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No. 127882. January 27,
2004.*LABUGAL-BLAANTRIBALASSOCIATION,INC.,representedbyitsChairmanFLONGMIGUELM.LUMAYONG,WIGBERTOE.TAADA,PONCIANOBENNAGEN,JAIMETADEO,RENATOR.CONSTANTINO,JR.,FLONGAGUSTINM.DABIE,ROBERTOP.AMLOY,RAQIML.DABIE,SIMEONH.DOLOJO,IMELDAM.GANDON,LENYB.GUSANAN,MARCELOL.GUSANAN,QUINTOLA.LABUAYAN,LOMINGGESD.LAWAY,BENITAP.TACUAYAN,minorsJOLYL.BUGOY,representedbyhisfatherUNDEROD.BUGOY,ROGERM.DADING,representedbyhisfatherANTONIOL.DADING,ROMYM.LAGARO,representedbyhisfatherTOTINGA.LAGARO,MIKENYJONGB.LUMAYONG,representedbyhisfatherMIGUELM.LUMAYONG,RENET.MIGUEL,representedbyhismotherEDITHAT.MIGUEL,ALDEMARL.SAL,representedbyhisfatherDANNYM.SAL,DAISYRECARSE,
represented by her mother LYDIA S. SANTOS,EDWARD M. EMUY, ALAN P.
MAM_______________* EN BANC.149VOL. 421, JANUARY 27, 2004 149La
Bugal-BLaan Tribal Association, Inc. vs.
RamosPARAIR,MARIOL.MANGCAL,ALDENS.TUSAN,AMPAROS.YAP,VIRGILIOCULAR,MARVICM.V.F.LEONEN,JULIAREGINACULAR,GIANCARLO8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=GuestCULAR,VIRGILIOCULAR,JR.,representedbytheirfatherVIRGILIOCULAR,PAULANTONIOP.VILLAMOR,
represented by his parents JOSE
VILLAMORandELIZABETHPUA-VILLAMOR,ANAGININAR.TALJA, represented by
her father MARIO JOSE B.
TALJA,SHARMAINER.CUNANAN,representedbyherfatherALFREDO M. CUNANAN,
ANTONIO JOSE A. VITUG III,represented by his mother ANNALIZA A.
VITUG, LEAN
D.NARVADEZ,representedbyhisfatherMANUELE.NARVADEZ,JR.,ROSERIOMARALAGLINGATING,representedbyherfatherRIOOLIMPIOA.LINGATING,MARIOJOSEB.TALJA,DAVIDE.DEVERA,MARIAMILAGROSL.SANJOSE,SR,,SUSANO.BOLANIO,OND,LOLITAG.DEMONTEVERDE,BENJIEL.NEQUINTO,1ROSELILIAS.ROMANO,ROBERTOS.VERZOLA,EDUARDOAURELIOC.REYES,LEANLOUELA.PERIA,representedbyhisfatherELPIDIOV.PERIA,2GREENFORUMPHILIPPINES,GREENFORUMWESTERNVISAYAS,(GF-WV),ENVIRONMENTALLEGALASSISTANCECENTER(ELAC),PHILIPPINEKAISAHANTUNGOSAKAUNLARANNGKANAYUNANATREPORMANGPANSAKAHAN(KAISAHAN),3KAISAHANTUNGOSAKAUNLARANNGKANAYUNANATREPORMANGPANSAKAHAN(KAISAHAN),PARTNERSHIPFORAGRARIANREFORMandRURALDEVELOPMENTSERVICES,INC.(PARRDS),PHILIPPINEPARTNERSHIPFORTHEDEVELOPMENTOFHUMANRESOURCESINTHERURALAREAS,INC.(PHILDHRRA),WOMENSLEGALBUREAU(WLB),CENTERFORALTERNATIVEDEVELOPMENTINITIATIVES,INC.(CADI),UPLANDDEVELOPMENTINSTITUTE(UDI),KINAIYAHANFOUNDATION,INC.,SENTRONGALTERNATIBONGLINGAPPANLIGAL(SALIGAN),LEGALRIGHTSANDNATURALRESOURCES_______________1
Appears as Nequito in the caption of the Petition by Nequinto inthe
body. (Rollo, p. 12.)2 As appears in the body of the Petition.
(Id., at p. 13.) The caption of8/8/15, 6:13 AM SUPREME COURT
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petition does not include Louel A. Peria as one of the petitioners
butthe name of his father Elpidio V. Peria appears
therein.3AppearsasKaisahanTungosaKaunlaranngKanayunanatRepormangPansakahan(KAISAHAN)inthecaptionofthePetitionbyPhilippine
Kaisahan Tungo sa Kaunlaran ng Kanayunan at RepormangPansakahan
(KAISAHAN) in the body. (Id., at p. 14.)150150 SUPREME COURT
REPORTS ANNOTATEDLa Bugal-BLaan Tribal Association, Inc. vs.
RamosCENTER, INC. (LRC), petitioners, vs. VICTOR O.
RAMOS,SECRETARY,DEPARTMENTOFENVIRONMENTANDNATURALRESOURCES(DENR),HORACIORAMOS,DIRECTOR,MINESANDGEOSCIENCESBUREAU(MGB-DENR),RUBENTORRES;EXECUTIVESECRETARY,andWMC(PHILIPPINES),INC.,4respondents.JudicialReview;Requisites.Whenanissueofconstitutionalityisraised,thisCourtcanexerciseitspowerofjudicialreviewonlyifthefollowingrequisitesarepresent:(1)Theexistenceofanactualandappropriatecase;(2)Apersonalandsubstantial
interest of the party raising the constitutional
question;(3)Theexerciseofjudicialreviewispleadedattheearliestopportunity;and(4)Theconstitutionalquestionisthelismotaofthe
case.Same; Same; Words and Phrases; An actual case or
controversymeans an existing case or controversy that is
appropriate or ripe
fordetermination,notconjecturaloranticipatory.Anactualcaseorcontroversymeansanexistingcaseorcontroversythatisappropriateorripefordetermination,notconjecturaloranticipatory,lestthedecisionofthecourtwouldamounttoanadvisoryopinion.Thepowerdoesnotextendtohypotheticalquestionssinceanyattemptatabstractioncouldonlyleadtodialecticsandbarrenlegalquestionsandtosterileconclusionsunrelated
to
actualities.Same;Same;Same;LocusStandi;Legalstandingorlocusstandi
has been defined as a personal and substantial interest in
the8/8/15, 6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 421Page 4
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestcasesuchthatthepartyhassustainedorwillsustaindirectinjuryas
a result of the governmental act that is being challenged,
allegingmorethanageneralizedgrievance.Legalstandingorlocusstandihasbeendefinedasapersonalandsubstantialinterestinthecasesuchthatthepartyhassustainedorwillsustaindirectinjury
as a result of the governmental act that is being
challenged,alleging more than a generalized grievance. The gist of
the
questionofstandingiswhetherapartyallegessuchpersonalstakeintheoutcomeofthecontroversyastoassurethatconcreteadversenesswhichsharpensthepresentationofissuesuponwhichthecourtdependsforilluminationofdifficultconstitutionalquestions.Unlessapersonisinjuriouslyaffectedinanyofhisconstitutionalrights
by the operation of statute or ordinance, he has no
standing._______________4ErroneouslydesignatedinthePetitionasWesternMiningPhilippinesCorporation.(Id.,atp.212.)Subsequently,WMC(Philippines),Inc.wasrenamed
Tampakan Mineral Resources Corporation. (Id., at p. 778.)151VOL.
421, JANUARY 27, 2004 151La Bugal-BLaan Tribal Association, Inc.
vs. RamosSame; Same;
Asthecaseinvolvesconstitutionalquestions,thisCourtisnotconcernedwithwhetherpetitionersarerealpartiesininterest,butwithwhethertheyhavelegalstanding.Thepresentactionisnotmerelyoneforannulmentofcontractbutforprohibitionandmandamus.Petitionersallegethatpublicrespondentsactedwithoutorinexcessofjurisdictioninimplementing
the FTAA, which they submit is unconstitutional.
Asthecaseinvolvesconstitutionalquestions,thisCourtisnotconcerned
with whether petitioners are real parties in interest,
butwithwhethertheyhavelegalstanding.AsheldinKilosbayanv.Morato: x x
x. It is important to note . . . that standing because ofits
constitutional and public policy underpinnings, is very
differentfrom questions relating to whether a particular plaintiff
is the
realpartyininterestorhascapacitytosue.Althoughallthreerequirementsaredirectedtowardsensuringthatonlycertain8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestpartiescanmaintainanaction,standingrestrictionsrequireapartialconsiderationofthemerits,aswellasbroaderpolicyconcerns
relating to the proper role of the judiciary in certain
areas.[](FRIEDENTHAL,KANEANDMILLER,CIVILPROCEDURE328[1985])Standingisaspecialconcerninconstitutionallawbecauseinsomecasessuitsarebroughtnotbypartieswhohavebeenpersonallyinjuredbytheoperationofalaworbyofficialactiontaken,butbyconcernedcitizens,taxpayersorvoterswhoactually
sue in the public interest. Hence, the question in
standingiswhethersuchpartieshaveallegedsuchapersonalstakeintheoutcomeofthecontroversyastoassurethatconcreteadversenesswhichsharpensthepresentationofissuesuponwhichthecourtsolargelydependsforilluminationofdifficultconstitutionalquestions.
(Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)Same; Same;
Thethirdrequisiteforjudicialreviewshouldnotbetakentomeanthatthequestionofconstitutionalitymustberaised
immediately after the execution of the state action
complainedofthatthequestionofconstitutionalityhasnotbeenraisedbeforeisnotavalidreasonforrefusingtoallowittoberaisedlater.MisconstruingtheapplicationofthethirdrequisiteforjudicialreviewthattheexerciseofthereviewispleadedattheearliestopportunityWMCPpointsoutthatthepetitionwasfiledonlyalmost
two years after the execution of the FTAA, hence, not raisedat the
earliest opportunity. The third requisite should not be
takentomeanthatthequestionofconstitutionalitymustberaisedimmediatelyaftertheexecutionofthestateactioncomplainedof.Thatthequestionofconstitutionalityhasnotbeenraisedbeforeisnotavalidreasonforrefusingtoallowittoberaisedlater.Acontraryrulewouldmeanthatalaw,otherwiseunconstitutional,would
lapse into constitutionality by the mere failure of the properparty
to promptly file a case to challenge the
same.Same;Prohibition;WordsandPhrases;Prohibitionisapreventiveremedy;Whiletheexecutionofthecontractitselfmaybefait
accompli, its implementation is not.Prohibition is a
preventiveremedy. It seeks a152152 SUPREME COURT REPORTS
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ordering the defendant to desist from continuing with
thecommissionofanactperceivedtobeillegal.Thepetitionforprohibitionatbaristhusanappropriateremedy.Whiletheexecutionofthecontractitselfmaybefaitaccompli,itsimplementationisnot.Publicrespondents,inbehalfoftheGovernment,haveobligationstofulfillundersaidcontract.Petitioners
seek to prevent them from fulfilling such obligations onthe theory
that the contract is unconstitutional and, therefore,
void.Same;HierarchyofCourts;TherepercussionsoftheissuesinthiscaseonthePhilippineminingindustry,ifnotthenationaleconomy,aswellasthenoveltythereof,constituteexceptionalandcompellingcircumstancestojustifyresorttotheSupremeCourtinthefirstinstance.Therepercussionsoftheissuesinthiscaseonthe
Philippine mining industry, if not the national economy, as
wellasthenoveltythereof,constituteexceptionalandcompellingcircumstances
to justify resort to this Court in the first instance. Inall
events, this Court has the discretion to take cognizance of a
suitwhichdoesnotsatisfytherequirementsofanactualcaseorlegalstandingwhenparamountpublicinterestisinvolved.Whentheissues
raised are of paramount importance to the public, this Courtmay
brush aside technicalities of procedure.National Economy and
Patrimony; Regalian Doctrine; The
firstsentenceofSection2,ArticleXIIoftheConstitution,embodiestheRegaliandoctrineorjuraregalia;IntroducedbySpainintotheseIslands,thisfeudalconceptisbasedontheStatespowerofdominium,whichisthecapacityoftheStatetoownoracquireproperty.ThefirstsentenceofSection2embodiestheRegaliandoctrine
or jura regalia. Introduced by Spain into these Islands, thisfeudal
concept is based on the States power of dominium, which
isthecapacityoftheStatetoownoracquireproperty.Initsbroadsense, the
term jura regalia refers to royal rights, or those rightswhich the
King has by virtue of his prerogatives. In Spanish law,
itreferstoarightwhichthesovereignhasoveranythinginwhichasubjecthasarightofpropertyorpropriedad.Thesewererightsenjoyedduringfeudaltimesbythekingasthesovereign.Thetheory
of the feudal system was that title to all lands was
originallyheldbytheKing,andwhiletheuseoflandswasgrantedouttootherswhowerepermittedtoholdthemundercertainconditions,the
King theoretically retained the title. By fiction of law, the
Kingwasregardedastheoriginalproprietorofalllands,andthetrue8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestandonlysourceoftitle,andfromhimalllandswereheld.Thetheoryofjuraregaliawasthereforenothingmorethananaturalfruit
of conquest.Same; Same; The Regalian doctrine extends not only to
land
butalsotoallnaturalwealththatmaybefoundinthebowelsoftheearth.ThePhilippineshavingpassedtoSpainbyvirtueofdiscoveryandconquest,earlierSpanishdecreesdeclaredthatalllands
were held from the153VOL. 421, JANUARY 27, 2004 153La Bugal-BLaan
Tribal Association, Inc. vs. RamosCrown. The Regalian doctrine
extends not only to land but also
toallnaturalwealththatmaybefoundinthebowelsoftheearth.Spain,inparticular,recognizedtheuniquevalueofnaturalresources,viewingthem,especiallyminerals,asanabundantsource
of revenue to finance its wars against other nations. Mininglaws
during the Spanish regime reflected this
perspective.Same;Same;UnlikeSpain,theUnitedStatesconsiderednatural
resources as a source of wealth for its nationals and saw
fittoallowbothFilipinoandAmericancitizenstoexploreandexploitmineralsinpubliclands,andtograntpatentstoprivateminerallands;TheRegaliandoctrineandtheAmericansystem,therefore,differinoneessentialrespectundertheRegaliantheory,mineralrightsarenotincludedinagrantoflandbythestatewhileundertheAmericandoctrine,mineralrightsareincludedinagrantoflandbythegovernment.UnlikeSpain,theUnitedStatesconsidered
natural resources as a source of wealth for its nationalsand saw
fit to allow both Filipino and American citizens to exploreand
exploit minerals in public lands, and to grant patents to
privateminerallands.Apersonwhoacquiredownershipoveraparcelofprivateminerallandpursuanttothelawsthenprevailingcouldexcludeotherpersons,eventheState,fromexploitingmineralswithinhisproperty.Thus,earlierjurisprudenceheldthat:Avalidandsubsistinglocationofmineralland,madeandkeptupinaccordance
with the provisions of the statutes of the United
States,hastheeffectofagrantbytheUnitedStatesofthepresentand8/8/15,
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possession of the lands located, and this exclusive right
ofpossessionandenjoymentcontinuesduringtheentirelifeofthelocation.
x x x x x x. The discovery of minerals in the ground by onewho has
a valid mineral location, perfect his claim and his location,not
only against third persons but also against the Government. x xx.
[Italics in the original.] The Regalian doctrine and the
Americansystem,therefore,differinoneessentialrespect.UndertheRegaliantheory,mineralrightsarenotincludedinagrantoflandbythestate;undertheAmericandoctrine,mineralrightsareincluded
in a grant of land by the government.Same; Same; Concession System;
Words and Phrases; Under
theconcessionsystem,theconcessionairemakesadirectequityinvestmentforthepurposeofexploitingaparticularnaturalresourcewithinagivenareatheconcessionamountstocompletecontrol
by the concessionaire over the countrys natural resource,
foritisgivenexclusiveandplenaryrightstoexploitaparticularresourceatthepointofextraction.Section21alsomadepossibletheconcession(frequentlystyledpermit,licenseorlease)system.Thiswasthetraditionalregimeimposedbythecolonialadministratorsfortheexploitationofnaturalresourcesintheextractive
sector (petroleum, hard minerals, timber, etc.). Under
theconcessionsystem,theconcessionairemakesadirectequityinvestmentforthepurposeofexploitingaparticularnaturalresource
within a given area. Thus, the154154 SUPREME COURT REPORTS
ANNOTATEDLa Bugal-BLaan Tribal Association, Inc. vs.
Ramosconcessionamountstocompletecontrolbytheconcessionaireoverthe
countrys natural resource, for it is given exclusive and
plenaryrightstoexploitaparticularresourceatthepointofextraction.Inconsiderationfortherighttoexploitanaturalresource,theconcessionaireeitherpaysrentorroyalty,whichisafixedpercentage
of the gross
proceeds.Same;Same;Same;Asadoptedinarepublicansystem,themedievalconceptofjuraregaliaisstrippedofroyalovertonesandownership
of the land is vested in the State.The 1935 Constitution8/8/15,
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the Regalian doctrine, declaring all natural resources of
thePhilippines,includingminerallandsandminerals,tobepropertybelongingtotheState.Asadoptedinarepublicansystem,themedievalconceptofjura
regaliaisstrippedofroyalovertonesandownership of the land is vested
in the
State.Same;Same;Same;Nationalization;ObjectivesofNationalization;Thenationalizationandconservationofthenatural
resources of the country was one of the fixed and
dominatingobjectivesofthe1935ConstitutionalConvention.Thenationalizationandconservationofthenaturalresourcesofthecountry
was one of the fixed and dominating objectives of the
1935ConstitutionalConvention.Thenationalizationofthenaturalresources
was intended (1) to insure their conservation for
Filipinoposterity; (2) to serve as an instrument of national
defense,
helpingpreventtheextensiontothecountryofforeigncontrolthroughpeacefuleconomicpenetration;and(3)toavoidmakingthePhilippinesasourceofinternationalconflictswiththeconsequentdanger
to its internal security and
independence.Same;Same;Same;Same;ParityAmendments;Theswellofnationalismthatsuffusedthe1935Constitutionwasradicallydiluted
when in November 1946, the Parity Amendment, which
cameintheformofanOrdinanceAppendedtotheConstitution,wasratified in
a plebiscite.The swell of nationalism that suffused
the1935ConstitutionwasradicallydilutedwhenonNovemberl946,theParityAmendment,whichcameintheformofanOrdinanceAppendedtotheConstitution,wasratifiedinaplebiscite.TheAmendmentextended,fromJuly4,1946toJuly3,1974,therightto
utilize and exploit our natural resources to citizens of the
UnitedStatesandbusinessenterprisesownedorcontrolled,directlyorindirectly,
by citizens of the United States. The Parity
Amendmentwassubsequentlymodifiedbythe1954RevisedTradeAgreement,also
known as the Laurel-Langley Agreement, embodied in RepublicAct No.
1355.Same;Same;ServiceContracts;TheOilExplorationandDevelopmentActof1972(PresidentialDecreeNo.87);WordsandPhrases;
The Oil Exploration and Development Act of 1972
signaledatransformationfromtheconcessionsystemtotheexplorationforand
production of indigenous1558/8/15, 6:13 AM SUPREME COURT REPORTS
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421, JANUARY 27, 2004 155La Bugal-BLaan Tribal Association, Inc.
vs.
Ramospetroleumthroughservicecontracts;Servicecontractsisatermthatassumesvaryingmeaningstodifferentpeople,andithascarriedmanynamesindifferentcountries,likeworkcontractsinIndonesia,concessionagreementsinAfrica,production-sharingagreementsintheMiddleEast,andparticipationagreementsinLatinAmerica.ThepromulgationonDecember31,1972ofPresidentialDecreeNo.87,otherwiseknownasTHEOILEXPLORATIONANDDEVELOPMENTACTOF1972signaledsuchatransformation.P.D.No.87permittedthegovernmenttoexploreforandproduceindigenouspetroleumthroughservicecontracts.Servicecontractsisatermthatassumesvaryingmeaningstodifferentpeople,andithascarriedmanynamesindifferentcountries,likeworkcontractsinIndonesia,concessionagreementsinAfrica,production-sharingagreementsintheMiddleEast,andparticipationagreementsinLatinAmerica.AfunctionaldefinitionofservicecontractsinthePhilippinesisprovided
as follows: A service contract is a contractual
arrangementforengagingintheexploitationanddevelopmentofpetroleum,mineral,energy,landandothernaturalresourcesbywhichagovernmentoritsagency,oraprivatepersongrantedarightorprivilegebythegovernmentauthorizestheotherparty(servicecontractor)toengageorparticipateintheexerciseofsuchrightortheenjoymentoftheprivilege,inthatthelatterprovidesfinancialor
technical resources, undertakes the exploitation or production
ofagivenresource,ordirectlymanagestheproductiveenterprise,operationsoftheexplorationandexploitationoftheresourcesorthe
disposition of marketing or
resources.Same;Same;Same;Ithasbeenopined,though,that,inthePhilippines,theconceptofaservicecontract,atleastinthepetroleumindustry,wasbasicallyaconcessionregimewithaproduction-sharingelement.Ostensibly,theservicecontractsystemhadcertainadvantagesovertheconcessionregime.Ithasbeenopined,though,that,inthePhilippines,ourconceptofaservice
contract, at least in the petroleum industry, was basically
aconcession regime with a production-sharing
element.Same;Same;Same;WhileSection9,ArticleXIVofthe1973Constitution
maintained the Filipino-only policy in the enjoyment of8/8/15, 6:13
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestnaturalresources,italsoallowedFilipinos,uponauthorityoftheBatasang
Pambansa, to enter into service contracts with any personor entity
for the exploration or utilization of natural resources.OnJanuary
17, 1973, then President Ferdinand E. Marcos
proclaimedtheratificationofanewConstitution.ArticleXIVontheNationalEconomyandPatrimonycontainedprovisionssimilartothe1935ConstitutionwithregardtoFilipinoparticipationinthenationsnaturalresources.Section8,ArticleXIVthereofprovides:WhileSection
9 of the same Article maintained the Filipino-only policy
intheenjoymentofnaturalresources,italsoallowedFilipinos,uponauthority
of the Batasang Pambansa, to enter into service contracts156156
SUPREME COURT REPORTS ANNOTATEDLa Bugal-BLaan Tribal Association,
Inc. vs.
