CONSTITUTION the fundamental and paramount law of the nation* a system of fundamental laws for the governance and administration of a nation** prescribes the permanent framework of a system of government, assigns to the different departments their respective powers and duties, and establishes certain fixed principles on which government is founded** It is supreme, imperious, absolute and unalterable except by the authority from which it emanates** it is a supreme law to which all other laws must conform and in accordance with which all private rights must be determined and all public authority administered** *16 C.J.S., Constitutional Law, Sec. 48, p. 101 **Way v. Barney, 116 Minn. 285, 133 N.W. 801, 804 38 L.R.A. (N.S.) 648, Ann. Cas. 1913 A, 719 ; Brice v. McDow, supra, at 87; Morgan v. Board of Supervisors, 67 Ariz. 133, 192 P. 2d 236, 241 ; Gonzales, supra..
Proposed Changes allowing 100% ownership of land by foreigners allowing foreigners to explore and exploit the country’s natural resources allowing 100% foreign ownership of public utilities and educational institutions by foreigners allowing foreigners ownership of mass media institutions and control of advertising clipping the powers of the Supreme Court to intervene in economic decisions and projects clipping the powers of the Senate by bestowing to the President the full authority to enter into international agreement and treaties http://www.agham.org/cms/content/
1987 Constitution: Economic Protectionism Provisions Overall declarations of nationalist economic policy covering foreign economic relations and domestic policy thrusts – Article II, Sections 2, 7, 17, 19, & 20 Restriction of foreign ownership and degree of involvement in decision-making – Article XII, Sections 1, 2, 3, 10, 11, 17, 18, & 19; Article XIII, Section 7; Article XIV, Section 4; Article XVI, Section 11
1987 Constitution: Economic Protectionism Provisions Regulation of exploration, development and use of national patrimony – Article XII, Section 2 Giving preference to Filipinos, regulating trade, and stating responsibility to protect, encourage and promote Filipino economic activity – Article II, Section 9; Article XII, Sections 1, 12, 13, & 14; Article XIV, Section 12; Article XVI, Section 11
Garcia vs. BOI G.R. No. 92024, 09 November 1990, En BancIssue:Whether or not the foreigninvestor has the right of finalchoice under the 1987Constitution and the OmnibusInvestment Code?
Garcia vs. BOIFacts of the Case:- First Case: 07 September 1989 and on 17 January 1990 (G.R. No. 88637).- LPC - change of plant site from Bataan to Batangas and shift of feedstock for the plant from naphtha only to naphtha and/or liquefied petroleum gas (LPG).- Reason given: insurgency and unstable labor condition in Bataan coupled with a huge LPG depot in Batangas owned by Philippine Shell Corporation.- formed by Taiwanese investors- a joint venture with PNOC.
Garcia vs. BOIFacts of the Case: - part of the terms and conditions of its registration, it isspecifically stated that it will use “naphtha cracker” and“naphtha” as feedstock or fuel for its plant. As such, it was“given pioneer status and accorded fiscal and other incentivesby BOI, like: (1) exemption from taxes on raw materials, (2)repatriation of the entire proceeds of liquidation investmentsin currency originally made and at the exchange rate obtainingat the time of repatriation; and (3) remittance of earnings oninvestments.”- petitioner pushed for the 48% ad valorem tax exemption ifand when naphtha will be used as raw materials for the plant.
Garcia vs. BOIConstitutional provision in question:Article XII, Section 1, 2nd par. The State shall promoteindustrialization and full employment based on soundagricultural development and agrarian reform, throughindustries that make full and efficient use of human andnatural resources, and which are competitive in bothdomestic and foreign markets. However, the State shallprotect Filipino enterprises against unfair foreigncompetition and trade practices.Article XII, Section 10, last par. The State shall regulateand exercise authority over foreign investments within itsnational jurisdiction and in accordance with its nationalgoals and priorities.
Garcia vs. BOIRuling:“Every provision of the Constitution on the nationaleconomy and patrimony is infused with the spirit ofnational interest. The non-alienation of natural resources,the States full control over the development andutilization of our scarce resources, agreements withforeigners being based on real contributions to theeconomic growth and general welfare of the country andthe regulation of foreign investments in accordance withnational goals and priorities are too explicit not to benoticed and understood.”
Garcia vs. BOIBackground:“In this particular BPC venture, not only has the Government givenunprecedented favors, among them:(1) For an initial authorized capital of only P20 million, the Central Bankgave an eligible relending credit or relending facility worth US $50million and a debt to swap arrangement for US $30 million or a totalaccommodation of US $80 million which at current exchange rates isaround P2080 million.(2) A major part of the companys capitalization shall not come fromforeign sources but from loans, initially a Pl Billion syndicated loan, to begiven by both government banks and a consortium of Philippine privatebanks or in common parlance, a case of guiniguisa sa sariling manteca.
