PHILIPPINE MINING ACT (PMA) OF 1995

The nationalization of natural resources in our Constitutions is intended to:

1. To insure their conservation for Filipino posterity;
2. To serve as an instrument of national defense, helping prevent the extension to the country
of foreign control thru peaceful economic penetration; and
3. To avoid making the Phil. a source of international conflicts with the consequent danger
to its internal security and independence
KEY POINTS:
A. Under the concept of jura regalia, the State shall have the full control and supervision in
the EDU of the country’s natural resources (**such as minerals wherever they may be
situated, private land or in ancestral lands)
✓ Ensures the country’s survival as a viable and sovereign republic
B. The old system of EDU of nat res thru licenses, concessions or leases has been omitted
under the 1987 Consti
✓ RA 7942 nonetheless respects previously issued valid and existing licenses (See Sec. 5,
7 and 18)
IMPORTANT CONCEPTS

TERMS DEFINITIONS
ANCESTRAL LANDS refers to all lands exclusively and actually possessed,
occupied, or utilized by indigenous cultural
communities by themselves or through their ancestors
in accordance with their customs and traditions since
time immemorial, and as may be defined and delineated
by law.

BLOCK OR MERIDIONAL means an area bounded by one-half (1/2) minute of

BLOCK latitude and one-half (1/2) minute of longitude,
containing approximately eighty-one hectares (81 has.).

CARRYING CAPACITY refers to the capacity of natural and human

environments to accommodate and absorb change
without experiencing conditions of instability and
attendant degradation.

 in terms of human activities that have impact to

environment, it is concerned as to how much it
would affect natural and human environment;
 can the environment manage to absorb the
changes to be introduced by these activities
without much adverse effects: IF YES, carrying
capacity is met; IF NOT, it did not; therefore,
activity should not be approved
 It should be PREVENTIVE and not curative
carrying capacity.

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CONTIGUOUS ZONE refers to water, sea bottom and substratum measured
twenty-four nautical miles (24 n.m.) seaward from the
base line of the Philippine archipelago.

CONTRACT AREA means land or body of water delineated for purposes of

exploration, development, or utilization of the minerals
found therein.
CONTRACTOR means a qualified person acting alone or in consortium
who is a party to a mineral agreement or to a financial
or technical assistance agreement.

CO-PRODUCTION AGREEMENT means an agreement entered into between the

(CA) Government and one or more contractors in accordance
with Section 26(b) hereof.

ECOLOGICAL PROFILE OR ✓ refers to geographic-based instruments for planners

ECO-PROFILE and decision-makers which presents an evaluation
of the environmental quality and carrying capacity
of an area.

 Profiling of the environment in order to consider

the environmental quality and carrying capacity
of the area that mining activities might be
feasible.
 Generic term which when use under PMA of
1995, it is always correlated with mining
activities.

ENVIRONMENTAL refers to the document issued by the government agency

COMPLIANCE CERTIFICATE concerned certifying that the project under
(ECC) consideration will not bring about an unacceptable
environmental impact and that the proponent has
complied with the requirements of the environmental
impact statement system.

ENVIRONMENTAL IMPACT is the document which aims to identify, predict,

STATEMENT (EIS) interpret, and communicate information regarding
changes in environmental quality associated with a
proposed project and which examines

 must be submitted to the respective government

body; for mining, it is submitted to the MGB
 if EIS passes the test of the EIA of the DENR, it
will issue the ECC
 only when an ECC can the contractor or any
person with authority can commence a mining
activity
 without an ECC, even if already granted with a
contract, an activity cannot be commenced

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ENVIRONMENTAL IMPACT **refers to the assessment made by the government on
ASSESSMENT (EIA) a proposed project that has environmental impact

EXCLUSIVE ECONOMIC ZONE means the water, sea bottom and subsurface measured
from the baseline of the Philippine archipelago up to
two hundred nautical miles (200 n.m.) offshore.

EXISTING means a valid and subsisting mining claim or permit or

MINING/QUARRYING RIGHT quarry permit or any mining lease contract or
agreement covering a mineralized area granted/issued
under pertinent mining laws.

