la bugal blaan vs. ramos part 2

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8/7/15, 7:18 PM SUPREME COURT REPORTS ANNOTATED VOLUME 445 Page 1 of 515 http://www.central.com.ph/sfsreader/session/0000014f07e161e1b1bb8a6a000a0094004f00ee/p/AJR205/?username=Guest G.R. No. 127882. December 1, 2004. * LA BUGAL-BÊLAAN TRIBAL ASSOCIATION, INC., represented by its Chairman FÊLONG MIGUEL M. LUMAYONG; WIGBERTO E. TAÑADA; PONCIANO BENNAGEN; JAIME TADEO; RENATO R. CONSTANTINO, JR.; FÊLONG AGUSTIN M. DABIE; ROBERTO P. AMLOY; RAQIM L. DABIE; SIMEON H. DOLOJO; IMELDA M. GANDON; LENY B. GUSANAN; MARCELO L. GUSANAN; QUINTOL A. LABUAYAN; LOMINGGES D. LAWAY; BENITA P. _______________ * EN BANC. 2 SUPREME COURT REPORTS ANNOTATED La Bugal-BÊLaan Tribal Association, Inc. vs. Ramos TACUAYAN; Minors JOLY L. BUGOY, Represented by His Father UNDERO D. BUGOY and ROGER M. DADING; Represented by His Father ANTONIO L. DADING; ROMY M. LAGARO, Represented by His Father TOTING A. LAGARO; MIKENY JONG B. LUMAYONG, Represented by His Father MIGUEL M. LUMAYONG; RENE T. MIGUEL, Represented by His Mother EDITHA T. MIGUEL; ALDEMAR L. SAL, Represented by His Father DANNY M. SAL; DAISY RECARSE, Represented by Her Mother LYDIA S. SANTOS; EDWARD M. EMUY; ALAN P. MAMPARAIR; MARIO L. MANGCAL; ALDEN S. TUSAN;

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  • 8/7/15, 7:18 PMSUPREME COURT REPORTS ANNOTATED VOLUME 445

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    G.R. No. 127882. December 1, 2004.*

    LA BUGAL-BLAAN TRIBAL ASSOCIATION, INC.,represented by its Chairman FLONG MIGUEL M.LUMAYONG; WIGBERTO E. TAADA; PONCIANOBENNAGEN; JAIME TADEO; RENATO R.CONSTANTINO, JR.; FLONG AGUSTIN M. DABIE;ROBERTO P. AMLOY; RAQIM L. DABIE; SIMEON H.DOLOJO; IMELDA M. GANDON; LENY B. GUSANAN;MARCELO L. GUSANAN; QUINTOL A. LABUAYAN;LOMINGGES D. LAWAY; BENITA P.

    _______________

    * EN BANC.

    2

    2 SUPREME COURT REPORTS ANNOTATED

    La Bugal-BLaan Tribal Association, Inc. vs. Ramos

    TACUAYAN; Minors JOLY L. BUGOY, Represented by HisFather UNDERO D. BUGOY and ROGER M. DADING;Represented by His Father ANTONIO L. DADING; ROMYM. LAGARO, Represented by His Father TOTING A.LAGARO; MIKENY JONG B. LUMAYONG, Representedby His Father MIGUEL M. LUMAYONG; RENE T.MIGUEL, Represented by His Mother EDITHA T.MIGUEL; ALDEMAR L. SAL, Represented by His FatherDANNY M. SAL; DAISY RECARSE, Represented by HerMother LYDIA S. SANTOS; EDWARD M. EMUY; ALAN P.MAMPARAIR; MARIO L. MANGCAL; ALDEN S. TUSAN;

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    AMPARO S. YAP; VIRGILIO CULAR; MARVIC M.V.F.LEONEN; JULIA REGINA CULAR, GIAN CARLOCULAR, VIRGILIO CULAR, JR., Represented by TheirFather VIRGILIO CULAR; PAUL ANTONIO P.VILLAMOR, Represented by His Parents JOSEVILLAMOR and ELIZABETH PUA-VILLAMOR; ANAGININA R. TALJA, Represented by Her Father MARIOJOSE B. TALJA; SHARMAINE R. CUNANAN,Represented by Her Father ALFREDO M. CUNANAN;ANTONIO JOSE A. VITUG III, Represented by HisMother ANNALIZA A. VITUG, LEAN D. NARVADEZ,Represented by His Father MANUEL E. NARVADEZ, JR.;ROSERIO MARALAG LINGATING, Represented by HerFather RIO OLIMPIO A. LINGATING; MARIO JOSE B.TALJA; DAVID E. DE VERA; MARIA MILAGROS L. SANJOSE; Sr. SUSAN O. BOLANIO, OND; LOLITA G.DEMONTEVERDE; BENJIE L. NEQUINTO;

    1 ROSE

    LILIA S. ROMANO; ROBERTO S. VERZOLA; EDUARDOAURELIO C. REYES; LEAN LOUEL A. PERIA,Represented by His Father ELPIDIO V. PERIA;

    2 GREEN

    FORUM PHILIPPINES; GREEN FORUM WESTERNVISAYAS (GF-WV); ENVIRONMENTAL LEGALASSISTANCE CEN

    _______________

    1 Spelled as Nequito in the caption of the Petition, but Nequinto in

    the body. Rollo, p. 12.2 As spelled in the body of the Petition. Id., p. 13. The caption of the

    Petition does not include Louel A. Peria as one of the petitioners; only the

    name of his father, Elpidio V. Peria, appears therein.

    3

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    La Bugal-BLaan Tribal Association, Inc. vs. Ramos

    TER (ELAC); KAISAHAN TUNGO SA KAUNLARAN NGKANAYUNAN AT REPORMANG PANSAKAHAN(KAISAHAN);

    3 PARTNERSHIP FOR AGRARIAN

    REFORM and RURAL DEVELOPMENT SERVICES, INC.

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    (PARRDS); PHILIPPINE PARTNERSHIP FOR THEDEVELOPMENT OF HUMAN RESOURCES IN THERURAL AREAS, INC. (PHILDHRRA); WOMENS LEGALBUREAU (WLB); CENTER FOR ALTERNATIVEDEVELOPMENT INITIATIVES, INC. (CADI); UPLANDDEVELOPMENT INSTITUTE (UDI); KINAIYAHANFOUNDATION, INC.; SENTRO NG ALTERNATIBONGLINGAP PANLIGAL (SALIGAN); and LEGAL RIGHTSAND NATURAL RESOURCES CENTER, INC. (LRC),petitioners, vs. VICTOR O. RAMOS, Secretary, Departmentof Environment and Natural Resources (DENR);HORACIO RAMOS, Director, Mines and GeosciencesBureau (MGB-DENR); RUBEN TORRES, ExecutiveSecretary; and WMC (PHILIPPINES), INC.,

    4 respondents.

    National Economy and Patrimony; Natural Resources;Philippine Mining Act of 1995 (R.A. No. 7942); Financial andTechnical Assistance Agreements (FTAA); FTAAs not limited toforeign-owned corporations only.On the first ground, petitionersassert that paragraph 4 of Section 2 of Article XII permits thegovernment to enter into FTAAs only with foreign-ownedcorporations. Petitioners insist that the first paragraph of thisconstitutional provision limits the participation of Filipinocorporations in the exploration, development and utilization ofnatural resources to only three species of contractsproductionsharing, co-production and joint ventureto the exclusion of allother arrangements or variations thereof, and the WMCP FTAAmay therefore not be validly assumed and implemented bySagittarius. In short, petitioners claim that a Filipino corporation isnot allowed by the Constitution to enter into an FTAA

    _______________

    3 Stated as Kaisahan Tungo sa Kaunlaran at Repormang Pansakahan

    (KAISAHAN) in the caption of the Petition, but Philippine Kaisahan Tungo

    sa Kaunlaran at Repormang Pansakahan (KAISAHAN) in the body. Id., p. 14.

    4 Erroneously designated in the Petition as Western Mining Philippines

    Corporation. Id., p. 212.

    4

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    with the government. However, a textual analysis of the firstparagraph of Section 2 of Article XII does not support petitionersargument. The pertinent part of the said provision states: Sec. 2. xx x The exploration, development and utilization of naturalresources shall be under the full control and supervision of theState. The State may directly undertake such activities, or it mayenter into coproduction, joint venture, or production-sharingagreements with Filipino citizens, or corporations or associations atleast sixty per centum of whose capital is owned by such citizens. x xx. Nowhere in the provision is there any express limitation orrestriction insofar as arrangements other than the threeaforementioned contractual schemes are concerned.