Garcia vs. BOIBackground:(3) Tax exemptions and privileges were given as part ofits preferred pioneer status.(4) Loan applications of other Philippine firms will becrowded out of the Asian Development Bank portfoliobecause of the petrochemical firms massive loanrequest. (Taken from the proceedings before the SenateBlue Ribbon Committee).
Garcia vs. BOIReason:“…the plant site of the LPC should be in Bataan,given the peculiar factual circumstances andissues related to the proposed transfer, amongthem the original choice of Bataan as plant site;the intended partnership of LPC, a foreigninvestor, with the PNOC; the fact that the BataanRefining Corporation can supply naphtha for thepetrochemical plant; and the importance of anindependent national economy. ..”
Garcia vs. BOIPostscript:“One can but remember the words of a greatFilipino leader who in part said he would notmind having a government run like hell byFilipinos than one subservient to foreigndictation. In this case, it is not even a foreigngovernment but an ordinary investor whom theBOI allows to dictate what we shall do with ourheritage.”
Garcia vs. BOIAfter effects:“With a project cost of $370 million, Luzon Petrochemwas the biggest direct foreign investment in the countryat that time. Unfortunately, the corporation closed shopnot too long after the high court ordered it to conductbusiness in its less preferred site. According to Capuno,the total net foreign exchange flows foregone as a resultamounted to about $1.32 billion—more than enough tolift more than 5.6 million Filipinos out of poverty in1998.” Panao, Alicor L, The Economics of Law, http://www.up.edu.ph/upforum.php?issue=16&i=124
Garcia vs. BOIAfter effects:Currently, USI Far East Corporation, the majorinvestor in LPC/BPC, maintained its operations inTaiwan and Hong Kong. In 2006, it has establishedits Shanghai office. Its main business is on themanufacture and sale of PE resins with its high-quality LDPE and HDPE enjoying high marketshare. It has diversified and invested inelectronics, materials, and finance and venturecapital industries. www.usife.com.tw/dirEngAbout/frmEngAbout6
Garcia vs. JG Summit G.R. No. 127925, 23 February 2007, Second DivisionIssue:Whether or not P.D. Nos. 949 and 1830mandates the establishment ofpetrochemical plant only in Limay, Bataan?
Garcia vs. JG SummitFacts of the Case:JG Summit Petrochemical Corp. (JG Summit) wasregistered by the BOI as a new domestic producer ofpolyethylene and polypropylene resins. In May 1994, ithas manifested that it will established its plant in NegrosOriental but two (2) years later, had advised the BOI thatit will locate in Batangas City.
Garcia vs. JG SummitConstitutional provision in question:Article XII, Section 10, last par. The State shall regulateand exercise authority over foreign investments withinits national jurisdiction and in accordance with itsnational goals and priorities.
Garcia vs. JG SummitRuling:“If only to lay the matter finally to rest, this Court nowreiterates that P.D. Nos. 949 and 1830 do not prohibit theestablishment of a petrochemical plant outside of Limay,Bataan. A meticulous perusal of the two decrees revealsthat nowhere in their provisions is it stated or can it beinferred that all petrochemical plants must be establishedin Limay, Bataan or, stated differently, that Bataan isintended to be the only site for all petrochemical plants.”
Garcia vs. JG SummitPostscript:“Finally, it is not for this Court to rule on whether the national interestwould be served by allowing respondent to locate its plant inBatangas, instead of Bataan. As the first Garcia case held, "[t]his Courtis not concerned with the economic, social, and political aspects of thiscase for it does not possess the necessary technology and scientificexpertise to determine whether the transfer of the proposed BPCpetrochemical complex from Bataan to Batangas and the change offuel from naphtha only to ‘naphtha and/or LPG will be best for theproject and for our country. This Court is not about to delve into theeconomics and politics of this case . . . ."
Garcia vs. JG SummitAfter effects:JG Summit is currently operating in Simlong, Batangas Cityand proud to claim as the first and only integratedPolyethylene and Polypropylene resin manufacturer in thecountry producing the EVALENE® brand of HDPE, LLDPE, andHomopolymer and Random Copolymer Polypropylene. Itsplant’s annual production capacities are 200,000MT forPolyethylene and 180,000MT for Polypropylene. JG Summit isa joint venture between JG Summit Holdings, Inc. of thePhilippines and Marubeni Corporation of Japan. http://www.jgspetrochem.com
Manila Prince Hotel vs. GSIS G.R. No. 122156, 03 February 1997, En BancIssues:1. Whether or not Article XII, Section 10, 2nd par., of the 1987 Constitution is self-executing?2. Whether or not Manila Hotel is part of our national economy and patrimony? And 51% of the equity of Manila Hotel is part of the national patrimony?3. Whether or not GSIS is deemed an arm of the State?4. Whether or not petitioner is not estopped from invoking the provisions of Article XII, Section 10 of the 1987 Constitution?
