La Bugal-B'Laan Tribal Association vs.

Ramos [GR 127882, 2 December 2004] Resolution En Banc, Panganiban (J): 14 concur Facts: The Petition for Prohibition and Mandamus before the Court challenges the constitutionality of (1) Republic Act 7942 (The Philippine Mining Act of 1995); (2) its Implementing Rules and Regulations (DENR Administrative Order [DAO] 96-40); and (3) the Financial and Technical Assistance Agreement (FTAA) dated 30 March 1995, executed by the government with Western Mining Corporation (Philippines), Inc. (WMCP). On 27 January 2004, the Court en banc promulgated its Decision, granting the Petition and declaring the unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well as of the entire FTAA executed between the government and WMCP, mainly on the finding that FTAAs are service contracts prohibited by the 1987 Constitution. The Decision struck down the subject FTAA for being similar to service contracts,[9] which, though permitted under the 1973 Constitution, were subsequently denounced for being antithetical to the principle of sovereignty over our natural resources, because they allowed foreign control over the exploitation of our natural resources, to the prejudice of the Filipino nation. The Decision quoted several legal scholars and authors who had criticized service contracts for, inter alia, vesting in the foreign contractor exclusive management and control of the enterprise, including operation of the field in the event petroleum was discovered; control of production, expansion and development; nearly unfettered control over the disposition and sale of the products discovered/extracted; effective ownership of the natural resource at the point of extraction; and beneficial ownership of our economic resources. According to the Decision, the 1987 Constitution (Section 2 of Article XII) effectively banned such service contracts. Subsequently, Victor O. Ramos (Secretary, Department of Environment and Natural Resources [DENR]), Horacio Ramos (Director, Mines and Geosciences Bureau [MGB-DENR]), Ruben Torres (Executive Secretary), and the WMC (Philippines) Inc. filed separate Motions for Reconsideration. Issue: Whether the Court has a role in the exercise of the power of control over the EDU of our natural resources Held: The Chief Executive is the official constitutionally mandated to enter into agreements with foreign owned corporations. On the other hand, Congress may review the action of the President once it is notified of every contract entered into in accordance with this [constitutional] provision within thirty days from its execution. In contrast to this express mandate of the President and Congress in the exploration, development and utilization (EDU) of natural resources, Article XII of the Constitution is silent on the role of the judiciary. However, should the President and/or Congress gravely abuse their discretion in this regard, the courts may -- in a proper case -- exercise their residual duty under Article VIII. Clearly then, the judiciary should not inordinately interfere in the exercise of this presidential power of control over the EDU of our natural resources. Under the doctrine of separation of powers and due respect for co-equal and coordinate branches of government, the Court must restrain itself from intruding into policy matters and must allow the President and Congress maximum discretion in using the resources of our country and in securing the assistance of foreign groups to eradicate the grinding poverty of our people and answer their cry for

viable employment opportunities in the country. The judiciary is loath to interfere with the due exercise by coequal branches of government of their official functions. As aptly spelled out seven decades ago by Justice George Malcolm, Just as the Supreme Court, as the guardian of constitutional rights, should not sanction usurpations by any other department of government, so should it as strictly confine its own sphere of influence to the powers expressly or by implication conferred on it by the Organic Act. Let the development of the mining industry be the responsibility of the political branches of government. And let not the Court interfere inordinately and unnecessarily. The Constitution of the Philippines is the supreme law of the land. It is the repository of all the aspirations and hopes of all the people. The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate economic growth or to serve narrow, parochial interests. Rather, it should be construed to grant the President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign investments and expertise, as well as to secure for our people and our posterity the blessings of prosperity and peace. The Court fully sympathize with the plight of La Bugal Blaan and other tribal groups, and commend their efforts to uplift their communities. However, the Court cannot justify the invalidation of an otherwise constitutional statute along with its implementing rules, or the nullification of an otherwise legal and binding FTAA contract. The Court believes that it is not unconstitutional to allow a wide degree of discretion to the Chief Executive, given the nature and complexity of such agreements, the humongous amounts of capital and financing required for large-scale mining operations, the complicated technology needed, and the intricacies of international trade, coupled with the States need to maintain flexibility in its dealings, in order to preserve and enhance our countrys competitiveness in world markets. On the basis of this control standard, the Court upholds the constitutionality of the Philippine Mining Law, its Implementing Rules and Regulations -- insofar as they relate to financial and technical agreements -- as well as the subject Financial and Technical Assistance Agreement (FTAA).