    Same; Same; Same; Same; Section 40 of R.A. No. 7942 expresslyapplies to the assignment of the FTAA, not to the sale and transfer ofshares of stock in a foreign corporation to a Filipino corporation;When the transferee of the FTAA happens to be a Filipinocorporation, the need for the safeguard of securing the priorapproval of the President and notification to Congress is not critical,and the lack of the same may not be deemed fatal as to render thetransfer invalid.Section 40 expressly applies to the assignment ortransfer of the FTAA, not to the sale and transfer of shares of stockin WMCP. When the transferee of an FTAA is another foreigncorporation, there is a logical application of the requirement of priorapproval by the President of the Republic and notification toCongress in the event of assignment or transfer of an FTAA. In thissituation, such approval and notification are appropriatesafeguards, considering that the new contractor is the subject of aforeign government. On the other hand, when the transferee of theFTAA happens to be a Filipino corporation, the need for suchsafeguard is not critical; hence, the lack of prior approval andnotification may not be deemed fatal as to render the transferinvalid. Besides, it is not as if approval by the President is entirelyabsent in this instance. As pointed out by private respondent in itsMemorandum, the issue of approval is the subject of one of thecases brought by Lepanto against Sagittarius in G.R. No. 162331.That case involved the review of the Decision of the Court ofAppeals dated November 21, 2003 in CA-G.R. SP No. 74161, which

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    affirmed the DENR Order dated December 31, 2001 and theDecision of the Office of the President dated July 23, 2002, bothapproving the assignment of the WMCP FTAA to Sagittarius.

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    Same; Same; Same; Same; Assuming arguendo the invalidity ofa FTAAs prior grant to a foreign-corporation, where said Agreementhas been transferred to, and is now held by, a Filipino corporation,the FTAA can no longer be assailedthe objective of theconstitutional provision to keep the exploration, development andutilization of our natural resources in Filipino hands would havebeen served.We believe that this case is clearly analogous toHalili, in which the land acquired by a non-Filipino was re-conveyed to a qualified vendee and the original transaction wasthereby cured. Paraphrasing Halili, the same rationale applies tothe instant case: assuming arguendo the invalidity of its prior grantto a foreign corporation, the disputed FTAAbeing now held by aFilipino corporationcan no longer be assailed; the objective of theconstitutional provisionto keep the exploration, development andutilization of our natural resources in Filipino handshas beenserved. More accurately speaking, the present situation is onedegree better than that obtaining in Halili, in which the originalsale to a non-Filipino was clearly and indisputably violative of theconstitutional prohibition and thus void ab initio. In the presentcase, the issuance/grant of the subject FTAA to the then foreign-owned WMCP was not illegal, void or unconstitutional at the time.The matter had to be brought to court, precisely for adjudication asto whether the FTAA and the Mining Law had indeed violated theConstitution. Since, up to this point, the decision of this Courtdeclaring the FTAA void has yet to become final, for all intents andpurposes, the FTAA must be deemed valid and constitutional.

    Same; Same; Same; Same; The Court finds outlandishpetitioners contention that an FTAA could be entered into by thegovernment only with a foreign corporation, never with a Filipinoenterprise; It does not take deep knowledge of law and logic tounderstand that what the Constitution grants to foreigners should

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    be equally available to Filipinos.At bottom, we find completelyoutlandish petitioners contention that an FTAA could be enteredinto by the government only with a foreign corporation, never with aFilipino enterprise. Indeed, the nationalistic provisions of theConstitution are all anchored on the protection of Filipino interests.How petitioners can now argue that foreigners have the exclusiveright to FTAAs totally overturns the entire basis of the Petitionpreference for the Filipino in the exploration, development andutilization of our natural resources. It does not take deep knowledgeof law and logic to under-

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    stand that what the Constitution grants to foreigners should beequally available to Filipinos.

    Same; Same; Same; Same; Moot Questions; The Court,recognizing the exceptional character of the situation and theparamount public interest involved, as well as the necessity for aruling to put an end to the uncertainties plaguing the miningindustry and the affected communities as a result of doubts castupon the constitutionality and validity of the Mining Act, the subjectFTAA and future FTAAs, and the need to avert a multiplicity ofsuits, must now resolve the constitutionality issue raised.TheCourt must recognize the exceptional character of the situation andthe paramount public interest involved, as well as the necessity fora ruling to put an end to the uncertainties plaguing the miningindustry and the affected communities as a result of doubts castupon the constitutionality and validity of the Mining Act, thesubject FTAA and future FTAAs, and the need to avert amultiplicity of suits. Paraphrasing Gonzales v. Commission onElections, it is evident that strong reasons of public policy demandthat the constitutionality issue be resolved now. In further supportof the immediate resolution of the constitutionality issue, publicrespondents cite Acop v. Guingona, to the effect that the courts willdecide a questionotherwise moot and academicif it is capable ofrepetition, yet evading review. Public respondents ask the Court to

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    avoid a situation in which the constitutionality issue may againarise with respect to another FTAA, the resolution of which may notbe achieved until after it has become too late for our miningindustry to grow out of its infancy. They also recall Salonga v. CruzPao, in which this Court declared that (t)he Court also has theduty to formulate guiding and controlling constitutional principles,precepts, doctrines or rules. It has the symbolic function of educatingthe bench and bar on the extent of protection given by constitutionalguarantees. x x x.

    Same; Same; Same; Same; Same; Judicial Review; When an actof the legislative department is seriously alleged to have infringedthe Constitution, settling the controversy becomes the duty of thisCourtby the mere enactment of the questioned law or the approvalof the challenged action, the dispute is said to have ripened into ajudicial controversy even without any other overt act.The mootnessof the case in relation to the WMCP FTAA led the undersignedponente to state in his dissent to the Decision that there was nomore justiciable

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    controversy and the plea to nullify the Mining Law has become avirtual petition for declaratory relief. The entry of the Chamber ofMines of the Philippines, Inc., however, has put into focus theseriousness of the allegations of unconstitutionality of RA 7942 andDAO 96-40 which converts the case to one for prohibition in theenforcement of the said law and regulations. Indeed, this CMPentry brings to fore that the real issue in this case is whetherparagraph 4 of Section 2 of Article XII of the Constitution iscontravened by RA 7942 and DAO 96-40, not whether it wasviolated by specific acts implementing RA 7942 and DAO 96-40.[W]hen an act of the legislative department is seriously alleged tohave infringed the Constitution, settling the controversy becomesthe duty of this Court. By the mere enactment of the questioned lawor the approval of the challenged action, the dispute is said to haveripened into a judicial controversy even without any other overt

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    act.

    Same; Same; Same; Same; Statutory Construction; Words andPhrases; The drafters choice of wordstheir use of the phraseagreements *** involving either technical or financial assistancedoes not indicate the intent to exclude other modes of assistance; Theuse of the word involving signifies the possibility of the inclusion ofother forms of assistance or activities having to do with, otherwiserelated to or compatible with financial or technical assistance.Wedo not see how applying a strictly literal or verba legisinterpretation of paragraph 4 could inexorably lead to theconclusions arrived at in the ponencia. First, the drafters choice ofwordstheir use of the phrase agreements x x x involving eithertechnical or financial assistancedoes not indicate the intent toexclude other modes of assistance. The drafters opted to useinvolving when they could have simply said agreements forfinancial or technical assistance, if that was their intention to beginwith. In this case, the limitation would be very clear and no furtherdebate would ensue. In contrast, the use of the word involvingsignifies the possibility of the inclusion of other forms of assistanceor activities having to do with, otherwise related to or compatiblewith financial or technical assistance. The word involving as usedin this context has three connotations that can be differentiatedthus: one, the sense of concerning, having to do with, oraffecting; two, entailing, requiring, implying ornecessitating; and three, including, containing or comprising.