Manila Prince Hotel vs. GSISFacts of the Case:The Government Service Insurance System (GSIS) offered tosell 30% to 51% of the issued and outstanding shares of ManilaHotel Corporation (MHC) in line with the privatizationprogram of the national government under Proclamation No.50 dated 08 December 1986. One of the integralrequirements for the offer to be considered is the fact that“the winning bidder, or the eventual "strategic partner," is toprovide management expertise and/or an internationalmarketing/reservation system, and financial support tostrengthen the profitability and performance of the ManilaHotel.”
Manila Prince Hotel vs. GSISFacts of the Case:On 18 September 1995, two (2) bidders pre-qualified, namely:herein petitioner, Manila Prince Hotel Corporation (MPHC), aFilipino corporation, and Renong Berhad, a Malaysian firmwith ITT Sheraton as operator. Renong Berhad won with itsoffer of Php44.00 per share or Php2.42 per share more thanMPHC’s offer of Php41.58 per share. MPHC subsequentlymatched the offer of Renong Berhad and even sent amanager’s check as its bid security. But GSIS did not acceptthe offer. Thus, MPHC went to court in order to enjoin therespondents from perfecting and consummating the sale toRenong Berhad.
Manila Prince Hotel vs. GSISConstitutional provision in question:Article XII, Section 10, second paragraph. Inthe grant of rights, privileges, andconcessions covering the national economyand patrimony, the State shall givepreference to qualified Filipinos.
Manila Prince Hotel vs. GSISRuling:First Issue: Whether or not Article XII, Section 10, 2nd par., of the 1987Constitution is self-executing?“… a provision which is complete in itself and becomesoperative without the aid of supplementary or enablinglegislation, or that which supplies sufficient rule by means ofwhich the right it grants may be enjoyed or protected, is self-executing. Thus a constitutional provision is self-executing ifthe nature and extent of the right conferred and the liabilityimposed are fixed by the constitution itself, so that they canbe determined by an examination and construction of itsterms, and there is no language indicating that the subject isreferred to the legislature for action.”
Manila Prince Hotel vs. GSISRuling:First Issue: Whether or not Article XII, Section 10, 2nd par., of the 1987Constitution is self-executing?“Sec. 10, second par., Art. XII of the of the 1987Constitution is a mandatory, positive commandwhich is complete in itself and which needs nofurther guidelines or implementing laws or rulesfor its enforcement.”
Manila Prince Hotel vs. GSISRuling:Second Issue: Whether or not Manila Hotel is part of our nationaleconomy and patrimony? And 51% of the equity of Manila Hotel is partof the national patrimony? “Manila Hotel has become part of our nationaleconomy and patrimony. For sure, 51% of theequity of the MHC comes within the purview ofthe constitutional shelter for it comprises themajority and controlling stock, so that anyonewho acquires or owns the 51% will have actualcontrol and management of the hotel.”
Manila Prince Hotel vs. GSISRuling:Third Issue: Whether or not GSIS is deemed an arm of the State?“In constitutional jurisprudence, the acts of personsdistinct from the government are considered "stateaction" covered by the Constitution(1) when the activity it engages in is a "publicfunction;"(2) when the government is so significantlyinvolved with the private actor as to make thegovernment responsible for his action; and,(3) when the government has approved orauthorized the action.
Manila Prince Hotel vs. GSISRuling:Third Issue: Whether or not GSIS is deemed an arm of the State?“It is evident that the act of respondent GSIS inselling 51% of its share in respondent MHC comesunder the second and third categories of "stateaction." Without doubt therefore the transaction,although entered into by respondent GSIS, is infact a transaction of the State and thereforesubject to the constitutional command.
Manila Prince Hotel vs. GSISRuling:Fourth Issue: Whether or not petitioner is not estopped from invokingthe provisions of Article XII, Section 10 of the 1987 Constitution?“In the instant case, where a foreign firm submits thehighest bid in a public bidding concerning the grant ofrights, privileges and concessions covering the nationaleconomy and patrimony, thereby exceeding the bid of aFilipino, there is no question that the Filipino will have to beallowed to match the bid of the foreign entity. And if theFilipino matches the bid of a foreign firm the award shouldgo to the Filipino. It must be so if we are to give life andmeaning to the Filipino First Policy provision of the 1987Constitution.
Manila Prince Hotel vs. GSISPostscript:“This Court does not discount the apprehension that thispolicy may discourage foreign investors. But theConstitution and laws of the Philippines are understood tobe always open to public scrutiny. These are given factorswhich investors must consider when venturing intobusiness in a foreign jurisdiction. Any person thereforedesiring to do business in the Philippines or with any of itsagencies or instrumentalities is presumed to know hisrights and obligations under the Constitution and the lawsof the forum.
