LA BUGAL-B’LAAN TRIBAL ASSOCIATION INC. VS.

DENR SECRETARY

FACTS:

On July 25, 1987, President Corazon C. Aquino issued Executive Order (E.O.) No. 279 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
large-scale 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, President Fidel V. Ramos approved R.A. No. 7942 to “govern the exploration, development, utilization and processing of all
mineral resources.”

On April 9, 1995, R.A. No. 7942 took effect. But shortly before the effectivity of R.A. No. 7942, (March 30th), the President entered into an
Financial and Technical Assistance Agreement (FTAA) with WMC Philippines, Inc. (WMCP) covering 99,387 hectares of land in South Cotabato, Sultan
Kudarat, Davao del Sur and North Cotabato. Subsequently, 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otherwise known as the Implementing Rules and Regulations of R.A. No. 7942 which was also later repealed by DAO No. 96-40, s. 1996.

Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction in signing and promulgating DENR Administrative Order No. 96-40
implementing Republic Act No. 7942, the latter being unconstitutional.

ISSUE:

Whether or not the requisites for judicial review are present to raise the constitutionality of Republic Act No. 7942.

HELD:

When an issue of constitutionality is raised, this Court can exercise its power of judicial review only if the following requisites are present:

(1) The existence of an actual and appropriate case;

(2) A personal and substantial interest of the party raising the constitutional question;
(3) The exercise of judicial review is pleaded at the earliest opportunity; and
(4) The constitutional question is the lis mota of the case. 

Respondents claim that the first three requisites are not present. Section 1, Article VIII of the Constitution states that “judicial power includes the duty of the
courts of justice to settle actual controversies involving rights which are legally demandable and enforceable.” The power of judicial review, therefore, is
limited to the determination of actual cases and controversies.

An actual case or controversy means an existing case or controversy that is appropriate or ripe for determination, not conjectural or anticipatory, lest the
decision of the court would amount to an advisory opinion. The power does not extend to hypothetical questions since any attempt at abstraction could only
lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities.

“Legal standing” or locus standi has been defined as a personal and substantial interest in the case such that the party has sustained or will sustain direct
injury as a result of the governmental act that is being challenged, alleging more than a generalized grievance. The gist of the question of standing is whether
a party alleges “such personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues
upon which the court depends for illumination of difficult constitutional questions.” Unless a person is injuriously affected in any of his constitutional rights by
the operation of statute or ordinance, he has no standing.

Petitioners traverse a wide range of sectors.  Among them are La Bugal B’laan Tribal Association, Inc., a farmers and indigenous people’s cooperative
organized under Philippine laws representing a community actually affected by the mining activities of WMCP, members of said cooperative, as well as other
residents of areas also affected by the mining activities of WMCP. These petitioners have standing to raise the constitutionality of the questioned FTAA as
they allege a personal and substantial injury.  They claim that they would suffer “irremediable displacement” as a result of the implementation of the FTAA
allowing WMCP to conduct mining activities in their area of residence.  They thus meet the appropriate case requirement as they assert an interest adverse to
that of respondents who, on the other hand, insist on the FTAA’s validity.

In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O. No. 279, by authority of which the FTAA was executed.

Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or both contracting parties to annul it. In other words, they
contend that petitioners are not real parties in interest in an action for the annulment of contract.

Public respondents’ contention fails.  The present action is not merely one for annulment of contract but for prohibition and mandamus.  Petitioners allege that
public respondents acted without or in excess of jurisdiction in implementing the FTAA, which they submit is unconstitutional.  As the case involves
constitutional questions, the Court is not concerned with whether petitioners are real parties in interest, but with whether they have legal standing.

Misconstruing the application of the third requisite for judicial review – that the exercise of the review is pleaded at the earliest opportunity – WMCP points out
that the petition was filed only almost two years after the execution of the FTAA, hence, not raised at the earliest opportunity.

The third requisite should not be taken to mean that the question of constitutionality must be raised immediately after the execution of the state action
complained of.  That the question of constitutionality has not been raised before is not a valid reason for refusing to allow it to be raised later. A contrary rule
would mean that a law, otherwise unconstitutional, would lapse into constitutionality by the mere failure of the proper party to promptly file a case to challenge
the same. 

LA BUGAL B’LAAN TRIBAL ASSOCIATION INC., et. al. v. V. O. RAMOS, Secretary Department of Environment and Natural Resources;
H. RAMOS, Director, Mines and Geosciences Bureau (MGB-DENR); R. TORRES, Executive Secretary; and WMC (PHILIPPINES) INC. 

FACTS:

The constitutional provision allowing the President to enter into FTAA is a exception to the rule that participation in the nation’s natural resources is reserved
exclusively to Filipinos. Provision must be construed strictly against their enjoyment by non-Filipinos.
RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity of RA 7942, or on March 30, 1995, the President signed a Financial
and Technical Assistance Agreement (FTAA) with WMCP, a corporation organized under Philippine laws, covering close to 100,000 hectares of land in South
Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. On August 15, 1995, the Environment Secretary Victor Ramos issued DENR Administrative
Order 95-23, which was later repealed by DENR Administrative Order 96-40, adopted on December 20, 1996.
Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the government and WMCP be declared unconstitutional on ground that
they allow fully foreign owned corporations like WMCP to exploit, explore and develop Philippine mineral resources in contravention of Article XII Section 2
paragraphs 2 and 4 of the Charter.
In January 2001, WMC – a publicly listed Australian mining and exploration company – sold its whole stake in WMCP to Sagittarius Mines, 60% of which is
owned by Filipinos while 40% of which is owned by Indophil Resources, an Australian company. DENR approved the transfer and registration of the FTAA in
Sagittarius‘ name but Lepanto Consolidated assailed the same. The latter case is still pending before the Court of Appeals.
EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to accept, consider and evaluate proposals from foreign owned
corporations or foreign investors for contracts or agreements involving wither technical or financial assistance for large scale exploration, development and
utilization of minerals which upon appropriate recommendation of the (DENR) Secretary, the President may execute with the foreign proponent. WMCP
likewise contended that the annulmentof the FTAA would violate a treaty between the Philippines and Australia which provides for the protection of Australian
investments.