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    Same; Same; Same; Same; Same; Same; The word involving,when understood in the sense of including, as in includingtechnical or financial assistance, necessarily implies that there areactivities other than those that are being includedthe use of theword involving implies that these agreements with foreigncorporations are not limited to mere financial or technicalassistance.The word involving, when understood in the sense ofincluding, as in including technical or financial assistance,necessarily implies that there are activities other than those that

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    are being included. In other words, if an agreement includestechnical or financial assistance, there isapart from suchassistancesomething else already in, and covered or may becovered by, the said agreement. In short, it allows for the possibilitythat matters, other than those explicitly mentioned, could be madepart of the agreement. Thus, we are now led to the conclusion thatthe use of the word involving implies that these agreements withforeign corporations are not limited to mere financial or technicalassistance. The difference in sense becomes very apparent when wejuxtapose agreements for technical or financial assistance againstagreements including technical or financial assistance. This muchis unalterably clear in a verba legis approach.

    Same; Same; Same; Same; Same; Same; If the real intention ofthe drafters was to confine foreign corporations to financial ortechnical assistance and nothing more, their language would havecertainly been so unmistakably restrictive and stringent as to leaveno doubt in anyones mind about their true intent.If the realintention of the drafters was to confine foreign corporations tofinancial or technical assistance and nothing more, their languagewould have certainly been so unmistakably restrictive and stringentas to leave no doubt in anyones mind about their true intent. Forexample, they would have used the sentence foreign corporationsare absolutely prohibited from involvement in the management oroperation of mining or similar ventures or words of similar import.A search for such stringent wording yields negative results. Thus,we come to the inevitable conclusion that there was a conscious anddeliberate decision to avoid the use of restrictive wording thatbespeaks an intent not to use the expression agreements x x xinvolving either technical or financial assistance in an exclusionaryand limiting manner.

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    Same; Same; Same; Same; Same; Same; Service Contracts; Anintent to eradicate service contracts cannot be definitively andconclusively established from the mere failure to carry the sameexpression or term over to the new Constitution, absent a more

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    specific, explicit and unequivocal statement to that effect.We donot see how a verba legis approach leads to the conclusion that themanagement or operation of mining activities by foreign contractors,which is the primary feature of service contracts, was precisely theevil that the drafters of the 1987 Constitution sought to eradicate.Nowhere in the above-quoted Section can be discerned the objectiveto keep out of foreign hands the management or operation of miningactivities or the plan to eradicate service contracts as these wereunderstood in the 1973 Constitution. Still, petitioners maintain thatthe deletion or omission from the 1987 Constitution of the termservice contracts found in the 1973 Constitution sufficientlyproves the drafters intent to exclude foreigners from themanagement of the affected enterprises. To our mind, however, suchintent cannot be definitively and conclusively established from themere failure to carry the same expression or term over to the newConstitution, absent a more specific, explicit and unequivocalstatement to that effect. What petitioners seek (a complete ban onforeign participation in the management of mining operations, aspreviously allowed by the earlier Constitutions) is nothing short ofbringing about a momentous sea change in the economic anddevelopmental policies; and the fundamentally capitalist, free-enterprise philosophy of our government. We cannot imagine such aradical shift being undertaken by our government, to the greatprejudice of the mining sector in particular and our economy ingeneral, merely on the basis of the omission of the terms servicecontract from or the failure to carry them over to the newConstitution. There has to be a much more definite and evenunarguable basis for such a drastic reversal of policies.

    Same; Same; Same; Same; Same; Same; Same; If merelyfinancial or technical assistance agreements are allowed, therewould be no need to limit them to large-scale mining operations, asthere would be far greater need for them in the smaller-scale miningactivities (and even in non-mining areas).There was therefore noneed 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 orcommercial activity in the Philippines. The last point needs to beemphasized: if merely

    10

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    financial or technical assistance agreements are allowed, therewould be no need to limit them to large-scale mining operations, asthere would be far greater need for them in the smaller-scale miningactivities (and even in non-mining areas). Obviously, the provisionin question was intended to refer to agreements other than those formere financial or technical assistance.

    Same; Same; Same; Same; Same; Same; Same; Judicial Notice;It is of common knowledge, and of judicial notice as well, that thegovernment is and has for many many years been financiallystrapped, to the point that even the most essential services havesuffered serious curtailmentseducation and health care, forinstance, not to mention judicial serviceshave had to make do withinadequate budgetary allocations.It is argued that Section 2 ofArticle XII authorizes nothing more than a rendition of specific andlimited financial service or technical assistance by a foreigncompany. This argument begs the question To whom or for whomwould it be rendered? or Who is being assisted? If the answer isThe State, then it necessarily implies that the State itself is theone directly and solely undertaking the large-scale exploration,development and utilization of a mineral resource, so it follows thatthe State must itself bear the liability and cost of repaying thefinancing sourced from the foreign lender and/or of payingcompensation to the foreign entity rendering technical assistance.However, it is of common knowledge, and of judicial notice as well,that the government is and has for many many years beenfinancially strapped, to the point that even the most essentialservices have suffered serious curtailmentseducation and healthcare, for instance, not to mention judicial serviceshave had tomake do with inadequate budgetary allocations. Thus, governmenthas had to resort to build-operate-transfer and similararrangements with the private sector, in order to get vitalinfrastructure projects built without any governmental outlay.

    Same; Same; Same; Same; Same; Same; Same; After the realitycheck, one will have to admit the implausibility of a directundertakingby the State itselfof large-scale exploration,development and utilization of minerals, petroleum and othermineral oils.The very recent brouhaha over the gargantuan

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    fiscal crisis or budget deficit merely confirms what the ordinarycitizen has suspected all along. After the reality check, one willhave to admit the implausibil-

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    ity of a direct undertakingby the State itselfof large-scaleexploration, development and utilization of minerals, petroleum andother mineral oils. Such an undertaking entails not onlyhumongous capital requirements, but also the attendant risk ofnever finding and developing economically viable quantities ofminerals, petroleum and other mineral oils.

    Same; Same; Same; Same; Same; Same; Same; By specifyingsuch agreements involving assistance, the drafters necessarily gaveimplied assent to everything that these agreements necessarilyentailed.By specifying such agreements involving assistance,the drafters necessarily gave implied assent to everything thatthese agreements necessarily entailed; or that could reasonably bedeemed necessary to make them tenable and effective, includingmanagement authority with respect to the day-to-day operations ofthe enterprise and measures for the protection of the interests ofthe foreign corporation, PROVIDED THAT Philippine sovereigntyover natural resources and full control over the enterpriseundertaking the EDU activities remain firmly in the State.

    Same; Same; Same; Same; Same; Same; Same; In regard to theplain-language approach, one of the practical difficulties that resultsfrom it is the fact that there is nothing by way of transitoryprovisions that would serve to confirm the theory that the omissionof the term service contract from the 1987 Constitution signaled thedemise of service contractsif the framers had intended to put anend to service contracts, they would have at least left specificinstructions to Congress to deal with these closing-out issues,perhaps by way of general guidelines and a timeline within which tocarry them out.Regarding the plain-language approach, one of thepractical difficulties that results from it is the fact that there isnothing by way of transitory provisions that would serve to confirm

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    the theory that the omission of the term service contract from the1987 Constitution signaled the demise of service contracts. Theframers knew at the time they were deliberating that there werevarious service contracts extant and in force and effect, includingthose in the petroleum industry. Many of these service contractswere long-term (25 years) and had several more years to run. If theyhad meant to ban service contracts altogether, they would have hadto provide for the termination or pretermination of the existingcontracts. Accordingly, they would have supplied the specifics andthe when and how of effecting

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    the extinguishment of these existing contracts (or at least themechanics for determining them); and of putting in place the meansto address the just claims of the contractors for compensation fortheir investments, lost opportunities, and so on, if not for therecovery thereof. If the framers had intended to put an end toservice contracts, they would have at least left specific instructionsto Congress to deal with these closing-out issues, perhaps by way ofgeneral guidelines and a timeline within which to carry them out.

    Same; Same; Same; Same; Same; Same; Same; Pertinentportions of the deliberations of the members of the ConstitutionalCommission (ConCom) conclusively show that they discussedagreements involving either technical or financial assistance in thesame breadth as service contracts and used the termsinterchangeably.Pertinent portions of the deliberations of themembers of the Constitutional Commission (ConCom) conclusivelyshow that they discussed agreements involving either technical orfinancial assistance in the same breadth as service contracts andused the terms interchangeably. The following exchange betweenCommissioner Jamir (sponsor of the provision) and CommissionerSuarez irrefutably proves that the agreements involving technicalor financial assistance were none other than service contracts.