 Concept of vested right: respects existing

mining rights prior the implem of PMA
EXPLORATION means the searching or prospecting for mineral
resources by geological, geochemical or geophysical
surveys, remote sensing, test pitting, trenching, drilling,
shaft sinking, tunneling or any other means for the
purpose of determining the existence, extent, quantity
and quality thereof and the feasibility of mining them
for profit.

FINANCIAL OR TECHNICAL means a contract involving financial or technical

ASSISTANCE AGREEMENT assistance for large-scale exploration, development,
and utilization of mineral resources.

FOREIGN-OWNED means any corporation, partnership, association, or

CORPORATION cooperative duly registered in accordance with law in
which less than fifty per centum (50%) of the
capital is owned by Filipino citizens.

*59% foreign-owned: not allowed

 Under the Constitution, the concept of 60%
Filipino ownership refers to the control of the
Filipinos in a certain corporation.
 Common shares v. preferred shares: under
corporation law, the holders of common shares
has the right to vote
 GR: those who have preferred shares do not
have voting rights, unless in certain
circumstances, they are given right to vote
 IMPLICATION: the control is manifested thru
voting (of the common share holders)

Illustration:
✓ XX, YY and ZZ, all Filipino, own 33.3% common
shares. (100% Filipino-owned)
✓ XX, a foreigner, owns 30% common shares; YY,
a Fil., owns 40% common shares; and ZZ, a Fil.,
owns 30% preferred non-voting shares. (70%
Filipino-owned BUT NOT ACTUALLY 60%

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 FILIPINO-OWNED, because XX and YY will
share in the votes as ZZ has no power to vote)

GROSS OUTPUT means the actual market value of minerals or mineral

products from its mining area as defined in the National
Internal Revenue Code.

INDIGENOUS CULTURAL means a group or tribe of indigenous Filipinos who have

COMMUNITY continuously lived as communities on communally-
bounded and defined land since time immemorial and
have succeeded in preserving, maintaining, and sharing
common bonds of languages, customs, traditions, and
other distinctive cultural traits, and as may be defined
and delineated by law.

JOINT VENTURE AGREEMENT means an agreement entered into between the

(JVA) Government and one or more contractors in accordance
with Section 26(c) hereof.

MINERALS refers to all naturally occurring inorganic substance in

solid, gas, liquid, or any intermediate state excluding
energy materials such as coal, petroleum, natural gas,
radioactive materials, and geothermal energy.

MINERAL AGREEMENT means a contract between the government and a

contractor, involving mineral production-sharing
agreement, co-production agreement, or joint-venture
agreement.

MINERAL LAND means any area where mineral resources are found.
MINERAL RESOURCE means any concentration of minerals/rocks with
potential economic value.
MINING AREA means a portion of the contract area identified by the
contractor for purposes of development, mining,
utilization, and sites for support facilities or in the
immediate vicinity of the mining operations.

MINING OPERATION means mining activities involving exploration,

feasibility, development, utilization, and processing.

**Development and utilization but NOT exploration

OFFSHORE ONSHORE

means the water, sea bottom and means the landward side from the mean tide elevation,
subsurface from the shore or including submerged lands in lakes, rivers and
coastline reckoned from the mean creeks.
low tide level up to the two hundred
nautical miles (200 n.m.) exclusive Examples:
economic zone including the ✓ mining activities in the mountain of Benguet
✓ Sierra Madre range located in Aurora to Isabela

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 archipelagic sea and contiguous ✓ Subsoil in the Laguna de Bay
zone.

Examples:
✓ subsoil in the eez

PERMITTEE means the holder of an exploration permit.

POLLUTION CONTROL AND refers to infrastructure, machinery, equipment and/or

INFRASTRUCTURE DEVICES improvements used for impounding, treating or
neutralizing, precipitating, filtering, conveying and
cleansing mine industrial waste and tailings as well as
eliminating or reducing hazardous effects of solid
particles, chemicals, liquids or other harmful
byproducts and gases emitted from any facility utilized
in mining operations for their disposal.

