualified person with
technical and financial capability to undertake large scale
exploration may neter into the said agreement with DENR.
 A legally organized foreign corp having less than 50%
of the capital is owned by Filipino citizens is deemd to
be qualified person – amount invested
Constitutionality of FTAA
  What was entered in this case was sevice contract –
mode 4
“agreements involving technical and financial assistance does
not cover service contract
“ casus omisus pro omisso habendus” A technical or financial
assistance agreements is not synonymous to service contracts.
Service con tracts are not under the new constitution, foreign
investors can not participate in Filipino enterise except
1. Technical assistance for highly technical enterprise
2. Financial assistance for large scale enterprise
3. * the intet of this povi is to to prevent the practice of
skirting the 60-40 rile
The constitutional provision in allowing the president to enter
into FTAA with foreign owned corp is an exception to the rle
that participation in the nation’s natural resources is reserved
exclusively to the Filipinos.
- The exemption subject to limitation and is strictly
construed in favor of the general provision rather than
the exemption
- UNCONSTITUTIONALITY- service contracts
- Gtaa contactor warrants that it has or has access to all
the finance ng managerial and technical expertise. This
would suggest that FTAA contactrr is bound to provide
some management assistance a form of assistance that
has been eliminated and thereof proscribed by the
present chapter.
- By allowing foreign contractors to manage or operate
all aspects of the mining operation, the above cited
provi have in effect conveyed beneficial ownership over
the nation’s mineral resources to these contactor leaving
nothing but a mare title to the state,
- BENEFICIAL OWNERSHIP – “all financing
technology and manamgement and personnel necessary
for mining operation to provide necessary service and
technology and financing in connection therewith and
to furnish all materials,labor exquipemnt and other
installantion.
- Beneficial ownership – grant WMCP ownership over
natural resources that property belong to the state are
intended for the benefit of its citizens therse stipulation
are abhorrent and that it is specifically what the law
seeks to avoid
- \
- * incorporate te either or argument