La Bugal-BLaan v.

Ramos
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La Bugal-BLaan v. Ramos
G.R. No. 127882.
December 1, 2004

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,[9] 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.

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. Subsequently, 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 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 EDU of our natural resources?

Held:

The Chief Executive is the official 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 notified 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 exploration, development and utilization (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.

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 the
grinding poverty of our people and answer their cry for viable employment opportunities in the country. 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 usurpations 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 the
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.

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 sufficient
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. The Court fully sympathize with the plight of La
Bugal Blaan and other tribal groups, and commend their efforts to uplift their communities. However, the Court
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. The Court believes that it is not unconstitutional to allow
a wide degree of discretion to the Chief Executive, given the nature and complexity of such agreements, the
humongous amounts of capital and financing required for large-scale mining operations, the complicated technology
needed, and the intricacies of international trade, coupled with the States need to maintain flexibility in its dealings, 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 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
Agreement (FTAA).

__
La Bugal-B?laan Tribal Association, Inc., et al. v. Victor O. Ramos, Secretary
Department of Environment and National Resources, et al. Dec 1, 2004

This case dealt with questions around exploration, development and utilization of mineral
resources in the Philippines with the help of foreign companies. There was a petition
before the court challenging the constitutionality of corresponding parts of the Philippine
Mining Act and related rules and regulations. The lower court had granted the petition
and declared the unconstitutionality of certain provisions. The mineral resources service
contracts were criticized for, inter alia, vesting in the foreign contractor exclusive
management and control of the enterprise, 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 Filipino economic resources. Upon motion for
reconsideration, the Supreme Court interpreted the relevant regulations as well as the
corresponding parts of the Constitution providing that the President could enter into
agreements with foreign-owned corporations for large-scale exploration, development,
and utilization of minerals, petroleum, and other mineral oils. It examined the extent of
control of the state in implementing the said agreements. It emphasized that all mineral
resources were owned by the State. Their exploration, development and utilization
always had to be subject to the full control and supervision of the State. However, given
the inadequacy of Filipino capital and technology, the State could secure the help of
foreign companies in all relevant matters -- especially financial and technical assistance --
provided that, at all times, the State maintained its right of full control. The Constitution
should not be used to strangulate economic growth. Rather, it should be construed to
 grant the President and Congress sufficient discretion to enable them to attract foreign
investments and expertise, as well as to secure for Filipino people prosperity and peace.
The regulations in question vested in the government more than a sufficient degree of
control and supervision over the conduct of mining operations. This setup could not be
regarded as disadvantageous to the State or the Filipino people; it did not convey
beneficial ownership of Filipino mineral resources to foreign contractors. The Court
upheld the constitutionality of the Philippine Mining Law and its implementing rules and
regulations - insofar as they related to financial and technical agreements - as well as the
Financial and Technical Assistance Agreement in question.
___

LA BUGAL BLAAN 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 nations 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.
ISSUES:

1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully
foreign-owned corporations to exploit the Philippine mineral resources. 2. Whether or
not the FTAA between the government and WMCP is a service contract that permits
fully foreign owned companies to exploit the Philippine mineral resources.

HELD:

First Issue: 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 resourcesshall 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 concessionaireover the countrys
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.
The constitutional provision allowing the President to enter into FTAAs is an exception
to the rule that participation in the nations 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 the 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 nations
mineral resources to these contractors, leaving the State with nothing but bare title
thereto.
The same provisions, whether by design or inadvertence, permit a circumvention of the
constitutionally ordained 60-40% capitalizationrequirement for corporations
or associations engaged in the exploitation, development and utilization of Philippine
natural resources.
When parts of a statute are so mutually dependent and connected as conditions,
considerations, inducements or compensations for each other as to warrant a belief that
the legislature intended them as a whole, then if some parts are unconstitutional, all
provisions that are thus dependent, conditional or connected, must fail with them.
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.
Second Issue: RP Government-WMCP FTAA is a Service Contract
The FTAA between he WMCP and the Philippine government is likewise
unconstitutional since the agreement itself is a service contract.
Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive
right to explore, exploit, utilize and dispose of all minerals and by-products that may be
produced from the contract area. Section 1.2 of the same agreement provides that EMCP
shall provide all financing, technology, management, and personnel necessary for the
Mining Operations.
These contractual stipulations and related provisions in the FTAA taken together, grant
WMCP beneficial ownership over natural resources that properly belong to the State
and are intended for the benefit of its citizens. These stipulations are abhorrent to the
1987 Constitution. They are precisely the vices that the fundamental law seeks to avoid,
the evils that it aims to suppress. Consequently, the contract from which they spring
must be struck down.

___

La Bugal-Blaan Tribal Association, Inc. Vs Ramos

Natural Resources and Environmental Laws

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 insofar 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.

at 11:56 PM

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___

R No. 127882, January 27 2004

FACTS:

On July 25, 1987, 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, President Fidel V. Ramos approved R.A. No. 7942 to

govern the exploration, development, utilization and processing of all
mineral resources.
On April 9, 1995, R.A. No. 7942 took effect. But shortly before the
effectivity of R.A. No. 7942, (March 30th), the President entered into an
Financial and Technical Assistance Agreement (FTAA) with WMC
Philippines, Inc. (WMCP) covering 99,387 hectares of land in South
Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. Subsequently,
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 which was also later repealed by DAO No. 96-
40, s. 1996.

Petitioners claim that the DENR Secretary acted without or in excess of

jurisdiction in signing and promulgating DENR Administrative Order No.
96-40 implementing Republic Act No. 7942, the latter being unconstitutional.

ISSUE:

Whether or not the requisites for judicial review are present to raise the
constitutionality of Republic Act No. 7942.

HELD:

When an issue of constitutionality is raised, this Court can exercise its power
of judicial review only if the following requisites are present:

(1) The existence of an actual and appropriate case;

(2) A personal and substantial interest of the party raising the constitutional
question;
(3) The exercise of judicial review is pleaded at the earliest opportunity; and
(4) The constitutional question is the lis mota of the case.

Respondents claim that the first three requisites are not present. Section 1,
Article VIII of the Constitution states that judicial power includes the duty
of the courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable. The power of judicial review,
therefore, is limited to the determination of actual cases and controversies.

An actual case or controversy means an existing case or controversy that is

appropriate or ripe for determination, not conjectural or anticipatory, lest the
decision of the court would amount to an advisory opinion. The power does
not extend to hypothetical questions since any attempt at abstraction could
only lead to dialectics and barren legal questions and to sterile conclusions
unrelated to actualities.

Legal standing or locus standi has been defined as a personal and

substantial interest in the case such that the party has sustained or will sustain
direct injury as a result of the governmental act that is being challenged,
alleging more than a generalized grievance. The gist of the question of
standing is whether a party alleges such personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court depends for illumination of
difficult constitutional questions. Unless a person is injuriously affected in
any of his constitutional rights by the operation of statute or ordinance, he has
no standing.

Petitioners traverse a wide range of sectors. Among them are La Bugal

Blaan Tribal Association, Inc., a farmers and indigenous peoples
cooperative organized under Philippine laws representing a community
actually affected by the mining activities of WMCP, members of said
cooperative, as well as other residents of areas also affected by the mining
activities of WMCP. These petitioners have standing to raise the
constitutionality of the questioned FTAA as they allege a personal and
substantial injury. They claim that they would suffer irremediable
displacement as a result of the implementation of the FTAA allowing
WMCP to conduct mining activities in their area of residence. They thus
meet the appropriate case requirement as they assert an interest adverse to
that of respondents who, on the other hand, insist on the FTAAs validity.