La Bugal-B'Laan Tribal Assn vs Ramos Case Digest G.R. No 127882 Facts : On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No. 2796 authorizing the 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 largescale exploration, development, and utilization of minerals, which, upon appropriate recommendation of the Secretary, the President may execute with the foreign proponent. On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern the exploration, development, utilization and processing of all mineral resources." R.A. No. 7942 defines the modes of mineral agreements for mining operations, outlines the procedure for their filing and approval, assignment/transfer and withdrawal, and fixes their terms. Similar provisions govern financial or technical assistance agreements. On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and Manila Times, two newspapers of general circulation, R.A. No. 7942 took effect. Shortly before the effectivity of R.A. No. 7942, however, or on March 30, 1995, the President entered into an FTAA with WMCP covering 99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No. 95-23, s. 1995, otherwise known as the Implementing Rules and Regulations of R.A. No. 7942. This was later repealed by DAO No. 96-40, s. 1996 which was adopted on December 20, 1996. On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary demanding that the DENR stop the implementation of R.A. No. 7942 and DAO No. 96-40, giving the DENR fifteen days from receipt to act thereon. The DENR, however, has yet to respond or act on petitioners' letter. Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction. They pray that the Court issue an order: (a) Permanently enjoining respondents from acting on any application for Financial or Technical Assistance Agreements; (b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional and null and void; (c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained in DENR Administrative Order No. 96-40 and all other similar administrative issuances as unconstitutional and null and void; and

(d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining Philippines, Inc. as unconstitutional, illegal and null and void. Issue : Whether or not Republic Act No. 7942 is unconstitutional. Ruling : The Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, Article XII of the Constitution and hereby declares unconstitutional and void: (1) The proviso in Section 3 (aq), which defines "qualified person," to wit: Provided, That a legally organized foreign-owned corporation shall be deemed a qualified person for purposes of granting an exploration permit, financial or technical assistance agreement or mineral processing permit. (2) Section 23, which specifies the rights and obligations of an exploration permittee, insofar as said section applies to a financial or technical assistance agreement, (3) Section 33, which prescribes the eligibility of a contractor in a financial or technical assistance agreement; (4) Section 35, which enumerates the terms and conditions for every financial or technical assistance agreement; (5) Section 39, which allows the contractor in a financial and technical assistance agreement to convert the same into a mineral production-sharing agreement; (6) Section 56, which authorizes the issuance of a mineral processing permit to a contractor in a financial and technical assistance agreement; The following provisions of the same Act are likewise void as they are dependent on the foregoing provisions and cannot stand on their own: (1) Section 3 (g), which defines the term "contractor," insofar as it applies to a financial or technical assistance agreement. Section 34, which prescribes the maximum contract area in a financial or technical assistance agreements; Section 36, which allows negotiations for financial or technical assistance agreements; Section 37, which prescribes the procedure for filing and evaluation of financial or technical assistance

agreement proposals; Section 38, which limits the term of financial or technical assistance agreements; Section 40, which allows the assignment or transfer of financial or technical assistance agreements; Section 41, which allows the withdrawal of the contractor in an FTAA; The second and third paragraphs of Section 81, which provide for the Government's share in a financial and technical assistance agreement; and Section 90, which provides for incentives to contractors in FTAAs insofar as it applies to said contractors; When the parts of the 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, and that if all could not be carried into effect, the legislature would not pass the residue independently, then, if some parts are unconstitutional, all the provisions which are thus dependent, conditional, or connected, must fall with them. WHEREFORE, the petition is GRANTED.