QUARRYING means the process of extracting, removing and

disposing quarry resources found on or underneath the
surface of private or public land.
QUARRY PERMIT means a document granted to a qualified person for the
extraction and utilization of quarry resources on public
or private lands
QUARRY RESOURCES refers to any common rock or other mineral substances
as the Director of Mines and Geosciences Bureau may
declare to be quarry resources such as, but not limited
to, andesite, basalt, conglomerate, coral sand,
diatomaceous earth, diorite, decorative stones, gabbro,
granite, limestone, marble, marl, red burning clays for
potteries and bricks, rhyolite, rock phosphate,
sandstone, serpentine, shale, tuff, volcanic cinders, and
volcanic glass: Provided, That such quarry resources do
not contain metals or metallic constituents and/or other
valuable minerals in economically workable quantities:
Provided, further, That non-metallic minerals such as
kaolin, feldspar, bull quartz, quartz or silica, sand and
pebbles, bentonite, talc, asbestos, barite, gypsum,
bauxite, magnesite, dolomite, mica, precious and semi-
precious stones, and other non-metallic minerals that
may later be discovered and which the: Director
declares the same to be of economically workable
quantities, shall not be classified under the category of
quarry resources.

**See PEISS law

MINERAL RESERVATIONS (Section 5)
What are the mineral reservations?
• When the national interest so requires, such as when there is a need to preserve strategic
raw materials for industries critical to national development, or
• Certain minerals for scientific, cultural or ecological value

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 o the President may establish mineral reservations upon the
recommendation of the Director through the Secretary.
• Mining operations in existing mineral reservations and such other reservations as may
thereafter be established, shall be undertaken by the Department or through a contractor
o a small scale-mining cooperative covered by Republic Act No. 7076 shall be given
preferential right to apply for a small-scale mining agreement for a
maximum aggregate area of twenty-five percent (25%) of such mineral
reservation
• All submerged lands within the contiguous zone and in the exclusive
economic zone of the Philippines are hereby declared to be mineral
reservations.
A ten per centum (10%) share of all royalties and revenues to be derived by the government
from the development and utilization of the mineral resources within mineral reservations as
provided under this Act shall accrue to the Mines and Geosciences Bureau to be allotted for special
projects and other administrative expenses related to the exploration and development of other
mineral reservations mentioned in Section 6 hereof.
• ***The DENR Sec has no power to withdraw lands from forest reserves and declare the
same as an area open for mining operations.

AREAS CLOSED TO MINING OPERATIONS (Section 19)

Mineral agreement or financial or technical assistance agreement applications shall not be
allowed:
a. In military and other government reservations, except upon prior written clearance by
the government agency concerned;
b. Near or under public or private buildings, cemeteries, archeological and historic sites,
bridges, highways, waterways, railroads, reservoirs, dams or other infrastructure projects,
public or private works including plantations or valuable crops, except upon written
consent of the government agency or private entity concerned;
c. In areas covered by valid and existing mining rights;
d. In areas expressly prohibited by law;
e. In areas covered by small-scale miners as defined by law unless with prior consent of
the small-scale miners, in which case a royalty payment upon the utilization of minerals
shall be agreed upon by the parties, said royalty forming a trust fund for the socioeconomic
development of the community concerned; and
f. Old growth or virgin forests, proclaimed watershed forest reserves, wilderness areas,
mangrove forests, mossy forests, national parks provincial/municipal forests, parks,
greenbelts, game refuge and bird sanctuaries as defined by law and in areas expressly
prohibited under the National Integrated Protected Areas System (NIPAS) under Republic
Act No. 7586, Department Administrative Order No. 25, series of 1992 and other laws.

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Q.: Can the State grant a contract for the conduct of mining activities underneath Philippine
Military Academy (PMA)?
ANS.: Yes, provided that there is prior written clearance by the government agency concerned
such as the Dept. of National Defense and PMA.

Q.: How about in Camp John Hay? **(It has been declared as mineral land)
ANS.: Yes, provided that there is prior written clearance by the government agency concerned.

• Areas closed to mining operations are open to mining applications subject to area status
and clearance. Some conditions include written consent of the concerned government
agency or private entity.
• No ancestral land shall be opened for mining operations without FPIC.

EXPLORATION PERMIT (Section 20)

An exploration permit grants the right to conduct exploration for all minerals in specified
areas. The Bureau shall have the authority to grant an exploration Permit to a qualified person.

