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    Facts: The Petition For Prohibition and Mandamus Before The Court Challenges The

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    James Ocampo
    This document summarizes a court case that challenges the constitutionality of the Philippine Mining Act of 1995 and the FTAA between the Philippine government and Western Mining Corporation. The court held that the Mining Act is unconstitutional because it allows fully foreign-owned corporations to exploit Philippine mineral resources, which violates the 1987 Constitution. The court also held that the FTAA is unconstitutional because it qualifies as a service contract by giving the foreign corporation beneficial ownership and control over exploitation of the mineral resources, contrary to the Constitution.

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    Facts: The Petition For Prohibition and Mandamus Before The Court Challenges The

    Uploaded by

    James Ocampo
    70 views3 pages
    This document summarizes a court case that challenges the constitutionality of the Philippine Mining Act of 1995 and the FTAA between the Philippine government and Western Mining Corporation. The court held that the Mining Act is unconstitutional because it allows fully foreign-owned corporations to exploit Philippine mineral resources, which violates the 1987 Constitution. The court also held that the FTAA is unconstitutional because it qualifies as a service contract by giving the foreign corporation beneficial ownership and control over exploitation of the mineral resources, contrary to the Constitution.

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    This document summarizes a court case that challenges the constitutionality of the Philippine Mining Act of 1995 and the FTAA between the Philippine government and Western Mining Corporation. The court held that the Mining Act is unconstitutional because it allows fully foreign-owned corporations to exploit Philippine mineral resources, which violates the 1987 Constitution. The court also held that the FTAA is unconstitutional because it qualifies as a service contract by giving the foreign corporation beneficial ownership and control over exploitation of the mineral resources, contrary to the Constitution.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    70 views3 pages

    Facts: The Petition For Prohibition and Mandamus Before The Court Challenges The

    Uploaded by

    James Ocampo
    This document summarizes a court case that challenges the constitutionality of the Philippine Mining Act of 1995 and the FTAA between the Philippine government and Western Mining Corporation. The court held that the Mining Act is unconstitutional because it allows fully foreign-owned corporations to exploit Philippine mineral resources, which violates the 1987 Constitution. The court also held that the FTAA is unconstitutional because it qualifies as a service contract by giving the foreign corporation beneficial ownership and control over exploitation of the mineral resources, contrary to the Constitution.

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    of 3

    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 Petition for Prohibition and Mandamus before the Court challenges the
    constitutionality 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 the government with Western Mining
    Corporation (Philippines), Inc. (WMCP). On January 27, 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, 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, respondents
    filed separate Motions for Reconsideration. In a Resolution dated March 9, 2004, the
    Court required petitioners to comment thereon. In the Resolution of June 8, 2004, it
    set the case for Oral Argument on June 29, 2004.

    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 concessionaire
    over 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% capitalization
    requirement 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.

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