    Same; Same; Same; Same; Same; Same; Same; The phraseagreements involving either technical or financial assistance,

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    referred to in paragraph 4, are in fact service contracts.We areimpelled to conclude that the phrase agreements involving eithertechnical or financial assistance, referred to in paragraph 4, are infact service contracts. But unlike those of the 1973 variety, the newones are between foreign corporations acting as contractors on theone hand; and on the other, the government as principal or ownerof the works. In the new service contracts, the foreign contractorsprovide capital, technology and technical know-how, andmanagerial expertise in the creation and operation of large-scalemining/extractive enterprises; and the government, through itsagencies (DENR, MGB), actively exercises control and supervisionover the entire operation.

    Same; Same; Same; Same; Same; Same; Same; ConstitutionalCommission; We cannot completely denigrate the value or usefulnessof the record of the Constitutional Commission simply becausecertain members chose not to speak out.The notion that thedeliberations

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    reflect only the views of those members who spoke out and not theviews of the majority who remained silent should be clarified. Wemust never forget that those who spoke out were heard by those whoremained silent and did not react. If the latter were silent becausethey happened not to be present at the time, they are presumed tohave read the minutes and kept abreast of the deliberations. Byremaining silent, they are deemed to have signified their assent toand/or conformity with at least some of the views propounded ortheir lack of objections thereto. It was incumbent upon them, asrepresentatives of the entire Filipino people, to follow thedeliberations closely and to speak their minds on the matter if theydid not see eye to eye with the proponents of the draft provisions. Inany event, each and every one of the commissioners had theopportunity to speak out and to vote on the matter. Moreover, theindividual explanations of votes are on record, and they show whereeach delegate stood on the issues. In sum, we cannot completely

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    denigrate the value or usefulness of the record of the ConCom,simply because certain members chose not to speak out.

    Same; Same; Same; Same; Same; Same; Same; Same; Verily,whether we like it or not, it is a bit too much to assume that everyone of those who voted to ratify the proposed Charter did so onlyafter carefully reading and mulling over it, provision by provisionwe believe that in reality, a good percentage of those who voted infavor of it did so more out of faith and trust.It is contended thatthe deliberations therein did not necessarily reflect the thinking ofthe voting population that participated in the referendum andratified the Constitution. Verily, whether we like it or not, it is a bittoo much to assume that every one of those who voted to ratify theproposed Charter did so only after carefully reading and mullingover it, provision by provision. Likewise, it appears ratherextravagant to assume that every one of those who did in factbother to read the draft Charter actually understood the import ofits provisions, much less analyzed it vis--vis the previousConstitutions. We believe that in reality, a good percentage of thosewho voted in favor of it did so more out of faith and trust. For them,it was the product of the hard work and careful deliberation of agroup of intelligent, dedicated and trustworthy men and women ofintegrity and conviction, whose love of country and fidelity to dutycould not be questioned.

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    Same; Same; Same; Same; Same; Same; Same; Same; By votingyes, many of the voters may be deemed to have signified theirvoluntary adoption of the understanding and interpretation of thedelegates with respect to the proposed Charter and its particularprovisions; Fundamentally speaking, in the process of rewriting theCharter, the members of the ConCom as a group were supposed torepresent the entire Filipino people.A large proportion of thevoters voted yes because the drafters, or a majority of them,endorsed the proposed Constitution. What this fact translates to isthe inescapable conclusion that many of the voters in thereferendum did not form their own isolated judgment about the

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    draft Charter, much less about particular provisions therein. Theyonly relied or fell back and acted upon the favorable endorsement orrecommendation of the framers as a group. In other words, byvoting yes, they may be deemed to have signified their voluntaryadoption of the understanding and interpretation of the delegateswith respect to the proposed Charter and its particular provisions.If its good enough for them, its good enough for me; or, in manyinstances, If its good enough for President Cory Aquino, its goodenough for me. And even for those who voted based on their ownindividual assessment of the proposed Charter, there is no evidenceavailable to indicate that their assessment or understanding of itsprovisions was in fact different from that of the drafters. Thisunwritten assumption seems to be petitioners as well. For all weknow, this segment of voters must have read and understood theprovisions of the Constitution in the same way the framers had, anassumption that would account for the favorable votes.Fundamentally speaking, in the process of rewriting the Charter,the members of the ConCom as a group were supposed to representthe entire Filipino people. Thus, we cannot but regard their viewsas being very much indicative of the thinking of the people withrespect to the matters deliberated upon and to the Charter as awhole.

    Same; Same; Same; Same; Same; Same; Same; Same; Aswritten by the framers and ratified and adopted by the people, theConstitution allows the continued use of service contracts withforeign corporationsas contractors who would invest in andoperate and manage extractive enterprises, subject to the full controland supervision of the Statesans the abuses of the past regime.Itis therefore reasonable and unavoidable to make the followingconclusion, based on the above arguments. As written by theframers and ratified and

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    adopted by the people, the Constitution allows the continued use ofservice contracts with foreign corporationsas contractors who

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    would invest in and operate and manage extractive enterprises,subject to the full control and supervision of the Statesans theabuses of the past regime. The purpose is clear: to develop andutilize our mineral, petroleum and other resources on a large scalefor the immediate and tangible benefit of the Filipino people.

    Same; Same; Same; Same; Same; Same; Same; Every part ofthe Constitution is to be given effect, and the Constitution is to beread and understood as a harmonious wholefull control andsupervision by the State must be understood as one that does notpreclude the legitimate exercise of management prerogatives by theforeign contractor; Full control and supervision cannot be takenliterally to mean that the State controls and supervises everythinginvolved, down to the minutest details, and makes all decisionsrequired in the mining operations.Under the third principle ofconstitutional construction laid down in Franciscout magis valeatquam pereatevery part of the Constitution is to be given effect,and the Constitution is to be read and understood as a harmoniouswhole. Thus, full control and supervision by the State must beunderstood as one that does not preclude the legitimate exercise ofmanagement prerogatives by the foreign contractor. Before anyfurther discussion, we must stress the primacy and supremacy ofthe principle of sovereignty and State control and supervision overall aspects of exploration, development and utilization of thecountrys natural resources, as mandated in the first paragraph ofSection 2 of Article XII. But in the next breadth we have to pointout that full control and supervision cannot be taken literally tomean that the State controls and supervises everything involved,down to the minutest details, and makes all decisions required inthe mining operations. This strained concept of control andsupervision over the mining enterprise would render impossible thelegitimate exercise by the contractors of a reasonable degree ofmanagement prerogative and authority necessary andindispensable to their proper functioning.

    Same; Same; Same; Same; Same; Same; The concept of controladopted in Section 2 of Article XII must be taken to mean less thandictatorial, all-encompassing control, but nevertheless sufficient togive the State the power to direct, restrain, regulate and govern theaffairs of the extractive enterprises.The concept of control adopted

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    in Section 2 of Article XII must be taken to mean less thandictatorial, all-encompassing control; but nevertheless sufficient togive the State the power to direct, restrain, regulate and govern theaffairs of the extractive enterprises. Control by the State may be ona macro level, through the establishment of policies, guidelines,regulations, industry standards and similar measures that wouldenable the government to control the conduct of affairs in variousenterprises and restrain activities deemed not desirable orbeneficial. The end in view is ensuring that these enterprisescontribute to the economic development and general welfare of thecountry, conserve the environment, and uplift the well-being of theaffected local communities. Such a concept of control would becompatible with permitting the foreign contractor sufficient andreasonable management authority over the enterprise it investedin, in order to ensure that it is operating efficiently and profitably,to protect its investments and to enable it to succeed.

    Same; Same; Same; Same; RA 7942 and DAO 96-40 vest in thegovernment more than a sufficient degree of control and supervisionover the conduct of mining operations.Considering the provisionsof the statute and the regulations just discussed, we believe that theState definitely possesses the means by which it can have theultimate word in the operation of the enterprise, set directions andobjectives, and detect deviations and noncompliance by thecontractor; likewise, it has the capability to enforce compliance andto impose sanctions, should the occasion therefor arise. In otherwords, the FTAA contractor is not free to do whatever it pleases andget away with it; on the contrary, it will have to follow thegovernment line if it wants to stay in the enterprise. Ineluctablythen, RA 7942 and DAO 96-40 vest in the government more than asufficient degree of control and supervision over the conduct ofmining operations.