• Such a permit does not amount to an authorization to extract and carry off the mineral
resources that may be discovered. No extraction is involved, there are no revenues or
incomes to speak of.
Q.: Can the period of an exploration permit be extended? – YES.
Terms and Conditions of the Exploration Permit (Section 21)
An exploration permit shall be for a period of two (2) years, subject to annual review and
relinquishment or renewal upon the recommendation of the Director.

• Transfer of exploration permit (Sec. 25)– requires prior approval of DENR Secretary upon
recommendation of the Director
• Terms and conditions – for 2 yrs from issuance, renewable not to exceed total of 4 years
(nonmetallic) or 6 years (metallic)
• Exploration permit is revocable when demanded by the police power; for general welfare

What are the maximum areas under the exploration permit?

ONSHORE INDIVDUAL PARTNERSHIPS/ CORP./
COOP./ ASSOC (PCCA)
In any province 20 blocks 200 blocks
(approx. 1,620 hectares) (approx. 16,200 hectares)

In the entire Philippines 40 blocks 400 blocks

(approx. 3,240 hectares) (approx. 32,400 hectares)

OFFSHORE, beyond 500m 100 blocks 1000 blocks

from the mean low tide level (approx. 8,100 hectares) (approx. 81,000 hectares)

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MINERAL AGREEMENTS
FORMS:
(a) Mineral production sharing agreement (MPSA) – is an agreement where the Government
grants to the contractor the exclusive right to conduct mining operations within a
contract area and shares in the gross output. The contractor shall provide the
financing, technology, management and personnel necessary for the implementation of
this agreement.
✓ Where the government participates the least
✓ The contractor provides for the financing, technology, management and personnel
necessary for the agreement’s implementation
✓ Total govt share here is the excise tax on mineral products
(b) Co-production agreement (CA) – is an agreement entered into between the Government
and one or more contractors (in accordance with Section 26(b) hereof) wherein the
government shall provide inputs to the mining other than the mineral resource.

Illustration:
AA – to provide manpower
BB – capital and manpower
CC – capital, manpower and equipment
▪ It will depend upon the State what it may input other than the minerals.

(c) Joint-venture agreement (JVA) – is an agreement where a joint-venture company is

organized by the Government and the contractor with both parties having equity shares.
Aside from earnings in equity, the Government shall be entitled to a share in the gross
output.
✓ Govt enjoys the greatest participation; both govt and contractor have equity shares and
the govt is entitled to a share in the gross output
✓ **the bigger equity share for the State compared to contractor, the bigger the share for
gross output plus excise tax

AREAS OPEN TO MINING OPERATIONS (Section 18)

Subject to any existing rights or reservations and prior agreements of all parties, all mineral
resources in public or private lands, including timber or forestlands as defined in
existing laws, shall be open to mineral agreements or financial or technical assistance
agreement applications. Any conflict that may arise under this provision shall be heard and
resolved by the panel of arbitrators.
C. RA 7942 reiterates ownership of natural resources by the State (Sec. 4)
D. Activities which may undertaken by the State in connection with its “full control and
supervision” are the ff. 4 modes:
a. Direct undertaking by the State
b. Co-production, joint venture or production sharing agreements with Filipino
citizens or qualified corporations
c. Small-scale utilization of natural resources by Filipino citizens (by law)