Manila Prince Hotel vs. GSISPostscript:“… the second paragraph of section 10, Article XII of theConstitution is pro-Pilipino but not anti-alien. It is pro-Filipino for it gives preference to Filipinos. It is not,however, anti-alien per se for it does not absolutely baraliens in the grant of rights, privileges and concessionscovering the national economy and patrimony. Indeed, inthe absence of qualified Filipinos, the State is notprohibited from granting these rights, privileges andconcessions to foreigners if the act will promote the wealof the nation.” Justice Reynato Puno, dissenting
Manila Prince Hotel vs. GSISAfter effects:To date, Manila Hotel is owned by MPHC after ittook over on May 7, 1997. It is currently beingpursued by GSIS for its unpaid obligationsamounting to Php8.7 billion, aside from unpaidrentals of Php286 million. It has since beenopined that Manila Hotel has lost its grandeurand magnificence and it reeks of commercialismrather than history. http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20090506-203379/Unpaid-Manila-Hotel-loans-soar-to-P17B Roces, Alejandro R., Roses & Thorns, “We need to bring back the lost glory”, published by The Philippine Star on 23 November 2010. http://188.8.131.52/Article.aspx?articleid=29379
Manila Prince Hotel vs. GSISAfter effects:Renong Berhad on the other hand filed forbankruptcy in 1998 as a result of the Asianfinancial crisis. It is Malaysia’s one of the biggestand most diversified conglomerate and at thesame time Malaysia’s biggest corporate debtor. http://bigdogdotcom.wordpress.com/2010/09/03/
Tanada vs. Angara G.R. No. 118295, 02 May 1997, En BancIssue:Whether or not the provisions of theAgreement Establishing the World TradeOrganization (WTO Agreement) are violativeof Section 19, Article II, and Sections 10 & 12,Article XII, of the 1987 Constitution?
Tanada vs. AngaraFacts of the Case:On 15 April 1994, the Philippines, as represented bythen Secretary Rizalino Navarro of the Department ofTrade and Industry, signed the Final Act Embodying theResults of the Uruguay Round of MultinationalNegotiations (Final Act). This Act, together with theWTO Agreement, the Ministerial Declarations andDecisions, and the Understanding on Commitments inFinancial Services were submitted to the Senate for itsconcurrence as provided for in Article VII, Section 21 ofthe 1987 Constitution. On 14 December 1994, theSenate ratified the WTO Agreement and two days later,or on 16 December 1994, then President Fidel V. Ramossigned the Instrument of Ratification.
Tanada vs. AngaraConstitutional provisions in question:Art. II, Sec. 19. The State shall develop a self-reliant andindependent national economy effectively controlled byFilipinos.Article XII, Sec. 10, 2nd par. In the grant of rights, privileges,and concessions covering the national economy andpatrimony, the State shall give preference to qualifiedFilipinos.Article XII, Sec. 12. The State shall promote the preferentialuse of Filipino labor, domestic materials and locallyproduced goods, and adopt measures that help make themcompetitive.
Tanada vs. AngaraRuling:“All told, while the Constitution indeed mandates a biasin favor of Filipino goods, services, labor andenterprises, at the same time, it recognizes the needfor business exchange with the rest of the world on thebases of equality and reciprocity and limits protectionof Filipino enterprises only against foreign competitionand trade practices that are unfair. In other words, theConstitution did not intend to pursue anisolationist policy.”
Tanada vs. AngaraRuling:“It did not shut out foreign investments, goodsand services in the development of thePhilippine economy. While the Constitutiondoes not encourage the unlimited entry offoreign goods, services and investments intothe country, it does not prohibit them either. Infact, it allows an exchange on thebasis of equality and reciprocity,frowning only on foreign competition that is unfair.”
Tanada vs. AngaraRuling:“The WTO reliance on “most favored nation,” “nationaltreatment,” and “trade without discrimination” cannot bestruck down as unconstitutional as in fact they are rules ofequality and reciprocity that apply to all WTOmembers. Aside from envisioning a trade policy based on“equality and reciprocity,” the fundamental lawencourages industries that are “competitive in bothdomestic and foreign markets,” thereby demonstrating aclear policy against a sheltered domestic tradeenvironment, but one in favor of the gradualdevelopment of robust industries that cancompete with the best in the foreign markets.”
Tanada vs. AngaraPostscript:“…what the Senate did was a valid exercise of itsauthority. As to whether such exercise was wise,beneficial or viable is outside the realm of judicial inquiryand review. That is a matter between the elected policymakers and the people. As to whether the nation shouldjoin the worldwide march toward trade liberalization andeconomic globalization is a matter that ourpeople should determine in electing theirpolicy makers. After all, the WTO Agreementallows withdrawal of membership, shouldthis be the political desire of a member.”
