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 [1911]; Brice v. McDow, supra, at 87; Morgan v. Board of Supervisors, 67 Ariz. 133, 192 P. 2d 236, 241 [1948]; 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 Banc

Issue: Whether or not the foreign investor has the right of final choice under the 1987 Constitution and the Omnibus Investment Code?

Garcia vs. BOI

Facts 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. BOI

Facts of the Case: - part of the terms and conditions of its registration, it is specifically 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 incentives by BOI, like: (1) exemption from taxes on raw materials, (2) repatriation of the entire proceeds of liquidation investments in currency originally made and at the exchange rate obtaining at the time of repatriation; and (3) remittance of earnings on investments.” - petitioner pushed for the 48% ad valorem tax exemption if and when naphtha will be used as raw materials for the plant.

Garcia vs. BOI

Article XII, Section 1, 2nd par. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.

Article XII, Section 10, last par. The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities.

Constitutional provision in question:

Garcia vs. BOI Ruling: “Every provision of the Constitution on the national economy and patrimony is infused with the spirit of national interest. The non-alienation of natural resources, the State's full control over the development and utilization of our scarce resources, agreements with foreigners being based on real contributions to the economic growth and general welfare of the country and the regulation of foreign investments in accordance with national goals and priorities are too explicit not to be noticed and understood.”

Garcia vs. BOI Background: “In this particular BPC venture, not only has the Government given unprecedented favors, among them: (1) For an initial authorized capital of only P20 million, the Central Bank gave an eligible relending credit or relending facility worth US $50 million and a debt to swap arrangement for US $30 million or a total accommodation of US $80 million which at current exchange rates is around P2080 million. (2) A major part of the company's capitalization shall not come from foreign sources but from loans, initially a Pl Billion syndicated loan, to be given by both government banks and a consortium of Philippine private banks or in common parlance, a case of 'guiniguisa sa sariling manteca.'

Garcia vs. BOI Background: (3) Tax exemptions and privileges were given as part of its 'preferred pioneer status.' (4) Loan applications of other Philippine firms will be crowded out of the Asian Development Bank portfolio because of the petrochemical firm's massive loan request. (Taken from the proceedings before the Senate Blue Ribbon Committee).

Garcia vs. BOI

Reason: “…the plant site of the LPC should be in Bataan, given the peculiar factual circumstances and issues related to the proposed transfer, among them the original choice of Bataan as plant site; the intended partnership of LPC, a foreign investor, with the PNOC; the fact that the Bataan Refining Corporation can supply naphtha for the petrochemical plant; and the importance of an independent national economy. ..”

Garcia vs. BOI

Postscript: “One can but remember the words of a great Filipino leader who in part said he would not mind having a government run like hell by Filipinos than one subservient to foreign dictation. In this case, it is not even a foreign government but an ordinary investor whom the BOI allows to dictate what we shall do with our heritage.”

Garcia vs. BOI

After effects: “With a project cost of $370 million, Luzon Petrochem was the biggest direct foreign investment in the country at that time. Unfortunately, the corporation closed shop not too long after the high court ordered it to conduct business in its less preferred site. According to Capuno, the total net foreign exchange flows foregone as a result amounted to about $1.32 billion—more than enough to lift more than 5.6 million Filipinos out of poverty in 1998.”

Panao, Alicor L, The Economics of Law, http://www.up.edu.ph/upforum.php?issue=16&i=124

Garcia vs. BOI After effects: Currently, USI Far East Corporation, the major investor in LPC/BPC, maintained its operations in Taiwan and Hong Kong. In 2006, it has established its Shanghai office. Its main business is on the manufacture and sale of PE resins with its high-quality LDPE and HDPE enjoying high market share. It has diversified and invested in electronics, materials, and finance and venture capital industries.

www.usife.com.tw/dirEngAbout/frmEngAbout6

Garcia vs. JG Summit G.R. No. 127925, 23 February 2007, Second Division

Issue: Whether or not P.D. Nos. 949 and 1830 mandates the establishment of petrochemical plant only in Limay, Bataan?

