4. La Bugal B'Laan Assoc. v. Ramos

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    EN BANC [G.R. No. 127882. December 1, 2004.] LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., Represented byits Chairman F'LONG MIGUEL M. LUMAYONG; WIGBERTO E.TAÑADA; PONCIANO BENNAGEN; JAIME TADEO; RENATO R.CONSTANTINO JR.; F'LONG AGUSTIN M. DABIE; ROBERTO P.AMLOY; RAQIM L. DABIE; SIMEON H. DOLOJO; IMELDA M.GANDON; LENY B. GUSANAN; MARCELO L. GUSANAN; QUINTOLA. LABUAYAN; LOMINGGES D. LAWAY; BENITA P. TACUAYAN;Minors JOLY L. BUGOY, Represented by His Father UNDERO D.BUGOY and ROGER M. DADING; Represented by His FatherANTONIO L. DADING; ROMY M. LAGARO, Represented by HisFather TOTING A. LAGARO; MIKENY JONG B. LUMAYONG,Represented by His Father MIGUEL M. LUMAYONG; RENE T.MIGUEL, Represented by His Mother EDITHA T. MIGUEL;ALDEMAR L. SAL, Represented by His Father DANNY M. SAL;DAISY RECARSE, Represented by Her Mother LYDIA S.SANTOS; EDWARD M. EMUY; ALAN P. MAMPARAIR; MARIO L.MANGCAL; ALDEN S. TUSAN; AMPARO S. YAP; VIRGILIOCULAR; MARVIC M.V.F. LEONEN; JULIA REGINA CULAR, GIANCARLO CULAR, VIRGILIO CULAR JR., Represented by TheirFather VIRGILIO CULAR; PAUL ANTONIO P. VILLAMOR,Represented by His Parents JOSE VILLAMOR and ELIZABETHPUA-VILLAMOR; ANA GININA R. TALJA, Represented by HerFather MARIO JOSE B. TALJA; SHARMAINE R. CUNANAN,Represented by Her Father ALFREDO M. CUNANAN; ANTONIO JOSE A. VITUG III, Represented by His Mother ANNALIZA A.VITUG, LEAN D. NARVADEZ, Represented by His FatherMANUEL E. NARVADEZ JR.; ROSERIO MARALAG LINGATING,Represented by Her Father RIO OLIMPIO A. LINGATING; MARIO JOSE B. TALJA; DAVID E. DE VERA; MARIA MILAGROS L. SAN JOSE; Sr. SUSAN O. BOLANIO, OND; LOLITA G.DEMONTEVERDE; BENJIE L. NEQUINTO; 1  ROSE LILIA S. ROMANO;ROBERTO S. VERZOLA; EDUARDO AURELIO C. REYES; LEAN LOUEL A.PERIA, Represented by His Father ELPIDIO V. PERIA; 2  GREEN FORUMPHILIPPINES; GREEN FORUM WESTERN VISAYAS (GF-WV);ENVIRONMENTAL LEGAL ASSISTANCE CENTER (ELAC); KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANGPANSAKAHAN (KAISAHAN); 3  PARTNERSHIP FOR AGRARIAN REFORMand RURAL DEVELOPMENT SERVICES, INC. (PARRDS); PHILIPPINEPARTNERSHIP FOR THE DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA); WOMEN'S LEGAL BUREAU  (WLB); CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC.(CADI); UPLAND DEVELOPMENT INSTITUTE (UDI); KINAIYAHANFOUNDATION, INC.; SENTRO NG ALTERNATIBONG LINGAP PANLIGAL(SALIGAN); and LEGAL RIGHTS AND NATURAL RESOURCES CENTER,INC. (LRC),  petitioners  , vs  . 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 WMC(PHILIPPINES), INC., 4   respondents  . R E S O L U T I O NPANGANIBAN ,  J p :All mineral resources are owned by the State. Their exploration, development andutilization (EDU) must always be subject to the full control and supervision of theState. More specifically, given the inadequacy of Filipino capital and technology in large-scale   EDU activities, the State may secure the help of foreign companies in allrelevant matters — especially financial and technical assistance — provided that,at all times, the State maintains its right of full control. The foreign assistor orcontractor assumes all financial, technical and entrepreneurial risks in the EDUactivities; hence, it may be given reasonable management, operational, marketing,audit and other prerogatives to protect its investments and to enable the businessto succeed.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 issimilar to that which is exercised by the board of directors of a private corporation:the performance of managerial, operational, financial, marketing and otherfunctions may be delegated to subordinate officers or given to contractual entities,but the board retains full residual control of the business.Who or what organ of government actually exercises this power of control on behalf of the State? The Constitution is crystal clear: the President  . Indeed, the Chief Executive is the official constitutionally mandated to enter into agreements withforeign 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 withthis [constitutional] provision within thirty days from its execution. In contrast tothis express mandate of the President and Congress in the EDU of natural resources,Article XII of the Constitution is silent on the role of the judiciary. However, shouldthe President and/or Congress gravely abuse their discretion in this regard, thecourts may — in a  proper   case — exercise their residual duty under Article VIII.Clearly then, the judiciary should not inordinately interfere in the exercise of thispresidential power of control over the EDU of our natural resources.   