In view of the alleged impending injury, petitioners also have standing to

assail the validity of E.O. No. 279, by authority of which the FTAA was
executed.

Public respondents maintain that petitioners, being strangers to the FTAA,

cannot sue either or both contracting parties to annul it. In other words, they
contend that petitioners are not real parties in interest in an action for the
annulment of contract.

Public respondents contention fails. The present action is not merely one for
annulment of contract but for prohibition and mandamus. Petitioners allege
that public respondents acted without or in excess of jurisdiction in
implementing the FTAA, which they submit is unconstitutional. As the case
involves constitutional questions, the Court is not concerned with whether
petitioners are real parties in interest, but with whether they have legal
standing.

Misconstruing the application of the third requisite for judicial review that
the exercise of the review is pleaded at the earliest opportunity WMCP
points out that the petition was filed only almost two years after the execution
of the FTAA, hence, not raised at the earliest opportunity.

The third requisite should not be taken to mean that the question of
constitutionality must be raised immediately after the execution of the state
action complained of. That the question of constitutionality has not been
raised before is not a valid reason for refusing to allow it to be raised later. A
contrary rule would mean that a law, otherwise unconstitutional, would lapse
into constitutionality by the mere failure of the proper party to promptly file a
case to challenge the same.
___

LA BUGAL-BLAAN VS RAMOS (GR NO. 127882 DECEMBER

1, 2004)
La Bugal-BLaan Tribal Association Inc. vs Ramos
GR No. 127882 December 1, 2004

Facts: 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); (2) its Implementing Rules and Regulations (DENR
Administrative Order No. [DAO] 96-40); and (3) the FTAA dated March 30, 1995,6 executed by the government
with Western Mining Corporation (Philippines), Inc. (WMCP). On January 27, 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. 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. Subsequently, respondents filed 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.

Issue: Whether or not the FTAA issued were valid.

Held: Yes. The notion that the deliberations reflect only the views of those members who spoke out and not the
views of the majority who remained silent should be clarified. We must never forget that those who spoke out were
heard by those who remained silent and did not react. If the latter were silent because they happened not to be
present at the time, they are presumed to have read the minutes and kept abreast of the deliberations. By remaining
silent, they are deemed to have signified their assent to and/or conformity with at least some of the views
propounded or their lack of objections thereto. It was incumbent upon them, as representatives of the entire Filipino
people, to follow the deliberations closely and to speak their minds on the matter if they did not see eye to eye with
the proponents of the draft provisions.

In any event, each and every one of the commissioners had the opportunity to speak out and to vote on the matter.
Moreover, the individual explanations of votes are on record, and they show where each delegate stood on the
issues. In sum, we cannot completely denigrate the value or usefulness of the record of the ConCom, simply because
certain members chose not to speak out.

However, it is of common knowledge, and of judicial notice as well, that the government is and has for many many
years been financially strapped, to the point that even the most essential services have suffered serious curtailments
education and health care, for instance, not to mention judicial services have had to make do with inadequate
budgetary allocations. Thus, government has had to resort to build-operate-transfer and similar arrangements with
the private sector, in order to get vital infrastructure projects built without any governmental outlay.

The drafters whose ranks included many academicians, economists, businessmen, lawyers, politicians and
government officials were not unfamiliar with the practices of foreign corporations and multinationals.
Neither were they so nave as to believe that these entities would provide assistance without conditionalities or
some quid pro quo. Definitely, as business persons well know and as a matter of judicial notice, this matter is not
just a question of signing a promissory note or executing a technology transfer agreement. Foreign corporations
usually require that they be given a say in the management, for instance, of day-to-day operations of the joint
venture. They would demand the appointment of their own men as, for example, operations managers, technical
experts, quality control heads, internal auditors or comptrollers. Furthermore, they would probably require seats on
the Board of Directors all these to ensure the success of the enterprise and the repayment of the loans and other
financial assistance and to make certain that the funding and the technology they supply would not go to waste.
Ultimately, they would also want to protect their business reputation and bottom lines.

___

La Bugal-B'laan Tribal Association, Inc. v DENR (Natural Resources)

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC. v DENR

G.R. No. 127882

January 27, 2004

FACTS:

The present petition for mandamus and prohibition assails the constitutionality of Republic
Act No. 7942, otherwise known as the PHILIPPINE MINING ACT OF 1995, along with the
Implementing Rules and Regulations issued pursuant thereto, Department of Environment
and Natural Resources (DENR) Administrative Order 96-40, and of the Financial and
Technical Assistance Agreement (FTAA) entered into on March 30, 1995 by the Republic of
the Philippines and WMC (Philippines), Inc. (WMCP), a corporation organized under
Philippine laws.

ISSUES:

Did the DENR Secretary acted without or in excess of jurisdiction: (1) x x x in signing and
promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942,
the latter being unconstitutional in that it allows fully foreign owned corporations to explore,
develop, utilize and exploit mineral resources in a manner contrary to Section 2, paragraph
4, Article XII of the Constitution; (2) x x x in recommending approval of and implementing
the Financial and Technical Assistance Agreement between the President of the Republic of
the Philippines and Western Mining Corporation Philippines Inc. because the same is illegal
and unconstitutional.
[Rulings for the substantive issues are not included in this digest since already reversed by
another case]

HELD:

As to procedural issues: * Requisites of judicial review - YES, OKAY.

When an issue of constitutionality is raised, this Court can exercise its power of judicial
review only if the following requisites are present:

(1) The existence of an actual and appropriate case; - The challenge against the
constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise fulfills the requisites of
justiciability. Although these laws were not in force when the subject FTAA was entered into,
the question as to their validity is ripe for adjudication.

(2) A personal and substantial interest of the party raising the constitutional question; -
petitioners have standing to raise the constitutionality of the questioned FTAA as they allege
a personal and substantial injury

(3) The exercise of judicial review is pleaded at the earliest opportunity; and - WMCP points
out that the petition was filed only almost two years after the execution of the FTAA, hence,
not raised at the earliest opportunity.mThe third requisite should not be taken to mean that
the question of constitutionality must be raised immediately after the execution of the state
action complained of. That the question of constitutionality has not been raised before is not
a valid reason for refusing to allow it to be raised later. A contrary rule would mean that a
law, otherwise unconstitutional, would lapse into constitutionality by the mere failure of the
proper party to promptly file a case to challenge the same.

(4) The constitutional question is the lis mota of the case

*Propriety of prohibition and mandamus - YES, OKAY.

The petition for prohibition at bar is thus an appropriate remedy. While the execution of the
contract itself may be fait accompli, its implementation is not. Public respondents, in behalf
of the Government, have obligations to fulfill under said contract. Petitioners seek to
prevent them from fulfilling such obligations on the theory that the contract is
unconstitutional and, therefore, void.

*Hierarchy of courts - YES, OKAY.

The repercussions of the issues in this case on the Philippine mining industry, if not the
national economy, as well as the novelty thereof, constitute exceptional and compelling
circumstances to justify resort to this Court in the first instance.

In all events, this Court has the discretion to take cognizance of a suit which does not
satisfy the requirements of an actual case or legal standing when paramount public interest
is involved. When the issues raised are of paramount importance to the public, this Court
may brush aside technicalities of procedure.

RATIO: (1) 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.

Consonant with the State's "full supervision and control" over natural resources, Section 2
offers the State two "options."182 One, the State may directly undertake these activities
itself; or two, it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or entities at least 60% of whose capital is owned by such
citizens.