Garcia vs. JG Summit

Facts of the Case: JG Summit Petrochemical Corp. (JG Summit) was registered by the BOI as a new domestic producer of polyethylene and polypropylene resins. In May 1994, it has manifested that it will established its plant in Negros Oriental but two (2) years later, had advised the BOI that it will locate in Batangas City.

Garcia vs. JG Summit

Article XII, Section 10, last par. The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities.

Constitutional provision in question:

Garcia vs. JG Summit Ruling: “If only to lay the matter finally to rest, this Court now reiterates that P.D. Nos. 949 and 1830 do not prohibit the establishment of a petrochemical plant outside of Limay, Bataan. A meticulous perusal of the two decrees reveals that nowhere in their provisions is it stated or can it be inferred that all petrochemical plants must be established in Limay, Bataan or, stated differently, that Bataan is intended to be the only site for all petrochemical plants.”

Garcia vs. JG Summit Postscript: “Finally, it is not for this Court to rule on whether the national interest would be served by allowing respondent to locate its plant in Batangas, instead of Bataan. As the first Garcia case held, "[t]his Court is not concerned with the economic, social, and political aspects of this case for it does not possess the necessary technology and scientific expertise to determine whether the transfer of the proposed BPC petrochemical complex from Bataan to Batangas and the change of fuel from naphtha only to ‘naphtha and/or LPG will be best for the project and for our country. This Court is not about to delve into the economics and politics of this case . . . ."

Garcia vs. JG Summit After effects: JG Summit is currently operating in Simlong, Batangas City and proud to claim as the first and only integrated Polyethylene and Polypropylene resin manufacturer in the country producing the EVALENE® brand of HDPE, LLDPE, and Homopolymer and Random Copolymer Polypropylene. Its plant’s annual production capacities are 200,000MT for Polyethylene and 180,000MT for Polypropylene. JG Summit is a joint venture between JG Summit Holdings, Inc. of the Philippines and Marubeni Corporation of Japan.

http://www.jgspetrochem.com

Manila Prince Hotel vs. GSIS G.R. No. 122156, 03 February 1997, En Banc

Issues: 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. GSIS

Facts of the Case: The Government Service Insurance System (GSIS) offered to sell 30% to 51% of the issued and outstanding shares of Manila Hotel Corporation (MHC) in line with the privatization program of the national government under Proclamation No. 50 dated 08 December 1986. One of the integral requirements for the offer to be considered is the fact that “the winning bidder, or the eventual "strategic partner," is to provide management expertise and/or an international marketing/reservation system, and financial support to strengthen the profitability and performance of the Manila Hotel.”

Manila Prince Hotel vs. GSIS

Facts of the Case: On 18 September 1995, two (2) bidders pre-qualified, namely: herein petitioner, Manila Prince Hotel Corporation (MPHC), a Filipino corporation, and Renong Berhad, a Malaysian firm with ITT Sheraton as operator. Renong Berhad won with its offer of Php44.00 per share or Php2.42 per share more than MPHC’s offer of Php41.58 per share. MPHC subsequently matched the offer of Renong Berhad and even sent a manager’s check as its bid security. But GSIS did not accept the offer. Thus, MPHC went to court in order to enjoin the respondents from perfecting and consummating the sale to Renong Berhad.

Manila Prince Hotel vs. GSIS Constitutional provision in question: Article XII, Section 10, second paragraph. In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.

Manila Prince Hotel vs. GSIS Ruling: First Issue: Whether or not Article XII, Section 10, 2nd par., of the 1987 Constitution is self-executing?

“… a provision which is complete in itself and becomes operative without the aid of supplementary or enabling legislation, or that which supplies sufficient rule by means of which the right it grants may be enjoyed or protected, is self-executing. Thus a constitutional provision is self-executing if the nature and extent of the right conferred and the liability imposed are fixed by the constitution itself, so that they can be determined by an examination and construction of its terms, and there is no language indicating that the subject is referred to the legislature for action.”

Manila Prince Hotel vs. GSIS Ruling: First Issue: Whether or not Article XII, Section 10, 2nd par., of the 1987 Constitution is self-executing?