Ramoswithanypersonorentityfortheexplorationorutilizationofnatural
resources.Same; Same; Same;
ConspicuouslyabsentinSection2,ArticleXIIofthe1987Constitutionistheprovisioninthe1935and1973Constitutions
authorizing the State to grant licenses, concessions, orleases for
the exploration, exploitation, development, or utilization
ofnaturalresourcesbysuchomission,theutilizationofinalienablelandsofpublicdomainthroughlicense,concessionorleaseisnolonger
allowed under the 1987 Constitution.The 1987
ConstitutionretainedtheRegaliandoctrine.ThefirstsentenceofSection2,Article
XII states: All lands of the public domain, waters,
minerals,coal,petroleum,andothermineraloils,allforcesofpotentialenergy,fisheries,forestsortimber,wildlife,floraandfauna,andother
natural resources are owned by the State. Like the 1935
and1973Constitutionsbeforeit,the1987Constitution,inthesecondsentenceofthesameprovision,prohibitsthealienationofnaturalresources,
except agricultural lands. The third sentence of the sameparagraph
is new: The exploration, development and utilization ofnatural
resources shall be under the full control and supervision ofthe
State.TheconstitutionalpolicyoftheStatesfullcontrolandsupervisionovernaturalresourcesproceedsfromtheconceptofjuraregalia,aswellastherecognitionoftheimportanceofthe8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestcountrysnaturalresources,notonlyfornationaleconomicdevelopment,butalsoforitssecurityandnationaldefense.Underthisprovision,theStateassumesamoredynamicroleintheexploration,developmentandutilizationofnaturalresources.ConspicuouslyabsentinSection2istheprovisioninthe1935and1973ConstitutionsauthorizingtheStatetograntlicenses,concessions,
or leases for the exploration, exploitation, development,or
utilization of natural resources. By such omission, the
utilizationof inalienable lands of public domain through license,
concession orlease is no longer allowed under the 1987
Constitution.Same; Same; Under the 1987 Constitution, the State
itself
mayundertaketheoperationofaconcessionorenterintojointventures.Having
omitted the provision on the concession system, Section
2proceededtointroduceunfamiliarlanguage:TheStatemaydirectly
undertake such activities or it may enter into
co-production,jointventure,orproduction-sharingagreementswithFilipinocitizens,
or corporations or associations at least sixty per centum ofwhose
capital is owned by such citizens. Consonant with the
Statesfullsupervisionandcontrolovernaturalresources,Section2offerstheStatetwooptions.One,theStatemaydirectlyundertaketheseactivitiesitself;ortwo,itmayenterintocoproduction,
joint venture, or production-sharing agreements withFilipino
citizens, or entities at least 60% of whose capital is owned-by
such citizens.157VOL. 421, JANUARY 27, 2004 157La Bugal-BLaan
Tribal Association, Inc. vs.
RamosSame;Same;Same;LimitationsonTechnicalorFinancialAssistanceAgreements.AlthoughSection2sanctionstheparticipationofforeign-ownedcorporationsintheexploration,development,
and utilization of natural resources, it imposes
certainlimitationsorconditionstoagreementswithsuchcorporations.First,thepartiestoFTAAs.OnlythePresident,inbehalfoftheState,
may enter into these agreements, and only with
corporations.Bycontrast,underthe1973Constitution,aFilipinocitizen,corporationorassociationmayenterintoaservicecontractwithaforeignpersonorentity.Second,thesizeoftheactivities:onlylarge-scale
exploration, development, and utilization is allowed. The8/8/15,
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large-scale usually refers to very capital-intensive
activities.Third, the
naturalresourcessubjectoftheactivitiesisrestrictedtominerals,
petroleum and other mineral oils, the intent being to
limitservicecontractstothoseareaswhereFilipinocapitalmaynotbesufficient.Fourth,consistencywiththeprovisionsofstatute.Theagreementsmustbeinaccordancewiththetermsandconditionsprovidedbylaw.Fifth,Section2prescribescertainstandardsforenteringintosuchagreements.Theagreementsmustbebasedonrealcontributionstoeconomicgrowthandgeneralwelfareofthecountry.Sixth,theagreementsmustcontainrudimentarystipulationsforthepromotionofthedevelopmentanduseoflocalscientificandtechnicalresources.Seventh,thenotificationrequirement.
ThePresidentshallnotifyCongressofeveryfinancialortechnicalassistanceagreemententeredintowithinthirtydaysfromitsexecution.Finally,thescopeoftheagreements.Whilethe1973Constitutionreferredtoservicecontractsforfinancial,technical,management,orotherformsofassistancethe1987Constitution
provides for agreements . . . involving either
financialortechnicalassistance.Itbearsnotingthatthephrasesservicecontractsandmanagementorotherformsofassistanceintheearlier
constitution have been
omitted.Same;Same;Same;ModesbyWhichtheStateMayExplore,Develop and
Utilize Natural Resources.The State, being the
ownerofthenaturalresources,isaccordedtheprimarypowerandresponsibilityintheexploration,developmentandutilizationthereof.Assuch,itmayundertaketheseactivitiesthroughfourmodes:TheStatemaydirectlyundertakesuchactivities.(2)TheStatemayenterintoco-production,jointventureorproduction-sharing
agreements with Filipino citizens or qualified
corporations.(3)Congressmay,bylaw,allowsmall-scaleutilizationofnaturalresourcesbyFilipinocitizens.(4)Forthelarge-scaleexploration,developmentandutilizationofminerals,petroleumandothermineral
oils, the President may enter into agreements with
foreign-ownedcorporationsinvolvingtechnicalorfinancialassistance.ExcepttochargetheMinesandGeosciencesBureauoftheDENRwithperformingresearchesandsurveys,andapassingmentionofgovernment-ownedorcontrolledcorporations,R.A.No.7942doesnot
specify how the State should go about the first mode. The
thirdmode, on the other hand, is governed by Republic Act
No.1588/8/15, 6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME
421Page 14 of 124
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SUPREME COURT REPORTS ANNOTATEDLa Bugal-BLaan Tribal Association,
Inc. vs.
Ramos7076(thePeoplesSmall-ScaleMiningActof1991)andotherpertinentlaws.R.A.No.7942primarilyconcernsitselfwiththesecond
and fourth
modes.Same;Same;Same;WordsandPhrases;ProductionSharingAgreements,Co-ProductionAgreements,andJointVentureAgreements,Explained.Mineralproductionsharing,co-productionandjointventureagreementsarecollectivelyclassifiedbyR.A.No.7942asmineralagreements.TheGovernmentparticipatestheleastinamineralproductionsharingagreement(MPSA).InanMPSA,theGovernmentgrantsthecontractortheexclusive
right to conduct mining operations within a contract
areaandsharesinthegrossoutput.TheMPSAcontractorprovidesthefinancing,
technology, management and personnel necessary for
theagreementsimplementation.ThetotalgovernmentshareinanMPSA is the
excise tax on mineral products under Republic Act
No.7729,amendingSection151(a)oftheNationalInternalRevenueCode,asamended.Inaco-productionagreement(CA),theGovernmentprovidesinputstotheminingoperationsotherthanthemineralresource,whileinajointventureagreement(JVA),wheretheGovernmentenjoysthegreatestparticipation,theGovernment
and the JVA contractor organize a company with
bothpartieshavingequityshares.Asidefromearningsinequity,theGovernment
in a JVA is also entitled to a share in the gross
output.TheGovernmentmayenterintoaCAorJVAwithoneormorecontractors.Same;
Statutes; Statutory Construction; ExecutiveOrder(E.O.)No. 279;
There is nothing in E.O. No. 200 that prevents a law
fromtakingeffectonadateotherthanevenbeforethe15-dayperiodafteritspublication;Wherealawprovidesforitsowndateofeffectivity,
such date prevails over that prescribed by E.O. No. 200.It bears
noting that there is nothing in E.O. No. 200 that prevents
alawfromtakingeffectonadateotherthanevenbeforethe15-dayperiodafteritspublication.Wherealawprovidesforitsowndateofeffectivity,suchdateprevailsoverthatprescribedbyE.O.No.
200. Indeed, this is the very essence, of the phrase unless it
isotherwiseprovidedinSection1thereof.Section1,E.O.No.200,therefore,appliesonlywhenastatutedoesnotprovideforitsown8/8/15,
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of effectivity. What is mandatory under E.O. No. 200, and whatdue
process requires, as this Court held in Taada v. Tuvera, is
thepublication of the law for without such notice and publication,
therewould be no basis for the application of the maxim ignorantia
legisn[eminem] excusat. It would be the height of injustice to
punish orotherwise burden a citizen for the transgression of a law
of which hehad no notice whatsoever, not even a constructive
one.Same;Same;Same;FromareadingthenofSection8ofE.O.No. 279, Section
1 of E.O. No. 200, and Taada v. Tuvera, this
CourtholdsthatE.O.No.279becameeffectiveimmediatelyuponitspublication
in the159VOL. 421, JANUARY 27, 2004 159La Bugal-BLaan Tribal
Association, Inc. vs.
RamosOfficialGazetteon3August1987.WhiletheeffectivityclauseofE.O.
No. 279 does not require its publication, it is not a ground
foritsinvalidationsincetheConstitution,beingthefundamental,paramountandsupremelawofthenation,isdeemedwritteninthelaw.Hence,thedueprocessclause,which,soTaadaheld,mandates
the publication of statutes, is read into Section 8 of
E.O.No.279.Additionally,Section1ofE.O.No.200whichprovidesforpublicationeitherintheOfficialGazetteorinanewspaperofgeneral
circulation in the Philippines, finds suppletory application.It is
significant to note that E.O. No. 279 was actually published
intheOfficialGazetteonAugust3,1987.FromareadingthenofSection 8 of
E.O. No. 279, Section 1 of E.O. No. 200, and Taada
v.Tuvera,thisCourtholdsthatE.O.No.279becameeffectiveimmediatelyuponitspublicationintheOfficialGazetteonAugust3,
1987.Same; Same; Same; The convening of the first Congress
merelyprecludedtheexerciseoflegislativepowersbyPresidentAquinoitdidnotpreventtheeffectivityoflawsshehadpreviouslyenacted.ThatsucheffectivitytookplaceaftertheconveningofthefirstCongressisirrelevant.AtthetimePresidentAquinoissuedE.O.No.