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 d. Large-scale EDU of minerals, petroleum and other mineral oil, the President may
enter into agreements with foreign-owned corporations involving technical or
financial assistance
• State mechanism of inspection and visitorial rights over mining operations are
established under Secs. 8, 9
GOVERNMENT SHARE IN OTHER MINERAL AGREEMENTs (Section 81)
The share of the Government in co-production and joint-venture agreements shall be
negotiated by the Government and the contractor taking into consideration the:
a. capital investment of the project;
b. risks involved;
c. contribution of the project to the economy; and
d. other factors that will provide for a fair and equitable sharing between the
Government and the contractor.
The Government shall also be entitled to compensations for its other contributions which
shall be agreed upon by the parties, and shall consist, among other things, the
contractor's income tax, excise tax, special allowance, withholding tax due from the
contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholders, in case of a foreign national, and all such other taxes, duties and
fees as provided for under existing laws.
The Government share in financial or technical assistance agreement shall consist of,
among other things, the contractor's corporate income tax, excise tax, special allowance,
withholding tax due from the contractor's foreign stockholders arising from dividend or interest
payments to the said foreign stockholder in case of a foreign national and all such other taxes,
duties and fees as provided for under existing laws.
Eligibility: WHO ARE QUALIFIED PERSONS?
a. INDIVIDUAL – must be a Filipino citizen of legal age and with capacity to contract; or
b. CORPORATION, PARTNERSHIP, ASSOC OR COOP – must be organized or authorized
for the purpose of engaging in mining, duly registered in accordance with law, at least 60%
of the capital of which is owned by Filipino citizens
ASSIGNMENT OR TRANSFER
– subject to prior approval of the Secretary except in FTAA; must be acted upon
within 30 working days from official receipt
***The DENR Sec has the authority to cancel mineral agreements

"Sec. 40. Assignment/Transfer – A financial or technical assistance agreement may

be assigned or transferred, in whole or in part, to a qualified person subject to the prior
approval of the President: Provided, that the President shall notify Congress of every
financial or technical assistance agreement assigned or converted in accordance with
this provision within thirty (30) days from the date of approval."

Q.: Can mineral agreement contractor withdraw prior to the expiration of the term of the
mineral agreement?
ANS.: YES

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HOW: There must be an approval by the SENR subject to corresponding legal justification:
mining operation is no longer feasible or viable (luging-lugi) or benefits is far outweighed by
the cost; and the contractor must have the financial, fiscal and legal obligations

CASE STUDY: Lepanto Consolidated Mining Co. v. WMC Resources, G.R. No. 162331,
November 20, 2006, 507 SCRA 315
DOCTRINE:
By imposing a new condition on the assignment and transfer of rights, which is
apart from those already contained in the Columbio FTAA, Section 40 of the Philippine
Mining Act of 1995, if made to apply to the Columbio FTAA will effectively modify the terms
of the original contract and restrict the exercise of vested rights under the agreement. Such
modification is equivalent to an impairment of contracts which is violative of the
Constitution.

Prospective application of the Philippine Mining Act of 1995 - The provisions of the law
shall be applied prospectively in the absence of either express declaration or an implication
that its provision shall be made to apply retrospectively.

Impairment of Contract Clauses - A law which changes the terms of a legal contract
between the parties, either in the time or mode of performance, or imposes new conditions,
or dispenses with those expressed, or authorizes for its satisfaction something different
from that provided in its terms, is law which impairs the obligation of a contract and is
therefore null and void.

FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT (FTAA)

✓ means a contract involving financial or technical assistance for large-scale exploration,
development, and utilization of mineral resources.
✓ Subject to negotiation
✓ **If there is transfer, withdrawal, assignement, it is the President who approves or
disapproves the same
The collection of Government share in financial or technical assistance agreement shall
commence after the financial or technical assistance agreement contractor has fully recovered
its pre-operating expenses, exploration, and development expenditures, inclusive.

An FTAA is a contract or property right which merits protection by the due process clause
✓ Reason: the cancellation will utterly deprive the contractor of its investments, most of
which cannot be pulled out
✓ With the inadequacy of Filipino capital and tech in large-scale EDU activities, the State
may secure the help of foreign companies in all relevant matters, esp. in FTAA,
provided that the State maintains its right of full control at all times.
✓ Foreign contractor assumes all financial, technical and entrepreneurial risks; hence, it
may be given reasonable management, operational, marketing, audit and other
prerogatives to protect its investments and to enable the business to succeed
✓ Entered into by the President on behalf of the State; thus, a govt or public contract
generally subject to the same laws and regulations governing private contracts

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Eligibility
✓ A legally organized foreign-owned corp: corp, partnership, assoc, or coop duly
registered in which less than 50% of the capital is owned by Filipino citizens is a
“qualified person”
✓ Considers the size of the contract area as large-scale as opposed to the amount invested
(US$ 50M) standard under EO 279
REQUIREMENTS OF FTAA
1) Entered into only by the Pres.
2) For large scale EDU of minerals, petroleum, and other mineral oils only
3) Accdg to gen. terms and conditions provided for by law based on REAL
CONTRIBUTIONS TO THE ECONOMIC GROWTH and GENERAL WELFARE of the
country.
4) The State shall promote the development and use of local scientific and technical
resources.