A third option is found in the third paragraph of the same section:

The Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish-
workers in rivers, lakes, bays, and lagoons.
While the second and third options are limited only to Filipino citizens or, in the case of the
former, to corporations or associations at least 60% of the capital of which is owned by
Filipinos, a fourth allows the participation of foreign-owned corporations. The fourth and
fifth paragraphs of Section 2 provide:

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.

The President shall notify the Congress of every contract entered into in accordance with
this provision, within thirty days from its execution.

Although Section 2 sanctions the participation of foreign-owned corporations in the

exploration, development, and utilization of natural resources, it imposes certain limitations
or conditions to agreements with such corporations.

First, the parties to FTAAs. Only the President, in behalf of the State, may enter into these
agreements, and only with corporations. By contrast, under the 1973 Constitution, a Filipino
citizen, corporation or association may enter into a service contract with a "foreign person
or entity."

Second, the size of the activities: only large-scale exploration, development, and utilization
is allowed. The term "large-scale usually refers to very capital-intensive activities."183

Third, the natural resources subject of the activities is restricted to minerals, petroleum and
other mineral oils, the intent being to limit service contracts to those areas where Filipino
capital may not be sufficient.184

Fourth, consistency with the provisions of statute. The agreements must be in accordance
with the terms and conditions provided by law.
Fifth, Section 2 prescribes certain standards for entering into such agreements. The
agreements must be based on real contributions to economic growth and general welfare of
the country.

Sixth, the agreements must contain rudimentary stipulations for the promotion of the
development and use of local scientific and technical resources.

Seventh, the notification requirement. The President shall notify Congress of every financial
or technical assistance agreement entered into within thirty days from its execution.

Finally, the scope of the agreements. While the 1973 Constitution referred to "service
contracts for financial, technical, management, or other forms of assistance" the 1987
Constitution provides for "agreements. . . involving either financial or technical assistance."
It bears noting that the phrases "service contracts" and "management or other forms of
assistance" in the earlier constitution have been omitted.

(2) KINDS OF MINERAL AGREEMENTS (important)

The State, being the owner of the natural resources, is accorded the primary power and
responsibility in the exploration, development and utilization thereof. As such, it may
undertake these activities through four modes:

The State may directly undertake such activities.

(2) The State may enter into co-production, joint venture or production-sharing agreements
with Filipino citizens or qualified corporations.

(3) Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens.

(4) For the large-scale exploration, development and utilization of minerals, petroleum and
other mineral oils, the President may enter into agreements with foreign-owned
corporations involving technical or financial assistance.
Except to charge the Mines and Geosciences Bureau of the DENR with performing
researches and surveys, and a passing mention of government-owned or controlled
corporations,188 R.A. No. 7942 does not specify how the State should go about the first
mode. The third mode, on the other hand, is governed by Republic Act No. 7076 (the
People's Small-Scale Mining Act of 1991) and other pertinent laws. R.A. No. 7942 primarily
concerns itself with the second and fourth modes.

Mineral production sharing, co-production and joint venture agreements are collectively
classified by R.A. No. 7942 as "mineral agreements."

A. MINERAL PRODUCTION SHARING AGREEMENTS (MPSA)

The Government participates the least in a mineral production sharing agreement (MPSA).
In an MPSA, the Government grants the contractor the exclusive right to conduct mining
operations within a contract area and shares in the gross output. The MPSA contractor
provides the financing, technology, management and personnel necessary for the
agreement's implementation. The total government share in an MPSA is the excise tax on
mineral products under Republic Act No. 7729, amending Section 151(a) of the National
Internal Revenue Code, as amended.

B. CO-PRODUCTION AGREEMENT (CA)

C. JOINT VENTURE AGREEMENT (JVA)

In a co-production agreement (CA), the Government provides inputs to the mining

operations other than the mineral resource, while in a joint venture agreement (JVA), where
the Government enjoys the greatest participation, the Government and the JVA contractor
organize a company with both parties having equity shares. Aside from earnings in equity,
the Government in a JVA is also entitled to a share in the gross output.

The Government may enter into a CA or JVA with one or more contractors. The
Government's share in a CA or JVA is set out in Section 81 of the law:
The share of the Government in co-production and joint venture agreements shall be
negotiated by the Government and the contractor taking into consideration the: (a) capital
investment of the project, (b) the risks involved, (c) contribution of the project to the
economy, and (d) other factors that will provide for a fair and equitable sharing between the
Government and the contractor. The Government shall also be entitled to compensations for
its other contributions.

which shall be agreed upon by the parties, and shall consist, among other things, the
contractor's income tax, excise tax, special allowance, withholding tax due from the
contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholders, in case of a foreign national and all such other taxes, duties and fees
as provided for under existing laws.

All mineral agreements grant the respective contractors the exclusive right to conduct
mining operations and to extract all mineral resources found in the contract area. A
"qualified person" may enter into any of the mineral agreements with the Government. A
"qualified person" is any citizen of the Philippines with capacity to contract, or a corporation,
partnership, association, or cooperative organized or authorized for the purpose of engaging
in mining, with technical and financial capability to undertake mineral resources
development and duly registered in accordance with law at least sixty per centum (60%) of
the capital of which is owned by citizens of the Philippines x x x.

D. FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENTS

The fourth mode involves "financial or technical assistance agreements." An FTAA is defined
as "a contract involving financial or technical assistance for large-scale exploration,
development, and utilization of natural resources."

Any qualified person with technical and financial capability to undertake large-scale
exploration, development, and utilization of natural resources in the Philippines may enter
into such agreement directly with the Government through the DENR. For the purpose of
granting an FTAA, a legally organized foreign-owned corporation (any corporation,
partnership, association, or cooperative duly registered in accordance with law in which less
than 50% of the capital is owned by Filipino citizens) is deemed a "qualified person."

Other than the difference in contractors' qualifications, the principal distinction between
mineral agreements and FTAAs is the maximum contract area to which a qualified person
may hold or be granted. "Large-scale" under R.A. No. 7942 is determined by the size of the
contract area, as opposed to the amount invested (US $50,000,000.00), which was the
standard under E.O. 279.

Like a CA or a JVA, an FTAA is subject to negotiation. The Government's contributions, in

the form of taxes, in an FTAA is identical to its contributions in the two mineral agreements,
save that in an FTAA: The collection of Government share in financial or technical assistance
agreement shall commence after the financial or technical assistance agreement contractor
has fully recovered its pre-operating expenses, exploration, and development expenditures,
inclusive.

OBITER DICTA:

(1) The Regalian doctrine and the American system, therefore, differ in one essential
respect. Under the Regalian theory, mineral rights are not included in a grant of land by the
state; under the American doctrine, mineral rights are included in a grant of land by the
government.

__

La Bugal-B'Laan Tribal Assn vs Ramos Case Digest

G.R. No 127882

Facts :

On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No. 2796 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.

They pray that the Court issue an order:

(a) Permanently enjoining respondents from acting on any application for Financial or Technical
Assistance Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional and null and
void;
(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained in DENR
Administrative Order No. 96-40 and all other similar administrative issuances as unconstitutional and
null and void; and
(d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining Philippines,
Inc. as unconstitutional, illegal and null and void.

Issue :

Whether or not Republic Act No. 7942 is unconstitutional.

Ruling :
The Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, Article XII of the
Constitution and hereby declares unconstitutional and void:

(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:
Provided, That a legally organized foreign-owned corporation shall be deemed a qualified person for
purposes of granting an exploration permit, financial or technical assistance agreement or mineral
processing permit.