ISSUES:

1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-owned corporations to exploit the Philippine mineral resources.

2. Whether or not the FTAA between the government and WMCP is a ―service contract that permits fully foreign owned companies to exploit the Philippine
mineral resources

HELD:

First Issue: RA 7942 is Unconstitutional

RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign owned corporations to exploit the Philippine natural resources.
Article XII Section 2 of the 1987 Constitution retained the Regalian Doctrine which states that ―All lands of the public domain, waters, minerals, coal,
petroleum, and other 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. The same section also states that, ―the exploration and development and utilization of natural resources
shall be under the full control and supervision of the State.
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution authorizing the State to grant licenses, concessions, or leases for the
exploration, exploitation, development, or utilization of natural resources. By such omission, the utilization of inalienable lands of the public domain through
license, concession or lease is no longer allowed under the 1987 Constitution.
Under the concession system, the concessionaire makes a direct equity investment for the purpose of exploiting a particular natural resource within a given
area. The concession amounts to complete control by the concessionaireover the country‘s natural resource, for it is given exclusive and plenary rights to
exploit a particular resource at the point of extraction.
The 1987 Constitution, moreover, has deleted the phrase ―management or other forms of assistance in the 1973 Charter. The present Constitution now
allows only ―technical and financial assistance. The management and the operation of the mining activities by foreign contractors, the primary feature of the
service contracts was precisely the evil the drafters of the 1987 Constitution sought to avoid.
The constitutional provision allowing the President to enter into FTAAs is an exception to the rule that participation in the nation‘s natural resources is
reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against their enjoyment by non-Filipinos. Therefore, RA 7942 is invalid
insofar as the said act authorizes service contracts. Although the statute employs the phrase ―financial and technical agreements in accordance with the
1987 Constitution, its pertinent provisions actually treat these agreements as service contracts that grant beneficial ownership to foreign contractors contrary
to the fundamental law.
The underlying assumption in the provisions of the law is that the foreign contractor manages the mineral resources just like the foreign contractor in a service
contract. By allowing foreign contractors to manage or operate all the aspects of the mining operation, RA 7942 has, in effect, conveyed beneficial ownership
over the nation‘s mineral resources to these contractors, leaving the State with nothing but bare title thereto.
The same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally ordained 60-40% capitalizationrequirement for
corporations or associations engaged in the exploitation, development and utilization of Philippine natural resources.
When parts of a 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, then if some parts are unconstitutional, all provisions that are thus dependent, conditional or connected,
must fail with them.
Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited only to merely technical or financial assistance to the State for large
scale exploration, development and utilization of minerals, petroleum and other mineral oils.

Second Issue: RP Government-WMCP FTAA is a Service Contract

The FTAA between he WMCP and the Philippine government is likewise unconstitutional since the agreement itself is a service contract.
Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive right to explore, exploit, utilize and dispose of all minerals and by-
products that may be produced from the contract area. Section 1.2 of the same agreement provides that EMCP shall provide all financing, technology,
management, and personnel necessary for the Mining Operations.
These contractual stipulations and related provisions in the FTAA taken together, grant WMCP beneficial ownership over natural resources that properly
belong to the State and are intended for the benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that
the fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they spring must be struck down.

La Bugal-B’laan Tribal Association, Inc. Vs Ramos Natural Resources and Environmental Laws

G.R. No. 127882;  January 27, 2004

FACTS:
This petition for prohibition and mandamus challenges the constitutionality of Republic Act No. 7942 (The Philippine Mining Act of 1995), its implementing
rules and regulations and the Financial and Technical Assistance Agreement (FTAA) dated March 30, 1995 by the government with Western Mining
Corporation(Philippines) Inc. (WMCP).
Accordingly, the FTAA violated the 1987 Constitution in that it is a service contract and is 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.

ISSUE:
What is the proper interpretation of the phrase “Agreements involving Either Technical or Financial Assistance” contained in paragraph 4, Section 2, Article
XII of the Constitution.

HELD:
The Supreme Court upheld 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.
Full control is not anathematic to day-to-day management by the contractor, provided that the State retains the power to direct overall strategy; and to set
aside, reverse or modify plans and actions of the contractor. The idea of full control is similar to that which is exercised by the board of directors of a private
corporation, the performance of managerial, operational, financial, marketing and other functions may be delegated to subordinate officers or given to
contractual entities, but the board retains full residual control of the business.
La Bugal-B’Laan v. Ramos 
G.R. No. 127882. 
December 1, 2004

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 or not 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 B’laan 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 State’s need to maintain flexibility in
its dealings, in order to preserve and enhance our country’s 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).