Q: Can a natural Filipino citizen enter into an FTAA if capable? Naturalized Filipino? Filipino
Corp/Assoc’n or partnership? Foreign-owned or controlled corp
ANS. YES.

Q: Can the FTAA be rescinded? If so, on what grounds?

ANS.: YES

GROUNDS FOR CANCELLATION, REVOCATION, & TERMINATION

✓ Late or Non-filing of Requirements (Section 95)
✓ Failure of the permittee or contractor to comply with any of the requirements
provided in this Act or in its implementing rules and regulations, without a valid
reason, shall be sufficient ground for the suspension of any permit or agreement provided
under this Act.
✓ Violation of the Terms and Conditions of Permits or Agreements (Section 96)
Violation of the terms and conditions of the permits or agreements shall be a
sufficient ground for cancellation of the same.
✓ Non-Payment of Taxes and Fees (Section 97)
Failure to pay the taxes and fees due the Government for two (2) consecutive years
shall cause the cancellation of the exploration permit, mineral agreement, financial or
technical assistance agreement and other agreements and the re-opening of the area
subject thereof to new applicants.
✓ Suspension or Cancellation of Tar Incentives and Credits (Section 98)
Failure to abide by the terms and conditions of tax incentive and credits shall cause
the suspension or cancellation of said incentives and credits.
✓ Falsehood or Omission of Facts in the Statement (Section 99)

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Negotiations (Section 36)
A financial or technical assistance agreement shall be negotiated by the Department and
executed and approved by the President. The President shall notify Congress of all
financial or technical assistance agreements within thirty (30) days from execution and
approval thereof.

Illustration on conversion:
A fully-owned foreign company entered into an FTAA of minerals in Palawan. The company
sought the conversion of the FTAA to MSA.
✓ This can be done provided that the 60% share be made Filipino-owned (common
shares)

Settlement Of Conflicts
PANEL OF ARBITRATORS (Section 77)
There shall be a panel of arbitrators in the regional office of the Department composed of
three (3) members, two (2) of whom must be members of the Philippine Bar in good standing and
one a licensed mining engineer or a professional in a related field, and duly designated by the
Secretary as recommended by the Mines and Geosciences Bureau Director. Those designated as
members of the panel shall serve as such in addition to their work in the Department without
receiving any additional compensation As much as practicable, said members shall come from the
different bureaus of the Department in the region. The presiding officer thereof shall be selected
by the drawing of lots. His tenure as presiding officer shall be on a yearly basis. The members of
the panel shall perform their duties and obligations in hearing and deciding cases until their
designation is withdrawn or revoked by the Secretary. Within thirty (30) working days, after the
submission of the case by the parties for decision, the panel shall have exclusive and original
jurisdiction to hear and decide on the following: (MEMORIZE!)
a. Disputes involving rights to mining areas;
b. Disputes involving mineral agreements or permits;
c. Disputes involving surface owners, occupants and
claimholders/concessionaires; and
d. Disputes pending before the Bureau and the Department at the date of
the effectivity of this Act.

APPEAL
✓ POA decision or order may be appealed to the Mines Adjudication Board
(MAB) within 15 days from receipt thereof which must be decided within 30
days from submission thereof for decision.

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 MINES ADJUDICATION BOARD
Composition:
1. Secretary ENR – as Chaiperson
2. Director of the Mines and Geosciences Bureau
3. Undersecretary for Operations of the Department
• MAB decisions are appealable to the Court of Appeals

OTHER JURISPRUDENCE ON MINING ISSUES:

W/N the State, through Republic Act No. 7942 and the CAMC FTAA, abdicated its
primary responsibility to the full control and supervision over natural resources.
• The State still has full control and supervision over natural resources. In La Bugal-B’Laan
Tribal Association, Inc. v. Ramos, the Supreme Court held that the Philippine Mining Act
“provides for the state’s control and supervision over mining operations.” Sections 8, 9
and 66 provide for the mechanism of inspection and visitorial rights over mining
operations as well as reportorial requirements. Both the Philippine Mining Act and its IRR
provided stipulations confirming the government’s control over mining enterprises. It
granted the government with sufficient control and supervision on the conduct of mining
operations. (Dipidio Earth-Savers’ Multi-Purpose Association v. Gozun, G.R. No. 157882,
March 30, 2006, 485 SCRA 586)