Tanada vs. AngaraPostscript: “Increased participation in the world economy has become the key to domestic economic growth and prosperity.” Peter Drucker
Tanada vs. AngaraAfter effects: R.A. No. 9182, the Special Purpose Vehicle Act - providing for 40% foreign equity limitation for private land ownership; R.A. No. 8756 - establishes the rules and guidelines for the maintenance of multinational companies’ Regional or Area Headquarters, Regional Operating Headquarters, and Regional Warehouses; R.A. No. 7942, the Mining Act of 1995 - defining foreign ownership and participation in the exploration, development, and utilization of our mineral resources;
Tanada vs. AngaraAfter effects: R.A. No. 8293, the Intellectual Property Code - protecting patents, trademarks, service marks, tradenames, and copyrights; R.A. No. 8752, the Anti-Dumping Law - strengthening the government’s capability to provide remedies for, and to counteract the practice of dumping products in the country; and many others.
Espina vs. Zamora G.R. No. 143855, 21 September 2010, En BancIssue:Whether or not R.A. No. 8762 isviolative of Sections 9, 19, and 20 ofArticle II of the 1987 Constitution?
Espina vs. ZamoraFacts of the Case:Republic Act No. 8762, otherwise known as theRetail Trade Liberalization Act of 2000 wassigned into law by then President Joseph E.Estrada on 07 March 2000. It repealed R.A. No.1180, which prohibits foreign nationals fromengaging in retail trade business. It also allowedforeign equity participation in retail trade andthe same rights as Filipino citizens to formerFilipinos.
Espina vs. ZamoraConstitutional provisions in question: Article II, Section 9. The State shall promote a just and dynamicsocial order that will ensure the prosperity and independenceof the nation and free the people from poverty through policiesthat provide adequate social services, promote fullemployment, a rising standard of living, and an improvedquality of life for all.Article II, Section 19. The State shall develop a self-reliant andindependent national economy effectively controlled byFilipinos.Article II, Section 20. The State recognizes the indispensablerole of the private sector, encourages private enterprise, andprovides incentives to needed investments.
Espina vs. ZamoraConstitutional provisions in question: Article XII, Section 10. The Congress shall, upon recommendation ofthe economic and planning agency, when the national interestdictates, reserve to citizens of the Philippines or to corporations orassociations at least sixty per centum of whose capital is owned bysuch citizens, or such higher percentage as Congress may prescribe,certain areas of investments. The Congress shall enact measures thatwill encourage the formation and operation of enterprises whosecapital is wholly owned by Filipinos. xxx xxx xxxThe State shall regulate and exercise authority over foreigninvestments within its national jurisdiction and in accordancewith its national goals and priorities.
Espina vs. ZamoraConstitutional provisions in question: Article XII, Section 12. The State shall promotethe preferential use of Filipino labor, domesticmaterials and locally produced goods, and adoptmeasures that help make them competitive.Article XII, Section 13. The State shall pursue atrade policy that serves the general welfare andutilizes all forms and arrangements of exchangeon the basis of equality and reciprocity.
Espina vs. ZamoraRuling:The Supreme Court reiterated its stand asstated in Tanada vs. Angara that the provisionsof Article II of the 1987 Constitution are not self-executing and that the provisions of Article XIIthereof laid down the ideals of economicnationalism.
Espina vs. ZamoraRuling:“In other words, while Section 19, Article II of the1987 Constitution requires the development of aself-reliant and independent national economyeffectively controlled by Filipino entrepreneurs, itdoes not impose a policy of Filipino monopoly ofthe economic environment. The objective is simplyto prohibit foreign powers or interests frommaneuvering our economic policies andensure that Filipinos are given preferencein all areas of development. ”
Espina vs. ZamoraRuling:“In other words, the 1987 Constitution does not rule outthe entry of foreign investments, goods, and services.While it does not encourage their unlimited entry into thecountry, it does not prohibit them either. In fact, it allowsan exchange on the basis of equality and reciprocity,frowning only on foreign competition that is unfair. Thekey, as in all economies in the world, is to strike a balancebetween protecting local businesses and allowing theentry of foreign investments and services.”
Espina vs. ZamoraPostscript:“the law itself provided strict safeguards on foreignparticipation in retail trade, to wit:“First, aliens can only engage in retail trade businesssubject to the categories above-enumerated;Second, only nationals from, or juridical entities formedor incorporated in countries which allow the entry ofFilipino retailers shall be allowed to engagein retail trade business; and
Espina vs. ZamoraPostscript:Third, qualified foreign retailers shall not be allowed toengage in certain retailing activities outside theiraccredited stores through the use of mobile or rollingstores or carts, the use of sales representatives, door-to-door selling, restaurants and sari-sari stores and suchother similar retailing activities.”
Espina vs. ZamoraAfter effects:To date, we see 7-11, Walmart, S&R Price,Watsons, Makro, McDonald’s, and othersstores, which are owned fully or in part byforeign nationals or companies, abound inevery corner.