279 on July 25, 1987, she was still validly exercising
legislativepowersundertheProvisionalConstitution.ArticleXVIII8/8/15,
6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 421Page 16 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guest(TransitoryProvisions)ofthe1987Constitutionexplicitlystates:SEC.6.TheincumbentPresidentshallcontinuetoexerciselegislativepowersuntilthefirstCongressisconvened.TheconveningofthefirstCongressmerelyprecludedtheexerciseoflegislativepowersbyPresidentAquino;itdidnotpreventtheeffectivityoflawsshehadpreviouslyenacted.Therecanbenoquestion,therefore,thatE.O.No.279isaneffective,andavalidlyenacted,
statute.Same;Same;Itisacardinalruleintheinterpretationofconstitutionsthattheinstrumentmustbesoconstruedastogiveeffecttotheintentionofthepeoplewhoadoptedit;Followingtheliteral
text of the Constitution, assistance accorded by
foreign-ownedcorporationsinthelarge-scaleexploration,development,andutilization
of petroleum, minerals and mineral oils should be limitedto
technical or financial assistance only.It is a cardinal rule
intheinterpretationofconstitutionsthattheinstrumentmustbesoconstruedastogiveeffecttotheintentionofthepeoplewhoadoptedit.Thisintentionistobesoughtintheconstitutionitself,and
the apparent meaning of the words is to be taken as
expressingit,exceptincaseswherethatassumptionwouldleadtoabsurdity,ambiguity,orcontradiction.WhattheConstitutionsaysaccordingtothetextoftheprovision,therefore,compelsacceptanceandnegatesthepowerofthecourtstoalterit,basedonthepostulatethattheframersandthepeoplemeanwhattheysay.Accordingly,following
the literal text of the Constitution, assistance accorded
byforeign-ownedcorporationsinthelarge-scaleexploration,development,andutilizationofpetroleum,mineralsandmineraloils
should be limited to technical or financial assistance only.160160
SUPREME COURT REPORTS ANNOTATEDLa Bugal-BLaan Tribal Association,
Inc. vs. RamosSame; Same; The management or operation of mining
activitiesbyforeigncontractors,whichistheprimaryfeatureofservicecontracts,waspreciselytheevilthatthedraftersofthe1987Constitution
sought to eradicate.As priorly pointed out, the phrasemanagement or
other forms of assistance in the 1973
Constitutionwasdeletedinthe1987Constitution,whichallowsonlytechnicalorfinancialassistance.Casusomisusproomissohabendusest.A8/8/15,
6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 421Page 17 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestperson,objectorthingomittedfromanenumerationmustbeheldtohavebeenomittedintentionally.Aswillbeshownlater,themanagementoroperationofminingactivitiesbyforeigncontractors,whichistheprimaryfeatureofservicecontracts,waspreciselytheevilthatthedraftersofthe1987Constitutionsoughtto
eradicate.Same;Same;ServiceContracts;IftheConstitutionalCommission
intended to retain the concept of service contracts
underthe1973Constitution,itcouldhavesimplyadoptedtheoldterminology(servicecontracts)insteadofemployingnewandunfamiliarterms(agreements...involvingeithertechnicalorfinancialassistance).Asearliernoted,thephraseservicecontractshasbeendeletedinthe1987ConstitutionsArticleonNationalEconomyandPatrimony.IftheCONCOMintendedtoretain
the concept of service contracts under the 1973
Constitution,itcouldhavesimplyadoptedtheoldterminology(servicecontracts)insteadofemployingnewandunfamiliarterms(agreements
. . . involving either technical or financial
assistance).Suchadifferencebetweenthelanguageofaprovisioninarevisedconstitutionandthatofasimilarprovisionintheprecedingconstitution
is viewed as indicative of a difference in purpose. If,
asrespondentssuggest,theconceptoftechnicalorfinancialassistance
agreements is identical to that of service contracts, theCONCOM
would not have bothered to fit the same dog with a
newcollar.Toupholdrespondentstheorywouldreducethefirsttoamereeuphemismforthesecondandrenderthechangeinphraseology
meaningless. An examination of the reason behind
thechangeconfirmsthattechnicalorfinancialassistanceagreementsare
not synonymous to service contracts. [T]he Court in
construingaConstitutionshouldbearinmindtheobjectsoughttobeaccomplishedbyitsadoption,andtheevils,ifany,soughttobepreventedorremedied.Adoubtfulprovisionwillbeexaminedinlightofthehistoryofthetimes,andtheconditionandcircumstances
under which the Constitution was framed. The
objectistoascertainthereasonwhichinducedtheframersoftheConstitutiontoenacttheparticularprovisionandthepurposesought
to be accomplished thereby, in order to construe the whole asto
make the words consonant to that reason and calculated to
effectthat purpose.Same; Same;
Same;TheinsightsoftheproponentsoftheU.P.LawDraftareinstructiveininterpretingthephrasetechnicalorfinancial
assistance.It appears that Proposed Resolution No. 496,8/8/15, 6:13
AM SUPREME COURT REPORTS ANNOTATED VOLUME 421Page 18 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=GuestwhichwasthedraftArticleonNationalEconomyandPatrimony,adopted
the concept of161VOL. 421, JANUARY 27, 2004 161La Bugal-BLaan
Tribal Association, Inc. vs.
Ramosagreements...involvingeithertechnicalorfinancialassistancecontainedintheDraftofthe1986U.P.LawConstitutionProject(U.P.Lawdraft)whichwastakenintoconsiderationduringthedeliberation
of the CONCOM. The former, as well as Article XII,
asadopted,employedthesameterminology,xxxTheinsightsoftheproponentsoftheU.P.Lawdraftare,therefore,instructiveininterpreting
the phrase technical or financial
assistance.Same;Same;Same;TheU.P.Lawdraftproponentsviewedservice
contracts under the 1973 Constitution as grants of
beneficialownershipofthecountrysnaturalresourcestoforeignownedcorporations.TheU.P.Lawdraftproponentsviewedservicecontractsunderthe1973Constitutionasgrantsofbeneficialownershipofthecountrysnaturalresourcestoforeignownedcorporations.While,intheory,theStateownsthesenaturalresourcesandFilipinocitizens,theirbeneficiariesservicecontractsactuallyvestedforeignerswiththerighttodispose,explorefor,develop,exploit,andutilizethesame.Foreigners,notFilipinos,becamethebeneficiariesofPhilippinenaturalresources.Thisarrangementisclearlyincompatiblewiththeconstitutionalidealofnationalizationofnaturalresources,withtheRegaliandoctrine,
and on a broader perspective, with Philippine sovereignty.Same;
Same; Same; The replacement of service contracts
withagreements...involvingeithertechnicalorfinancialassistance,as
well as the deletion of the phrase management or other forms
ofassistance, assumes greater significance when note is taken that
theU.P.LawdraftproposedotherequallycrucialchangesthatwereobviouslyheededbytheCONCOM;Inlightofthedeliberationsofthe
CONCOM, the text of the Constitution, and the adoption of
otherproposed changes, there is no doubt that the framers
considered
andsharedtheintentoftheU.P.Lawproponentsinemployingthephraseagreements...involvingeithertechnicalorfinancial8/8/15,
6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 421Page 19 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestassistance.Theproponentsneverthelessacknowledgedtheneedforcapitalandtechnicalknow-howinthelarge-scaleexploitation,developmentandutilizationofnaturalresourcesthesecondparagraphoftheproposeddraftitselfbeinganadmissionofsuchscarcity.Hence,theyrecommendedacompromisetoreconcilethenationalistic
provisions dating back to the 1935 Constitution, whichreserved all
natural resources exclusively to Filipinos, and the moreliberal
1973 Constitution, which allowed foreigners to participate inthese
resources through service contracts. Such a compromise
calledfortheadoptionofanewsystemintheexploration,development,andutilizationofnaturalresourcesintheformoftechnicalagreementsorfinancialagreementswhich,necessity,aredistinctconceptsfromservicecontracts.Thereplacementofservicecontractswithagreements...involvingeithertechnicalorfinancialassistance,aswellasthedeletionofthephrasemanagementorotherformsofassistance,assumesgreatersignificance
when note is taken that the162162 SUPREME COURT REPORTS ANNOTATEDLa
Bugal-BLaan Tribal Association, Inc. vs.
RamosU.P.Lawdraftproposedotherequallycrucialchangesthatwereobviously
heeded by the CONCOM. These include the abrogation
oftheconcessionsystemandtheadoptionofnewoptionsfortheStateintheexploration,development,andutilizationofnaturalresources.TheproponentsdeemedthesechangestobemoreconsistentwiththeStatesownershipof,anditsfullcontrolandsupervision(aphrasealsoemployedbytheframers)over,suchresources.
In light of the deliberations of the CONCOM, the text ofthe
Constitution, and the adoption of other proposed changes, thereis
no doubt that the framers considered and shared the intent of
theU.P.Lawproponentsinemployingthephraseagreements...involving
either technical or financial
assistance.Same;Same;Same;LoosestatementsofsomeoftheCommissionersintheCONCOMdonotnecessarilytranslatetotheadoptionofthe1973Constitutionprovisionallowingservicecontracts.Whilecertaincommissionersmayhavementionedthe8/8/15,
6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 421Page 20 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=GuesttermservicecontractsduringtheCONCOMdeliberations,theymaynothavebeennecessarilyreferringtotheconceptofservicecontractsunderthe1973Constitution.Asnotedearlier,servicecontractsisatermthatassumesdifferentmeaningstodifferentpeople.Thecommissionersmayhavebeenusingthetermloosely,andnotinitstechnicalandlegalsense,torefer,ingeneral,toagreementsconcerningnaturalresourcesenteredintobytheGovernmentwithforeigncorporations.Theseloosestatementsdonotnecessarilytranslatetotheadoptionofthe1973Constitutionprovision
allowing service
contracts.Same;Same;Same;AdministrativeLaw;Whenanadministrativeorexecutiveagencyrendersanopinionorissuesastatementofpolicy,itmerelyinterpretsapre-existinglaw;andtheadministrativeinterpretationofthelawisatbestadvisory,foritisthe
courts that finally determine what the law means.WMCP
citesOpinionNo.75,s.1987,andOpinionNo.175,s.1990oftheSecretaryofJustice,expressingtheviewthatafinancialortechnical
assistance agreement is no different in concept from theservice
contract allowed under the 1973 Constitution. This Court isnot,
however, bound by this interpretation. When an
administrativeorexecutiveagencyrendersanopinionorissuesastatementofpolicy,itmerelyinterpretsapreexistinglaw;andtheadministrative
interpretation, of the law is at best advisory, for it isthe courts
that finally determine what the law means.Same; Same; Same;
ThePresidentmayenterintoFTAAswithforeign-ownedcorporationintheexploitationofournaturalresources.Inanycase,theconstitutionalprovisionallowingthePresidenttoenterintoFTAAswithforeign-ownedcorporationsisanexceptiontotherulethatparticipationinthenationsnaturalresourcesisreservedexclusivelytoFilipinos.Accordingly,suchprovisionmustbeconstruedstrictlyagainsttheirenjoymentbynon-Filipinos.
As Commissioner Villegas emphasized,163VOL. 421, JANUARY 27, 2004
163La Bugal-BLaan Tribal Association, Inc. vs.
Ramostheprovisionisveryrestrictive.CommissionerNolledoalso8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestremarked
that entering into service contracts is an exception to therule on
protection of natural resources for the interest of the
nationand,therefore,beinganexception,itshouldbesubject,wheneverpossible,tostringentrules.Indeed,exceptionsshouldbestrictlybut
reasonably construed; they extend only so far as their
languagefairlywarrantsandalldoubtsshouldberesolvedinfavorofthegeneral
provision rather than the
exception.Same;Same;Same;PhilippineMiningActof1995(RepublicActNo.7942);Withtheforegoingdiscussioninmind,thisCourtfindsthatR.A.No.7942isinvalidinsofarassaidActauthorizesservice
contracts.With the foregoing discussion in mind, this
CourtfindsthatR.A.No.7942isinvalidinsofarassaidActauthorizesservicecontracts.Althoughthestatuteemploysthephrasefinancialandtechnicalagreementsinaccordancewiththe1987Constitution,itactuallytreatstheseagreementsasservicecontractsthatgrantbeneficialownershiptoforeigncontractorscontrary
to the fundamental
law.Same;Same;Same;Same;Theunderlyingassumptioninallsome of the
provisions of R.A. No. 7942 is that the foreign
contractormanagesthemineralresources,justliketheforeigncontractorinaservicecontract;Byallowingforeigncontractorstomanageoroperatealltheaspectsoftheminingoperation,theabove-citedprovisionsofR.A.No.7942haveineffectconveyedbeneficialownershipoverthenationsmineralresourcestothesecontractors,leavingtheStatewithnothingbutbaretitlethereto.Theunderlyingassumptioninalltheseprovisionsisthattheforeigncontractormanagesthemineralresources,justliketheforeigncontractorinaservicecontract.Furthermore,ChapterXIIoftheAct
grants foreign contractors in FTAAs the same auxiliary miningrights
that it grants contractors in mineral agreements (MPSA,
CAandJV).Parenthetically,Sections72to75usethetermcontractor,withoutdistinguishingbetweenFTAAandmineralagreementcontractors.AndsodoesholdersofminingrightsinSection76.AforeigncontractormayevenconvertitsFTAAintoamineralagreementiftheeconomicviabilityofthecontractareaisfoundtobeinadequatetojustifylarge-scaleminingoperations,providedthatitreducesitsequityinthecorporation,partnership,association
or cooperative to forty percent (40%). Finally, under
theAct,anFTAAcontractorwarrantsthatithasorhasaccesstoallthefinancing,managerial,andtechnicalexpertise....ThissuggeststhatanFTAAcontractorisboundtoprovidesomemanagementassistanceaformofassistancethathasbeen8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guesteliminatedand,therefore,proscribedbythepresentCharter.Byallowing
foreign contractors to manage or operate all the aspects
oftheminingoperation,theabove-citedprovisionsofR.A.No.7942haveineffectconveyedbeneficialownershipoverthenationsmineralresourcestothesecontractors,leavingtheStatewithnothing
but bare title thereto.164164 SUPREME COURT REPORTS ANNOTATEDLa
Bugal-BLaan Tribal Association, Inc. vs. RamosSame; Same; Same;
Same; Provisions of R.A. No. 7942
ViolativeofSection2,ArticleXIIoftheConstitution.Insum,theCourtfindsthefollowingprovisionsofR.A.No.7942tobeviolativeofSection
2, Article XII of the Constitution: (1) The proviso in
Section3(aq),whichdefinesqualifiedperson,towit:Provided,Thatalegallyorganizedforeign-ownedcorporationshallbedeemedaqualifiedpersonforpurposesofgrantinganexplorationpermit,financialortechnicalassistanceagreementormineralprocessingpermit.
