121381-2004-La_Bugal-B_laan_Tribal_Association_Inc._v.20180411-1159-kcpm6w_2.pdf - EN BANC[G.R No 127882 December 1 2004 LA BUGAL-B'LAAN TRIBAL

121381-2004-La_Bugal-B_laan_Tribal_Association_Inc._v.20180411-1159-kcpm6w_2.pdf

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Unformatted text preview: EN BANC [G.R. No. 127882. December 1, 2004.] LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., Represented by its Chairman F'LONG MIGUEL M. LUMAYONG; WIGBERTO E. TAÑADA; PONCIANO BENNAGEN; JAIME TADEO; RENATO R. CONSTANTINO JR.; F'LONG AGUSTIN M. DABIE; ROBERTO P. AMLOY; RAQIM L. DABIE; SIMEON H. DOLOJO; IMELDA M. GANDON; LENY B. GUSANAN; MARCELO L. GUSANAN; QUINTOL A. LABUAYAN; LOMINGGES D. LAWAY; BENITA P. TACUAYAN; Minors JOLY L. BUGOY, Represented by His Father UNDERO D. BUGOY and ROGER M. DADING; Represented by His Father ANTONIO L. DADING; ROMY M. LAGARO, Represented by His Father TOTING A. LAGARO; MIKENY JONG B. LUMAYONG, Represented by His Father MIGUEL M. LUMAYONG; RENE T. MIGUEL, Represented by His Mother EDITHA T. MIGUEL; ALDEMAR L. SAL, Represented by His Father DANNY M. SAL; DAISY RECARSE, Represented by Her Mother LYDIA S. SANTOS; EDWARD M. EMUY; ALAN P. MAMPARAIR; MARIO L. MANGCAL; ALDEN S. TUSAN; AMPARO S. YAP; VIRGILIO CULAR; MARVIC M.V.F. LEONEN; JULIA REGINA CULAR, GIAN CARLO CULAR, VIRGILIO CULAR JR., Represented by Their Father VIRGILIO CULAR; PAUL ANTONIO P. VILLAMOR, Represented by His Parents JOSE VILLAMOR and ELIZABETH PUA-VILLAMOR; ANA GININA R. TALJA, Represented by Her Father MARIO JOSE B. TALJA; SHARMAINE R. CUNANAN, Represented by Her Father ALFREDO M. CUNANAN; ANTONIO JOSE A. VITUG III, Represented by His Mother ANNALIZA A. VITUG, LEAN D. NARVADEZ, Represented by His Father MANUEL E. NARVADEZ JR.; ROSERIO MARALAG LINGATING, Represented by Her Father RIO OLIMPIO A. LINGATING; MARIO JOSE B. TALJA; DAVID E. DE VERA; MARIA MILAGROS L. SAN JOSE; Sr. SUSAN O. BOLANIO, OND; LOLITA G. DEMONTEVERDE; BENJIE L. NEQUINTO; 1 ROSE LILIA S. ROMANO; ROBERTO S. VERZOLA; EDUARDO AURELIO C. REYES; LEAN LOUEL A. PERIA, Represented by His Father ELPIDIO V. PERIA; 2 GREEN FORUM PHILIPPINES; GREEN FORUM WESTERN VISAYAS (GF-WV); ENVIRONMENTAL LEGAL ASSISTANCE CENTER (ELAC); KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN); 3 PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT SERVICES, INC. (PARRDS); PHILIPPINE PARTNERSHIP FOR THE DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA); WOMEN'S LEGAL BUREAU (WLB); CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI); UPLAND DEVELOPMENT INSTITUTE (UDI); KINAIYAHAN FOUNDATION, INC.; SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN); and LEGAL RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners, vs . VICTOR O. RAMOS, Secretary, Department of Environment and Natural Resources (DENR); HORACIO RAMOS, Director, Mines and Geosciences Bureau (MGB-DENR); RUBEN TORRES, Executive Secretary; and WMC CD Technologies Asia, Inc. © 2018 cdasiaonline.com (PHILIPPINES), INC., 4 respondents. RESOLUTION PANGANIBAN , J : p 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 speci cally, 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 nancial and technical assistance —” provided that, at all times, the State maintains its right of full control. The foreign assistor or contractor assumes all nancial, 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. 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, nancial, marketing and other functions may be delegated to subordinate o cers or given to contractual entities, but the board retains full residual control of the business. Who or what organ of government actually exercises this power of control on behalf of the State? The Constitution is crystal clear: the President. Indeed, the Chief Executive is the o cial constitutionally mandated to "enter into agreements with foreign owned corporations." On the other hand, Congress may review the action of the President once it is noti ed of "every contract entered into in accordance with this [constitutional] provision within thirty days from its execution." In contrast to this 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 —” in a proper case —” exercise their residual duty under Article VIII. Clearly then, the judiciary should not inordinately interfere in the exercise of this presidential power of control over the EDU of our natural resources. The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate economic growth or to serve narrow, parochial interests. Rather, it should be construed to grant the President and Congress su cient discretion and reasonable leeway to enable them to attract foreign investments and expertise, as well as to secure for our people and our posterity the blessings of prosperity and peace. 