    Same; Same; Same; Same; Exploration Permits; While theConstitution mandates the State to exercise full control andsupervision over the exploitation of mineral resources, nowhere doesit require the government to hold all exploration permits and similarauthorizations.An objection has been expressed that Section 3(aq)of RA 7942which allows a foreign contractor to apply for and hold

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    an exploration permitis unconstitutional. The reasoning is thatSection 2 of Article XII of the Constitution does not allow foreign-owned

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    corporations to undertake mining operations directly. They may actonly as contractors of the State under an FTAA; and the State, asthe party directly undertaking exploitation of its natural resources,must hold through the government all exploration permits andsimilar authorizations. Hence, Section 3(aq), in permitting foreign-owned corporations to hold exploration permits, is unconstitutional.The objection, however, is not well-founded. While the Constitutionmandates the State to exercise full control and supervision over theexploitation of mineral resources, nowhere does it require thegovernment to hold all exploration permits and similarauthorizations. In fact, there is no prohibition at all against foreignor local corporations or contractors holding exploration permits. Thereason is not hard to see.

    Same; Same; Same; Same; Same; An exploration permit merelygrants to a qualified person the right to conduct exploration for allminerals in specified areasit does not amount to an authorizationto extract and carry off the mineral resources that may be discovered.Pursuant to Section 20 of RA 7942, an exploration permit merelygrants to a qualified person the right to conduct exploration for allminerals in specified areas. Such a permit does not amount to anauthorization to extract and carry off the mineral resources that maybe discovered. This phase involves nothing but expenditures forexploring the contract area and locating the mineral bodies. As noextraction is involved, there are no revenues or incomes to speak of.In short, the exploration permit is an authorization for the granteeto spend its own funds on exploration programs that arepreapproved by the government, without any right to recoveranything should no minerals in commercial quantities bediscovered. The State risks nothing and loses nothing by grantingthese permits to local or foreign firms; in fact, it stands to gain in

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    the form of data generated by the exploration activities.

    Same; Same; Same; Same; Same; The exploration permit servesa practical and legitimate purpose in that it protects the interestsand preserves the rights of the exploration permit grantee (thewould-be contractor)foreign or localduring the period of timethat it is spending heavily on exploration works, without yet beingable to earn revenues to recoup any of its investments andexpenditures.In brief, the exploration permit serves a practical andlegitimate purpose in that it protects the interests and preserves therights of the exploration

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    permit grantee (the would-be contractor)foreign or localduringthe period of time that it is spending heavily on exploration works,without yet being able to earn revenues to recoup any of itsinvestments and expenditures. Minus this permit and the protectionit affords, the exploration works and expenditures may end upbenefiting only claim-jumpers. Such a possibility tends todiscourage investors and contractors. Thus, Section 3(aq) of RA7942 may not be deemed unconstitutional.

    Same; Same; Same; Same; The discretion given to thecontractor to select the contract area does not constitute abdication ofcontrolit is a mere acknowledgment of the fact that the contractorwill have determined, after appropriate exploration works, whichportions of the contract area do not contain minerals in commercialquantities sufficient to justify developing the same and oughttherefore to be relinquished.Petitioners complain that thecontractor has full discretion to selectand the government has nosay whatsoever as tothe parts of the contract area to berelinquished pursuant to Clause 4.6 of the WMCP FTAA. Thisclause, however, does not constitute abdication of control. Rather, itis a mere acknowledgment of the fact that the contractor will havedetermined, after appropriate exploration works, which portions ofthe contract area do not contain minerals in commercial quantitiessufficient to justify developing the same and ought therefore to be

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    relinquished. The State cannot just substitute its judgment for thatof the contractor and dictate upon the latter which areas to give up.Moreover, we can be certain that the contractors self-interest willpropel proper and efficient relinquishment. According to privaterespondent, a mining company tries to relinquish as much non-mineral areas as soon as possible, because the annual occupationfees paid to the government are based on the total hectarage of thecontract area, net of the areas relinquished. Thus, the larger theremaining area, the heftier the amount of occupation fees to be paidby the contractor. Accordingly, relinquishment is not an issue, giventhat the contractor will not want to pay the annual occupation feeson the non-mineral parts of its contract area. Neither will it want torelinquish promising sites, which other contractors maysubsequently pick up.

    Same; Same; Same; Same; Eminent Domain; A mechanismwhereby the foreign-owned contractor, disqualified to own land,identifies to the government the specific surface areas within the

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    FTAA contract area to be acquired for the mine infrastructure doesnot call for the exercise of the power of eminent domainanddetermination of just compensation is not an issueas much as itcalls for a qualified party to acquire the surface rights on behalf of aforeign-owned contractor.Section 10.2(e) sets forth the mechanismwhereby the foreign-owned contractor, disqualified to own land,identifies to the government the specific surface areas within theFTAA contract area to be acquired for the mine infrastructure. Thegovernment then acquires ownership of the surface land areas onbehalf of the contractor, in order to enable the latter to proceed tofully implement the FTAA. The contractor, of course, shoulders thepurchase price of the land. Hence, the provision allows it, aftertermination of the FTAA, to be reimbursed from proceeds of the saleof the surface areas, which the government will dispose of throughpublic bidding. It should be noted that this provision will not beapplicable to Sagittarius as the present FTAA contractor, since it is

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    a Filipino corporation qualified to own and hold land. As such, itmay therefore freely negotiate with the surface rights owners andacquire the surface property in its own right. Clearly, petitionershave needlessly jumped to unwarranted conclusions, without beingaware of the rationale for the said provision. That provision doesnot call for the exercise of the power of eminent domainanddetermination of just compensation is not an issueas much as itcalls for a qualified party to acquire the surface rights on behalf of aforeign-owned contractor.

    Same; Same; Same; Same; Mortgages; Contractors right tomortgage and encumber its rights and interests in the FTAA and theinfrastructure and improvements introduced, as well as the mineralproducts extracted, is not objectionable per seordinarily, bankslend not only on the security of mortgages on fixed assets but also onencumbrances of goods produced that can easily be sold andconverted into cash that can be applied to the repayment of loan;Banks even lend on the security of accounts receivable that arecollectible within 90 days.Petitioners also question the absoluteright of the contractor under Clause 10.2 (1) to mortgage andencumber not only its rights and interests in the FTAA and theinfrastructure and improvements introduced, but also the mineralproducts extracted. Private respondents do not touch on this matter,but we believe that this provision may have to do with theconditions imposed by the creditor-banks of the then foreigncontractor WMCP to secure the

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    lendings made or to be made to the latter. Ordinarily, banks lendnot only on the security of mortgages on fixed assets, but also onencumbrances of goods produced that can easily be sold andconverted into cash that can be applied to the repayment of loans.Banks even lend on the security of accounts receivable that arecollectible within 90 days. It is not uncommon to find that a debtorcorporation has executed deeds of assignment by way of securityover the production for the next twelve months and/or the proceeds

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    of the sale thereofor the corresponding accounts receivable, if soldon termsin favor of its creditor-banks. Such deeds may includeauthorizing the creditors to sell the products themselves and tocollect the sales proceeds and/or the accounts receivable.

    Same; Same; Same; Same; Corporation Law; It is not necessaryfor government to attempt to limit or restrict the freedom of theshareholders in the contractor to freely transfer, dispose of orencumber their shareholdings, consonant with the unfetteredexercise of their business judgment and discretion.It is notnecessary for government to attempt to limit or restrict the freedomof the shareholders in the contractor to freely transfer, dispose of orencumber their shareholdings, consonant with the unfetteredexercise of their business judgment and discretion. Rather, what iscritical is that, regardless of the identity, nationality and percentageownership of the various shareholders of the contractorandregardless of whether these shareholders decide to take the companypublic, float bonds and other fixed-income instruments, or allow thecreditor-banks to take an equity position in the companytheforeign-owned contractor is always in a position to render theservices required under the FTAA, under the direction and control ofthe government.

    Same; Same; Same; Same; Ownership; Words and Phrases;Beneficial ownership has been defined as ownership recognized bylaw and capable of being enforced in the courts at the suit of thebeneficial owner; Usually, beneficial ownership is distinguishedfrom naked ownership, which is the enjoyment of all the benefits andprivileges of ownership, as against possession of the bare title toproperty.Beneficial ownership has been defined as ownershiprecognized by law and capable of being enforced in the courts at thesuit of the beneficial owner. Blacks Law Dictionary indicates thatthe term is used in two senses: first, to indicate the interest of abeneficiary in trust property (also called equitable ownership);and second, to

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    refer to the power of a corporate shareholder to buy or sell theshares, though the shareholder is not registered in the corporationsbooks as the owner. Usually, beneficial ownership is distinguishedfrom naked ownership, which is the enjoyment of all the benefitsand privileges of ownership, as against possession of the bare titleto property.

