LA BUGAL B’LAAN TRIBAL ASSOCIATION INC., et. al. v. V. O.

RAMOS, Secretary
Department of Environment and Natural Resources; H. RAMOS, Director, Mines and Geosciences
Bureau (MGB-DENR); R. TORRES, Executive Secretary; and WMC (PHILIPPINES) INC.

The constitutional provision allowing the President to enter into FTAA is a exception to the rule that
participation in the nation’s natural resources is reserved exclusively to Filipinos. Provision must be
construed strictly against their enjoyment by non-Filipinos.

RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity of RA 7942, or
on March 30, 1995, the President signed a Financial and Technical Assistance Agreement (FTAA) with
WMCP, a corporation organized under Philippine laws, covering close to 100,000 hectares of land in South
Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. On August 15, 1995, the Environment
Secretary Victor Ramos issued DENR Administrative Order 95-23, which was later repealed by DENR
Administrative Order 96-40, adopted on December 20, 1996.

Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the government and
WMCP be declared unconstitutional on ground that they allow fully foreign owned corporations like
WMCP to exploit, explore and develop Philippine mineral resources in contravention of Article XII Section
2 paragraphs 2 and 4 of the Charter.
In January 2001, WMC – a publicly listed Australian mining and exploration company – sold its whole
stake in WMCP to Sagittarius Mines, 60% of which is owned by Filipinos while 40% of which is owned
by Indophil Resources, an Australian company. DENR approved the transfer and registration of the FTAA
in Sagittarius‘ name but Lepanto Consolidated assailed the same. The latter case is still pending before the
Court of Appeals.

EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to accept,
consider and evaluate proposals from foreign owned corporations or foreign investors for contracts
or agreements involving wither technical or financial assistance for large scale exploration,
development and utilization of minerals which upon appropriate recommendation of the (DENR)
Secretary, the President may execute with the foreign proponent. WMCP likewise contended that
the annulment of the FTAA would violate a treaty between the Philippines and Australia which
provides for the protection of Australian investments.
ISSUE:
1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-owned
corporations to exploit the Philippine mineral resources.
HELD:

RA 7942 is Unconstitutional
RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign owned
corporations to exploit the 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, ―the 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 Constitution authorizing the State
to grant licenses, concessions, or leases for the exploration, exploitation, development, or utilization of
natural resources. By such omission, the utilization of inalienable lands of the public domain through
license, concession or lease is no longer allowed under the 1987 Constitution.
Under the concession system, the concessionaire makes a direct equity investment for the purpose of
exploiting a particular natural resource within a given area. The concession amounts to complete control by
the concessionaire over the country‘s natural resource, for it is given exclusive and plenary rights to exploit
a particular resource at the point of extraction.
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 and the operation of the mining activities by foreign contractors, the primary feature of the
service contracts was precisely the evil the drafters of the 1987 Constitution sought to avoid.
Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited only to merely
technical or financial assistance to the State for large scale exploration, development and utilization of
minerals, petroleum and other mineral oils.