FIRST DIVISION

[G.R. No. 157882. March 30, 2006.]

DIDIPIO EARTH-SAVERS' MULTI-PURPOSE ASSOCIATION,

INCORPORATED (DESAMA), MANUEL BUTIC, CESAR MARIANO,
LAURO ABANCE, BEN TAYABAN, ANTONIO DINGCOG, TEDDY B.
KIMAYONG, ALONZO ANANAYO, ANTONIO MALANUYA, JOSE
BAHAG, ANDRES INLAB, RUFINO LICYAYO, ALFREDO CULHI,
CATALILNA INABYUHAN, GUAY DUMMANG, GINA PULIDO, EDWIN
ANSIBEY, CORAZON SICUAN, LOPEZ DUMULAG, FREDDIE AYDINON,
VILMA JOSE, FLORENTINA MADDAWAT, LINDA DINGCOG, ELMER
SICUAN, GARY ANSIBEY, JIMMY MADDAWAT, JIMMY GUAY,
ALFREDO CUT-ING, ANGELINA UDAN, OSCAR INLAB, JUANITA CUT-
ING, ALBERT PINKIHAN, CECILIA TAYABAN, CRISTA BINWAK,
PEDRO DUGAY, SR., EDUARDO ANANAYO, ROBIN INLAB, JR.,
LORENZO PULIDO, TOMAS BINWAG, EVELYN BUYA, JAIME
DINGCOG, DINAOAN CUT-ING, PEDRO DONATO, MYRNA GUAY,
FLORA ANSIBEY, GRACE DINAMLING, EDUARDO MENCIAS,
ROSENDA JACOB, SIONITA DINGCOG, GLORIA JACOB, MAXIMA
GUAY, RODRIGO PAGGADUT, MARINA ANSIBEY, TOLENTINO INLAB,
RUBEN DULNUAN, GERONIMO LICYAYO, LEONCIO CUMTI, MARY
DULNUAN, FELISA BALANBAN, MYRNA DUYAN, MARY MALANUYA,
PRUDENCIO ANSIBEY, GUILLERMO GUAY, MARGARITA CULHI,
ALADIN ANSIBEY, PABLO DUYAN, PEDRO PUGUON, JULIAN INLAB,
JOSEPH NACULON, ROGER BAJITA, DINAON GUAY, JAIME
ANANAYO, MARY ANSIBEY, LINA ANANAYO, MAURA DUYAPAT,
ARTEMEO ANANAYO, MARY BABLING, NORA ANSIBEY, DAVID
DULNUAN, AVELINO PUGUON, LUCAS GUMAWI, LUISA ABBAC,
CATHRIN GUWAY, CLARITA TAYABAN, FLORA JAVERA, RANDY
SICOAN, FELIZA PUTAKI, CORAZON P. DULNUAN, NENA D.
BULLONG, ERMELYN GUWAY, GILBERT BUTALE, JOSEPH B.
BULLONG, FRANCISCO PATNAAN, JR., SHERWIN DUGAY, TIRSO
GULLINGAY, BENEDICT T. NABALLIN, RAMON PUN-ADWAN,
ALFONSO DULNUAN, CARMEN D. BUTALE, LOLITA ANSIBEY,
ABRAHAM DULNUAN, ARLYNDA BUTALE, MODESTO A. ANSIBEY,
EDUARDO LUGAY, ANTONIO HUMIWAT, ALFREDO PUMIHIC, MIKE
TINO, TONY CABARROGUIS, BASILIO TAMLIWOK, JR., NESTOR
TANGID, ALEJO TUGUINAY, BENITO LORENZO, RUDY BAHIWAG,
ANALIZA BUTALE, NALLEM LUBYOC, JOSEPH DUHAYON, RAFAEL
CAMPOL, MANUEL PUMALO, DELFIN AGALOOS, PABLO CAYANGA,
PERFECTO SISON, ELIAS NATAMA, LITO PUMALO, SEVERINA
DUGAY, GABRIEL PAKAYAO, JEOFFREY SINDAP, FELIX TICUAN,
MARIANO S. MADDELA, MENZI TICAWA, DOMINGA DUGAY, JOE
BOLINEY, JASON ASANG, TOMMY ATENYAYO, ALEJO AGMALIW,
DIZON AGMALIW, EDDIE ATOS, FELIMON BLANCO, DARRIL DIGOY,
LUCAS BUAY, ARTEMIO BRAZIL, NICANOR MODI, LUIS REDULFIN,
NESTOR JUSTINO, JAIME CUMILA, BENEDICT GUINID, EDITHA
ANIN, INOH-YABAN BANDAO, LUIS BAYWONG, FELIPE DUHALNGON,
PETER BENNEL, JOSEPH T. BUNGGALAN, JIMMY B. KIMAYONG,
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 HENRY PUGUON, PEDRO BUHONG, BUGAN NADIAHAN, SR., MARIA
EDEN ORLINO, SPC, PERLA VISSORO, and BISHOP RAMON VILLENA ,
petitioners, vs . ELISEA GOZUN, in her capacity as SECRETARY of the
DEPARTMENT OF ENVIRONMENT and NATURAL RESOURCES
(DENR), HORACIO RAMOS, in his capacity as Director of the Mines
and Geosciences Bureau (MGB-DENR), ALBERTO ROMULO, in his
capacity as the Executive Secretary of the O ce of the President,
RICHARD N. FERRER, in his capacity as Acting Undersecretary of the
O ce of the President, IAN HEATH SANDERCOCK, in his capacity
as President of CLIMAX-ARIMCO MINING CORPORATION ,
respondents.

