La Bugal-B’laan Tribal Assn vs Ramos

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 – in so far 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.

Ruling:
The constitutional provision at the nucleus of the controversy is paragraph 4 of
Section 2 of Article XII of the 1987 Constitution. In order to appreciate its
context, Section 2 is reproduced in full:
"The President may enter into agreements with foreign-owned corporations
involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and... conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In
such agreements, the State shall promote the development and use of local
scientific and technical resources.
Petitioners claim that the phrase "agreements x x x involving either technical or
financial assistance" simply means technical assistance or financial assistance
agreements, nothing more and nothing else. They insist that there is no
ambiguity in the phrase, and... that a plain reading of paragraph 4 quoted
above leads to the inescapable conclusion that what a foreign-owned
corporation may enter into with the government is merely an agreement for
either financial or technical assistance only, for the large-scale... exploration,
development and utilization of minerals, petroleum and other mineral oils; such
a limitation, they argue, excludes foreign management and operation of a
mining enterprise
We do not see how applying a strictly literal or verba legis interpretation of
paragraph 4 could inexorably lead to the conclusions arrived at in the ponencia.
First, the drafters' choice of words -- their use of the phrase agreements x x x
involving... either technical or financial assistance -- does not indicate the intent
to exclude other modes of assistance. The drafters opted to use involving when
they could have simply said agreements for financial or technical assistance, if
that was their intention to... begin with. In this case, the limitation would be
very clear and no further debate would ensue
In contrast, the use of the word "involving" signifies the possibility of the
inclusion of other forms of assistance or activities having to do with, otherwise
related to or compatible with financial or technical assistance. The word
"involving" as used in this context... has three connotations that can be
differentiated thus: one, the sense of "concerning," "having to do with," or
"affecting"; two, "entailing," "requiring," "implying" or "necessitating"; and
three, "including," "containing" or "comprising."
Plainly, none of the three connotations convey a sense of exclusivity. Moreover,
the word "involving," when understood in the sense of "including," as in
including technical or financial assistance, necessarily implies that there are
activities other than those... that are being included. In other words, if an
agreement includes technical or financial assistance, there is apart from such
assistance something else already in, and covered or may be covered by, the
said agreement.
In short, it allows for the possibility that matters, other than those explicitly
mentioned, could be made part of the agreement. Thus, we are now led to the
conclusion that the use of the word "involving" implies that these agreements
with foreign corporations are not... limited to mere financial or technical
assistance. The difference in sense becomes very apparent when we juxtapose
"agreements for technical or financial assistance" against "agreements including
technical or financial assistance." This much is unalterably clear in a verba legis
approach.
Second, if the real intention of the drafters was to confine foreign corporations
to financial or technical assistance and nothing more, their language would have
certainly been so unmistakably restrictive and stringent as to leave no doubt in
anyone's mind about... their true intent. For example, they would have used the
sentence foreign corporations are absolutely prohibited from involvement in the
management or operation of mining or similar ventures or words of similar
import. A search for such stringent wording yields... negative results. Thus, we
come to the inevitable conclusion that there was a conscious and deliberate
decision to avoid the use of restrictive wording that bespeaks an intent not to
use the expression "agreements x x x involving either technical or financial
assistance". in an exclusionary and limiting manner.
Principles:
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.
On the basis of this control standard, this 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