La Bugal-B’laan vs. DENRThis case was initiallydecided by theSupreme Court on 27January 2004.On motion forreconsideration, theSupreme Court, on 01December 2004reversed itself. Source: Global Metals News (2010)
La Bugal-B’laan vs. DENRIssue: Whether or not R.A. No. 7942 is unconstitutional?
La Bugal-B’laan vs. DENRFacts of the Case:The petition was filed by the petitioners formandamus and prohibition with prayer for issuanceof a temporary restraining order assailing theconstitutionality of Republic Act No. 7942 (thePhilippine Mining Act of 1995), its Implementing Rulesand Regulations, DENR Administrative Order 96-40,and the Financial and Technical Assistance Agreement(FTAA) between the Philippines and WMC(Philippines), Inc. (WMCP).
La Bugal-B’laan vs. DENRFacts of the Case:The petitioners claim that at the time of the filingof the petition, “100 FTAA applications hadalready been filed, covering an area of 8.4 millionhectares, 64 of which applications are by fullyforeign-owned corporations covering a total of5.8 million hectares, and at least one by a fullyforeign-owned mining company over offshoreareas.”
La Bugal-B’laan vs. DENRConstitutional provision in question:Article XII, Section 2, 4th paragraph. The Presidentmay enter into agreements with foreign-ownedcorporations involving either technical or financialassistance for large-scale exploration, development,and utilization of minerals, petroleum, and othermineral oils according to the general terms andconditions provided by law, based on realcontributions to the economic growth and generalwelfare of the country. In such agreements, the Stateshall promote the development and use of localscientific and technical resources.
La Bugal-B’laan vs. DENRRuling: January 27, 2004 Decision“WHEREFORE, the petition is GRANTED. The Court herebydeclares unconstitutional and void: (1) The following provisions of Republic Act No. 7942: (a) The proviso in Section 3 (aq),(b) Section 23,(c) Section 33 to 41,(d) Section 56,(e) The second and third paragraphs of Section 81, and(f) Section 90. (2) All provisions of Department of Environment and NaturalResources Administrative Order 96-40, s. 1996 which are notin conformity with this Decision, and (3) The Financial and Technical Assistance Agreementbetween the Government of the Republic of the Philippinesand WMC Philippines, Inc.”
La Bugal-B’laan vs. DENRRuling: 01 December 2004 Resolution“WHEREFORE, the Court RESOLVES to GRANT the respondentsand the intervenors Motions for Reconsideration; to REVERSEand SET ASIDE this Courts January 27, 2004 Decision; to DISMISSthe Petition; and to issue this new judgment declaringCONSTITUTIONAL (1) Republic Act No. 7942 (the PhilippineMining Law), (2) its Implementing Rules and Regulationscontained in DENR Administrative Order (DAO) No. 9640 --insofar as they relate to financial and technical assistanceagreements referred to in paragraph 4 of Section 2 of Article XIIof the Constitution; and (3) the Financial and TechnicalAssistance Agreement (FTAA) dated March 30, 1995 executedby the government and Western Mining Corporation PhilippinesInc. (WMCP), except Sections 7.8 and 7.9 of the subject FTAAwhich are hereby INVALIDATED for being contrary to publicpolicy and for being grossly disadvantageous to thegovernment.”
La Bugal-B’laan vs. DENRRuling: 01 December 2004 ResolutionIn finding R.A. No. 7942 and its IRR to be constitutional, the SupremeCourt explained that:“All mineral resources are owned by the State. Their exploration,development and utilization (EDU) must always be subject to the fullcontrol and supervision of the State. More specifically, given theinadequacy of Filipino capital and technology in large-scale EDU activities,the State may secure the help of foreign companies in all relevantmatters -- especially financial and technical assistance -- provided that, atall times, the State maintains its right of full control. The foreign assistoror contractor assumes all financial, technical and entrepreneurial risks inthe EDU activities; hence, it may be given reasonable management,operational, marketing, audit and other prerogativesto protect its investments and to enable the businessto succeed.
La Bugal-B’laan vs. DENRRuling: 01 December 2004 Resolution“The Constitution should be read in broad, life-giving strokes. Itshould not be used to strangulate economic growth or to servenarrow, parochial interests. Rather, it should be construed to grantthe President and Congress sufficient discretion and reasonableleeway to enable them to attract foreign investments and expertise,as well as to secure for our people and our posterity the blessings ofprosperity and peace.On the basis of this control standard, this Court upholds theconstitutionality of the Philippine Mining Law, its Implementing Rulesand Regulations -- insofar as they relate to financialand technical agreements -- as well as the subjectFinancial and Technical Assistance Agreement (FTAA).”
