This case is a petition for mandamus and prohibition to assails the constitutionality of Republic Act No.

7942, otherwise known as the Philippine Mining Act of 1995, along with the Implementing Rules and Regulations DAO 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, a corporation organized under Philippine laws.

A brief background of the case is as follows: 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 foreignowned 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. President Fidel V. Ramos approved R.A No. 7942 on March 3, 1995, to govern the exploration, development, utilization and processing of all mineral resources. It defines the modes and outlines the procedure for the filing, approval, assignment or transfer, withdrawal and fixes the terms. It also governs the financial and technical assistance agreements. On January 10, 1997, the petitioners, through their counsels, sent a letter demanding that the DENR stop the implementation of R.A No. 7942 and DAO 96-40. But the DENR did not respond nor act on the petitioners letter. For that matter, the petitioners filed the present petition for prohibition and mandamus, with a prayer for a temporary restraining order.

The Supreme Court had different decisions over the said case. The first decision was held on January 27, 2004, Justice Carpio Morales as the ponente, stated that following the literal text of the Constitution provided by Section 2, Article XII, assistance accorded by foreign-owned corporations in the large-scale exploration, development, and utilization of petroleum, minerals and mineral oils should be limited to "technical" or "financial" assistance only. Consonant with the State's "full supervision and control" over natural resources, Section 2 offers the State two "options." 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 and a fourth allows the participation of foreign-owned corporations. 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. 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. Professor Pacifico A. Agabin criticized service contracts for they "lodge exclusive management and control of the enterprise to the service contractor, which is reminiscent of the old concession regime. He elaborates that the service contract as we know it here is antithetical to the principle of sovereignty over our natural resources restated in the same article of the [1973] Constitution containing the provision for service contracts. If the service contractor happens to be a foreign

corporation, the contract would also run counter to the constitutional provision on nationalization or Filipinization, of the exploitation of our natural resources. Thus, the Supreme Court per Justice Carpio Morales stated that R.A. No. 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, it actually treats these agreements as service contracts that grant beneficial ownership to foreign contractors contrary to the fundamental law. A foreign-owned/-controlled corporation may likewise be granted a mineral processing permit. "Mineral processing" is the milling, beneficiation or upgrading of ores or minerals and rocks or by similar means to convert the same into marketable products. An FTAA contractor makes a warranty that the mining operations shall be conducted in accordance with the provisions of R.A. No. 7942 and its implementing rules and for work programs and minimum expenditures and commitments. under the Act, an FTAA contractor warrants that it "has or has access to all the financing, managerial, and technical expertise. . . ." This suggests that an FTAA contractor is bound to provide some management assistance a form of assistance that has been eliminated and, therefore, proscribed by the present Charter. By allowing foreign contractors to manage or operate all the aspects of the mining operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the nation's mineral resources to these contractors, leaving the State with nothing but bare title thereto.

On the other hand, the Supreme Court had another decision on December 1, 2004 and Justice Panganiban as the ponente over the same case. He reversed the decision of January 27, 2004 and he stated that the Court did not see how applying a strictly literal or verba legis interpretation of paragraph 4 could inexorably lead to the conclusions arrived at in the ponencia. First, the drafters' choice of words -- their use of the phrase agreements x x x involving either technical or financial assistance -- does not indicate the intent to exclude other modes of assistance. The drafters opted to use involving when they could have simply said agreements for financial or technical assistance, if that was their intention to begin with. In this case, the limitation would be very clear and no further debate would ensue. In contrast, the use of the word "involving" signifies the possibility of the inclusion of other forms of assistance or activities having to do with, otherwise related to or compatible with financial or technical assistance. The word "involving" as used in this context has three connotations that can be differentiated thus: one, the sense of "concerning," "having to do with," or "affecting"; two, "entailing," "requiring," "implying" or "necessitating"; and three, "including," "containing" or "comprising." Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word "involving," when understood in the sense of "including," as in including technical or financial assistance, necessarily implies that there are activities other than those that are being included. In other words, if an agreement includes technical or financial assistance, there is apart from such assistance -- something else already in, and covered or may be covered by, the said agreement. Thus, the use of the word "involving" implies that these agreements with foreign corporations are not limited to mere financial or technical assistance. The difference in sense becomes very apparent when we juxtapose "agreements for technical or financial assistance" against "agreements including technical or financial assistance." This much is unalterably clear in a verba legis approach. Second, if the real intention of the drafters was to confine foreign corporations to financial or technical assistance and nothing more, their language would have certainly been so unmistakably restrictive and stringent as to leave no doubt in anyone's mind about their true intent. For example, they would have used the sentence foreign corporations are absolutely

prohibited from involvement in the management or operation of mining or similar ventures or words of similar import. A search for such stringent wording yields negative results. Thus, there was a conscious and deliberate decision to avoid the use of restrictive wording that bespeaks an intent not to use the expression "agreements x x x involving either technical or financial assistance" in an exclusionary and limiting manner. The Supreme Court held that they do not see how a verba legis approach leads to the conclusion that "the management or operation of mining activities by foreign contractors, which is the primary feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate." Such intent cannot be definitively and conclusively established from the mere failure to carry the same expression or term over to the new Constitution, absent a more specific, explicit and unequivocal statement to that effect. There was therefore no need for a constitutional provision specifically allowing foreign-owned corporations to render financial or technical assistance, whether in respect of mining or some other resource development or commercial activity in the Philippines. The last point needs to be emphasized: if merely financial or technical assistance agreements are allowed, there would be no need to limit them to large-scale mining operations, as there would be far greater need for them in the smallerscale mining activities (and even in non-mining areas). Obviously, the provision in question was intended to refer to agreements other than those for mere financial or technical assistance. The Supreme Court sum up matters based on a careful reading of the ConCom deliberations and it was established that they were going to permit service contracts with foreign corporations as contractors, but with safety measures to prevent abuses, as an exception to the general norm established in the first paragraph of Section 2 of Article XII. This provision reserves or limits to Filipino citizens -- and corporations at least 60 percent of which is owned by such citizens -- the exploration, development and utilization of natural resources. Furthermore, The Supreme Court per Justice Panganiban stated that, the setup under RA 7942 and DAO 96-40 hardly relegates the State to the role of a "passive regulator" dependent on submitted plans and reports. On the contrary, the government agencies concerned are empowered to approve or disapprove -- hence, to influence, direct and change -- the various work programs and the corresponding minimum expenditure commitments for each of the exploration, development and utilization phases of the mining enterprise. In other words, the FTAA contractor is not free to do whatever it pleases and get away with it; on the contrary, it will have to follow the government line if it wants to stay in the enterprise. Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a sufficient degree of control and supervision over the conduct of mining operations. The two Justicesof the Supreme Court established their logical point of view in the foregoing cases. As for my own opinion, I concur with Justice Panganiban that RA 7942 and its Implementing Rules and Regulations are no unconstitu

ENVIRONMENTAL LAW

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., ET AL VERSUS VICTOR O. RAMOS, Secretary, Department of Environment and Natural Resources (DENR), ET AL

SUBMITTED TO: ATTY. GA-YA

SUBMITTED BY: MATIAS, MA. LOURDES C. I-A