[NATURAL RESOURCES AND ENVIRONMENTAL LAWS] July 20, 2016

LA BUGAL-BLAAN TRIBAL ASSOCIATION, INC. vs. RAMOS (DENR Secretary)

G.R. No. 127882
December 1, 2004

Ponente: Panganiban, J.:

Topic: 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 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.
Parties of the case:
Petitioner: La Bugal-Blaan Tribal Association, Inc.
Respondent: Hon. Victor O. Ramos (DENR Secretary)

Facts:
The Petition for Prohibition and Mandamus before the Court challenges the
constitutionality of (1) Republic Act 7942 (The Philippine Mining Act of 1995); (2) its
Implementing Rules and Regulations (DENR Administrative Order [DAO] 96-40); and (3)
the Financial and Technical Assistance Agreement (FTAA) dated 30 March 1995, executed
by the government with Western Mining Corporation (Philippines), Inc. (WMCP).
On 27 January 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.

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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.
Pursuant to Section 2 Article XII of the Constitution it effectively banned such service
contracts. Subsequently, Victor O. Ramos (Secretary, Department of Environment and Natural
Resources [DENR]), Horacio Ramos (Director, Mines and Geo sciences Bureau [MGB-DENR]),
Ruben Torres (Executive Secretary), and the WMC (Philippines) Inc. filed separate Motions for
Reconsideration.

Issue:

Whether or not the Court has a role in the exercise of the power of control over the
exploration, development and utilization (EDU) of our natural resources?

Held:

In contrast to 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, should
the President and/or Congress gravely abuse their discretion in this regard, the courts may
exercise their residual duty under Article VIII. Under the doctrine of separation of powers and
due respect for co-equal and coordinate branches of government, the Court must restrain itself
from intruding into policy matters and must allow the President and Congress maximum
discretion in using the resources of our country and in securing the assistance of foreign groups
to eradicate poverty and answer employment opportunities in the country.

The Court believes that it is not unconstitutional to allow a wide degree of discretion to
the Chief Executive in order to preserve and enhance our countrys competitiveness in world
markets. On the basis of this control standard, the Court upholds the constitutionality of the

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 [NATURAL RESOURCES AND ENVIRONMENTAL LAWS] July 20, 2016

Philippine Mining Law, its Implementing Rules and Regulations insofar as they relate to
financial and technical agreements as well as the subject FTAA.

The judiciary is loath to interfere with the due exercise by coequal branches of
government of their official functions. As aptly spelled out seven decades ago by Justice George
Malcolm, Just as the Supreme Court, as the guardian of constitutional rights, should not
sanction usurpation by any other department of government, so should it as strictly confine its
own sphere of influence to the powers expressly or by implication conferred on it by the
Organic Act. Let the development of the mining industry be the responsibility of the political
branches of government. And let not this Court interfere inordinately and unnecessarily.

The Constitution of the Philippines is the supreme law of the land. It is the repository of
all the aspirations and hopes of all the people. We fully sympathize with the plight of Petitioner
La Bugal Blaan and other tribal groups, and commend their efforts to uplift their communities.
However, we cannot justify the invalidation of an otherwise constitutional statute along with its
implementing rules, or the nullification of an otherwise legal and binding FTAA contract.

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