(2) Section 23, which specifies the rights and obligations of an exploration permittee, insofar as said
section applies to a financial or technical assistance agreement,

(3) Section 33, which prescribes the eligibility of a contractor in a financial or technical assistance
agreement;

(4) Section 35, which enumerates the terms and conditions for every financial or technical assistance
agreement;

(5) Section 39, which allows the contractor in a financial and technical assistance agreement to convert
the same into a mineral production-sharing agreement;

(6) Section 56, which authorizes the issuance of a mineral processing permit to a contractor in a financial
and technical assistance agreement;
The following provisions of the same Act are likewise void as they are dependent on the foregoing
provisions and cannot stand on their own:

(1) Section 3 (g), which defines the term "contractor," insofar as it applies to a financial or technical
assistance agreement.

Section 34, which prescribes the maximum contract area in a financial or technical assistance agreements;

Section 36, which allows negotiations for financial or technical assistance agreements;

Section 37, which prescribes the procedure for filing and evaluation of financial or technical assistance
agreement proposals;
Section 38, which limits the term of financial or technical assistance agreements;

Section 40, which allows the assignment or transfer of financial or technical assistance agreements;

Section 41, which allows the withdrawal of the contractor in an FTAA;

The second and third paragraphs of Section 81, which provide for the Government's share in a financial
and technical assistance agreement; and

Section 90, which provides for incentives to contractors in FTAAs insofar as it applies to said contractors;

When the parts of the statute are so mutually dependent and connected as conditions, considerations,
inducements, or compensations for each other, as to warrant a belief that the legislature intended them as
a whole, and that if all could not be carried into effect, the legislature would not pass the residue
independently, then, if some parts are unconstitutional, all the provisions which are thus dependent,
conditional, or connected, must fall with them.

WHEREFORE, the petition is GRANTED.

___

La Bugal-Blaan Tribal Association, Inc. et al. v. Ramos et al.

27 January 2004

Parties

Petitioners: LA BUGAL-BLAAN TRIBAL ASSOCIATION, INC., represented by its

Chairman FLONG MIGUEL M. LUMAYONG, WIGBERTO E. TAADA, PONCIANO
BENNAGEN, JAIME TADEO, RENATO R. CONSTANTINO, JR., FLONG 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, 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, ROSE LILIA S. ROMANO, ROBERTO S. VERZOLA, EDUARDO AURELIO C.
REYES, LEAN LOUEL A. PERIA, represented by his father ELPIDIO V. PERIA, GREEN
FORUM PHILIPPINES, GREEN FORUM WESTERN VISAYAS, (GF-WV), ENVIRONMETAL
LEGAL ASSISTANCE CENTER (ELAC), PHILIPPINE KAISAHAN TUNGO SA KAUNLARAN
NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN), KAISAHAN TUNGO SA
KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN),
PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT SERVICES, INC.
(PARRDS), PHILIPPINE PART`NERSHIP FOR THE DEVELOPMENT OF HUMAN
RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA), WOMENS LEGAL BUREAU
(WLB), CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI), UPLAND
DEVELOPMENT INSTITUTE (UDI), KINAIYAHAN FOUNDATION, INC., SENTRO NG
ALTERNATIBONG LINGAP PANLIGAL (SALIGAN), LEGAL RIGHTS AND NATURAL
RESOURCES CENTER, INC. (LRC)

Respondents: 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 (PHILIPPINES) , INC.

Ponente: Carpio-Morales, J.

Background:

Nature and Case History

25 July 1987 EO 279 authorized DENR 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. In entering into such proposals, the President shall consider the real
contributions to the economic growth and general welfare of the country that will be realized, as
well as the development and use of local scientific and technical resources that will be promoted
by the proposed contract or agreement. Until Congress shall determine otherwise, large-scale
mining, for purpose of this Section, shall mean those proposals for contracts or agreements for
mineral resources exploration, development, and utilization involving a committed capital
investment in a single mining unit project of at least Fifty Million Dollars in United States
Currency (US $50,000,000. 00)

3 March 1995 RA 7942 signed into law

30 March 1995 Government entered FTAA with WMCP 99,387 hectares of land in South
Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato .

9 April 1995 30 days after publication on 10 March 1995, RA 7942 took effect

20 December 1996 DENR Secretary Victor Ramos issued DAO 96-40

10 January 1997 counsels for petitioner sent letter to Ramos demanding DENR to stop
implementing RA 7942 and DAO 96-40.

No response, thus this petition for Mandamus and Prohibition with prayer of TRO and
preliminary injunction (denied) claiming that petitioner Ramos acted without or in excess of
jurisdiction in implementing the assailed Constitutionality of RA 7942 [1], of DENR
Administrative Order 96-40 [2], and of the Financial and Technical Assistance Agreement
entered into on 30 March 1995 between the Republic of the Philippines and WMC (Philippines) ,
Inc..

23 January 2001 Manifestation of respondents that WMCP is no longer foreign-owned as

WMC has sold 100% of its equity to Filipino company Sagittarius Mines, Inc. which is 60%
owned by Filipinos or Filipino-owned corporations. WMCP is renamed as Tampakan Mineral
Resources Corporation.

18 December 2001 DENR approved the transfer and registration of FTAA to Sagittarius from
WMCP.
Supreme Court said that this manifestation and transfer does not render the issue moot since
the question of validity of the FTAA will affect even that held by Sagittarius.

Facts of the Case

-Stated in case history-

Issue/s

Preliminary Issue: Standing of Petitioners

1WON EO 279 is an invalid law having been issued two days before President Aquinos
legislative powers expired with the convening of Regular Congress and having thus took effect
after which.

2WON RA 7942 and DAO 96-40 are unconstitutional and consequently the FTAA entered
pursuant to above stated laws is invalid

Ratio Decidendi

Preliminary Issue: Petitioners have standing since they are residents of the land covered by the
FTAA. Since the petition if for mandamus and prohibition and the issue is of constitutionality of a
statute, the Supreme is no longer concerned whether or not petitioners are real parties of
interest to the contract/agreement.

1NO. EO 279 is valid and whether or not the laws effectivity date lies beyond the expiration of
the Presidents legislative power is irrelevant since it was still enacted when the president held
such power. It does not run counter to EO 200 requiring laws to have 15 days after publication
requirement before its effectivity since EO 200 also provides unless it is otherwise provided,
EO 279 having stated its own effectivity as shall take effect immediately. In addition, the 15-
day post-publication requirement was for the information of the public and does not in any way
affect the date of enactment and is not a ground for invalidation. EO 279 nonetheless was
published on the Official Gazette on 3 August 1987.
2Yes. The 1987 Constitution provides The President may enter into agreements with foreign-
owned corporations involving either technical or financial assistance for large-scale exploration,
development, or 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.[3]

The Constitution provides for four modes by which the States may explore, develop, and Utilize
Natural Resources

(1) State may directly undertake such activities

(2) State may enter into co-production, joint-venture or production-sharing agreements with
Filipino citizens or qualified corporations (60% Filipino owned)

(3) Congress may allow small-scale utilization of natural resources by Filipino citizens

(4) For the large-scale exploration, development, or utilization of minerals, petroleum, and
other mineral oils, the President may enter into agreements with foreign-owned corporation for
technical or financial assistance.

The framers of this Constitution expressly omitted the phrase service contracts that was
provided for in the 1973 Constitution which allowed foreign companies to manage and operate
mining activities and replaced it with technical or financial assistance only.