DECISION

CHICO-NAZARIO , J : p

This petition for prohibition and mandamus under Rule 65 of the Rules of Court
assails the constitutionality of Republic Act No. 7942 otherwise known as the
Philippine Mining Act of 1995, together with the Implementing Rules and Regulations
issued pursuant thereto, Department of Environment and Natural Resources (DENR)
Administrative Order No. 96-40, s. 1996 (DAO 96-40) and of the Financial and Technical
Assistance Agreement (FTAA) entered into on 20 June 1994 by the Republic of the
Philippines and Arimco Mining Corporation (AMC), a corporation established under the
laws of Australia and owned by its nationals.
On 25 July 1987, then President Corazon C. Aquino promulgated Executive Order
No. 279 which authorized the DENR Secretary to accept, consider and evaluate
proposals from foreign-owned corporations or foreign investors for contracts of
agreements involving either technical or nancial assistance for large-scale exploration,
development, and utilization of minerals, which, upon appropriate recommendation of
the Secretary, the President may execute with the foreign proponent.
On 3 March 1995, then President Fidel V. Ramos signed into law Rep. Act No.
7942 entitled, "An Act Instituting A New System of Mineral Resources Exploration,
Development, Utilization and Conservation," otherwise known as the Philippine Mining
Act of 1995.
On 15 August 1995, then DENR Secretary Victor O. Ramos issued DENR
Administrative Order (DAO) No. 23, Series of 1995, containing the implementing
guidelines of Rep. Act No. 7942. This was soon superseded by DAO No. 96-40, s. 1996,
which took effect on 23 January 1997 after due publication.
Previously, however, or speci cally on 20 June 1994, President Ramos executed
an FTAA with AMC over a total land area of 37,000 hectares covering the provinces of
Nueva Vizcaya and Quirino. Included in this area is Barangay Dipidio, Kasibu, Nueva
Vizcaya.
Subsequently, AMC consolidated with Climax Mining Limited to form a single
company that now goes under the new name of Climax-Arimco Mining Corporation
(CAMC), the controlling 99% of stockholders of which are Australian nationals.
On 7 September 2001, counsels for petitioners led a demand letter addressed
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 to then DENR Secretary Heherson Alvarez, for the cancellation of the CAMC FTAA for
the primary reason that Rep. Act No. 7942 and its Implementing Rules and Regulations
DAO 96-40 are unconstitutional. The O ce of the Executive Secretary was also
furnished a copy of the said letter. There being no response to both letters, another
letter of the same content dated 17 June 2002 was sent to President Gloria Macapagal
Arroyo. This letter was indorsed to the DENR Secretary and eventually referred to the
Panel of Arbitrators of the Mines and Geosciences Bureau (MGB), Regional O ce No.
02, Tuguegarao, Cagayan, for further action. IEHScT

On 12 November 2002, counsels for petitioners received a letter from the Panel
of Arbitrators of the MGB requiring the petitioners to comply with the Rules of the
Panel of Arbitrators before the letter may be acted upon.
Yet again, counsels for petitioners sent President Arroyo another demand letter
dated 8 November 2002. Said letter was again forwarded to the DENR Secretary who
referred the same to the MGB, Quezon City.
In a letter dated 19 February 2003, the MGB rejected the demand of counsels for
petitioners for the cancellation of the CAMC FTAA.
Petitioners thus led the present petition for prohibition and mandamus, with a
prayer for a temporary restraining order. They pray that the Court issue an order:
1. enjoining public respondents from acting on any application for FTAA;

2. declaring unconstitutional the Philippine Mining Act of 1995 and its

Implementing Rules and Regulations;

3. canceling the FTAA issued to CAMC.

In their memorandum petitioners pose the following issues:

I

WHETHER OR NOT REPUBLIC ACT NO. 7942 AND THE CAMC FTAA ARE VOID
BECAUSE THEY ALLOW THE UNJUST AND UNLAWFUL TAKING OF PROPERTY
WITHOUT PAYMENT OF JUST COMPENSATION, IN VIOLATION OF SECTION 9,
ARTICLE III OF THE CONSTITUTION.