“Sec. 10, second par., Art. XII of the of the 1987 Constitution is a mandatory, positive command which is complete in itself and which needs no further guidelines or implementing laws or rules for its enforcement.”

Manila Prince Hotel vs. GSIS Ruling: Second Issue: 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?

“Manila Hotel has become part of our national economy and patrimony. For sure, 51% of the equity of the MHC comes within the purview of the constitutional shelter for it comprises the majority and controlling stock, so that anyone who acquires or owns the 51% will have actual control and management of the hotel.”

Manila Prince Hotel vs. GSIS Ruling: Third Issue: Whether or not GSIS is deemed an arm of the State?

“In constitutional jurisprudence, the acts of persons distinct from the government are considered "state action" covered by the Constitution (1) when the activity it engages in is a "public function;" (2) when the government is so significantly involved with the private actor as to make the government responsible for his action; and, (3) when the government has approved or authorized the action.

Manila Prince Hotel vs. GSIS Ruling: Third Issue: Whether or not GSIS is deemed an arm of the State?

“It is evident that the act of respondent GSIS in selling 51% of its share in respondent MHC comes under the second and third categories of "state action." Without doubt therefore the transaction, although entered into by respondent GSIS, is in fact a transaction of the State and therefore subject to the constitutional command.

Manila Prince Hotel vs. GSIS Ruling: Fourth Issue: Whether or not petitioner is not estopped from invoking the provisions of Article XII, Section 10 of the 1987 Constitution?

“In the instant case, where a foreign firm submits the highest bid in a public bidding concerning the grant of rights, privileges and concessions covering the national economy and patrimony, thereby exceeding the bid of a Filipino, there is no question that the Filipino will have to be allowed to match the bid of the foreign entity. And if the Filipino matches the bid of a foreign firm the award should go to the Filipino. It must be so if we are to give life and meaning to the Filipino First Policy provision of the 1987 Constitution.

Manila Prince Hotel vs. GSIS

Postscript: “This Court does not discount the apprehension that this policy may discourage foreign investors. But the Constitution and laws of the Philippines are understood to be always open to public scrutiny. These are given factors which investors must consider when venturing into business in a foreign jurisdiction. Any person therefore desiring to do business in the Philippines or with any of its agencies or instrumentalities is presumed to know his rights and obligations under the Constitution and the laws of the forum.

Manila Prince Hotel vs. GSIS Postscript: “… the second paragraph of section 10, Article XII of the Constitution 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 bar aliens in the grant of rights, privileges and concessions covering the national economy and patrimony. Indeed, in the absence of qualified Filipinos, the State is not prohibited from granting these rights, privileges and concessions to foreigners if the act will promote the weal of the nation.” Justice Reynato Puno, dissenting

Manila Prince Hotel vs. GSIS

After effects: To date, Manila Hotel is owned by MPHC after it took over on May 7, 1997. It is currently being pursued by GSIS for its unpaid obligations amounting to Php8.7 billion, aside from unpaid rentals of Php286 million. It has since been opined that Manila Hotel has lost its grandeur and magnificence and it reeks of commercialism rather 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://208.184.76.175/Article.aspx?articleid=29379

Manila Prince Hotel vs. GSIS

After effects: Renong Berhad on the other hand filed for bankruptcy in 1998 as a result of the Asian financial crisis. It is Malaysia’s one of the biggest and most diversified conglomerate and at the same time Malaysia’s biggest corporate debtor.

http://bigdogdotcom.wordpress.com/2010/09/03/

Tanada vs. Angara G.R. No. 118295, 02 May 1997, En Banc

Issue: Whether or not the provisions of the Agreement Establishing the World Trade Organization (WTO Agreement) are violative of Section 19, Article II, and Sections 10 & 12, Article XII, of the 1987 Constitution?