La Bugal-B’laan vs. DENRPostscript:“Verily, under the doctrine of separation of powers anddue respect for co-equal and coordinate branches ofgovernment, this Court must restrain itself fromintruding into policy matters and must allow thePresident and Congress maximum discretion in usingthe resources of our country and in securing theassistance of foreign groups to eradicate the grindingpoverty of our people and answer their cry for viableemployment opportunities in the country.
La Bugal-B’laan vs. DENRPostscript:Whether we consider the near term or take the longerview, we cannot overemphasize the need for anappropriate balancing of interests and needs -- the needto develop our stagnating mining industry and extractwhat NEDA Secretary Romulo Neri estimates is someUS$840 billion (approx. PhP47.04 trillion) worth ofmineral wealth lying hidden in the ground, in order tojumpstart our floundering economy on the one hand, andon the other, the need to enhance our nationalisticaspirations, protect our indigenous communities, andprevent irreversible ecological damage.
La Bugal-B’laan vs. DENRPostscript:This Court cannot but be mindful that any decisionrendered in this case will ultimately impact not only thecultural communities which lodged the instant Petition,and not only the larger community of the Filipinopeople now struggling to survive amidst afiscal/budgetary deficit, ever increasing prices of fuel,food, and essential commodities and services, theshrinking value of the local currency, and a governmenthamstrung in its delivery of basic services by a severelack of resources, but also countless future generationsof Filipinos.
La Bugal-B’laan vs. DENRAfter effects:In July this year(2007) , then DENR Secretary Angelo Reyes issuedDepartment Administrative Order (DAO) 2007-12 on the Revised FiscalRegime of FTAAs or foreign technical assistance agreements. In anews report dated July 2, 2007, ABS-CBN Interactive stated:Reyes, however, clarified that the scheme (revised fiscal regime) isincluded in the three options given to foreign investors before theyare allowed to start mining operations. The three options arecumulative face value of cash flows, profit based sharing andcumulative net mining revenue.J. Antonio Carpio, Closing the gaps between law and justice,Keynote Speech, Regional Convention of MindanaoLawyers, 21-23 November 2007
La Bugal-B’laan vs. DENRAfter effects:“Companies coming over would naturally choose the option that will bemost beneficial to them; and they will end up choosing one, that is thesecond option,” he said.He added: “(The) second option will be disadvantageous to thegovernment because it says that the additional government share … willonly kick in fi the profitability ratio net income over gross income ishigher than 40 percent.”He said no mining company in the history of the industry achieves that40 percent income. He said the probability of the government getting anadditional and fair share of its minerals from the mining companies is“somewhere from zero to nil.”J. Antonio Carpio, Closing the gaps between law and justice,Keynote Speech, Regional Convention of MindanaoLawyers, 21-23 November 2007
La Bugal-B’laan vs. DENRAfter effects:Let me repeat that: the DENR Secretary, doing his own arithmetic,publicly admitted that, under the profit sharing formula in DAO 99-56approved in La Bugal, the government will receive “somewhere fromzero to nil” in the mining revenues of foreign contractors. “Zero tonil” means not even a pittance. The Filipino people will receivenothing, zero, nil, ni sinkosin wala, in the profits from the estimatedP47 trillion mineral wealth of the country. This is the conclusion ofthe DENR Secretary. The DENR Secretary therefore revised the profitsharing formula in the net mining revenues into a 50-50 split betweenthe State and the FTAA contractor. This is ordained in the recentlyissued DAO 2007-12.J. Antonio Carpio, Closing the gaps between law and justice,Keynote Speech, Regional Convention of MindanaoLawyers, 21-23 November 2007
La Bugal-B’laan vs. DENRAfter effects:Should you now be jumping with joy? I believe that lawyersshould always have a healthy skepticism. The devil often lurks inthe details. I have not studied thoroughly DAO 2007-12. You, thelawyers from Mindanao, where a substantial portion of the P47trillion mineral wealth of the nation is found, should be the firstto study thoroughly DAO 2007-12. The P47 trillion mineralwealth belongs to the State. You, your children, grandchildrenand great grandchildren are the primary beneficiaries of thisvast, God-given wealth. You have a tremendous stake in howthe mineral wealth of the nation is going to be carved out.J. Antonio Carpio, Closing the gaps between law and justice,Keynote Speech, Regional Convention of MindanaoLawyers, 21-23 November 2007
La Bugal-B’laan vs. DENRAfter effects:Let me just cite two points about DAO 2007-12, and these should serveas caveats. First, DAO 2007-12 by its express terms appliesprospectively. There are only two existing FTAAs, and both weresigned before the effectivity of DAO 2007-12. That means DAO 2007-12 does not at present apply to any existing FTAA. That also meansthat the two existing FTAAs will still be governed by the formulaapproved by the majority of the Court in La Bugal, the formula in theold DAO 99-56. That old formula, in the words of then DENRSecretary Reyes, gives the Filipino people “somewhere from zero tonil” in mining revenues. Ironically, this is the fate the DENR wants theFilipino people to accept for the 49,373 hectares of mineral landscovered by the two existing FTAAs.J. Antonio Carpio, Closing the gaps between law and justice,Keynote Speech, Regional Convention of MindanaoLawyers, 21-23 November 2007