    Same; Same; Same; Same; Same; A careful perusal of thestatute itself and its implementing rules reveals that neither RA7942 nor DAO 99-56 can be said to convey beneficial ownership ofany mineral resource or product to any foreign FTAA contractor.Aspublic respondents correctly point out, any interest the contractormay have in the proceeds of the mining operation is merely theequivalent of the consideration the government has undertaken topay for its services. All lawful contracts require such mutualprestations, and the WMCP FTAA is no different. The contractorcommits to perform certain services for the government in respect ofthe mining operation, and in turn it is to be compensated out of thenet mining revenues generated from the sale of mineral products.What would be objectionable is a contractual provision that undulybenefits the contractor far in excess of the service rendered or valuedelivered, if any, in exchange therefor. A careful perusal of thestatute itself and its implementing rules reveals that neither RA7942 nor DAO 99-56 can be said to convey beneficial ownership ofany mineral resource or product to any foreign FTAA contractor.

    Same; Same; Same; Same; The general framework or conceptfollowed in crafting the fiscal regime of the FTAA is based on theprinciple that the government expects real contributions to theeconomic growth and general welfare of the country, while thecontractor expects a reasonable return on its investments in theproject.On the contrary, DAO 99-56, entitled GuidelinesEstablishing the Fiscal Regime of Financial or Technical AssistanceAgreements aims to ensure an equitable sharing of the benefitsderived from mineral resources. These benefits are to be equitablyshared among the government (national and local), the FTAAcontractor, and the affected communities. The purpose is to ensuresustainable mineral resources development; and a fair, equitable,competitive and stable investment regime for the large-scaleexploration, development and commercial utilization of minerals.The general framework or concept followed in crafting the fiscalregime of the FTAA is based on the

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    principle that the government expects real contributions to theeconomic growth and general welfare of the country, while thecontractor expects a reasonable return on its investments in theproject.

    Same; Same; Same; Same; DAO 99-56 spells out the financialbenefits the government will receive from an FTAA, referred to asthe Government Share, composed of a basic government share andan additional government share.Specifically, under the fiscalregime, the governments expectation is, inter alia, the receipt of itsshare from the taxes and fees normally paid by a mining enterprise.On the other hand, the FTAA contractor is granted by thegovernment certain fiscal and non-fiscal incentives to help supportthe formers cash flow during the most critical phase (cost recovery)and to make the Philippines competitive with other mineral-producing countries. After the contractor has recovered its initialinvestment, it will pay all the normal taxes and fees comprising thebasic share of the government, plus an additional share for thegovernment based on the options and formulae set forth in DAO 99-56. The said DAO spells out the financial benefits the governmentwill receive from an FTAA, referred to as the Government Share,composed of a basic government share and an additionalgovernment share.

    Same; Same; Same; Same; Statutory Construction; Words andPhrases; The inclusion of the term among other things in thesecond paragraph of Section 81 of R.A. No. 7942 clearly andunmistakably reveals the legislative intent to have the State collectmore than just the usual taxes, duties and feessuch additionalgovernment share to consist not of taxes, but of a share in theearnings or cash flows of the mining enterprise.The law providesno definition of the term among other things, for the reason thatCongress deliberately avoided setting unnecessary limitations as towhat may constitute compensation to the State for the exploitationand use of mineral resources. But the inclusion of that phrase

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    clearly and unmistakably reveals the legislative intent to have theState collect more than just the usual taxes, duties and fees.Certainly, there is nothing in that phraseor in the secondparagraph of Section 81that would suggest that such phraseshould be interpreted as referring only to taxes, duties, fees and thelike. Precisely for that reason, to fulfill the legislative intent behindthe inclusion of the phrase among other things in the secondparagraph of Section 81, the DENR structured and formulated inDAO 99-56 the said additional government share.

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    Such a share was to consist not of taxes, but of a share in theearnings or cash flows of the mining enterprise. The additionalgovernment share was to be paid by the contractor on top of thebasic share, so as to achieve a fifty-fifty sharingbetween thegovernment and the contractorof net benefits from mining. In theRamos-De Vera paper, the explanation of the three options orformulaspresented in DAO 99-56 for the computation of theadditional government shareserves to debunk the claim that thegovernments take from an FTAA consists solely of taxes, fees andduties.

    Same; Same; Same; Same; Same; Same; The legislature actedjudiciously in not defining the term among other things and,instead, leaving it to the agencies concerned to devise and developthe various modes of arriving at a reasonable and fair amount forthe additional government share; The Court does not share the viewthat in FTAAs with foreign contractors under RA 7942, thegovernments share is limited to taxes, fees and duties.One lastpoint on the subject. The legislature acted judiciously in notdefining the terms among other things and, instead, leaving it to theagencies concerned to devise and develop the various modes ofarriving at a reasonable and fair amount for the additionalgovernment share. As can be seen from DAO 99-56, the agenciesconcerned did an admirable job of conceiving and developing notjust one formula, but three different formulae for arriving at the

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    additional government share. Each of these options is quite fair andreasonable; and, as Messrs. Ramos and De Vera stated, otheralternatives or schemes for a possible improvement of the fiscalregime for FTAAs are also being studied by the government.Besides, not locking into a fixed definition of the term among otherthings will ultimately be more beneficial to the government, as itwill have that innate flexibility to adjust to and cope with rapidlychanging circumstances, particularly those in the internationalmarkets. Such flexibility is especially significant for the governmentin terms of helping our mining enterprises remain competitive inworld markets despite challenging and shifting economic scenarios.In conclusion, we stress that we do not share the view that in FTAAswith foreign contractors under RA 7942, the governments share islimited to taxes, fees and duties. Consequently, we find the attackson the second paragraph of Section 81 of RA 7942 totallyunwarranted.

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    Same; Same; Same; Same; Congress did not set any time limitfor the grace period, preferring to leave it to the concerned agencies,which are, on account of their technical expertise and training, in abetter position to determine the appropriate durations for suchrecovery periods after which the government share in the FTAA maybe collected.The third or last paragraph of Section 81 providesthat the government share in FTAAs shall be collected when thecontractor shall have recovered its pre-operating expenses andexploration and development expenditures. The objection has beenadvanced that, on account of the proviso, the collection of the Statesshare is not even certain, as there is no time limit in RA 7942 forthis grace period or recovery period. We believe that Congress didnot set any time limit for the grace period, preferring to leave it tothe concerned agencies, which are, on account of their technicalexpertise and training, in a better position to determine theappropriate durations for such recovery periods. After all, theserecovery periods are determined, to a great extent, by technical andtechnological factors peculiar to the mining industry. Besides, withdevelopments and advances in technology and in the geosciences,

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    we cannot discount the possibility of shorter recovery periods. Atany rate, the concerned agencies have not been remiss in this area.The 1995 and 1996 Implementing Rules and Regulations of RA7942 specify that the period of recovery, reckoned from the date ofcommercial operation, shall be for a period not exceeding five years,or until the date of actual recovery, whichever comes earlier.

    Same; Same; Same; Same; Mineral Production SharingAgreements (MPSA); Section 80 and the colatilla in Section 84,limiting the States share in a mineral production-sharingagreement to just the excise tax on the mineral product, pertain onlyto MPSAs and have no application to FTAAs.It should be pointedout that Section 80 and the colatilla in Section 84 pertain only toMPSAs and have no application to FTAAs. These particularstatutory provisions do not come within the issues that weredefined and delineated by this Court during the Oral Argumentparticularly the third issue, which pertained exclusively to FTAAs.Neither did the parties argue upon them in their pleadings. Hence,this Court cannot make any pronouncement in this case regardingthe constitutionality of Sections 80 and 84 without violating thefundamental rules of due process. Indeed, the two provisos willhave to await another case specifically placing them in issue.

