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La Bugal-BLaan Tribal Assn., Inc. v. Ramos (DENR Secretary), et al, and private
respondent, WMC (Philippines), Inc.
GR. No. 127882. January 27, 2004
J. Carpio-Morales
- SPECIAL CIVIL ACTION in the Supreme Court. Mandamus and Prohibition.
Facts :
President Corazon Aquino, on July 25, 1987, issued Executive Order (EO)
No. 279, which authorizes the DENR Secretary to accept, consider, and
evaluate proposals from foreign-based corporations or foreign investors for
contracts of agreements involving either technical or financial
assistance for large-scale exploration, development, and utilization of
minerals. Upon appropriate recommendation of the DENR Secretary, the
President may execute contract with foreign proponent. Large-scale mining
shall mean contracts involving a committed single unit capital of at least
Fifty Million US Dollars.
On March 3, 1995, then President Fidel Ramos approved RA No. 7942
known as the Philippine Mining Act of 1995 to govern the exploration,
development, utilization, and processing of all mineral resources. The act
goes into details of contracts, agreements for mining operations, settlement
of conflicts among holders of mining rights, and specifies grounds for the
cancellation, revocation, and termination of agreements and permits.
On April 9, 1995, 30 days following the publication of the act on March 10 in
2 newspapers of major circulation, RA 7942 took effect. However, before
the effectivity date, the President entered into a Financial and Technical
Assistance Agreement (FTAA) on March 30 with Western Mining
Corporation, Philippines (WMCP) covering lands in South Cotabato, Sultan
Kudarat, Davao Del Sure, and North Cotabato.
DENR Secretary and respondent Victor Ramos issued DENR Administrative
Order (DAO) No. 95-23, s. 1995 known as the Implementing Rules and
Regulations of RA No. 7942. This was repealed by DAO No. 96-40, s. 1996
which was adopted on 1996.
Petitioners and their counsels sent a letter to the DENR Secretary
demanding DENR to stop the implementation of Phil. Mining Act and DAO
96-40, giving the department 15 days to act thereon. No response was given
by DENR.
Petitioners thus filed this present petition for prohibition and mandamus
with a prayer for temporary restraining order. Petitioners alleged that at the
time of the filing of the petition, 100 FTAA applications had already been
filed, 64 of which were made by fully foreign-owned corporations, and at
least one fully foreign-owned mining company. They claimed that DENR
Secretary acted without or in excess of jurisdiction by assailing that
RA 7942, DAO 96-40, and the FTAA granted to WMCP are
unconstitutional on the following ground:

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DAO 96-40 implements RA 7942, which is claimed unconstitutional for

allowing fully-foreign owned corporations to explore, develop, utilize,
and exploit mineral resources in a manner contrary to Sec. 2(4) Art.
XII of the Constitution
RA 7942 is unconstitutional for allowing the taking of private property
without determination of public use and for just compensation
RA 7942 violates Sec. 1 Art III of the Constitution by denying equal
protection of the laws
RA 7942 violates Sec. 2(2) Art. XII of the Constitution by allowing the
enjoyment of foreign citizens and fully foreign-owned corporations of
the nations marine wealth
RA 7942 violates Art. XII of the Constitution
RA 7942 violates Sec. 1(1), Sec. 2(4) Art. II of the Constitution for
allowing inequitable sharing or wealth
The recommending approval and implementation of FTAA granted to
WMCP is illegal and unconstitutional

WMCP filed a manifestation on September 22, 2001 alleging that on

January 23, 2001, WMC sold all its shares in WMCP to Sagittarius
Mines, Inc., and was subsequently named Tampakan Mineral Resources
Corporation. WMCP claimed that at least 60% of the equity of
Sagittarius is Filipino-owned, whereas WMCP before was WMC
Resources International, a publicly listed Australian mining and
exploration company.
On December 18, 2001, by virtue of the sale mentioned above, DENR
Secretary approved the transfer and registration of the FTAA to Sagittarius
from WMCP.

Issues:
Whether or not EO 279, the law in force when WMCs FTAA was executed, is
an invalid law and thus did not actually take effect?
Whether or not RA 7942 and DAO 96-40 are unconstitutional and thus, the
FTAA transferred and granted is invalid.
Held:
NO, EO 279 is an effective and validly enacted statute.
Ratio: While petitioners argue that EO 279 was signed into law two
days before the opening of Congress in 1987, and that the order could
have only taken effect 15 days after its publication at a time when the
legislative powers of the President has already been ceased, EO 279
became effective immediately upon its publication as found in a
provision in the order. Where a law provides for its own date of
effectivity, such date prevails. That such effectivity took place even
after the convening of the Congress is irrelevant because at the time

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when EO 279 was issued, the President was still validly exercising
legislative powers. The convening of the Congress merely precluded
the exercise of the Presidents legislative powers and did not prevent
the effectivity of the laws previously enacted.

YES, RA 7942 and DAO 96-40 are unconstitutional. FTAA granted to WMCP
is invalid.
Ratio: The constitution provides on Sec. 2(4) Art. XII that The
President may enter into agreements with foreign-owned corporations
involving either technical or financial assistance for large-scale
exploration, development, or 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. The same article also accounts for provisions on
how the State may proceed with the exploration, development, and
utilization of natural resources, which are as follows:

State may be in direct control.

State may enter into co-production or joint venture with Filipino

citizens or corporations that are at least 60% Filipino-owned.

Congress may allow small-scale utilization by Filipino citizens

The President may enter into agreements with foreign-owned

corporations for technical and financial assistance in cases
of large-scale exploration
Although DENR Secretary contends that the FTAA also acts as a
service contract, the framers of the 1987 Constitution specifically
omitted that same phrase from the 1973 Constitution, which allowed
foreign-owned corporations to directly manage and then operate
mining activities. Instead, what was replaced was the phrase
technical and financial assistance, which effectively limited the
capacities of foreign-owned companies in utilizing the nations
natural resources for the benefit of the Filipinos.
Under RA 7942, an FTAA contractor warrants that it has or has
access to all the financing, managerial, and technical expertise,
which suggests that an FTAA contractor is bound to provide
management assistance something which has been explicitly
eliminated in the 1987 Constitution. The act has then conveyed
beneficial ownership to foreign contractors over the nations
mineral resources, leaving the State with nothing but bare title.

Ruling: Petition granted. The Court declares the following unconstitutional and
void:
The following provisions of RA7942:

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Section 3
Section 23
Section 33 to 41
Section 56
Second and third paragraphs of Section 81
Section 90
All provisions of DAO 96-40 which are not in conformity with the Decision
The FTAA between the government and WMC, Philippines

Separate Opinion:
Panganiban, J.:
Controversy Now Moot
Nullity of FTAA is based upon the contractor being a foreign
corporation. Since the FTAA is now to be implemented by a majority
Filipino-based corporation, how can the Court still declare it
unconstitutional?
Not Limited to Technical or Financial Assistance Only
The original framers of the constitution actually mentioned allowing
service contracts to be given to foreign contractors in special
circumstances. The members of the Constitutional Commission had in
mind the Marcos era service contracts that they were familiar with.
Put differently, technical and financial assistance agreements were
understood by the delegates to include service contracts duly
modified to prevent abuse.