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 nancial and technical agreements —” as well as the subject Financial and Technical Assistance Agreement (FTAA). 5 Background 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); CD Technologies Asia, Inc. © 2018 cdasiaonline.com (2) its Implementing Rules and Regulations (DENR Administrative Order No. [DAO] 9640); and (3) the FTAA dated March 30, 1995, 6 executed by the government with Western Mining Corporation (Philippines), Inc. (WMCP). 7 On January 27, 2004, the Court en banc promulgated its Decision 8 granting the Petition and declaring the unconstitutionality of certain provisions of RA 7942, DAO 9640, 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, 9 which, though permitted under the 1973 Constitution, 1 0 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 eld 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 led 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. After hearing the opposing sides, the Court required the parties to submit their respective Memoranda in ampli cation of their arguments. In a Resolution issued later the same day, June 29, 2004, the Court noted, inter alia, the Manifestation and Motion (in lieu of comment) filed by the Office of the Solicitor General (OSG) on behalf of public respondents. The OSG said that it was not interposing any objection to the Motion for Intervention filed by the Chamber of Mines of the Philippines, Inc. (CMP) and was in fact joining and adopting the latter's Motion for Reconsideration. Memoranda were accordingly led by the intervenor as well as by petitioners, public respondents, and private respondent, dwelling at length on the three issues discussed below. Later, WMCP submitted its Reply Memorandum, while the OSG —” in obedience to an Order of this Court —” led a Compliance submitting copies of more FTAAs entered into by the government. Three Issues Identified by the Court During the Oral Argument, the Court identi ed the three issues to be resolved in the present controversy, as follows: 1.Has the case been rendered moot by the sale of WMC shares in WMCP to Sagittarius (60 percent of Sagittarius' equity is owned by Filipinos and/or Filipinoowned corporations while 40 percent is owned by Indophil Resources NL, an Australian company) and by the subsequent transfer and registration of the FTAA from WMCP to Sagittarius? 2.Assuming that the case has been rendered moot, would it still be proper to resolve the constitutionality of the assailed provisions of the Mining Law, DAO 96-40 and the WMCP FTAA? CD Technologies Asia, Inc. © 2018 cdasiaonline.com 3.What is the proper interpretation of the phrase Agreements Involving Either Technical or Financial Assistance contained in paragraph 4 of Section 2 of Article XII of the Constitution? Should the Motion for Reconsideration Be Granted? Respondents' and intervenor's Motions for Reconsideration should be granted, for the reasons discussed below. The foregoing three issues identi ed by the Court shall now be taken up seriatim. First Issue: Mootness In declaring unconstitutional certain provisions of RA 7942, DAO 96-40, and the WMCP FTAA, the majority Decision agreed with petitioners' contention that the subject FTAA had been executed in violation of Section 2 of Article XII of the 1987 Constitution. According to petitioners, the FTAAs entered into by the government with foreign-owned corporations are limited by the fourth paragraph of the said provision to agreements involving only technical or nancial assistance for large-scale exploration, development and utilization of minerals, petroleum and other mineral oils. Furthermore, the foreign contractor is allegedly permitted by the FTAA in question to fully manage and control the mining operations and, therefore, to acquire "bene cial ownership" of our mineral resources. The Decision merely shrugged off the Manifestation by WMPC informing the Court (1) that on January 23, 2001, WMC had sold all its shares in WMCP to Sagittarius Mines, Inc., 60 percent of whose equity was held by Filipinos; and (2) that the assailed FTAA had likewise been transferred from WMCP to Sagittarius. 