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    Same; Same; Same; Same; Same; Due Process; Basic dueprocess requires that the Court hear the parties who have a real legalinterest in the MPSAs (i.e. the parties who executed them) beforethese MPSAs can be reviewed, or worse, struck down by the Courtanything less than that requirement would be arbitrary andcapricious.Justices Carpio and Morales maintain that the Courtmust rule now on the constitutionality of Sections 80, 84 and 112,allegedly because the WMCP FTAA contains a provision whichgrants the contractor unbridled and automatic authority toconvert the FTAA into an MPSA; and should such conversionhappen, the State would be prejudiced since its share would belimited to the 2 percent excise tax. Justice Carpio adds that thereare five MPSAs already signed just awaiting the judgment of this

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    Court on respondents and intervenors Motions for Reconsideration.We hold however that, at this point, this argument is based on purespeculation. The Court cannot rule on mere surmises andhypothetical assumptions, without firm factual anchor. We repeat:basic due process requires that we hear the parties who have a reallegal interest in the MPSAs (i.e. the parties who executed them)before these MPSAs can be reviewed, or worse, struck down by theCourt. Anything less than that requirement would be arbitrary andcapricious.

    Same; Same; Same; Same; Let it be put on record that not onlyforeign contractors, but all businessmen and all business entities ingeneral, have to recoup their investments and costs.Let it be puton record that not only foreign contractors, but all businessmen andall business entities in general, have to recoup their investmentsand costs. That is one of the first things a student learns inbusiness school. Regardless of its nationality, and whether or not abusiness entity has a five-year cost recovery period, it willmusthave to recoup its investments, one way or another. This is justcommon business sense. Recovery of investments is absolutelyindispensable for business survival; and business survival ensuressoundness of the economy, which is critical and contributory to thegeneral welfare of the people. Even government corporations mustrecoup their investments in order to survive and continue inoperation. And, as the preceding discussion has shown, there is nobusiness that gets ahead or earns profits without any cost to it.

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    Same; Same; Same; Same; We can hardly talk about foreigncontractors taking our mineral resources for freeIt takes a lot ofhard cash to even begin to do what they do; The Court definitelydisagrees with the sweeping claim that no FTAA under Section 81will ever make any real contribution to the growth of the economy orto the general welfare of the country.We can hardly talk aboutforeign contractors taking our mineral resources for free. It takes alot of hard cash to even begin to do what they do. And what they doin this country ultimately benefits the local economy, grows

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    businesses, generates employment, and creates infrastructure, asdiscussed above. Hence, we definitely disagree with the sweepingclaim that no FTAA under Section 81 will ever make any realcontribution to the growth of the economy or to the general welfareof the country. This is not a plea for foreign contractors. Rather, thisis a question of focusing the judicial spotlight squarely on all thepertinent facts as they bear upon the issue at hand, in order to avoidleaping precipitately to ill-conceived conclusions not solidlygrounded upon fact.

    Same; Same; Same; Same; It is not correct to say that all of theafter-tax income will accrue to the foreign FTAA contractorthegovernment effectively receives a significant portion thereof.Theconcerned agencies have correctly interpreted the second paragraphof Section 81 of RA 7942 to mean that the government is entitled toan additional share, to be computed based on any one of thefollowing factors: net mining revenues, the present value of the cashflows, or excess profits reckoned against a benchmark rate of returnon investments. So it is not correct to say that all of the after-taxincome will accrue to the foreign FTAA contractor, as thegovernment effectively receives a significant portion thereof.

    Same; Same; Same; Same; Even a bit of knowledge of corporatefinance will show that it will be impossible to maintain a businessas a going concern if the entire net profit earned in anyparticular year will be taken out and repatriatedno sane businessperson, concerned with maintaining the mining enterprise as a goingconcern and keeping a foothold in its market, can afford torepatriate the entire after-tax income to the home country.Theforeign contractors can hardly repatriate the entire after-tax incometo their home countries. Even a bit of knowledge of corporatefinance will show that it will be impossible to maintain a businessas a going concern if the

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    entire net profit earned in any particular year will be taken outand repatriated. The net income figure reflected in the bottom line

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    is a mere accounting figure not necessarily corresponding to cash inthe bank, or other quick assets. In order to produce and set asidecash in an amount equivalent to the bottom line figure, one mayneed to sell off assets or immediately collect receivables or liquidateshort-term investments; but doing so may very likely disruptnormal business operations. In terms of cash flows, the fundscorresponding to the net income as of a particular point in time areactually in use in the normal course of business operations. Pullingout such net income disrupts the cash flows and cash position of theenterprise and, depending on the amount being taken out, couldseriously cripple or endanger the normal operations and financialhealth of the business enterprise. In short, no sane business person,concerned with maintaining the mining enterprise as a goingconcern and keeping a foothold in its market, can afford torepatriate the entire after-tax income to the home country.

    Same; Same; Same; Same; The Court fails to see how we canproperly conclude that the Constitution mandates the State toextract at least 60 percent of the after-tax income from a miningcompany run by a foreign contractorThe Charter did not intend tofix an iron-clad rule on the 60 percent share, applicable to allsituations at all times and in all circumstances.We fail to see howwe can properly conclude that the Constitution mandates the Stateto extract at least 60 percent of the after-tax income from a miningcompany run by a foreign contractor. The argument is that theCharter requires the States partner in a co-production agreement,joint venture agreement or MPSA to be a Filipino corporation (atleast 60 percent owned by Filipino citizens). We question the logic ofthis reasoning, premised on a supposedly parallel or analogoussituation. We are, after all, dealing with an essentially differentequation, one that involves different elements. The Charter did notintend to fix an iron-clad rule on the 60 percent share, applicable toall situations at all times and in all circumstances. If ever such wasthe intention of the framers, they would have spelt it out in blackand white. Verba legis will serve to dispel unwarranted anduntenable conclusions.

    Same; Same; Same; Same; Oil Industry; The 60 percent rule inthe petroleum industry cannot be insisted upon at all times in themining businessthe numerous intrinsic differences involved intheir

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    respective operations and requirements, cost structures andinvestment needs render it highly inappropriate to use petroleumoperations FTAAs as benchmarks for mining FTAAs.The 60percent rule in the petroleum industry cannot be insisted upon atall times in the mining business. The reason happens to be the factthat in petroleum operations, the bulk of expenditures is inexploration, but once the contractor has found and tapped into thedeposit, subsequent investments and expenditures are relativelyminimal. The crude (or gas) keeps gushing out, and the workentailed is just a matter of piping, transporting and storing. Not soin mineral mining. The ore body does not pop out on its own. Evenafter it has been located, the contractor must continually invest inmachineries and expend funds to dig and build tunnels in order toaccess and extract the minerals from underneath hundreds of tonsof earth and rock. As already stated, the numerous intrinsicdifferences involved in their respective operations andrequirements, cost structures and investment needs render ithighly inappropriate to use petroleum operations FTAAs asbenchmarks for mining FTAAs. Verily, we cannot just ignore therealities of the distinctly different situations and stubbornly insiston the minimum 60 percent.

    Same; Same; Same; Same; Same; The mere fact that gas and oilexploration contracts grant the State 60 percent of the net revenuesdoes not necessarily imply that mining contracts should likewiseyield a minimum of 60 percent for the State.To repeat, the merefact that gas and oil exploration contracts grant the State 60percent of the net revenues does not necessarily imply that miningcontracts should likewise yield a minimum of 60 percent for theState. Jumping to that erroneous conclusion is like comparingapples with oranges. The exploration, development and utilization ofgas and oil are simply different from those of mineral resources. Tostress again, the main risk in gas and oil is in the exploration. Butonce oil in commercial quantities is struck and the wells are put inplace, the risk is relatively over and black gold simply flows outcontinuously with comparatively less need for fresh investmentsand technology. On the other hand, even if minerals are found inviable quantities, there is still need for continuous fresh capital and

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    expertise to dig the mineral ores from the mines. Just becausedeposits of mineral ores are found in one area is no guarantee thatan equal amount can be found in the adjacent areas. There aresimply continuing risks and need for more capital, expertise andindustry all the time. Note,

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    however, that the indirect benefitsapart from the cash revenuesare much more in the mineral industry. As mines are explored andextracted, vast employment is created, roads and otherinfrastructure are built, and other multiplier effects arise. On theother hand, once oil wells start producing, there is less need foremployment. Roads and other public works need not be constructedcontinuously. In fine, there is no basis for saying that governmentrevenues from the oil industry and from the mineral industries areto be identical all the time.