(2) Section 23, which specifies the rights and obligations
ofanexplorationpermittee,insofarassaidsectionappliestoafinancialortechnicalassistanceagreement;(3)Section33,whichprescribestheeligibilityofacontractorinafinancialortechnicalassistanceagreement;(4)Section35,whichenumeratesthetermsandconditionsforeveryfinancialortechnicalassistanceagreement;
(5) Section 39, which allows the contractor in a
financialandtechnicalassistanceagreementtoconvertthesameintoamineralproduction-sharingagreement;Section37,whichprescribestheprocedureforfilingandevaluationoffinancialortechnicalassistanceagreementproposals;Section38,whichlimitsthe
term of financial or technical assistance agreements; Section
40,whichallowstheassignmentortransferoffinancialortechnicalassistanceagreements;Section41,whichallowsthewithdrawalofthecontractorinanFTAA;ThesecondandthirdparagraphsofSection
81, which provide for the Governments share in a financialand
technical assistance agreement; and Section 90, which
providesforincentivestocontractorsinFTAAsinsofarasitappliestosaidcontractors;Same;
Same; Same; Same; When the parts of the statute are
somutuallydependentandconnectedasconditions,considerations,8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestinducements,
or compensations for each other, as to warrant a
beliefthatthelegislatureintendedthemasawhole,andthatifallcouldnotbecarriedintoeffect,thelegislaturewouldnotpasstheresidueindependently,then,ifsomepartsareunconstitutional,alltheprovisionswhicharethusdependent,conditional,orconnected,must
fall with them.When the parts of the statute are so
mutuallydependentandconnectedasconditions,considerations,inducements,
or compensations for each other, as to warrant a beliefthat the
legislature intended them as a whole, and that if all couldnot be
carried into effect, the legislature would not pass the
residueindependently,then,ifsomepartsareunconstitutional,alltheprovisionswhicharethusdependent,conditional,orconnected,must
fall with
them.Same;InternationalLaw;Treaties;EqualProtectionClause;TheannulmentoftheFTAAwouldnotconstituteabreachoftheAgreementonthePromotionandProtectionofInvestmentsbetweenthePhilippineandAustralianGovernments,forthedecisionhereininvalidatingthesubjectFTAAformspartofthelegalsystemofthePhilippines,andtheequalprotectionclauseguaranteesthatsuchdecisionshallapplytoallcontractsbelongingtothesameclass,hence,
upholding rather than violating, the fair and165VOL. 421, JANUARY
27, 2004 165La Bugal-BLaan Tribal Association, Inc. vs.
Ramosequitable treatment stipulation in said treaty.The
invalidation
ofthesubjectFTAA,itisargued,wouldconstituteabreachofsaidtreatywhich,inturn,wouldamounttoaviolationofSection3,ArticleIIoftheConstitutionadoptingthegenerallyacceptedprinciples
of international law as part of the law of the land. One
ofthesegenerallyacceptedprinciplesispactasuntservanda,whichrequirestheperformanceingoodfaithoftreatyobligations.EvenassumingarguendothatWMCPiscorrectinitsinterpretationofthetreatyanditsassertionthatthePhilippinescouldnot...depriveanAustralianinvestor(like[WMCP])offairandequitabletreatmentbyinvalidating[WMCPs]FTAAwithoutlikewisenullifying
the service contracts entered into before the enactment of8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=GuestRA7942...,theannulmentoftheFTAAwouldnotconstituteabreachofthetreatyinvoked.Forthisdecisionhereininvalidatingthe
subject FTAA forms part of the legal system of the
Philippines.Theequalprotectionclauseguaranteesthatsuchdecisionshallapply
to all contracts belonging to the same class, hence,
upholdingrather than violating, the fair and equitable treatment
stipulationin said
treaty.Same;StatutoryConstruction;Aconstitutionisnottobeinterpreted
as demanding the impossible or the impracticableandunreasonable or
absurd consequences, if possible, should be avoidedcourts are not
to give words a meaning that would lead to
absurdorunreasonableconsequencesandaliteralinterpretationistoberejectedifitwouldbeunjustorleadtoabsurdresults.One
othermatterrequiresclarification.Petitionerscontendthat,consistentwith
the provisions of Section 2, Article XII of the Constitution,
thePresidentmayenterintoagreementsinvolvingeithertechnicalorfinancial
assistance only. The agreement in question, however, is
atechnicalandfinancialassistanceagreement.Petitionerscontentiondoesnotlie.ToadheretotheliterallanguageoftheConstitutionwouldleadtoabsurdconsequences.AsWMCPcorrectly
put it: x x x such a theory of petitioners would compel
thegovernment (through the President) to enter into contract with
two(2)foreign-ownedcorporations,oneforfinancialassistanceagreement
and with the other, for technical assistance over one
andthesameminingareaorland;ortoexecutetwo(2)contractswithonlyoneforeign-ownedcorporationwhichhasthecapabilitytoprovidebothfinancialandtechnicalassistance,oneforfinancialassistanceandanotherfortechnicalassistance,overthesameminingarea.Suchanabsurdresultisdefinitelynotsanctionedunderthecanonsofconstitutionalconstruction.[Italicsintheoriginal.]Surely,theframersofthe1987Charterdidnotcontemplatesuchanabsurdresultfromtheiruseofeither/or.Aconstitution
is not to be interpreted as demanding the impossible
ortheimpracticable;andunreasonableorabsurdconsequences,ifpossible,
should be avoided. Courts are not to give words a
meaningthatwouldleadtoabsurdorunreasonableconsequencesandaliteral
interpretation is to be rejected if it would be unjust or lead
toabsurd results. That1668/8/15, 6:13 AM SUPREME COURT REPORTS
ANNOTATED VOLUME 421Page 25 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guest166
SUPREME COURT REPORTS ANNOTATEDLa Bugal-BLaan Tribal Association,
Inc. vs.
Ramosisastrongargumentagainstitsadoption.Accordingly,petitionersinterpretation
must be rejected.VITUG, J., Separate
Opinion:NationalEconomyandPatrimony;StatutoryConstruction;Itcould
not have been the object of the framers of the Charter to
limitthecontractswhichthePresidentmayenterinto,tomereagreements for
financial and technical assistance; The
ConstitutionhasnotprohibitedtheStatefromitselfexploring,developing,orutilizingthecountrysnaturalresources,and,forthispurpose,itmay,
enter into the necessary agreements with individuals or entitiesin
the pursuit of a feasible operation.The majority would cite
theemphaticstatementsofCommissionersVillegasandDavidethatthe
countrys natural resources are exclusively reserved for
Filipinocitizens and that, according to Commissioner Villegas, the
deletionofthephraseservicecontracts(isthe)firstattempttoavoidsomeof
the abuses in the past regime in the use of service contracts to
goaroundthe60-40arrangement.ThesedeclarationsdonotnecessarilymeanthattheGovernmentmaynolongerenterintoservicecontractswithforeignentities.InordertoupholdandstrengthenthenationalpolicyofpreservinganddevelopingthecountrysnaturalresourcesexclusivelyfortheFilipinopeople,thepresent
Constitution indeed has provided for safeguards to
preventtheexecutionofservicecontractsoftheoldregime,butnotofservicecontractsperse.ItcouldnothavebeentheobjectoftheframersoftheChartertolimitthecontractswhichthePresidentmayenterinto,tomereagreementsforfinancialandtechnicalassistance.
One would take it that the usual terms and
conditionsrecognizedandstipulatedinagreementsofsuchnaturehavebeencontemplated.Basically,thefinancierandtheownerofknow-howwould
understandably satisfy itself with the proper
implementationandtheprofitabilityoftheproject.Itwouldbeabnormalforthefinancier
and owner of the know-how not to assure itself that all
theactivitiesneededtobringtheprojectintofruitionareproperlyimplemented,attendedto,andcarriedout.Needlesstosay,noforeign
investor would readily lend financial or technical
assistancewithouttheproperincentives,includingfairreturns,therefor.The8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=GuestConstitutionhasnotprohibitedtheStatefromitselfexploring,developing,
or utilizing the countrys natural resources, and, for thispurpose,
it may, I submit, enter into the necessary agreements
withindividuals or entities in the pursuit of a feasible
operation.Same; Supreme
Court;JudicialReview;SeparationofPowers;While I cannot ignore an
impression of the business community
thattheSupremeCourtiswont,attimes,tointerferewiththeeconomicdecisionsofCongressandthegovernmentseconomicmanagers,Imusthastentoadd,however,thatinsovotingasabove,Ihavenotbeen
unduly overwhelmed by that perception.Just a word. While Icannot
ignore an impression of the busi-167VOL. 421, JANUARY 27, 2004
167La Bugal-BLaan Tribal Association, Inc. vs.