1 1 The ponencia declared that the instant case had not been rendered moot by the transfer and registration of the FTAA to a Filipino-owned corporation, and that the validity of the said transfer remained in dispute and awaited nal judicial determination. 1 2 Patently therefore, the Decision is anchored on the assumption that WMCP had remained a foreign corporation. The crux of this issue of mootness is the fact that WMCP, at the time it entered into the FTAA , happened to be wholly owned by WMC Resources International Pty., Ltd. (WMC), which in turn was a wholly owned subsidiary of Western Mining Corporation Holdings Ltd., a publicly listed major Australian mining and exploration company. The nullity of the FTAA was obviously premised upon the contractor being a foreign corporation. Had the FTAA been originally issued to a Filipino-owned corporation, there would have been no constitutionality issue to speak of. Upon the other hand, the conveyance of the WMCP FTAA to a Filipino corporation can be likened to the sale of land to a foreigner who subsequently acquires Filipino citizenship, or who later resells the same land to a Filipino citizen. The conveyance would be validated, as the property in question would no longer be owned by a disqualified vendee. And, inasmuch as the FTAA is to be implemented now by a Filipino corporation, it is no longer possible for the Court to declare it unconstitutional. The case pending in the Court of Appeals is a dispute between two Filipino companies (Sagittarius and Lepanto), both claiming the right to purchase the foreign shares in WMCP. So, regardless of which side eventually wins, the FTAA would still be in the hands of a quali ed Filipino company. Considering that there is no longer any justiciable controversy, the plea to nullify the Mining Law has become a virtual petition for CD Technologies Asia, Inc. © 2018 cdasiaonline.com declaratory relief, over which this Court has no original jurisdiction. DCcTHa In their Final Memorandum, however, petitioners argue that the case has not become moot, considering the invalidity of the alleged sale of the shares in WMCP from WMC to Sagittarius, and of the transfer of the FTAA from WMCP to Sagittarius, resulting in the change of contractor in the FTAA in question. And even assuming that the said transfers were valid, there still exists an actual case predicated on the invalidity of RA 7942 and its Implementing Rules and Regulations (DAO 96-40). Presently, we shall discuss petitioners' objections to the transfer of both the shares and the FTAA. We shall take up the alleged invalidity of RA 7942 and DAO 96-40 later on in the discussion of the third issue. No Transgression of the Constitution by the Transfer of the WMCP Shares Petitioners claim, rst , that the alleged invalidity of the transfer of the WMCP shares to Sagittarius violates the fourth paragraph of Section 2 of Article XII of the Constitution; second, that it is contrary to the provisions of the WMCP FTAA itself; and third, that the sale of the shares is suspect and should therefore be the subject of a case in which its validity may properly be litigated. On the rst ground, petitioners assert that paragraph 4 of Section 2 of Article XII permits the government to enter into FTAAs only with foreign-owned corporations. Petitioners insist that the rst paragraph of this constitutional provision limits the participation of Filipino corporations in the exploration, development and utilization of natural resources to only three species of contracts —” production sharing, coproduction and joint venture —” to the exclusion of all other arrangements or variations thereof, and the WMCP FTAA may therefore not be validly assumed and implemented by Sagittarius. In short, petitioners claim that a Filipino corporation is not allowed by the Constitution to enter into an FTAA with the government. However, a textual analysis of the rst paragraph of Section 2 of Article XII does not support petitioners' argument. The pertinent part of the said provision states: "Sec. 2. . . . The exploration, development and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. . . ." Nowhere in the provision is there any express limitation or restriction