RA 7942, DAO 96-40, and the FTAA between the government and WMCP allows for the
management and operation of the foreign-owned corporation for the large-scale exploration,
development, or utilization of minerals, petroleum, and other mineral oils. Although counsel for
respondents claim that technical is a very broad term that may cover the management and
operation of such activities, it is still clear from the deliberation of the Constitutional
Commission that they intended to limit the utilization of the natural resources for the sole
enjoyment of the Filipinos.

Decision

Petition Granted. Certain provisions of RA 7942 are declared null and void. So are all provisions
of Department of Environment and Natural Resources Administrative Order 96-40, s. 1996
which are not in conformity with this Decision, and the Financial and Technical Assistance
Agreement between the Government of the Republic of the Philippines and WMC Philippines,
Inc.
Appendix:

[1] Philippine Mining Act of 1995

[2] Implementing Rules and Regulations pursuant to RA 7942 issued by the DENR

[3] Cont. Art. XII, Sec. 2, par. 4

Const. Art. XII Sec. 2.

All lands of the public domain, waters, 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. With the exception of agricultural lands, all other natural
resources shall not be alienated. 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. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under such terms and
conditions as may be provided by law. In cases of water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, beneficial use may be
the measure and limit of the grant.

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and
exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens,
as well as cooperative fish farming, with priority to subsistence fishermen and fishworkers in
rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either
technical of 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.
The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution.

___

LA BUGAL BLAAN TRIBAL ASSOCIATION INC., ET AL. V. RAMOS

G.R. No. 127882

27 January 2004
Ponente: Carpio-Morales

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.

They pray that the Court issue an order:

(a) Permanently enjoining respondents from acting on any application for Financial or Technical
Assistance Agreements;

(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional and null
and void;

(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained in
DENR Administrative Order No. 96-40 and all other similar administrative issuances as
unconstitutional and null and void; and
 (d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining
Philippines, Inc. as unconstitutional, illegal and null and void.

In January 2001, MMC 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. WMCP contends that the annulment of
the FTAA would violate a treaty between the Philippines and Australia which provides for the protection of
Australian investments.

ISSUE: W/N the Philippine Mining Act is unconstitutional for allowing fully foreign-owned corporations to
exploit Philippine mineral resources. YES.

ISSUE: W/N the FTAA between WMCP and the Philippines is a service contract. YES.

RATIO:

First Issue:

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.

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 countrys 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 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 nations 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 nations mineral resources to these contractors, leaving the State with nothing but
bare title thereto.

The same provisions, whether by design or inadvertence, permit a circumvention of the

constitutionally ordained 60-40% capitalization requirement for corporations or associations engaged in
the exploitation, development and utilization of Philippine natural resources.

When parts of a statute are so mutually dependent and connected as conditions, considerations,
inducements or compensations for each other as to warrant a belief that the legislature intended them as
a whole, then if some parts are unconstitutional, all provisions that are thus dependent, conditional or
connected must fall with them.

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.

2nd Issue:

The FTAA between WMCP and the Philippine government is likewise unconstitutional since the
agreement itself is a device contract.

Section 1.3 of the FTAA grants WMCP, a fully foreign owned corporation, the exclusive right to
explore, exploit, utilize and dispose of all minerals and by-products that may be produced from the
contract area. Section 1.2 of the same agreement provides that WMCP shall provide all financing,
technology, management, and personnel necessary for the Mining Operations.

These contractual stipulations and related provisions in the FTAA taken together, grant WMCP
beneficial ownership over natural resources that properly belong to the State and are intended for the
benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the
vices that the fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the
contract from which they spring must be struck down.
__

Francisco Chavez vs Public

Estates Authority (July 2002)
The Public Estates Authority (PEA) is the central implementing agency tasked to undertake
reclamation projects nationwide. It took over the leasing and selling functions of the DENR
(Department of Environmental and Natural Resources) insofar as reclaimed or about to be
reclaimed foreshore lands are concerned.
PEA sought the transfer to the Amari Coastal Bay and Development Corporation, a private
corporation, of the ownership of 77.34 hectares of the Freedom Islands. PEA also sought to
have 290.156 hectares of submerged areas of Manila Bay to Amari.
ISSUE: Whether or not the transfer is valid.
HELD: No. To allow vast areas of reclaimed lands of the public domain to be transferred to
Amari as private lands will sanction a gross violation of the constitutional ban on private
corporations from acquiring any kind of alienable land of the public domain.
The Supreme Court affirmed that the 157.84 hectares of reclaimed lands comprising the
Freedom Islands, now covered by certificates of title in the name of PEA, are alienable
lands of the public domain. The 592.15 hectares of submerged areas of Manila Bay remain
inalienable natural resources of the public domain. The transfer (as embodied in a joint
venture agreement) to AMARI, a private corporation, ownership of 77.34 hectares of the
Freedom Islands, is void for being contrary to Section 3, Article XII of the 1987 Constitution
which prohibits private corporations from acquiring any kind of alienable land of the public
domain. Furthermore, since the Amended JVA also seeks to transfer to Amari ownership of
290.156 hectares of still submerged areas of Manila Bay, such transfer is void for being
contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of
natural resources other than agricultural lands of the public domain.
__

Chavez v PEA and AMARI G.R. No. 133250. July 9, 2002.

7/7/2010

0 Comments

Facts: On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating
PEA. PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop,
improve, acquire, lease and sell any and all kinds of lands." On the same date, then President Marcos issued
Presidential Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore of the Manila
Bay" under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).

On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting and
transferring to PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP) containing a total area of one million nine hundred fifteen thousand eight hundred ninety four (1,915,894)
square meters." Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of Paraaque issued
Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the three reclaimed islands
known as the "Freedom Islands" located at the southern portion of the Manila-Cavite Coastal Road, Paraaque City.

PEA and AMARI entered into the JVA through negotiation without public bidding. On April 28, 1995, the Board of
Directors of PEA, in its Resolution No. 1245, confirmed the JVA. On June 8, 1995, then President Fidel V. Ramos,
through then Executive Secretary Ruben Torres, approved the JVA.

The Senate Committees reported the results of their investigation in Senate Committee Report No. 560 dated
September 16, 1997. Among the conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer to
AMARI under the JVA are lands of the public domain which the government has not classified as alienable lands and
therefore PEA cannot alienate these lands; (2) the certificates of title covering the Freedom Islands are thus void, and
(3) the JVA itself is illegal.

On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating a
Legal Task Force to conduct a study on the legality of the JVA in view of Senate Committee Report No. 560. The
members of the Legal Task Force were the Secretary of Justice, the Chief Presidential Legal Counsel, and the
Government Corporate Counsel. The Legal Task Force upheld the legality of the JVA, contrary to the conclusions
reached by the Senate Committees.

On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition for
Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order.
Petitioner contends the government stands to lose billions of pesos in the sale by PEA of the reclaimed lands to
AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the JVA, invoking Section 28,
Article II, and Section 7, Article III, of the 1987 Constitution on the right of the people to information on matters of
public concern.

Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on
"constitutional and statutory grounds the renegotiated contract be declared null and void."

Issue: The issues raised by petitioner, PEA and AMARI are as follows:
1. Whether the reliefs prayed for are moot and academic because of subsequent events;
2. Whether the petition should be dismissed for failing to observe the principle of governing the heirarchy of
courts;
3. Whether the petition should be dismissed for non-exhaustion of administrative remedies;
4. Whether petitioner has locus standi;
5. Whether the constitutional right to information includes information on on-going neogtiations BEFORE a final
agreement;
6. Whether the stipulations in the amended joint venture agreement for the transfer to AMARI of certain lands,
reclaimed and still to be reclaimed violate the 1987 Constitution; and
7. Whether the Court has jurisdiction over the issue whether the amended JVA is grossly disadvantageous to the
government

Held: 1. We rule that the signing and of the Amended JVA by PEA and AMARI and its approval by the President
cannot operate to moot the petition and divest the Court of its jurisdiction.