RamosnesscommunitythattheCourtiswont,attimes,tointerferewiththeeconomicdecisionsofCongressandthegovernmentseconomicmanagers,Imusthastentoadd,however,thatinsovotingasabove,Ihavenotbeenundulyoverwhelmedbythatperception.Quitethecontrary,theCourthasalwaysproceededwithgreatcaution,suchasnow,inresolvingcasesthatcouldinextricablyinvolvepolicyquestionsthoughttobebestlefttothetechnicalexpertise
of the legislative and executive departments.PANGANIBAN, J.,
Separate
Opinion:MootandAcademicIssues;IbelievethattheCourtshoulddismissthePetitiononthegroundofmootnessadecisionontheconstitutionalityissueshouldawaitthewisdomofanewdaywhentheCourtwouldhavealivecasebeforeit.Withduerespect,Ibelieve
that the Court should dismiss the Petition on the ground
ofmootness.Isubmitthatadecisionontheconstitutionalityissueshould
await the wisdom of a new day when the Court would have alive case
before it. The nullity of the FTAA is unarguably premisedupon the
contractor being a foreign corporation. Had the FTAA
beenoriginallyissuedtoaFilipino-ownedcorporation,wewouldhavehadnoconstitutionalityissuetospeakof.Upontheotherhand,conveyanceoftheFTAAtoaFilipinocorporationcanbelikenedto8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=GuestthesaleoflandtoaforeignerwhosubsequentlyacquiresFilipinocitizenship,
or who later re-sells the same land to a Filipino
citizen.Theconveyancewouldbevalidated,asthepropertyinquestionwould
no longer be owned by a disqualified vendee. Since the
FTAAisnowtobeimplementedbyaFilipinocorporation,howcantheCourtstilldeclareitunconstitutional?TheCAcaseisadisputebetweentwoFilipinocompanies(SagittariusandLepanto)bothclaimingtherighttopurchasetheforeignsharesinWMCP.Soregardless
of which side eventually wins, the FTAA would still be inthe hands
of a qualified Filipino
company.NationalEconomyandPatrimony;StatutoryConstruction;Iftheintentionofthedrafterswerestrictlytoconfineforeigncorporationstofinancialortechnicalassistanceandnothingmore,theirlanguagewouldhavebeenunmistakablyrestrictiveandstringent.First,thedrafterschoiceofwordstheiruseofthephraseagreementsxxxinvolvingxxxtechnicalorfinancialassistancedoes
not absolutely indicate the intent to exclude
othermodesofassistance.Rather,thephrasesignifiesthepossibilityofthe
inclusion of other activities, provided they bear some
reasonablerelationshiptoandcompatibilitywithfinancialortechnicalassistance.Iftheintentionofthedrafterswerestrictlytoconfineforeign
corporations to financial or technical assistance and
nothingmore,Iamcertainthattheirlanguagewouldhavebeenunmistakablyrestrictiveandstringent.Theywouldhavesaid,forexample:Foreigncorporationsareprohibitedfromprovidingmanagementorotherformsofassistance,orwordstothateffect.The
conscious avoidance of restrictive wording bespeaks an intent168168
SUPREME COURT REPORTS ANNOTATEDLa Bugal-BLaan Tribal Association,
Inc. vs. Ramosnot to employin an exclusionary, inflexible and
limiting
mannertheexpressionagreementsinvolvingtechnicalorfinancialassistance.Same;Same;ServiceContracts;ThepresentConstitutionstillrecognizesandallowsservicecontracts(andhasnotrenderedthemtaboo),
albeit subject to several restrictions and modifications
aimed8/8/15, 6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 421Page
28 of 124
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avoiding the pitfalls of the past.Second, I believe the
foregoingposition is supported by the fact that our present
Constitution stillrecognizes and allows service contracts (and has
not rendered themtaboo), albeit subject to several restrictions and
modifications aimedat avoiding the pitfalls of the past. Below are
some excerpts from
thedeliberationsoftheConstitutionalCommission(Concom),showingthatitsmembersdiscussedtechnicalorfinancialagreementsinthesamebreathasservicecontractsandusedthetermsinterchangeably.Same;Same;Same;Inthemindsofthecommissioners,theconceptoftechnicalandfinancialassistanceagreementsdidnotexist
at all apart from the concept of service contracts duly
modifiedtopreventabusestechnicalandfinancialagreementswereunderstoodbythedelegatestoincludeservicecontractsdulymodified
to prevent abuses.The foregoing is but a small
samplingofthelengthydiscussionsoftheconstitutionalcommissionersonthesubjectofservicecontractsandtechnicalandfinancialassistanceagreements.Quotingtherestoftheirdiscussionswouldhavetakenupseveralmorepages,andthesehavethusbeenomittedforthesakeofbrevity.Inanyevent,itwouldappearthatthemembersoftheConcomactuallyhadinmindtheMarcoseraservice
contracts
thattheywerefamiliarwith(butwhichtheydulymodifiedandrestrictedsoastopreventabuses),whentheywerecrafting
and polishing the provisions dealing with financial and/ortechnical
assistance agreements. These provisions ultimately becamethe fourth
and the fifth paragraphs of Section 2 of Article XII of
the1987Constitution.Putdifferently,technicalandfinancialassistance
agreements were understood by the delegates to includeservice
contracts duly modified to prevent abuses. Since the
drafterswerereferringonlytoservicecontractstobegrantedtoforeignersand
to nothing else, this fact necessarily implies that we ought
nottreat the idea of agreements involving either technical or
financialassistanceashavinganysignificanceorexistenceapartfromservicecontracts.Inotherwords,inthemindsofthecommissioners,theconceptoftechnicalandfinancialassistanceagreementsdidnotexistatallapartfromtheconceptofservicecontracts
duly modified to prevent
abuses.Same;Same;Same;Currentbusinesspracticesoftenrequireborrowersseekinghugeloanstoallowcreditorsaccesstofinancialrecordsandotherdata,andprobablyaseatortwoontheformersboardofdirectors,oratleastsomeparticipationincertainmanagementdecisionsthatmayhaveanimpactonthefinancial8/8/15,
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or long-term viability of the debtor,169VOL. 421, JANUARY 27, 2004
169La Bugal-BLaan Tribal Association, Inc. vs.
Ramoswhichofcoursewilldirectlyaffectthelatterscapacitytorepayitsloans.Tantamount
to closing ones eyes to reality is the
insistencethatthetermagreementsinvolvingtechnicalorfinancialassistance
refers only to purely technical or financial assistance tobe
rendered to the State by a foreign corporation (and must
perforceexcludemanagementandotherformsofassistance).Nowadays,securingthekindoffinancialassistancerequiredbylarge-scaleexplorations,whichinvolvehundredsofmillionsofdollars,isnotjustamatterofsigningasimplepromissorynoteinfavorofalender.Currentbusinesspracticesoftenrequireborrowersseekinghugeloanstoallowcreditorsaccesstofinancialrecordsandotherdata,
and probably a seat or two on the formers board of directors;or at
least some participation in certain management decisions thatmay
have an impact on the financial health or long-term viability ofthe
debtor, which of course will directly affect the latters capacity
torepayitsloans.Prudentlendingpracticesnecessitateacertaindegree of
involvement in the borrowers management
process.Same;Same;Same;IftheSupremeCourtclosesitsdoorstointernationalrealitiesandunilaterallysetsupitsownconceptsofstricttechnicalandfinancialassistance,thenitmayunwittinglymake
the country a virtual hermitan economic isolationistin thereal
world of finance.Given the modern-day reality that even
theWorldBank(WB)andtheInternationalMonetaryFund(IMF)donot lend on
the basis merely of bare promissory notes, but on
someconditionalities designed to assure the borrowers financial
viability,I would like to hear in an Oral Argument in a live, not a
moot, casewhat these international practices are and how they
impact on
ourconstitutionalrestrictions.Thisisnottosaythatweshouldbendourbasiclaw;rather,weshouldfindoutwhatkindofFTAAprovisionsarerealisticvis--vistheseinternationalstandardsandour
constitutional protection. Unless there is a live FTAA, the
Courtwouldnotbeabletoanalyzetheprovisionsvis--visthe8/8/15, 6:13 AM
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=GuestConstitution,theMiningLawandthesemoderndaylendingpractices.
I mentioned the WB and the IMF, not necessarily becauseI agree with
their oftentimes stringent policies, but because they
setthestandardsthatinternationalandmultinationalfinancialinstitutionsoftentakebearingsfrom.TheWBandIMFareakin(though
not equivalent) to the Bangko Sentral, which all
Philippinebanksmustabideby.IfthisCourtclosesitsdoorstotheseinternationalrealitiesandunilaterallysetsupitsownconceptsofstricttechnicalandfinancialassistance,thenitmayunwittinglymake
the country a virtual hermitan economic isolationistin thereal
world of finance.Constitutions; Statutory Construction;
Thecommissionersfullyrealizedthattheirworkwouldhavetowithstandthetestoftime,thattheCharter,thoughcraftedwiththewisdombornofpastexperiences
and lessons painfully learned, would have to be a
livingdocumentthatwouldanswertheneedsofthenationwellintothefuture.I
believe that the170170 SUPREME COURT REPORTS ANNOTATEDLa
Bugal-BLaan Tribal Association, Inc. vs. RamosConcom did not mean
to tie the hands of the President and
restrictthelatteronlytoagreementsonrigidfinancialandtechnicalassistanceandnothing
else.Thecommissionersfullyrealizedthattheirworkwouldhavetowithstandthetestoftime;thattheCharter,thoughcraftedwiththewisdombornofpastexperiencesandlessonspainfullylearned,wouldhavetobealivingdocumentthat
would answer the needs of the nation well into the future. Thus,the
unerring emphasis on flexibility and adaptability.SPECIAL CIVIL
ACTION in the Supreme Court.Mandamus and Prohibition.The facts are
stated in the opinion of the
Court.MarivicM.V.F.Leonen,EdgarDLBernal,IngridRosalie L. Gorre and
Emily L. Manuel for petitioners.Ma. Paz G. Luna for petitioner
David de Vera, et al.Magistrado A. Mendoza for petitioner
KAISAHAN.8/8/15, 6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME
421Page 31 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=GuestThe
Solicitor General for public
respondents.FactoranandAssociatesLawOffice;Belo,Gozon,Elma,
Parel,AsuncionandLucila;andAzcuna,Yorac,Sarmiento,Arroyo & Chua
for private respondent WMC (Phils.).Mario C.V. Jalandoni co-counsel
for WMC (Phils.).CARPIO-MORALES, J.:The present petition for
mandamus and prohibition
assailstheconstitutionalityofRepublicActNo.7942,5otherwiseknownasthePHILIPPINEMININGACTOF1995,alongwiththeImplementingRulesandRegulationsissuedpursuant
thereto, Department of Environment and
NaturalResources(DENR)AdministrativeOrder96-40,andoftheFinancialandTechnicalAssistanceAgreement(FTAA)enteredintoonMarch30,1995bytheRepublicofthePhilippinesandWMC(Philippines),Inc.(WMCP),acorporation
organized under Philippine
laws.OnJuly25,1987,thenPresidentCorazonC.AquinoissuedExecutiveOrder(E.O.)No.2796authorizingtheDENR
Secretary to_______________5 An Act Instituting A New System of
Mineral Resources Exploration,Development, Utilization and
Conservation.6 Authorizing the Secretary of Environment and Natural
Resources toNegotiate and Conclude Joint Venture, Co-Production, or
Production-171VOL. 421, JANUARY 27, 2004 171La Bugal-BLaan Tribal
Association, Inc. vs. Ramosaccept, consider and evaluate proposals
from
foreign-ownedcorporationsorforeigninvestorsforcontractsofagreementsinvolvingeithertechnicalorfinancialassistanceforlarge-scaleexploration,development,andutilizationofminerals,which,uponappropriaterecommendationoftheSecretary,thePresidentmayexecutewiththeforeignproponent.Inenteringintosuch8/8/15,
6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 421Page 32 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestproposals,thePresidentshallconsidertherealcontributionstotheeconomicgrowthandgeneralwelfareofthecountrythatwillberealized,aswellasthedevelopmentanduseoflocalscientificandtechnicalresources
that will be promoted by the proposed contract
oragreement.UntilCongressshalldetermineotherwise,large-scalemining,forpurposeofthisSection,shallmeanthoseproposalsforcontractsoragreementsformineralresourcesexploration,development,andutilizationinvolvingacommittedcapitalinasingleminingunitprojectofatleastFiftyMillionDollarsinUnitedStatescurrency
(US
$50,000,000.00).7OnMarch3,1995,thenPresidentFidelV.RamosapprovedR.A.No.7942togoverntheexploration,development,utilizationandprocessingofallmineralresources.8R.A.No.7942definesthemodesofmineralagreementsforminingoperations,9outlinestheprocedurefortheirfilingandapproval,10assignment/transfer11andwithdrawal,12andfixestheirterms.13Similarprovisionsgovern
financial or technical assistance agreements.14The law prescribes
the qualifications of contractors15
andgrantsthemcertainrights,includingtimber,16
water17andease-_______________Sharing Agreements for the
Exploration, Development and
UtilizationofMineralResources,andPrescribingtheGuidelinesforsuchAgreementsandthoseAgreementsinvolvingTechnicalorFinancialAssistancebyForeign-OwnedCorporationsforLarge-ScaleExploration,Development
and Utilization of Minerals.7 Exec. Order No. 279 (1987), sec. 4.8
Rep. Act No. 7942 (1995), sec. 15.9Id., sec. 26 (a)-(c).10 Id.,
sec. 29.11 Id., sec. 30.12 Id., sec. 31.13 Id., sec. 32.14 Id., ch.