Tanada vs. Angara Facts of the Case: On 15 April 1994, the Philippines, as represented by then Secretary Rizalino Navarro of the Department of Trade and Industry, signed the Final Act Embodying the Results of the Uruguay Round of Multinational Negotiations (Final Act). This Act, together with the WTO Agreement, the Ministerial Declarations and Decisions, and the Understanding on Commitments in Financial Services were submitted to the Senate for its concurrence as provided for in Article VII, Section 21 of the 1987 Constitution. On 14 December 1994, the Senate ratified the WTO Agreement and two days later, or on 16 December 1994, then President Fidel V. Ramos signed the Instrument of Ratification.

Tanada vs. Angara Constitutional provisions in question: Art. II, Sec. 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos. Article XII, Sec. 10, 2nd par. In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. Article XII, Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive.

Tanada vs. Angara Ruling: “All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity and limits protection of Filipino enterprises only against foreign competition and trade practices that are unfair. In other words, the Constitution did not intend to pursue an isolationist policy.”

Tanada vs. Angara Ruling: “It did not shut out foreign investments, goods and services in the development of the Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and investments into the country, it does not prohibit them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.”

Tanada vs. Angara Ruling: “The WTO reliance on “most favored nation,” “national treatment,” and “trade without discrimination” cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on “equality and reciprocity,” the fundamental law encourages industries that are “competitive in both domestic and foreign markets,” thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of the gradual development of robust industries that can compete with the best in the foreign markets.”

Tanada vs. Angara Postscript: “…what the Senate did was a valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a matter between the elected policy makers and the people. As to whether the nation should join the worldwide march toward trade liberalization and economic globalization is a matter that our people should determine in electing their policy makers. After all, the WTO Agreement allows withdrawal of membership, should this be the political desire of a member.”

Tanada vs. Angara Postscript:

“Increased participation in the world economy has become the key

to domestic economic growth and prosperity.”

Peter Drucker

Tanada vs. Angara After 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. Angara After 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 Banc

Issue: Whether or not R.A. No. 8762 is violative of Sections 9, 19, and 20 of Article II of the 1987 Constitution?

Espina vs. Zamora

Facts of the Case: Republic Act No. 8762, otherwise known as the Retail Trade Liberalization Act of 2000 was signed into law by then President Joseph E. Estrada on 07 March 2000. It repealed R.A. No. 1180, which prohibits foreign nationals from engaging in retail trade business. It also allowed foreign equity participation in retail trade and the same rights as Filipino citizens to former Filipinos.

Espina vs. Zamora Constitutional provisions in question: Article II, Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. Article II, Section 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos. Article II, Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.

Espina vs. Zamora Constitutional provisions in question: Article XII, Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. xxx xxx xxx The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities.

Espina vs. Zamora

Constitutional provisions in question: Article XII, Section 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive. Article XII, Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity.

Espina vs. Zamora

Ruling:

The Supreme Court reiterated its stand as stated in Tanada vs. Angara that the provisions of Article II of the 1987 Constitution are not self-executing and that the provisions of Article XII thereof laid down the ideals of economic nationalism.

Espina vs. Zamora Ruling: “In other words, while Section 19, Article II of the 1987 Constitution requires the development of a self-reliant and independent national economy effectively controlled by Filipino entrepreneurs, it does not impose a policy of Filipino monopoly of the economic environment. The objective is simply to prohibit foreign powers or interests from maneuvering our economic policies and ensure that Filipinos are given preference in all areas of development. ”

Espina vs. Zamora Ruling: “In other words, the 1987 Constitution does not rule out the entry of foreign investments, goods, and services. While it does not encourage their unlimited entry into the country, it does not prohibit them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair. The key, as in all economies in the world, is to strike a balance between protecting local businesses and allowing the entry of foreign investments and services.”

Espina vs. Zamora Postscript: “the law itself provided strict safeguards on foreign participation in retail trade, to wit: “First, aliens can only engage in retail trade business subject to the categories above-enumerated; Second, only nationals from, or juridical entities formed or incorporated in countries which allow the entry of Filipino retailers shall be allowed to engage in retail trade business; and

Espina vs. Zamora Postscript: Third, qualified foreign retailers shall not be allowed to engage in certain retailing activities outside their accredited stores through the use of mobile or rolling stores or carts, the use of sales representatives, door-to-door selling, restaurants and sari-sari stores and such other similar retailing activities.”