PEA and AMARI have still to implement the Amended JVA. The prayer to enjoin the signing of the Amended JVA
on constitutional grounds necessarily includes preventing its implementation if in the meantime PEA and AMARI have
signed one in violation of the Constitution. Petitioner's principal basis in assailing the renegotiation of the JVA is its
violation of the Section 3, Article XII of the Constitution, which prohibits the government from alienating lands of the
public domain to private corporations. The Amended JVA is not an ordinary commercial contract but one which seeks
to transfer title and ownership to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay to a single
private corporation.

Also, the instant petition is a case of first impression being a wholly government owned corporation performing
public as well as proprietary functions. All previous decisions of the Court involving Section 3, Article XII of the 1987
Constitution, or its counterpart provision in the 1973 Constitution, covered agricultural lands sold to private
corporations which acquired the lands from private parties.

Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because of the possible
transfer at any time by PEA to AMARI of title and ownership to portions of the reclaimed lands. Under the Amended
JVA, PEA is obligated to transfer to AMARI the latter's seventy percent proportionate share in the reclaimed areas as
the reclamation progresses, The Amended JVA even allows AMARI to mortgage at any time the entire reclaimed
area to raise financing for the reclamation project.

2. The instant case, however, raises constitutional issues of transcendental importance to the public. The Court
can resolve this case without determining any factual issue related to the case. Also, the instant case is a petition for
mandamus which falls under the original jurisdiction of the Court under Section 5, Article VIII of the Constitution. We
resolve to exercise primary jurisdiction over the instant case.

3. PEA was under a positive legal duty to disclose to the public the terms and conditions for the sale of its lands.
The law obligated PEA make this public disclosure even without demand from petitioner or from anyone. PEA failed
to make this public disclosure because the original JVA, like the Amended JVA, was the result of a negotiated
contract, not of a public bidding. Considering that PEA had an affirmative statutory duty to make the public disclosure,
and was even in breach of this legal duty, petitioner had the right to seek direct judicial intervention.
 The principle of exhaustion of administrative remedies does not apply when the issue involved is a purely legal or
constitutional question. The principal issue in the instant case is the capacity of AMARI to acquire lands held by PEA
in view of the constitutional ban prohibiting the alienation of lands of the public domain to private corporations. We
rule that the principle of exhaustion of administrative remedies does not apply in the instant case.

The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to comply with
its constitutional duties. There are two constitutional issues involved here. First is the right of citizens to information
on matters of public concern. Second is the application of a constitutional provision intended to insure the equitable
distribution of alienable lands of the public domain among Filipino Citizens.
The thrust of the second issue is to prevent PEA from alienating hundreds of hectares of alienable lands of the public
domain in violation of the Constitution, compelling PEA to comply with a constitutional duty to the nation.

4. Ordinary taxpayers have a right to initiate and prosecute actions questioning the validity of acts or orders of
government agencies or instrumentalities, if the issues raised are of 'paramount public interest,' and if they
'immediately affect the social, economic and moral well being of the people.'

We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional rights to
information and to the equitable diffusion of natural resources matters of transcendental public importance, the
petitioner has the requisite locus standi.

5. The State policy of full transparency in all transactions involving public interest reinforces the people's right to
information on matters of public concern. This State policy is expressed in Section 28, Article II of the Constitution,
thus: Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest."

Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission understood that the
right to information "contemplates inclusion of negotiations leading to the consummation of the transaction." Certainly,
a consummated contract is not a requirement for the exercise of the right to information. Otherwise, the people can
never exercise the right if no contract is consummated, and if one is consummated, it may be too late for the public to
expose its defects.

Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly
disadvantageous to the government or even illegal, becomes a fait accompli.

However, the right to information does not compel PEA to prepare lists, abstracts, summaries and the like relating
to the renegotiation of the JVA. 34 The right only affords access to records, documents and papers, which means the
opportunity to inspect and copy them. One who exercises the right must copy the records, documents and papers at
his expense. The exercise of the right is also subject to reasonable regulations to protect the integrity of the public
records and to minimize disruption to government operations, like rules specifying when and how to conduct the
inspection and copying.

6. Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
"Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State,
riverbanks, shores, roadsteads, and that of a similar character;
2. That belonging exclusively to the State which, without being of general public use, is employed in some public
service, or in the development of the national wealth, such as walls, fortresses, and other works for the defense of the
territory, and mines, until granted to private individuals.

Property devoted to public use referred to property open for use by the public. In contrast, property devoted to
public service referred to property used for some specific public service and open only to those authorized to use the
property.Property of public dominion referred not only to property devoted to public use, but also to property not so
used but employed to develop the national wealth. This class of property constituted property of public dominion
although employed for some economic or commercial activity to increase the national wealth.
 "Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the territory,
shall become a part of the private property of the State." This provision, however, was not self-executing. The
legislature, or the executive department pursuant to law, must declare the property no longer needed for public use or
territorial defense before the government could lease or alienate the property to private parties.

Act No. 2874 of the Philippine Legislature

Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be classified
as suitable for residential purposes or for commercial, industrial, or other productive purposes other than agricultural
purposes, and shall be open to disposition or concession, shall be disposed of under the provisions of this chapter,
and not otherwise.

The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands for
non-agricultural purposes retain their inherent potential as areas for public service. This is the reason the government
prohibited the sale, and only allowed the lease, of these lands to private parties. The State always reserved these
lands for some future public service.

However, government reclaimed and marshy lands, although subject to classification as disposable public
agricultural lands, could only be leased and not sold to private parties because of Act No. 2874.

The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations from
acquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution allows
private corporations to hold alienable lands of the public domain only through lease. As in the 1935 and 1973
Constitutions, the general law governing the lease to private corporations of reclaimed, foreshore and marshy
alienable lands of the public domain is still CA No. 141.

Without the constitutional ban, individuals who already acquired the maximum area of alienable lands of the public
domain could easily set up corporations to acquire more alienable public lands. An individual could own as many
corporations as his means would allow him. An individual could even hide his ownership of a corporation by putting
his nominees as stockholders of the corporation. The corporation is a convenient vehicle to circumvent the
constitutional limitation on acquisition by individuals of alienable lands of the public domain.

PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the Freedom Islands,
is equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable lands of the public
domain. Being neither timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall under
the classification of agricultural lands of the public domain. Under the 1987 Constitution, agricultural lands of the
public domain are the only natural resources that the State may alienate to qualified private parties. All other natural
resources, such as the seas or bays, are "waters . . . owned by the State" forming part of the public domain, and are
inalienable pursuant to Section 2, Article XII of the 1987 Constitution.

In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested
with the power to undertake the physical reclamation of areas under water whether directly or through private
contractors. DENR is also empowered to classify lands of the public domain into alienable or disposable lands
subject to the approval of the President. On the other hand, PEA is tasked to develop, sell or lease the reclaimed
alienable lands of the public domain.

Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the
reclaimed lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA. Likewise,
the mere transfer by the National Government of lands of the public domain to PEA does not make the lands
alienable or disposable lands of the public domain, much less patrimonial lands of PEA.