VI.15 Id., secs. 27 and 33 in relation to sec. 3 (aq).16 Id., sec.
72.17 Id., sec. 73.8/8/15, 6:13 AM SUPREME COURT REPORTS ANNOTATED
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SUPREME COURT REPORTS ANNOTATEDLa Bugal-BLaan Tribal Association,
Inc. vs. Ramosment18 rights, and the right to possess explosives.19
Surfaceowners,occupants,orconcessionairesareforbiddenfrompreventingholdersofminingrightsfromenteringprivatelandsandconcessionareas.20Aprocedureforthesettlement
of conflicts is likewise provided
for.21TheActrestrictstheConditionsforexploration,22quarry23andother24permits.Itregulatesthetransport,saleandprocessingofminerals,25andpromotesthedevelopmentofminingcommunities,scienceandminingtechnology,26
and safety and environmental protection.27The governments share in
the agreements is spelled
outandallocated,28taxesandfeesareimposed,29incentivesgranted.30Asidefrompenalizingcertainacts,31thelawlikewisespecifiesgroundsforthecancellation,revocationand
termination of agreements and
permits.32OnApril9,1995,30daysfollowingitspublicationonMarch10,1995inMalayaandManilaTimes,twonewspapersofgeneralcirculation,R.A.No.7942tookeffect.33ShortlybeforetheeffectivityofR.A.No.7942,however,or
on March 30, 1995, the President entered into an
FTAAwithWMCPcovering99,387hectaresoflandinSouthCotabato,SultanKudarat,DavaodelSurandNorthCotabato.34_______________18
Id., sec. 75.19 Id., sec. 74.20 Id., sec. 76.21 Id., ch. XIII.22
Id., secs. 20-22.23 Id., secs. 43, 45.24 Id., secs. 46-49, 51-52.25
Id., ch. IX.26 Id., ch. X.8/8/15, 6:13 AM SUPREME COURT REPORTS
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Id., ch. XI.28 Id., ch. XIV.29 Id., ch. XV.30 Id., ch. XVI.31 Id.,
ch. XIX32 Id., ch.
XVII.33Section116,R.A.No.7942providesthattheActshalltakeeffectthirty
(30) days following its complete publication in two (2)
newspapersof general circulation in the Philippines.34 WMCP FTAA,
sec. 4.1.173VOL. 421, JANUARY 27, 2004 173La Bugal-BLaan Tribal
Association, Inc. vs.
RamosOnAugust15,1995,thenDENRSecretaryVictorO.RamosissuedDENRAdministrativeOrder(DAO)No.95-23,s.1995,otherwiseknownastheImplementingRulesandRegulationsofR.A.No.7942.Thiswaslaterrepealedby
DAO No. 96-40, s. 1996 which was adopted on December20,
1996.OnJanuary10,1997,counselsforpetitionerssentalettertotheDENRSecretarydemandingthattheDENRstop
the implementation of R.A. No, 7942 and DAO No.
96-40,35givingtheDENRfifteendaysfromreceipt36toactthereon. The
DENR, however, has yet to respond or act onpetitioners
letter.37Petitioners thus filed the present petition for
prohibitionand mandamus, with a prayer for a temporary
restrainingorder.Theyallegethatatthetimeofthefilingofthepetition,100FTAAapplicationshadalreadybeenfiled,coveringanareaof8.4millionhec-tares,3864ofwhichapplicationsarebyfullyforeign-ownedcorporationscovering
a total of 5.8 million hectares, and at least one
byafullyforeign-ownedminingcompanyoveroffshoreareas.39PetitionersclaimthattheDENRSecretaryactedwithout
or in excess of jurisdiction:I8/8/15, 6:13 AM SUPREME COURT REPORTS
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x x in signing and promulgating DENR Administrative Order
No.96-40implementingRepublicActNo.7942,thelatterbeingunconstitutionalinthatitallowsfullyforeignownedcorporationstoexplore,develop,utilizeandexploitmineralresourcesinamannercontrarytoSection2,paragraph4,ArticleXIIoftheConstitution;IIxxxinsigningandpromulgatingDENRAdministrativeOrderNo.96-40implementingRepublicActNo.7942,thelatterbeingunconstitutionalinthatitallowsthetakingofprivatepropertywithout
the determination of public use and for just
compensation;_______________35 Rollo, p. 22.36 Ibid.37 Ibid.38
Ibid. The number has since risen to 129 applications when the
petitionersfiled their Reply. (Rollo, p. 363.)39 Id., at p.
22.174174 SUPREME COURT REPORTS ANNOTATEDLa Bugal-BLaan Tribal
Association, Inc. vs.
RamosIIIxxxinsigningandpromulgatingDENRAdministrativeOrderNo.96-40implementingRepublicActNo.7942,thelatterbeingunconstitutionalinthatitviolatesSec.1,Art.IIIoftheConstitution;IVxxxinsigningandpromulgatingDENRAdministrativeOrderNo.96-40implementingRepublicActNo.7942,thelatterbeingunconstitutionalinthatitallowsenjoymentbyforeigncitizensaswellasfullyforeignownedcorporationsofthenationsmarinewealthcontrarytoSection2,paragraph2ofArticleXIIoftheConstitution;8/8/15,
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guest(a)(b)(c)VxxxinsigningandpromulgatingDENRAdministrativeOrderNo.96-40implementingRepublicActNo.7942,thelatterbeingunconstitutionalinthatitallowsprioritytoforeignandfullyforeignownedcorporationsintheexploration,developmentandutilizationofmineralresourcescontrarytoArticleXIIoftheConstitution;VIxxxinsigningandpromulgatingDENRAdministrativeOrderNo.96-40implementingRepublicActNo.7942,thelatterbeingunconstitutional
in that it allows the inequitable sharing of wealthcontrary to
Sections [sic]1,paragraph1,andSection2,paragraph4[,] [Article XII]
of the
Constitution;VIIxxxinrecommendingapprovalofandimplementingtheFinancialandTechnicalAssistanceAgreementbetweenthePresidentoftheRepublicofthePhilippinesandWesternMiningCorporationPhilippines,Inc.becausethesameisillegalandunconstitutional.40They
pray that the Court issue an
order:PermanentlyenjoiningrespondentsfromactingonanyapplicationforFinancialorTechnicalAssistance
Agreements;DeclaringthePhilippineMiningActof1995orRepublic Act No.
7942 as unconstitutional and nulland void;Declaring the
Implementing Rules and
RegulationsofthePhilippineMiningActcontainedinDENRAdministrativeOrderNo.96-40andallothersimilaradministrativeissuancesasunconstitutional
and null and void; and_______________40 Id., at pp.
23-24.1758/8/15, 6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME
421Page 37 of 124
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421, JANUARY 27, 2004 175La Bugal-BLaan Tribal Association, Inc.
vs.
RamosCancellingtheFinancialandTechnicalAssistanceAgreementissuedtoWesternMiningPhilippines,Inc.
as unconstitutional, illegal and null and
void.41ImpleadedaspublicrespondentsareRubenTorres,thethen Executive
Secretary, Victor O. Ramos, the then
DENRSecretary,andHoracioRamos,DirectoroftheMinesandGeosciencesBureauoftheDENR.Alsoimpleadedisprivate
respondent WMCP, which entered into the assailedFTAA with the
Philippine Government. WMCP is owned
byWMCResourcesInternationalPty.,Ltd.(WMC),awhollyownedsubsidiaryofWesternMiningCorporationHoldingsLimited,apubliclylistedmajorAustralianminingandexploration
company.42 By WMCPs information, it is a100% owned subsidiary of
WMC
LIMITED.43Respondents,asidefrommeetingpetitionerscontentions,arguethattherequisitesforjudicialinquiryhavenotbeenmetandthatthepetitiondoesnotcomplywiththecriteriaforprohibitionandmandamus.Additionally,
respondent WMCP argues that there has beena violation of the rule
on hierarchy of courts.After petitioners filed their reply, this
Court granted
duecoursetothepetition.Thepartieshavesincefiledtheirrespective
memoranda.WMCPsubsequentlyfiledaManifestationdatedSeptember25,2002allegingthatonJanuary23,2001WMCsoldallitssharesinWMCPtoSagittariusMines,Inc.
(Sagittarius), a corporation organized under
Philippinelaws.44WMCPwassubsequentlyrenamedTampakanMineralResourcesCorporation.45WMCPclaimsthatatleast
60% of the equity of Sagittarius is owned by
Filipinosand/orFilipino-ownedcorporationswhileabout40%isowned by
Indophil Resources NL, an Australian
company.46Itfurtherclaimsthatbysuchsaleandtransferofshares,WMCPhasceasedtobeconnectedinanywaywithWMC.47_______________8/8/15,
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Id., at pp. 52-53. Emphasis and italics supplied.42 WMCP FTAA, p.
2.43 Rollo, p. 220.44 Id., at p. 754.45 Vide Note 4.46 Rollo, p.
754.47 Id., at p. 755.176176 SUPREME COURT REPORTS ANNOTATEDLa
Bugal-BLaan Tribal Association, Inc. vs. RamosBy virtue of such
sale and transfer, the DENR Secretary,
byOrderofDecember18,2001,48approvedthetransferandregistrationofthesubjectFTAAfromWMCPtoSagittarius.
Said Order, however, was appealed by
LepantoConsolidatedMiningCo.(Lepanto)totheOfficeofthePresident
which upheld it by Decision of July 23, 2002.49 Itsmotion for
reconsideration having been denied by the
OfficeofthePresidentbyResolutionofNovember12,2002,50Lepantofiledapetitionforreview51beforetheCourtofAppeals.
Incidentally, two other petitions for review relatedto the approval
of the transfer and registration of the FTAAto Sagittarius were
recently resolved by this
Court.52Itbearsstressingthatthiscasehasnotbeenrenderedmoot either
by the transfer and registration of the FTAA
toaFilipino-ownedcorporationorbythenon-issuanceofatemporary
restraining order or a preliminary injunction
tostaytheabove-saidJuly23,2002decisionoftheOfficeofthePresident.53Thevalidityofthetransferremainsindisputeandawaitsfinaljudicialdetermination.Thisassumes,ofcourse,thatsuchtransfercurestheFTAAsallegedunconstitutionality,onwhichquestionjudgmentisreserved.WMCP
also points out that the original, claimowners ofthe major
mineralized areas included in the WMCP
FTAA,namely,Sagittarius,TampakanMiningCorporation,andSouthcotMiningCorporation,areallFilipino-ownedcorporations,54eachofwhichwasaholderofanapprovedMineral
Production Sharing Agreement8/8/15, 6:13 AM SUPREME COURT REPORTS
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Id., at pp. 761-763.49 Id., at pp. 764-776.50 Id., at pp.
782-786.51 Docketed as C.A.-G.R. No. 74161.52 G.R. No. 153885,
entitled Lepanto Consolidated Mining Company
v.WMCResourcesInternationalPty.Ltd.,etal.,decidedSeptember24,2003,412SCRA101andG.R.No.156214,entitledLepantoMiningCompany
v. WMC Resources International Pty. Ltd., WMC
(Philippines),Inc.,SouthcotMiningCorporation,TampakanMiningCorporationandSagittarius
Mines, Inc., decided September 23,
2003.53Section12,Rule43oftheRulesofCourt,invokedbyprivaterespondent,
states, The appeal shall not stay the award, judgment,
finalorderorresolutionsoughttobereviewedunlesstheCourtofAppealsshall
direct otherwise upon such terms as it may deem just.54 WMCPs Reply
(dated May 6, 2003) to Petitioners Comment (to theManifestation and
Supplemental Manifestation), p. 3.177VOL. 421, JANUARY 27, 2004
177La Bugal-BLaan Tribal Association, Inc. vs.