La Bugal-B’laan vs. DENRAfter effects:Second, DAO 2007-12 applies only to FTAAs and not to MPSAs ormineral production sharing agreements. There is no law or DAO thatgives the Filipino people any share, not even a single centavo, in theprofits from MPSAs. And yet all the existing mining permits issued bythe government are MPSAs except for two FTAAs. In short, the twoFTAAs reveal only the tip of the iceberg, and what lies below thesurface of the waters are the more than 262 MPSAs approved as ofJuly 31, 2007 comprising a total of 422,804 hectares of mineral lands.You can just imagine where the bulk, even all, of the profits from theP47 trillion mineral wealth of the nation is now going—certainly notto the coffers of the State, certainly not to the Filipino people,certainly not for your benefit. To paraphrase then DENR SecretaryReyes, ni sinkosin wala kayong parte sa kita.”J. Antonio Carpio, Closing the gaps between law and justice,Keynote Speech, Regional Convention of MindanaoLawyers, 21-23 November 2007
La Bugal-B’laan vs. DENRAfter effects:“The 1987 Constitution has been in effect for 20 years now.The 1987 Constitution discarded the “concession and lease”system under the 1935 and 1973 Constitutions. Instead, the1987 Constitution mandates the State to exploit our mineralresources through direct undertaking, joint venture, or co-production arrangements. The purpose is for the State, asowner of the mineral resources, to receive its fair share in theprofits from the exploitation of our mineral resources. Sadly,for the last 20 years the State has not received a single centavofrom the profits of mining companies.”J. Antonio Carpio, Closing the gaps between law and justice,Keynote Speech, Regional Convention of MindanaoLawyers, 21-23 November 2007
Conclusion“…. the Supreme Court (SC) needs your trust. If it must betrue to its name and if its decisions must be obeyed, itmust have the continuing trust of the populace. True,court decisions are not crafted on the basis of what ispopular. Rather, judges act only to weigh the logicalcompatibility of the established facts with the applicablelaw. That is, cases are won or lost, not because of popularpalatability or compromise or friendship or pecuniaryconsideration, but because of reasoned arguments flowingfrom legal principles and precedents.” Justice Artemio V. Panganiban Philippine Business Forum/ Economist Corporate Network 8 December 2004
Conclusion“Suffice it to say for the present that the Supreme Courtdoes not interfere in policy judgments of the President andCongress, even if these judgments may turn out to beunwise or inconvenient. However, when the actions of anyofficial of the government blatantly violate the Constitutionor the law, or are otherwise done with grave abuse ofdiscretion, the Court is duty-bound to “interfere” and touphold the rule of law. Correctly understood therefore, theCourt does not render economic decisions. Rather it issuesjudgments on how laws are applied to or interpreted in anyfield of human endeavor—family matters, criminalprosecutions or business activities.” Justice Artemio V. Panganiban Philippine Business Forum/ Economist Corporate Network 8 December 2004
ConclusionEconomic sovereignty is critical to economicdevelopment. And sovereignty means“liberalizing” when ready to do so and on termsbeneficial to domestic economy. Moreover, aneconomy will only get net benefits if the Stateexercises its sovereignty over foreign directinvestments (FDI) and requires real technologytransfers, controls the use and repatriation ofprofits, and applies local content and otherperformance requirements with strict limits onforeign equity ownership. http://www.bulatlat.com/main/2009/02/07/the-economic-folly-of-charter-change/
ConclusionIn the Philippines, the net result of the last twodecades of FDI is that foreign investors have beenable to make their profits without any realcontribution to domestic social and economicdevelopment. Increasing FDI has actually beenaccompanied by increasing unemployment, increasinglabor export, falling real wages, shrinkingmanufacturing and more volatile growth. There havealso not been any real increases in domestic capitalformation or in government revenues which haveincreasingly relied on regressive taxes on personalconsumption. http://www.bulatlat.com/main/2009/02/07/the-economic-folly-of-charter-change/
Conclusion"Let not our children be mere tenants and trespassers in their own country. Let us preserve and bequeath to them what isrightfully theirs, free from all foreign liens and encumbrances." Jose P. Laurel, Proceedings of the Philippine Constitutional Convention (1934-1935), p. 562
Conclusion “With all these said, it is the undersigned’s belief that a balanced between economic progress and sovereignty can be attained only if we trust our political leaders, if we are confident of the independence of our judicialsystem, and if there is stability in our peace and order. In the end, it is only a people who truly love their nation who can steer the same towards a common goal: sovereignty amidst progress.”