Republic v. Rosemoor, G.R. No. 149927, March 30, 2004, 426 SCRA 517
DOCTRINE: A mining license that contravenes a mandatory provision of the law under which it
is granted is void. Being a mere privilege, a license does not vest absolute rights in the holder.
Thus, without offending the due process and the non-impairment clauses of the Constitution, it
can be revoked by the State in the public interest.

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NOTES LA BUGAL-B’LAAN V. RAMOS CASE (2004 RULING)

In a CPA that the government enters into with one or more contractors, the government shall
provide inputs to the mining operations other than the mineral resource itself.

In a JVA, a JV company is organized by the government and the contractor, with both parties
having equity shares (investments); and the contractor is granted the exclusive right to conduct
mining operations and to extract minerals found in the area.

In an MPSA, the government grants the contractor the exclusive right to conduct mining
operations within the contract area and shares in the gross output; and the contractor provides
the necessary financing, technology, management and manpower.

FTAA is limited to large-scale projects and only for minerals, petroleum and other mineral oils.

SUMMATION:

1. The Meaning of "Agreements Involving Either Technical or Financial Assistance"

➢ the framers' choice of words does not indicate the intent to exclude other modes of
assistance, but rather implies that there are other things being included or
possibly being made part of the agreement, apart from financial or technical assistance.

2. Ultimate Test: Full State Control

a. Control by the State may be on a macro level, through the establishment of policies,
guidelines, regulations, industry standards and similar measures that would enable
government to regulate the conduct of affairs in various enterprises, and restrain activities
deemed not desirable or beneficial
b. It does not mean that the State controls and supervises everything down to the smallest
details- as this would render impossible the legitimate exercise by the contractor of a
reasonable degree of management prerogative and authority.

3. Government Granted Full Control by RA 7942 and DAO 96-40

➢ the State definitely has a pivotal say in the operation of the individual enterprises, and
can set directions and objectives, detect deviations and non-compliances by the
contractor, and enforce compliance and impose sanctions should the occasion arise.

4. WMCP FTAA Likewise Gives the State Full Control and Supervision
a. Provisions of WMCP FTAA vest the State with control and supervision over practically all
aspects of the operations of the FTAA contractor, including the charging of pre-operating
and operating expenses, and the disposition of mineral products.
b. No relinquishment of control on account of specific provisions of the WMCP FTAA.

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5. No Surrender of Financial Benefits
DAO 99-56: “Guidelines Establishing the Fiscal Regime of Financial or Technical Assistance
Agreements”
a. Basic Government Share
✓ Direct taxes
✓ Fees
✓ Royalties
✓ Other payments made by the contractor during the term of the FTAA

b. Additional Government Share

✓ Share in the earnings or cash flows of the mining enterprise.
✓ To achieve a 50/50 sharing of net benefits from mining bet. the Gov’t and the
Contractor.

6. Invalid Provisions of the WMCP FTAA

a. Sec. 7.9

• Acc. to the provision, the Gov’t will have no “net mining revenue” share once the
foreign corpos sell 60% or more of its equity to a Filipino citizen or corporation.
• This may fall into abuse by foreign stockholders.

b. Sec. 7.8 (e)

• allowing the sums spent by government for the benefit of the contractor to be
deductible from the State's share in net mining revenues.
• This benefits the contractor twice.

CONCLUSION

All mineral resources are owned by the State. Their exploration, development and
utilization (EDU) must always be subject to the full control and supervision of the State.

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 all relevant matters --
especially financial and technical assistance -- provided that, at all times, the State maintains its
right of full control.

The foreign assistor or contractor assumes all financial, technical and entrepreneurial risks
in the EDU activities; hence, it may be given reasonable management, operational, marketing,
audit and other prerogatives to protect its investments and to enable the business to succeed.

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