    Same; Same; Same; Same; Same; The proffered minimum 60percent suggestion tends to limit the flexibility and tie the hands ofgovernment, ultimately hampering the countrys competitiveness inthe international market, to the detriment of the Filipino people.Toour mind, the proffered minimum 60 percent suggestion tends tolimit the flexibility and tie the hands of government, ultimatelyhampering the countrys competitiveness in the internationalmarket, to the detriment of the Filipino people. This you-have-to-give-us-60-percent-of-after-tax-income-or-we-dont-do-business-with-you approach is quite perilous. True, this situation may notseem too unpalatable to the foreign contractor during good years,when international market prices are up and the mining firmmanages to keep its costs in check. However, under unfavorableeconomic and business conditions, with costs spiraling skywardsand minerals prices plummeting, a mining firm may consider itselflucky to make just minimal profits. The inflexible, carved-in-granitedemand for a 60 percent government share may spell the end of themining venture, scare away potential investors, and thereby furtherworsen the already dismal economic scenario. Moreover, such an

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    unbending or unyielding policy prevents the government fromresponding appropriately to changing economic conditions andshifting market forces. This inflexibility further renders our countryless attractive as an investment option compared with othercountries.

    Same; Same; Same; Same; Same; Separation of Powers; Forthis Court to decree imperiously that the governments share shouldbe not less than 60 percent of the after-tax income of FTAAcontractors at all times is nothing short of dictating upon thegovernmentthe result, ironically, is that the State ends up losingcontrol.For this Court to decree imperiously that thegovernments share should be not less than 60 percent of the after-tax income of FTAA contrac-

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    tors at all times is nothing short of dictating upon the government.The result, ironically, is that the State ends up losing control. Toavoid compromising the States full control and supervision over theexploitation of mineral resources, this Court must back off frominsisting upon a minimum 60 percent rule. It is sufficient that theState has the power and means, should it so decide, to get a 60percent share (or more) in the contractors net mining revenues orafter-tax income, or whatever other basis the government maydecide to use in reckoning its share. It is not necessary for it to do soin every case, regardless of circumstances. In fact, the governmentmust be trusted, must be accorded the liberty and the utmostflexibility to deal, negotiate and transact with contractors and thirdparties as it sees fit; and upon terms that it ascertains to be mostfavorable or most acceptable under the circumstances, even if itmeans agreeing to less than 60 percent. Nothing must prevent theState from agreeing to a share less than that, should it be deemedfit; otherwise the State will be deprived of full control over mineralexploitation that the Charter has vested in it.

    Same; Same; Same; Same; Same; Same; Judicial Legislation;To stress again, there is simply no constitutional or legal provision

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    fixing the minimum share of the government in an FTAA at 60percent of the net profit.There is simply no constitutional or legalprovision fixing the minimum share of the government in an FTAAat 60 percent of the net profit. For this Court to decree suchminimum is to wade into judicial legislation, and therebyinordinately impinge on the control power of the State. Let it beclear: the Court is not against the grant of more benefits to theState; in fact, the more the better. If during the FTAA negotiations,the President can secure 60 percent, or even 90 percent, then all thebetter for our people. But, if under the peculiar circumstances of aspecific contract, the President could secure only 50 percent or 55percent, so be it. Needless to say, the President will have to report(and be responsible for) the specific FTAA to Congress, andeventually to the people.

    Same; Same; Same; Same; It is quite well known that miningcompanies do perform some marketing activities abroad in respect ofselling their mineral products and by-products, hence, it would notbe improper to allow the deduction of reasonable consulting feesincurred abroad, as well as administrative expenses and overheads

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    related to marketing offices also located abroad.It is quite wellknown, however, that mining companies do perform somemarketing activities abroad in respect of selling their mineralproducts and by-products. Hence, it would not be improper to allowthe deduction of reasonable consulting fees incurred abroad, as wellas administrative expenses and overheads related to marketingoffices also located abroadprovided that these deductions aredirectly related or properly allocatable to the mining operations andreasonably related to the performance of the contractors obligationsand exercise of its rights. In any event, more facts are needed. Untilwe see how these provisions actually operate, mere suspicions willnot suffice to propel this Court into taking action.

    Same; Same; Same; Same; As finally structured, Section 7.9 ofthe FTAA has the deleterious effect of depriving government of the

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    entire 60 percent share in WMCPs net mining revenues, without anyform of compensation whatsoever, an outcome which is completelyunacceptable.Section 7.9 has the effect of depriving the State ofits 60 percent share in the net mining revenues of WMCP withoutany offset or compensation whatsoever. It is possible that theinclusion of the offending provision was initially prompted by thedesire to provide some form of incentive for the principal foreignstockholder in WMCP to eventually reduce its equity position andultimately divest in favor of Filipino citizens and corporations.However, as finally structured, Section 7.9 has the deleterious effectof depriving government of the entire 60 percent share in WMCPsnet mining revenues, without any form of compensationwhatsoever. Such an outcome is completely unacceptable.

    Same; Same; Same; Same; Anti-Graft and Corrupt PracticesAct; Section 7.9 of the WMCP FTAA effectively gives away the Statesshare of net mining revenues (provided for in Section 7.7) withoutanything in exchangethe outcome likewise constitutes unjustenrichment on the part of the local and foreign stockholders ofWMCP; The provision in question is without a doubt grosslydisadvantageous to the government, detrimental to the interests ofthe Filipino people, and violative of public policy; Being preciselyviolative of anti-graft provisions and contrary to public policy,Section 7.9 must therefore be stricken off as invalid.Section 7.9 ofthe WMCP FTAA effectively gives away the States share of netmining revenues (provided for in Section 7.7) without anything inexchange. Moreover, this outcome

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    constitutes unjust enrichment on the part of the local and foreignstockholders of WMCP. By their mere divestment of up to 60percent equity in WMCP in favor of Filipino citizens and/orcorporations, the local and foreign stockholders get a windfall. Theirshare in the net mining revenues of WMCP is automaticallyincreased, without their having to pay the government anything forit. In short, the provision in question is without a doubt grossly

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    disadvantageous to the government, detrimental to the interests ofthe Filipino people, and violative of public policy. Moreover, it hasbeen reiterated in numerous decisions that the parties to a contractmay establish any agreements, terms and conditions that theydeem convenient; but these should not be contrary to law, morals,good customs, public order or public policy. Being precisely violativeof anti-graft provisions and contrary to public policy, Section 7.9must therefore be stricken off as invalid.

    Same; Same; Same; Same; Same; Estoppel; AdministrativeLaw; Law on Public Officers; It is hornbook doctrine that theprinciple of estoppel does not operate against the government for theact of its agents, and that it is never estopped by any mistake or erroron their part.Whether the government officials concerned accededto that provision by sheer mistake or with full awareness of the illconsequences, is of no moment. It is hornbook doctrine that theprinciple of estoppel does not operate against the government forthe act of its agents, and that it is never estopped by any mistake orerror on their part. It is therefore possible and proper to rectify thesituation at this time. Moreover, we may also say that the FTAA inquestion does not involve mere contractual rights; being impressedas it is with public interest, the contractual provisions andstipulations must yield to the common good and the nationalinterest.

    Same; Same; Same; Same; It makes no sense why money spentby the government for the benefit of the contractor in building roadsleading to the mine site should still be deductible from the Statesshare in net mining revenuesallowing this deduction results inbenefiting the contractor twice over, constituting unjust enrichmenton the part of the contractor at the expense of the government.Section 7.8(e) is out of place in the FTAA. It makes no sense why,for instance, money spent by the government for the benefit of thecontractor in building roads leading to the mine site should still bedeductible from the States share in net mining revenues. Allowing

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    this deduction results in benefiting the contractor twice over. Itconstitutes unjust enrichment on the part of the contractor at theexpense of the government, since the latter is effectively being madeto pay twice for the same item. For being grossly disadvantageousand prejudicial to the government and contrary to public policy,Section 7.8(e) is undoubtedly invalid and must be declared to bewithout effect. Fortunately, this provision can also easily be strickenoff without affecting the rest of the FTAA.

    Same; Same; Same; Same; The term limitation of twenty-fiveyears for agreements for the exploration, development and utilizationof natural resources provided for in the paragraph 1, Section 2,Article XII does not apply to FTAAsit refers only to co-productionagreements, joint venture agreements and mineral production-sharing agreements.We hold that the term limitation of twenty-five years does not apply to FTAAs. The reason is that the aboveprovision is found within paragraph 1 of Section 2 of Article XII,which refers to mineral agreementsco-production agreements,joint venture agreements and mineral production-sharingagreementswhich the government may enter into with Filipinocitizens and corporations, at least 60 percent owned by Filipinocitizens. The word such clearly