The Constitution should be read in broad, life-giving strokes. It should not be used tostrangulate economic growth or to serve narrow, parochial interests. Rather, itshould be construed to grant the President and Congress sufficient discretion andreasonable leeway to enable them to attract foreign investments and expertise, aswell as to secure for our people and our posterity the blessings of prosperity andpeace.On the basis of this control standard, this Court upholds the constitutionality of thePhilippine Mining Law, its Implementing Rules and Regulations — insofar as theyrelate to financial and technical agreements — as well as the subject Financial and Technical Assistance Agreement (FTAA). 5 Background   The Petition for Prohibition and Mandamus   before the Court challenges theconstitutionality of (1) Republic Act No. [RA] 7942 (The Philippine Mining Act of 1995); (2) its Implementing Rules and Regulations (DENR Administrative Order No.[DAO] 96-40); and (3) the FTAA dated March 30, 1995, 6   executed by thegovernment with Western Mining Corporation (Philippines), Inc. (WMCP). 7 On January 27, 2004, the Court en banc   promulgated its Decision 8  granting thePetition and declaring the unconstitutionality of certain provisions of RA 7942, DAO96-40, 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, 10  were subsequentlydenounced for being antithetical to the principle of sovereignty over our naturalresources, because they allowed foreign control over the exploitation of our naturalresources, to the prejudice of the Filipino nation. The Decision quoted several legal scholars and authors who had criticized servicecontracts for, inter alia  , vesting in the foreign contractor exclusive   management andcontrol of the enterprise, including operation of the field in the event petroleum wasdiscovered; control of production, expansion and development; nearly unfetteredcontrol over the disposition and sale of the products discovered/extracted; effectiveownership of the natural resource at the point of extraction; and beneficialownership of our economic resources. According to the Decision, the 1987Constitution (Section 2 of Article XII) effectively banned such service contracts.Subsequently, respondents filed separate Motions for Reconsideration. In aResolution dated March 9, 2004, the Court required petitioners to commentthereon. In the Resolution of June 8, 2004, it set the case for Oral Argument on June29, 2004.After hearing the opposing sides, the Court required the parties to submit theirrespective Memoranda in amplification of their arguments. In a Resolution issuedlater the same day, June 29, 2004, the Court noted, inter alia  , the Manifestation  and Motion (in lieu of comment) filed by the Office of the Solicitor General (OSG) onbehalf of public respondents. The OSG said that it was not interposing any objectionto the Motion for Intervention filed by the Chamber of Mines of the Philippines, Inc.(CMP) and was in fact joining and adopting the latter's Motion for Reconsideration.Memoranda were accordingly filed by the intervenor as well as by petitioners, publicrespondents, and private respondent, dwelling at length on the three issuesdiscussed below. Later, WMCP submitted its Reply Memorandum, while the OSG— in obedience to an Order of this Court — filed a Compliance submitting copiesof more FTAAs entered into by the government. Three Issues Identified by the Court  During the Oral Argument, the Court identified the three issues to be resolved inthe present controversy, as follows:1.Has the case been rendered moot by the sale of WMC shares in WMCP toSagittarius (60 percent of Sagittarius' equity is owned by Filipinos and/or Filipino-owned corporations while 40 percent is owned by Indophil Resources NL, anAustralian company) and by the subsequent transfer and registration of the FTAAfrom WMCP to Sagittarius?2.Assuming that the case has been rendered moot, would it still be proper to resolvethe constitutionality of the assailed provisions of the Mining Law, DAO 96-40 andthe WMCP FTAA?3.What is the proper interpretation of the phrase Agreements Involving Either Technical or Financial Assistance   contained in paragraph 4 of Section 2 of Article XIIof the Constitution? Should the Motion for Reconsideration Be Granted  ?Respondents' and intervenor's Motions for Reconsideration should be granted, forthe reasons discussed below. The foregoing three issues identified by the Court shallnow be taken up seriatim  . First Issue  : Mootness  In declaring unconstitutional certain provisions of RA 7942, DAO 96-40, and theWMCP FTAA, the majority Decision agreed with petitioners' contention that thesubject FTAA had been executed in violation of Section 2 of Article XII of the 1987Constitution. According to petitioners, the FTAAs entered into by the governmentwith foreign-owned corporations are limited by the fourth paragraph of the saidprovision to agreements involving only technical or financial assistance   for large-scale exploration, development and utilization of minerals, petroleum and othermineral oils. Furthermore, the foreign contractor is allegedly permitted by the FTAAin question to fully manage and control the mining operations and, therefore, toacquire beneficial ownership of our mineral resources.
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