There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD No.
1085 merely transferred "ownership and administration" of lands reclaimed from Manila Bay to PEA, while EO No.
525 declared that lands reclaimed by PEA "shall belong to or be owned by PEA." PEA's charter, however, expressly
tasks PEA "to develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of
lands . . . owned, managed, controlled and/or operated by the government." 87 (Emphasis supplied) There is,
therefore, legislative authority granted to PEA to sell its lands, whether patrimonial or alienable lands of the public
domain. PEA may sell to private parties its patrimonial properties in accordance with the PEA charter free from
constitutional limitations. The constitutional ban on private corporations from acquiring alienable lands of the public
domain does not apply to the sale of PEA's patrimonial lands.

Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the government
is required to sell valuable government property through public bidding. Section 79 of PD No. 1445 mandates that:...
"In the event that the public auction fails, the property may be sold at a private sale at such price as may be fixed by
the same committee or body concerned and approved by the Commission."

However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250
hectares still to be reclaimed, it also granted an option to AMARI to reclaim another 350 hectares. The original JVA, a
negotiated contract, enlarged the reclamation area to 750 hectares. The failure of public bidding on December 10,
1991, involving only 407.84 hectares, is not a valid justification for a negotiated sale of 750 hectares, almost double
the area publicly auctioned.

Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable land of the
public domain automatically becomes private land cannot apply to government units and entities like PEA.

The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not
automatically convert alienable lands of the public domain into private or patrimonial lands. The alienable lands of the
public domain must be transferred to qualified private parties, or to government entities not tasked to dispose of
public lands, before these lands can become private or patrimonial lands. Otherwise, the constitutional ban will
become illusory if Congress can declare lands of the public domain as private or patrimonial lands in the hands of a
government agency tasked to dispose of public lands.

To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will sanction
a gross violation of the constitutional ban on private corporations from acquiring any kind of alienable land of the
public domain. This scheme can even be applied to alienable agricultural lands of the public domain since PEA can
"acquire . . . any and all kinds of lands."

The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in the
name of PEA, are alienable lands of the public domain. PEA may lease these lands to private corporations but may
not sell or transfer ownership of these lands to private corporations.

7. Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last issue.
Besides, the Court is not the trier of facts, and this last issue involves a determination of factual matters.

WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay
Development Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint Venture
Agreement which is hereby declared NULL and VOID ab initio.

__

Chavez v Public Estate Authority

GR No. 133250, July 9, 2002

Facts:
On November 20, 1973, the government through the Commissioner of Public Highways signed a
contract with the Construction and Development Corporation of the Philippines (CDCP) to reclaim
certain foreshore and offshore areas of Manila Bay. The contract also included the construction of
Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in
consideration of fifty percent of the total reclaimed land.
On April 25, 1995 the PEA entered into a Joint Venture Agreement (JVA) with AMARI to develop the
Freedom Islands. This JVA was entered into through negotiation without public bidding.
The Senate Committee on Government Corporations and Public Enterprises, and the Committee on
Accountability of Public Officers and Investigations, conducted a joint investigation. Among the
conclusion are: that the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the
public domain which the government has not classified as alienable lands and therefore PEA cannot
alienate these lands, the certificates of the title covering the Freedom Islands are thus void, and the JVA
itself is illegal.
On December 5, 1997, President Ramos created a Legal Task Force to conduct a study on the legality of
the JVA. The Task Force upheld the legality of the JVA, contrary to the conclusions of the Senate
Committees.
On April 27, 1998, Petitioner as taxpayer filed the instant petition for mandamus with prayer for the
issuance of a writ of preliminary injunction and TRO. Petitioner contends the government stands to lose
billions of pesos in the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly
disclose the terms of any renegotiation of the JVA. Furthermore, petitioner assails the sale to AMARI of
lands of the public domains as blatant violation of Sec 3, Art XII of the Constitution prohibiting the sale
of alienable lands of the public domain to private corporations. Petitioner assert that he seeks to enjoin
the loss of billion of pesos in properties of the State that are of public dominion.

Issue:
Whether or not the petitioner has legal standing to bring the suit.

Ratio Decidendi:
The petitioner has standing to bring the taxpayers suit because the petition seeks to compel PEA to
comply with its constitutional duties. This duties are particularly in answer of the right of citizens to
information on matters of public concern, and of a constitutional provision intended to insure the
equitable distribution of alienable lands of the public domain among Filipino citizens. Furthermore, the
court considered that the petition raised matters of transcendental importance tot eh public. The mere
fact that the petitioner is a citizen satisfies the requirement of personal interest when the proceeding
involves the assertion of a public right. Also, ordinary taxpayers have a right to initiate and prosecute
actions questioning the validity of acts or orders of government agencies or instrumentalities if the
issues raise are of paramount public interest and if they immediately affect the social, economic and
moral well being of the people.
The amended JVA does not make the issue moot and academic since this compels the court to insure
the government itself does not violate a provision of the Constitution intended to safeguard the national
patrimony. The content of the amended JVA seeks to transfer title and ownership of reclaimed lands to
a single corporation. The court does not hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, bar and the public.
The instant case raises constitutional issues of transcendental importance to the public. Court can
resolve this case without determining any factual issue related to the case. The instant case is a petition
for mandamus which falls under the original jurisdiction of the Court. Furthermore, PEA was under a
positive legal duty to disclose to the public the terms and conditions for the sale of its lands. The
principle of exhaustion of administrative remedies does not apply when the issue involved is purely legal
or constitutional question.
The right to information includes official information on on-going negotiations before a final agreement
as required by the constitution.
The Supreme Court granted the petition. PEA and Amari Coastal Bay Development Corporation are
permanently enjoined from implementing the amended JVA which is hereby declared null and void ab
initio.
__

Chavez v. Pea and Amari

24 SEP
Chavez v. Pea and Amari

Fact:
In 1973, the Comissioner on Public Highways entered into a contract to reclaim areas of Manila Bay
with the Construction and Development Corportion of the Philippines (CDCP).

PEA (Public Estates Authority) was created by President Marcos under P.D. 1084, tasked with
developing and leasing reclaimed lands. These lands were transferred to the care of PEA under P.D.
1085 as part of the Manila Cavite Road and Reclamation Project (MCRRP). CDCP and PEA entered
into an agreement that all future projects under the MCRRP would be funded and owned by PEA.

By 1988, President Aquino issued Special Patent No. 3517 transferring lands to PEA. It was followed
by the transfer of three Titles (7309, 7311 and 7312) by the Register of Deeds of Paranaque to PEA
covering the three reclaimed islands known as the FREEDOM ISLANDS.

Subsquently, PEA entered into a joint venture agreement (JVA) with AMARI, a Thai-Philippine
corporation to develop the Freedom Islands. Along with another 250 hectares, PEA and AMARI
entered the JVA which would later transfer said lands to AMARI. This caused a stir especially when
Sen. Maceda assailed the agreement, claiming that such lands were part of public domain (famously
known as the mother of all scams).

Peitioner Frank J. Chavez filed case as a taxpayer praying for mandamus, a writ of preliminary
injunction and a TRO against the sale of reclaimed lands by PEA to AMARI and from implementing
the JVA. Following these events, under President Estradas admin, PEA and AMARI entered into an
Amended JVA and Mr. Chaves claim that the contract is null and void.

Issue:
w/n: the transfer to AMARI lands reclaimed or to be reclaimed as part of the stipulations in the
(Amended) JVA between AMARI and PEA violate Sec. 3 Art. XII of the 1987 Constitution
w/n: the court is the proper forum for raising the issue of whether the amended joint venture
agreement is grossly disadvantageous to the government.
Held:
On the issue of Amended JVA as violating the constitution:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by
certificates of title in the name of PEA, are alienable lands of the public domain. PEA may lease these
lands to private corporations but may not sell or transfer ownership of these lands to private
corporations. PEA may only sell these lands to Philippine citizens, subject to the ownership
limitations in the 1987 Constitution and existing laws.

