GR 127882; (December, 2004) (Digest)
G.R. No. 127882 December 1, 2004
La Bugal-B’laan Tribal Association, Inc., et al., petitioners, vs. Victor O. Ramos, Secretary, Department of Environment and Natural Resources, et al., respondents.
FACTS
Petitioners, comprising indigenous communities, individuals, and non-governmental organizations, filed a Petition for Prohibition and Mandamus challenging the constitutionality of Republic Act No. 7942 (The Philippine Mining Act of 1995), its Implementing Rules and Regulations (DENR Administrative Order No. 96-40), and the Financial and Technical Assistance Agreement (FTAA) executed between the government and Western Mining Corporation (Philippines), Inc. (WMCP). The FTAA granted WMCP the right to explore, develop, and utilize mineral resources in a specified area. The petitioners argued that the FTAA, as sanctioned by the Mining Act, was essentially a prohibited “service contract” that allowed foreign control over the nation’s natural resources, in violation of the constitutional mandate that the State exercise full control and supervision over the exploration, development, and utilization of such resources.
The Court initially granted the petition in a January 27, 2004 Decision, declaring the assailed provisions and the FTAA unconstitutional. It found that the FTAA arrangement was akin to the service contracts denounced under the 1987 Constitution, as it allegedly ceded control over natural resources to a foreign corporation. The respondents filed a Motion for Reconsideration, leading to this Resolution.
ISSUE
Whether the Philippine Mining Act of 1995, its Implementing Rules and Regulations, and the Financial and Technical Assistance Agreement (FTAA) with WMCP are constitutional under the State’s regime of full control over the exploration, development, and utilization of natural resources.
RULING
The Court, upon reconsideration, reversed its prior Decision and upheld the constitutionality of the Philippine Mining Act, its Implementing Rules, and the subject FTAA. The constitutional logic centers on the interpretation of “full control and supervision” by the State. The Court clarified that full control does not necessitate the State’s direct day-to-day management of all mining operations. Given the inadequacy of Filipino capital and technology for large-scale activities, the State may secure foreign financial and technical assistance. The foreign contractor assumes all entrepreneurial risks and may therefore be granted reasonable managerial and operational prerogatives to protect its investment.
The State retains full residual control, analogous to a corporate board of directors delegating operational functions but retaining ultimate strategic direction and the power to modify or reverse actions. This control is constitutionally vested in the President, who is empowered to enter into such agreements, subject to congressional review. The FTAA mechanism, as structured under the law, was found to be consistent with this framework, as it preserves the State’s authority to direct overall strategy and ensure that operations align with national interest, thereby not constituting a prohibited service contract that relinquishes State control.