II
WHETHER OR NOT THE MINING ACT AND ITS IMPLEMENTING RULES AND
REGULATIONS ARE VOID AND UNCONSTITUTIONAL FOR SANCTIONING AN
UNCONSTITUTIONAL ADMINISTRATIVE PROCESS OF DETERMINING JUST
COMPENSATION.

III
WHETHER OR NOT THE STATE, THROUGH REPUBLIC ACT NO. 7942 AND THE
CAMC FTAA, ABDICATED ITS PRIMARY RESPONSIBILITY TO THE FULL
CONTROL AND SUPERVISION OVER NATURAL RESOURCES.
IV

WHETHER OR NOT THE RESPONDENTS' INTERPRETATION OF THE ROLE OF

WHOLLY FOREIGN AND FOREIGN-OWNED CORPORATIONS IN THEIR
INVOLVEMENT IN MINING ENTERPRISES, VIOLATES PARAGRAPH 4, SECTION 2,
ARTICLE XII OF THE CONSTITUTION.
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 V
WHETHER OR NOT THE 1987 CONSTITUTION PROHIBITS SERVICE CONTRACTS.
1

Before going to the substantive issues, the procedural question raised by public
respondents shall rst be dealt with. Public respondents are of the view that
petitioners' eminent domain claim is not ripe for adjudication as they fail to allege that
CAMC has actually taken their properties nor do they allege that their property rights
have been endangered or are in danger on account of CAMC's FTAA. In effect, public
respondents insist that the issue of eminent domain is not a justiciable controversy
which this Court can take cognizance of. EHIcaT

A justiciable controversy is de ned as a de nite and concrete dispute touching

on the legal relations of parties having adverse legal interests which may be resolved by
a court of law through the application of a law. 2 Thus, courts have no judicial power to
review cases involving political questions and as a rule, will desist from taking
cognizance of speculative or hypothetical cases, advisory opinions and cases that have
become moot. 3 The Constitution is quite explicit on this matter. 4 It provides that
judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable. Pursuant to this
constitutional mandate, courts, through the power of judicial review, are to entertain
only real disputes between con icting parties through the application of law. For the
courts to exercise the power of judicial review, the following must be extant (1) there
must be an actual case calling for the exercise of judicial power; (2) the question must
be ripe for adjudication; and (3) the person challenging must have the "standing." 5
An actual case or controversy involves a con ict of legal rights, an assertion of
opposite legal claims, susceptible of judicial resolution as distinguished from a
hypothetical or abstract difference or dispute. 6 There must be a contrariety of legal
rights that can be interpreted and enforced on the basis of existing law and
jurisprudence.
Closely related to the second requisite is that the question must be ripe for
adjudication. A question is considered ripe for adjudication when the act being
challenged has had a direct adverse effect on the individual challenging it. 7
The third requisite is legal standing or locus standi. It is de ned as a personal or
substantial interest in the case such that the party has sustained or will sustain direct
injury as a result of the governmental act that is being challenged, alleging more than a
generalized grievance. 8 The gist of the question of standing is whether a party alleges
"such personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court depends
for illumination of di cult constitutional questions." 9 Unless a person is injuriously
affected in any of his constitutional rights by the operation of statute or ordinance, he
has no standing. 1 0
In the instant case, there exists a live controversy involving a clash of legal rights
as Rep. Act No. 7942 has been enacted, DAO 96-40 has been approved and an FTAAs
have been entered into. The FTAA holders have already been operating in various
provinces of the country. Among them is CAMC which operates in the provinces of
Nueva Vizcaya and Quirino where numerous individuals including the petitioners are
imperiled of being ousted from their landholdings in view of the CAMC FTAA. In light of
this, the court cannot await the adverse consequences of the law in order to consider
the controversy actual and ripe for judicial intervention. 1 1 Actual eviction of the land
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 owners and occupants need not happen for this Court to intervene. As held in Pimentel,
Jr. v. Hon. Aguirre 1 2 :
By the mere enactment of the questioned law or the approval of the challenged
act, the dispute is said to have ripened into a judicial controversy even without
any other overt act. Indeed, even a singular violation of the Constitution and/or
the law is enough to awaken judicial duty. 1 3