2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the
public domain until classified as alienable or disposable lands open to disposition and declared no
longer needed for public service. The government can make such classification and declaration only
after PEA has reclaimed these submerged areas. Only then can these lands qualify as agricultural
lands of the public domain, which are the only natural resources the government can alienate. In
their present state, the 592.15 hectares of submerged areas are inalienable and outside the commerce
of man.

3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34
hectares110 of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII
of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable
land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares111 of still
submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of
the 1987 Constitution which prohibits the alienation of natural resources other than agricultural
lands of the public domain.

PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed
lands as alienable or disposable, and further declare them no longer needed for public service. Still,
the transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view of
Section 3, Article XII of the 1987Constitution which prohibits private corporations from acquiring
any kind of alienable land of the public domain.

__

CHAVEZ V. PUBLIC ESTATES

AUTHORITY
384 SCRA 152
FACTS:
President Marcos through a presidential decree created PEA, which was
tasked with the development, improvement, and acquisition, lease, and sale of all kinds of
lands. The then president also transferred to PEA the foreshore and offshore lands of Manila Bay
under the Manila-Cavite Coastal
Road and Reclamation Project.

Thereafter, PEA was granted patent to the reclaimed areas of land and then, years later, PEA
entered into a JVA with AMARI for the development
of the Freedom Islands. These two entered into a joint venture in the absence of any public
bidding.

Later, a privilege speech was given by Senator President Maceda denouncing the JVA
as the grandmother of all scams. An investigation was conducted and it was concluded that the
lands that PEA was conveying to
AMARI were lands of the public domain; the certificates of title over the
Freedom Islands were void; and the JVA itself was illegal. This prompted Ramos to form an
investigatory committee on the legality of the JVA.

Petitioner now comes and contends that the government stands to lose
billions by the conveyance or sale of the reclaimed areas to AMARI. He also asked for the
full disclosure of the renegotiations happening between the parties.

ISSUE:
W/N stipulations in the amended JVA for the transfer to AMARI of the lands, reclaimed or to
be reclaimed, violate the Constitution.

HELD:
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian
doctrine, which holds that the State owns all lands and waters of the public domain.

The 1987 Constitution recognizes the Regalian doctrine. It declares that all
natural resources are owned by the State and except for alienable
agricultural lands of the public domain, natural resources cannot be alienated.

The Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750
hectare reclamation project have been reclaimed, and the rest of the area are still submerged areas
forming part of Manila
Bay. Further, it is provided that AMARI will reimburse the actual costs in reclaiming the areas
of land and it will shoulder the other reclamation costs to be incurred.

The foreshore and submerged areas of Manila Bay are part of the lands of
the public domain, waters and other natural resources and consequently owned by the
State. As such, foreshore and submerged areas shall not be
alienable unless they are classified as agricultural lands of the public domain. The mere
reclamation of these areas by the PEA doesnt convert
these inalienable natural resources of the State into alienable and disposable lands of the
public domain. There must be a law or presidential
proclamation officially classifying these reclaimed lands as alienable and
disposable if the law has reserved them for some public or quasi-public use.

___

CHAVEZ V. PUBLIC ESTATE

AUTHORITY
FACTS:
From the time of Marcos until Estrada, portions of Manila Bay were being reclaimed. A law was
passed creating the Public Estate Authority which was granted with the power to transfer reclaimed
lands. Now in this case, PEA entered into a Joint Venture Agreement with AMARI, a private
corporation. Under the Joint Venture Agreement between AMARI and PEA, several hectares of
reclaimed lands comprising the Freedom Islands and several portions of submerged areas of Manila
Bay were going to be transferred to AMARI .

ISSUE:
Whether or not the stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or
to be reclaimed, violate the Constitution

RULING: YES!

Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable and
disposable lands of the public domain Section 3 of the Constitution: Alienable lands of the public
domain shall be limited to agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease The 157.84 hectares of reclaimed lands
comprising the Freedom Islands, now covered by certificates of title in the name of PEA, are
alienable lands of the public domain. PEA may lease these lands to private corporations but may not
sell or transfer ownership of these lands to private corporations. PEA may only sell these lands to
Philippine
citizens, subject to the ownership limitations in the 1987 Constitution and existing laws. Clearly, the
Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article
1409 of the Civil Code, contracts whose object or purpose is contrary to law, or whose object is
outside the commerce of men, are inexistent and void from the beginning. The Court must perform
its duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and
void ab initio.

__
Francisco Chavez vs Public
Estates Authority (May 2003)
In July 2002, Amari Coastal Bay Development Corporation lost a case (PEA-Amari
Scandal) before the Supreme Court involving certain reclaimed lands. Upon receipt of the
adverse decision, Amari filed a Motion for Inhibition asking the ponente of said case, Justice
Antonio Carpio, to inhibit from the case on the ground that before Justice Carpio was
appointed to the Supreme Court, he wrote a column in the Manila Times newspaper where
he questioned the legality of the agreement between the Public Estates Authority and Amari
regarding the said reclaimed property (PEA-Amari deal). Amari insists that Justice Carpio
already prejudged the issue as his bias and prejudice were already apparent. Amari also
prays for a re-deliberation after Justice Carpio inhibits.
ISSUE: Whether or not Justice Carpio should inhibit from the case by reason of the said
Manila Times column.
HELD: No. In the first place, the decision was already promulgated when Amari filed its
motion requesting Justice Carpio to inhibit. The rule is that a motion to inhibit must be
denied if filed after a member of the Court had already given an opinion on the merits of the
case. Reason: a litigant cannot be permitted to speculate upon the action of the Court (only
to) raise an objection of this sort after a decision has been rendered.
Second, judges and justices are not disqualified from participating in a case just because
they have written legal articles on the law involved in the case.
Third, looking at Justice Carpios Manila Times article, his article questioned the legality of
the PEA Amari deal on the basis of the lack of public bidding. In this particular case before
the Supreme Court, the issue of the absence of public bidding was not raised by any of the
parties involved hence, Justice Carpios write up had nothing to do with the very merits of
the case.

___
Usero v CA Digest
G.R. No. 152115, 26 January 2005
Property Law

Facts: This is a consolidated petition assailing the decision of the Court of Appeals (CA). Petitioners
and the private respondent are registered owners of neighboring parcels of land wherein between
the lots is a low-level strip of land with stagnant body of water. Whenever there is a storm or heavy
rain, the water therein would flood thereby causing damage to houses of the Polinars prompting
them to build a concrete wall on the bank of the strip of land about 3meters from their house and
riprapped the soil in that portion.

The Useros claimed ownership of the strip, demanded the halt of the construction but the Polinars
never heeded believing that the strip is part of a creek. However, the Polinars offered to pay for the
land. As the parties still failed to settle, both filed separate complaints for forcible entry. The
Municipal Trial Court ruled in favor of the petitioner, while the regional trial court reversed and
ordered the dismissal of the complaint and confirmed the existence of the creek between the lots.

Issue: Whether or not the disputed strip of land is part of the creek hence part of public
domain

Held: YES. Art. 420 of the Philippine New Civil Code (NCC) provides for properties which are part of
public domain. A creek is included in the phrase "and others of similar character". A creek, which
refers to a recess or arm of a river is a property belonging to the public domain, therefore not
susceptible of private ownership. Being a public water, it cannot be registered under the Torrens
system under the name of any individual.