Espina vs. Zamora

After effects: To date, we see 7-11, Walmart, S&R Price, Watsons, Makro, McDonald’s, and others stores, which are owned fully or in part by foreign nationals or companies, abound in every corner.

La Bugal-B’laan vs. DENR

Source: Global Metals News (2010)

This case was initially decided by the Supreme Court on 27 January 2004. On motion for reconsideration, the Supreme Court, on 01 December 2004 reversed itself.

La Bugal-B’laan vs. DENR

Issue:

Whether or not R.A. No. 7942 is unconstitutional?

La Bugal-B’laan vs. DENR

Facts of the Case: The petition was filed by the petitioners for mandamus and prohibition with prayer for issuance of a temporary restraining order assailing the constitutionality of Republic Act No. 7942 (the Philippine Mining Act of 1995), its Implementing Rules and 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. DENR Facts of the Case: The petitioners claim that at the time of the filing of the petition, “100 FTAA applications had already been filed, covering an area of 8.4 million hectares, 64 of which applications are by fully foreign-owned corporations covering a total of 5.8 million hectares, and at least one by a fully foreign-owned mining company over offshore areas.”

La Bugal-B’laan vs. DENR Constitutional provision in question:

Article XII, Section 2, 4th paragraph. The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.

La Bugal-B’laan vs. DENR Ruling: January 27, 2004 Decision “WHEREFORE, the petition is GRANTED. The Court hereby declares 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 Natural Resources Administrative Order 96-40, s. 1996 which are not in conformity with this Decision, and (3) The Financial and Technical Assistance Agreement between the Government of the Republic of the Philippines and WMC Philippines, Inc.”

La Bugal-B’laan vs. DENR Ruling: 01 December 2004 Resolution “WHEREFORE, the Court RESOLVES to GRANT the respondents' and the intervenors' Motions for Reconsideration; to REVERSE and SET ASIDE this Court's January 27, 2004 Decision; to DISMISS the Petition; and to issue this new judgment declaring CONSTITUTIONAL (1) Republic Act No. 7942 (the Philippine Mining Law), (2) its Implementing Rules and Regulations contained in DENR Administrative Order (DAO) No. 9640 -- insofar as they relate to financial and technical assistance agreements referred to in paragraph 4 of Section 2 of Article XII of the Constitution; and (3) the Financial and Technical Assistance Agreement (FTAA) dated March 30, 1995 executed by the government and Western Mining Corporation Philippines Inc. (WMCP), except Sections 7.8 and 7.9 of the subject FTAA which are hereby INVALIDATED for being contrary to public policy and for being grossly disadvantageous to the government.”

La Bugal-B’laan vs. DENR Ruling: 01 December 2004 Resolution

In finding R.A. No. 7942 and its IRR to be constitutional, the Supreme Court explained that: “All mineral resources are owned by the State. Their exploration, development and utilization (EDU) must always be subject to the full control and supervision of the State. More specifically, given the inadequacy of Filipino capital and technology in large-scale EDU activities, the State may secure the help of foreign companies in all relevant matters -- especially financial and technical assistance -- provided that, at all times, the State maintains its right of full control. The foreign assistor or contractor assumes all financial, technical and entrepreneurial risks in the EDU activities; hence, it may be given reasonable management, operational, marketing, audit and other prerogatives to protect its investments and to enable the business to succeed.

La Bugal-B’laan vs. DENR Ruling: 01 December 2004 Resolution

“The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate economic growth or to serve narrow, parochial interests. Rather, it should be construed to grant the President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign investments and expertise, as well as to secure for our people and our posterity the blessings of prosperity and peace. On the basis of this control standard, this Court upholds the constitutionality of the Philippine Mining Law, its Implementing Rules and Regulations -- insofar as they relate to financial and technical agreements -- as well as the subject Financial and Technical Assistance Agreement (FTAA).”