insofar as arrangements other than the three aforementioned contractual schemes are concerned. Neither can one reasonably discern any implied stricture to that effect. Besides, there is no basis to believe that the framers of the Constitution, a majority of whom were obviously concerned with furthering the development and utilization of the country's natural resources, could have wanted to restrict Filipino participation in that area. This point is clear, especially in the light of the overarching constitutional principle of giving preference and priority to Filipinos and Filipino corporations in the development of our natural resources. Besides, even assuming (purely for argument's sake) that a constitutional limitation barring Filipino corporations from holding and implementing an FTAA actually exists, nevertheless, such provision would apply only to the transfer of the FTAA to Sagittarius, but de nitely not to the sale of WMC's equity stake in WMCP to Sagittarius. Otherwise, an unreasonable curtailment of property rights without due process of law would ensue. Petitioners' argument must therefore fail. CD Technologies Asia, Inc. © 2018 cdasiaonline.com FTAA Not Intended Solely for Foreign Corporation Equally barren of merit is the second ground cited by petitioners —” that the FTAA was intended to apply solely to a foreign corporation, as can allegedly be seen from the provisions therein. They manage to cite only one WMCP FTAA provision that can be regarded as clearly intended to apply only to a foreign contractor: Section 12, which provides for international commercial arbitration under the auspices of the International Chamber of Commerce, after local remedies are exhausted. This provision, however, does not necessarily imply that the WMCP FTAA cannot be transferred to and assumed by a Filipino corporation like Sagittarius, in which event the said provision should simply be disregarded as a superfluity. No Need for a Separate Litigation of the Sale of Shares Petitioners claim as third ground the "suspicious" sale of shares from WMC to Sagittarius; hence, the need to litigate it in a separate case. Section 40 of RA 7942 (the Mining Law) allegedly requires the President's prior approval of a transfer. A re-reading of the said provision, however, leads to a different conclusion. " Sec. 40. Assignment/Transfer —” A nancial or technical assistance agreement may be assigned or transferred, in whole or in part, to a quali ed person subject to the prior approval of the President: Provided, That the President shall notify Congress of every nancial or technical assistance agreement assigned or converted in accordance with this provision within thirty (30) days from the date of the approval thereof ." Section 40 expressly applies to the assignment or transfer of the FTAA, not to the sale and transfer of shares of stock in WMCP. Moreover, when the transferee of an FTAA is another foreign corporation, there is a logical application of the requirement of prior approval by the President of the Republic and noti cation to Congress in the event of assignment or transfer of an FTAA. In this situation, such approval and noti cation are appropriate safeguards, considering that the new contractor is the subject of a foreign government. On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need for such safeguard is not critical; hence, the lack of prior approval and noti cation may not be deemed fatal as to render the transfer invalid. Besides, it is not as if approval by the President is entirely absent in this instance. As pointed out by private respondent in its Memorandum, 1 3 the issue of approval is the subject of one of the cases brought by Lepanto against Sagittarius in GR No. 162331. That case involved the review of the Decision of the Court of Appeals dated November 21, 2003 in CA-GR SP No. 74161, which a rmed the DENR Order dated December 31, 2001 and the Decision of the O ce of the President dated July 23, 2002, both approving the assignment of the WMCP FTAA to Sagittarius. Petitioners also question the sale price and the nancial capacity of the transferee. According to the Deed of Absolute Sale dated January 23, 2001, executed between WMC and Sagittarius, the price of the WMCP shares was xed at US$9,875,000, equivalent to P553 million at an exchange rate of 5...
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