LA BUGAL-BLAAN TRIBAL ASSOCIATION, INC. V.

RAMOS
GR No. 127882, Dec. 1, 2004, 445 SCRA 1
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FACTS:
On July 25, 1987, then 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, then President Fidel V. Ramos approved R.A. No. 7942 to "govern
the exploration, development, utilization and processing of all mineral resources." R.A. No. 7942
defines the modes of mineral agreements for mining operations, outlines the procedure for their
filing and approval, assignment/transfer and withdrawal, and fixes their terms. Similar provisions
govern financial or technical assistance agreements.
On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and
Manila Times, two newspapers of general circulation, R.A. No. 7942 took effect. Shortly before
the effectivity of R.A. No. 7942, however, or on March 30, 1995, the President entered into an
FTAA with WMCP covering 99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao
del Sur and North Cotabato.
On August 15, 1995, then 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. This was later repealed by DAO No. 96-40, s. 1996 which
was adopted on December 20, 1996.
On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary
demanding that the DENR stop the implementation of R.A. No. 7942 and DAO No. 96-40, giving
the DENR fifteen days from receipt to act thereon. The DENR, however, has yet to respond or
act on petitioners' letter.
Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction.
ISSUE:
Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-
owned corporations to exploit Philippine mineral resources.
HELD:
YES. RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully
foreign owned corporations to exploit 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,
“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 Constitutions
authorizing the State to grant licenses, concessions, or leases for the exploration, exploitation,
development or utilization of natural resources. Y such omission, the utilization of inalienable
lands of public domain through license, concession or lease is no longer allowed under the 1987
Constitution.
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 or operation of mining activities by foreign contractors,
the primary feature of 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 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 bear title thereto.