La Bugal-B’laan vs. DENR Postscript: “Verily, under the doctrine of separation of powers and due respect for co-equal and coordinate branches of government, this Court must restrain itself from intruding into policy matters and must allow the President and Congress maximum discretion in using the resources of our country and in securing the assistance of foreign groups to eradicate the grinding poverty of our people and answer their cry for viable employment opportunities in the country.

La Bugal-B’laan vs. DENR Postscript:

Whether we consider the near term or take the longer view, we cannot overemphasize the need for an appropriate balancing of interests and needs -- the need to develop our stagnating mining industry and extract what NEDA Secretary Romulo Neri estimates is some US$840 billion (approx. PhP47.04 trillion) worth of mineral wealth lying hidden in the ground, in order to jumpstart our floundering economy on the one hand, and on the other, the need to enhance our nationalistic aspirations, protect our indigenous communities, and prevent irreversible ecological damage.

La Bugal-B’laan vs. DENR Postscript:

This Court cannot but be mindful that any decision rendered in this case will ultimately impact not only the cultural communities which lodged the instant Petition, and not only the larger community of the Filipino people now struggling to survive amidst a fiscal/budgetary deficit, ever increasing prices of fuel, food, and essential commodities and services, the shrinking value of the local currency, and a government hamstrung in its delivery of basic services by a severe lack of resources, but also countless future generations of Filipinos.

La Bugal-B’laan vs. DENR After effects:

In July this year(2007) , then DENR Secretary Angelo Reyes issued Department Administrative Order (DAO) 2007-12 on the Revised Fiscal Regime of FTAAs or foreign technical assistance agreements. In a news report dated July 2, 2007, ABS-CBN Interactive stated: Reyes, however, clarified that the scheme (revised fiscal regime) is included in the three options given to foreign investors before they are allowed to start mining operations. The three options are cumulative face value of cash flows, profit based sharing and cumulative net mining revenue.

J. Antonio Carpio, Closing the gaps between law and justice, Keynote Speech, Regional Convention of Mindanao Lawyers, 21-23 November 2007

La Bugal-B’laan vs. DENR After effects:

“Companies coming over would naturally choose the option that will be most beneficial to them; and they will end up choosing one, that is the second option,” he said. He added: “(The) second option will be disadvantageous to the government because it says that the additional government share … will only kick in fi the profitability ratio net income over gross income is higher than 40 percent.” He said no mining company in the history of the industry achieves that 40 percent income. He said the probability of the government getting an additional 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 Mindanao Lawyers, 21-23 November 2007

La Bugal-B’laan vs. DENR After effects:

Let me repeat that: the DENR Secretary, doing his own arithmetic, publicly admitted that, under the profit sharing formula in DAO 99-56 approved in La Bugal, the government will receive “somewhere from zero to nil” in the mining revenues of foreign contractors. “Zero to nil” means not even a pittance. The Filipino people will receive nothing, zero, nil, ni sinkosin wala, in the profits from the estimated P47 trillion mineral wealth of the country. This is the conclusion of the DENR Secretary. The DENR Secretary therefore revised the profit sharing formula in the net mining revenues into a 50-50 split between the State and the FTAA contractor. This is ordained in the recently issued DAO 2007-12.

J. Antonio Carpio, Closing the gaps between law and justice, Keynote Speech, Regional Convention of Mindanao Lawyers, 21-23 November 2007

La Bugal-B’laan vs. DENR After effects:

Should you now be jumping with joy? I believe that lawyers should always have a healthy skepticism. The devil often lurks in the details. I have not studied thoroughly DAO 2007-12. You, the lawyers from Mindanao, where a substantial portion of the P47 trillion mineral wealth of the nation is found, should be the first to study thoroughly DAO 2007-12. The P47 trillion mineral wealth belongs to the State. You, your children, grandchildren and great grandchildren are the primary beneficiaries of this vast, God-given wealth. You have a tremendous stake in how the 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 Mindanao Lawyers, 21-23 November 2007

La Bugal-B’laan vs. DENR After effects:

Let me just cite two points about DAO 2007-12, and these should serve as caveats. First, DAO 2007-12 by its express terms applies prospectively. There are only two existing FTAAs, and both were signed before the effectivity of DAO 2007-12. That means DAO 2007-12 does not at present apply to any existing FTAA. That also means that the two existing FTAAs will still be governed by the formula approved by the majority of the Court in La Bugal, the formula in the old DAO 99-56. That old formula, in the words of then DENR Secretary Reyes, gives the Filipino people “somewhere from zero to nil” in mining revenues. Ironically, this is the fate the DENR wants the Filipino people to accept for the 49,373 hectares of mineral lands covered by the two existing FTAAs.

J. Antonio Carpio, Closing the gaps between law and justice, Keynote Speech, Regional Convention of Mindanao Lawyers, 21-23 November 2007

La Bugal-B’laan vs. DENR After effects:

Second, DAO 2007-12 applies only to FTAAs and not to MPSAs or mineral production sharing agreements. There is no law or DAO that gives the Filipino people any share, not even a single centavo, in the profits from MPSAs. And yet all the existing mining permits issued by the government are MPSAs except for two FTAAs. In short, the two FTAAs reveal only the tip of the iceberg, and what lies below the surface of the waters are the more than 262 MPSAs approved as of July 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 the P47 trillion mineral wealth of the nation is now going—certainly not to the coffers of the State, certainly not to the Filipino people, certainly not for your benefit. To paraphrase then DENR Secretary Reyes, ni sinkosin wala kayong parte sa kita.”

J. Antonio Carpio, Closing the gaps between law and justice, Keynote Speech, Regional Convention of Mindanao Lawyers, 21-23 November 2007

La Bugal-B’laan vs. DENR After 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, the 1987 Constitution mandates the State to exploit our mineral resources through direct undertaking, joint venture, or co-production arrangements. The purpose is for the State, as owner of the mineral resources, to receive its fair share in the profits from the exploitation of our mineral resources. Sadly, for the last 20 years the State has not received a single centavo from the profits of mining companies.”

J. Antonio Carpio, Closing the gaps between law and justice, Keynote Speech, Regional Convention of Mindanao Lawyers, 21-23 November 2007

Conclusion “…. the Supreme Court (SC) needs your trust. If it must be true to its name and if its decisions must be obeyed, it must have the continuing trust of the populace. True, court decisions are not crafted on the basis of what is popular. Rather, judges act only to weigh the logical compatibility of the established facts with the applicable law. That is, cases are won or lost, not because of popular palatability or compromise or friendship or pecuniary consideration, but because of reasoned arguments flowing from 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 Court does not interfere in policy judgments of the President and Congress, even if these judgments may turn out to be unwise or inconvenient. However, when the actions of any official of the government blatantly violate the Constitution or the law, or are otherwise done with grave abuse of discretion, the Court is duty-bound to “interfere” and to uphold the rule of law. Correctly understood therefore, the Court does not render economic decisions. Rather it issues judgments on how laws are applied to or interpreted in any field of human endeavor—family matters, criminal prosecutions or business activities.”

Justice Artemio V. Panganiban Philippine Business Forum/

Economist Corporate Network 8 December 2004

Conclusion Economic sovereignty is critical to economic development. And sovereignty means “liberalizing” when ready to do so and on terms beneficial to domestic economy. Moreover, an economy will only get net benefits if the State exercises its sovereignty over foreign direct investments (FDI) and requires real technology transfers, controls the use and repatriation of profits, and applies local content and other performance requirements with strict limits on foreign equity ownership.

http://www.bulatlat.com/main/2009/02/07/the-economic-folly-of-charter-change/

Conclusion In the Philippines, the net result of the last two decades of FDI is that foreign investors have been able to make their profits without any real contribution to domestic social and economic development. Increasing FDI has actually been accompanied by increasing unemployment, increasing labor export, falling real wages, shrinking manufacturing and more volatile growth. There have also not been any real increases in domestic capital formation or in government revenues which have increasingly relied on regressive taxes on personal consumption.

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 is

rightfully 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 judicial system, 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.”