Ramosawardedin1994,albeittheirrespectivemineralclaimswere subsumed
in the WMCP FTAA;55 and that these threecompanies are the same
companies that consolidated theirinterests in Sagittarius to whom
WMC sold its 100%
equityinWMCP.56WMCPconcludesthatintheeventthattheFTAAisinvalidated,theMPSAsofthethreecorporationswouldberevivedandthemineralclaimswouldreverttotheir
original
claimants.57Thesecircumstances,whileinformative,arehardlysignificantintheresolutionofthiscase,itinvolvingthevalidityoftheFTAA,notthepossibleconsequencesofitsinvalidation.Oftheabove-enumeratedsevengroundscitedbypetitioners,aswillbeshownlater,onlythefirstandthelastneedbedelvedinto;inthelatter,thediscussionshalldwell
only insofar as it questions the effectivity of E.O.
No.279byvirtueofwhichorderthequestionedFTAAwasforged.8/8/15, 6:13
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http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guest(1)(2)(3)(4)IBeforegoingintothesubstantiveissues,theproceduralquestions
posed by respondents shall first be tackled.Requisites For Judicial
ReviewWhen an issue of constitutionality is raised, this Court
canexerciseitspowerofjudicialreviewonlyifthefollowingrequisites are
present:The existence of an actual and appropriate
case;Apersonalandsubstantialinterestofthepartyraising the
constitutional
question;Theexerciseofjudicialreviewispleadedattheearliest
opportunity;
andTheconstitutionalquestionisthelismotaofthecase.58_______________55
Ibid.56 Ibid.57 WMCPs Reply (dated May 6, 2003) to Petitioners
Comment (to theManifestation and Supplemental Manifestation), p.
4.58PhilippineConstitutionAssociationv.Enriquez,235SCRA506(1994);NationalEconomicProtectionismAssociationv.Ongpin,171SCRA657(1989);Dumlaov.CommissiononElections,95SCRA392(1980).178178
SUPREME COURT REPORTS ANNOTATEDLa Bugal-BLaan Tribal Association,
Inc. vs.
RamosRespondentsclaimthatthefirstthreerequisitesarenotpresent.Section1,ArticleVIIIoftheConstitutionstatesthat(j)udicial
power includes the duty of the courts of justice
tosettleactualcontroversiesinvolvingrightswhicharelegally
demandable and enforceable. The power of judicial8/8/15, 6:13 AM
SUPREME COURT REPORTS ANNOTATED VOLUME 421Page 41 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestreview,therefore,islimitedtothedeterminationofactualcases
and controversies.59An actual case or controversy means an existing
case
orcontroversythatisappropriateorripe.fordetermination,notconjecturaloranticipatory,60lestthedecisionofthecourtwouldamounttoanadvisoryopinion.61Thepowerdoesnotextendtohypotheticalquestions62sinceanyattemptatabstractioncouldonlyleadtodialecticsandbarren
legal questions and to sterile conclusions unrelatedto
actualities.63Legalstandingorlocusstandihasbeendefinedasapersonal
and substantial interest in the case such that theparty has
sustained or will sustain direct injury as a resultof the
governmental act that is being challenged,64
allegingmorethanageneralizedgrievance.65Thegistofthequestionofstandingiswhetherapartyallegessuchpersonalstakeintheoutcomeofthecontroversyastoassurethatconcreteadversenesswhichsharpensthepresentationofissuesuponwhichthecourtdependsforilluminationofdifficultconstitutionalquestions.66Unlessa
person is injuriously affected in any of his
constitutionalrightsbytheoperationofstatuteorordinance,hehasnostanding.67Petitionerstraverseawiderangeofsectors.AmongthemareLaBugalBlaanTribalAssociation,Inc.,afarmers
and indigenous_______________59 Dumlao v. Commission on Elections,
supra.60 Board of Optometry v. Colet, 260 SCRA 88 (1996).61 Dumlao
v. Commission on Elections, supra.62
SubicBayMetropolitanAuthorityv.CommissiononElections,262SCRA 492
(1996).63 Angara v. Electoral Commission, 63 Phil. 139
(1936).64IntegratedBarofthePhilippinesv.Zamora,338SCRA81,100(2000);Dumlaov.CommissiononElections,supra;Peoplev.Vera,65Phil.
56 (1937).65 Dumlao v. Commission on Elections, supra.66 Integrated
Bar of the Philippines v. Zamora, supra.67
Ermita-MalateHotelandMotelOperatorsAssociation,Inc.v.CityMayor of
Manila, 21 SCRA 449 (1967).8/8/15, 6:13 AM SUPREME COURT REPORTS
ANNOTATED VOLUME 421Page 42 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guest179VOL.
421, JANUARY 27, 2004 179La Bugal-BLaan Tribal Association, Inc.
vs.
RamospeoplescooperativeorganizedunderPhilippinelawsrepresentingacommunityactuallyaffectedbytheminingactivitiesofWMCP,membersofsaidcooperative,68aswellasotherresidentsofareasalsoaffectedbytheminingactivitiesofWMCP.69ThesepetitionershavestandingtoraisetheconstitutionalityofthequestionedFTAAastheyallegeapersonalandsubstantialinjury.Theyclaimthatthey
would suffer irremediable displacement70 as a
resultoftheimplementationoftheFTAAallowingWMCPtoconductminingactivitiesintheirareaofresidence.Theythus
meet the appropriate case requirement as they
assertaninterestadversetothatofrespondentswho,ontheother hand,
insist on the FTAAs validity.In view of the alleged impending
injury, petitioners
alsohavestandingtoassailthevalidityofE.O.No.279,byauthority of
which the FTAA was
executed.Publicrespondentsmaintainthatpetitioners,beingstrangerstotheFTAA,cannotsueeitherorbothcontractingpartiestoannulit.71Inotherwords,theycontendthatpetitionersarenotrealpartiesininterestinan
action for the annulment of
contract.Publicrespondentscontentionfails.Thepresentactionisnotmerelyoneforannulmentofcontractbutforprohibitionandmandamus.PetitionersallegethatpublicrespondentsactedwithoutorinexcessofjurisdictioninimplementingtheFTAA,whichtheysubmitisunconstitutional.Asthecaseinvolvesconstitutionalquestions,thisCourtisnotconcernedwithwhetherpetitionersarerealpartiesininterest,butwithwhetherthey
have legal standing. As held in Kilosbayan v.
Morato:72xxx.Itisimportanttonote...thatstandingbecauseofitsconstitutionalandpublicpolicyunderpinnings,isverydifferentfrom
questions relating to whether a particular plaintiff is the
realparty in interest or has8/8/15, 6:13 AM SUPREME COURT REPORTS
ANNOTATED VOLUME 421Page 43 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guest_______________68PetitionersRobertoP.Amloy,RaqimL.Dabie,SimeonH.Dolojo,ImeldaGandon,LenyB.Gusanan,MarceloL.Gusanan,QuintalA.Labuayan,Lomingges
Laway, and Benita P.
Tacuayan.69PetitionersFlongAgustinM.Dabie,MarioL.Mangcal,AldenS.Tusan,Sr.
Susuan O. Bolanio, OND, Lolita G. Demonteverde, Benjie L. Nequinto,
RoseLilia S. Romano and Amparo S. Yap.70 Rollo, p. 6.71 Id., at p.
337, citing Malabanan v. Gaw Ching, 181 SCRA 84 (1990).72 246 SCRA
540 (1995).180180 SUPREME COURT REPORTS ANNOTATEDLa Bugal-BLaan
Tribal Association, Inc. vs.
Ramoscapacitytosue.Althoughallthreerequirementsaredirectedtowards
ensuring that only certain parties can maintain an
action,standingrestrictionsrequireapartialconsiderationofthemerits,as
well as broader policy concerns relating to the proper role of
thejudiciaryincertainareas.[](FRIEDENTHAL,KANEANDMILLER, CIVIL
PROCEDURE 328
[1985])Standingisaspecialconcerninconstitutionallawbecauseinsomecasessuitsarebroughtnotbypartieswhohavebeenpersonallyinjuredbytheoperationofalaworbyofficialactiontaken,butbyconcernedcitizens,taxpayersorvoterswhoactuallysueinthepublicinterest.Hence,thequestioninstandingiswhethersuchpartieshaveallegedsuchapersonalstakeintheoutcomeofthecontroversyastoassurethatconcreteadversenesswhichsharpensthepresentationofissuesuponwhichthecourtsolargelydependsforilluminationofdifficultconstitutionalquestions.
(Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)As earlier
stated, petitioners meet this
requirement.ThechallengeagainsttheconstitutionalityofR.A.No.7942andDAONo.96-40likewisefulfillstherequisitesofjusticiability.Althoughtheselawswerenotinforcewhenthe
subject FTAA was entered into, the question as to theirvalidity is
ripe for adjudication.The WMCP FTAA provides:14.3 Future
Legislation8/8/15, 6:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME
421Page 44 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=GuestAnytermandconditionmorefavourabletoFinancial&TechnicalAssistance
Agreement contractors resulting from repeal or amendment ofany
existing law or regulation or from the enactment of a law,
regulationor administrative order shall be considered a part of
this
Agreement.ItisundisputedthatR.A.No.7942andDAONo.96-40containprovisionsthataremorefavorabletoWMCP,hence,theselaws,totheextentthattheyarefavorabletoWMCP,
govern the
FTAA.Inaddition,R.A.No.7942explicitlymakescertainprovisions apply
to pre-existing agreements.SEC. 112. Non-impairment of Existing
Mining/Quarrying
Rights.xxxThattheprovisionsofChapterXIVongovernmentshareinmineralproduction-sharingagreementandofChapterXVIonincentivesofthisActshallimmediatelygovernandapplytoamininglesseeorcontractorunlessthemininglesseeorcontractorindicates
his intention to the secretary in writing not to avail of
saidprovisions x x x Provided, finally,181VOL. 421, JANUARY 27,
2004 181La Bugal-BLaan Tribal Association, Inc. vs.
RamosThatsuchleases,production-sharingagreements,financialortechnicalassistanceagreementsshallcomplywiththeapplicableprovisions
of this Act and its implementing rules and
regulations.AsthereisnosuggestionthatWMCPhasindicateditsintentionnottoavailoftheprovisionsofChapterXVIofR.A.
No. 7942, it can safely be presumed that they apply tothe WMCP
FTAA.MisconstruingtheapplicationofthethirdrequisiteforjudicialreviewthattheexerciseofthereviewispleadedattheearliestopportunityWMCPpointsoutthatthepetition
was filed only almost two years after the executionof the FTAA,
hence, not raised at the earliest opportunity.The third requisite
should not be taken to mean that
thequestionofconstitutionalitymustberaisedimmediatelyaftertheexecutionofthestateactioncomplainedof.Thatthe
question of constitutionality has not been raised
beforeisnotavalidreasonforrefusingtoallowittoberaised8/8/15, 6:13
AM SUPREME COURT REPORTS ANNOTATED VOLUME 421Page 45 of 124
http://www.central.com.ph/sfsreader/session/0000014f0a394f1da81fa4fa000a0094004f00ee/p/AKM417/?username=Guestlater.73Acontraryrulewouldmeanthatalaw,otherwiseunconstitutional,wouldlapseintoconstitutionalitybythemerefailureoftheproperpartytopromptlyfileacasetochallenge
the same.Propriety of Prohibition and
MandamusBeforetheeffectivityinJuly1997oftheRevisedRulesofCivil
Procedure, Section 2 of Rule 65
read:SEC.2.Petitionforprohibition.Whentheproceedingsofanytribunal,corporation,board,orperson,whetherexercisingfunctionsjudicialorm