1. La Bugal-B’Laan Tribal Association Inc.

vs Ramos

GR No. 127882 December 1, 2004

Facts: The Petition for Prohibition and Mandamus before the Court challenges the constitutionality of (1)
Republic Act No. [RA] 7942 (The Philippine Mining Act of 1995); (2) its Implementing Rules and
Regulations (DENR Administrative Order No. [DAO] 96-40); and (3) the FTAA dated March 30, 1995,6
executed by the government with Western Mining Corporation (Philippines), Inc. (WMCP). On January
27, 2004, the Court en banc promulgated its Decision granting the Petition and declaring the
unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well as of the entire FTAA executed
between the government and WMCP, mainly on the finding that FTAAs are service contracts prohibited
by the 1987 Constitution. The Decision struck down the subject FTAA for being similar to service
contracts, which, though permitted under the 1973 Constitution, were subsequently denounced for
being antithetical to the principle of sovereignty over our natural resources, because they allowed
foreign control over the exploitation of our natural resources, to the prejudice of the Filipino nation. The
Decision quoted several legal scholars and authors who had criticized service contracts for, inter alia,
vesting in the foreign contractor exclusive management and control of the enterprise, including
operation of the field in the event petroleum was discovered; control of production, expansion and
development; nearly unfettered control over the disposition and sale of the products
discovered/extracted; effective ownership of the natural resource at the point of extraction; and
beneficial ownership of our economic resources. According to the Decision, the 1987 Constitution
(Section 2 of Article XII) effectively banned such service contracts. Subsequently, respondents filed
separate Motions for Reconsideration. In a Resolution dated March 9, 2004, the Court required
petitioners to comment thereon. In the Resolution of June 8, 2004, it set the case for Oral Argument on
June 29, 2004.

Issue: Whether or not the FTAA issued were valid.

Held: Yes. The notion that the deliberations reflect only the views of those members who spoke out and
not the views of the majority who remained silent should be clarified. We must never forget that those
who spoke out were heard by those who remained silent and did not react. If the latter were silent
because they happened not to be present at the time, they are presumed to have read the minutes and
kept abreast of the deliberations. By remaining silent, they are deemed to have signified their assent to
and/or conformity with at least some of the views propounded or their lack of objections thereto. It was
incumbent upon them, as representatives of the entire Filipino people, to follow the deliberations
closely and to speak their minds on the matter if they did not see eye to eye with the proponents of the
draft provisions.
In any event, each and every one of the commissioners had the opportunity to speak out and to vote on
the matter. Moreover, the individual explanations of votes are on record, and they show where each
delegate stood on the issues. In sum, we cannot completely denigrate the value or usefulness of the
record of the ConCom, simply because certain members chose not to speak out.

However, it is of common knowledge, and of judicial notice as well, that the government is and has for
many many years been financially strapped, to the point that even the most essential services have
suffered serious curtailments — education and health care, for instance, not to mention judicial services
— have had to make do with inadequate budgetary allocations. Thus, government has had to resort to
build-operate-transfer and similar arrangements with the private sector, in order to get vital
infrastructure projects built without any governmental outlay.

The drafters — whose ranks included many academicians, economists, businessmen, lawyers, politicians
and government officials — were not unfamiliar with the practices of foreign corporations and
multinationals.

Neither were they so naïve as to believe that these entities would provide “assistance” without
conditionalities or some quid pro quo. Definitely, as business persons well know and as a matter of
judicial notice, this matter is not just a question of signing a promissory note or executing a technology
transfer agreement. Foreign corporations usually require that they be given a say in the management,
for instance, of day-to-day operations of the joint venture. They would demand the appointment of
their own men as, for example, operations managers, technical experts, quality control heads, internal
auditors or comptrollers. Furthermore, they would probably require seats on the Board of Directors —
all these to ensure the success of the enterprise and the repayment of the loans and other financial
assistance and to make certain that the funding and the technology they supply would not go to waste.
Ultimately, they would also want to protect their business reputation and bottom lines.

2.