Petitioners embrace various segments of the society. These include Didipio

Earth-Savers' Multi-Purpose Association, Inc., an organization of farmers and
indigenous peoples organized under Philippine laws, representing a community actually
affected by the mining activities of CAMC, as well as other residents of areas affected
by the mining activities of CAMC. These petitioners have the standing to raise the
constitutionality of the questioned FTAA as they allege a personal and substantial
injury. 1 4 They assert that they are affected by the mining activities of CAMC. Likewise,
they are under imminent threat of being displaced from their landholdings as a result of
the implementation of the questioned FTAA. They thus meet the appropriate case
requirement as they assert an interest adverse to that of respondents who, on the other
hand, claim the validity of the assailed statute and the FTAA of CAMC.
Besides, the transcendental importance of the issues raised and the magnitude
of the public interest involved will have a bearing on the country's economy which is to a
greater extent dependent upon the mining industry. Also affected by the resolution of
this case are the proprietary rights of numerous residents in the mining contract areas
as well as the social existence of indigenous peoples which are threatened. Based on
these considerations, this Court deems it proper to take cognizance of the instant
petition.
Having resolved the procedural question, the constitutionality of the law under
attack must be addressed squarely.
First Substantive Issue: Validity of Section 76 of Rep. Act No. 7942 and
DAO 96-40
In seeking to nullify Rep. Act No. 7942 and its implementing rules DAO 96-40 as
unconstitutional, petitioners set their sight on Section 76 of Rep. Act No. 7942 and
Section 107 of DAO 96-40 which they claim allow the unlawful and unjust "taking" of
private property for private purpose in contradiction with Section 9, Article III of the
1987 Constitution mandating that private property shall not be taken except for public
use and the corresponding payment of just compensation. They assert that public
respondent DENR, through the Mining Act and its Implementing Rules and Regulations,
cannot, on its own, permit entry into a private property and allow taking of land without
payment of just compensation.
Interpreting Section 76 of Rep. Act No. 7942 and Section 107 of DAO 96-40,
juxtaposed with the concept of taking of property for purposes of eminent domain in
the case of Republic v. Vda. de Castellvi , 1 5 petitioners assert that there is indeed a
"taking" upon entry into private lands and concession areas. ADETca

Republic v. Vda. de Castellvi de nes "taking" under the concept of eminent

domain as entering upon private property for more than a momentary period, and,
under the warrant or color of legal authority, devoting it to a public use, or otherwise
informally appropriating or injuriously affecting it in such a way as to substantially oust
the owner and deprive him of all beneficial enjoyment thereof.
From the criteria set forth in the cited case, petitioners claim that the entry into a
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 private property by CAMC, pursuant to its FTAA, is for more than a momentary period,
i.e., for 25 years, and renewable for another 25 years; that the entry into the property is
under the warrant or color of legal authority pursuant to the FTAA executed between
the government and CAMC; and that the entry substantially ousts the owner or
possessor and deprives him of all bene cial enjoyment of the property. These facts,
according to the petitioners, amount to taking. As such, petitioners question the
exercise of the power of eminent domain as unwarranted because respondents failed
to prove that the entry into private property is devoted for public use.
Petitioners also stress that even without the doctrine in the Castellvi case, the
nature of the mining activity, the extent of the land area covered by the CAMC FTAA and
the various rights granted to the proponent or the FTAA holder, such as (a) the right of
possession of the Exploration Contract Area, with full right of ingress and egress and
the right to occupy the same; (b) the right not to be prevented from entry into private
lands by surface owners and/or occupants thereof when prospecting, exploring and
exploiting for minerals therein; (c) the right to enjoy easement rights, the use of timber,
water and other natural resources in the Exploration Contract Area; (d) the right of
possession of the Mining Area, with full right of ingress and egress and the right to
occupy the same; and (e) the right to enjoy easement rights, water and other natural
resources in the Mining Area, result in a taking of private property.
Petitioners quickly add that even assuming arguendo that there is no absolute,
physical taking, at the very least, Section 76 establishes a legal easement upon the
surface owners, occupants and concessionaires of a mining contract area su cient to
deprive them of enjoyment and use of the property and that such burden imposed by
the legal easement falls within the purview of eminent domain.
To further bolster their claim that the legal easement established is equivalent to
taking, petitioners cite the case of National Power Corporation v. Gutierrez 1 6 holding
that the easement of right-of-way imposed against the use of the land for an inde nite
period is a taking under the power of eminent domain.
Traversing petitioners' assertion, public respondents argue that Section 76 is not
a taking provision but a valid exercise of the police power and by virtue of which, the
state may prescribe regulations to promote the health, morals, peace, education, good
order, safety and general welfare of the people. This government regulation involves the
adjustment of rights for the public good and that this adjustment curtails some
potential for the use or economic exploitation of private property. Public respondents
concluded that "to require compensation in all such circumstances would compel the
government to regulate by purchase."
Public respondents are inclined to believe that by entering private lands and
concession areas, FTAA holders do not oust the owners thereof nor deprive them of all
bene cial enjoyment of their properties as the said entry merely establishes a legal
easement upon surface owners, occupants and concessionaires of a mining contract
area.
Taking in Eminent Domain Distinguished from Regulation in Police
Power
The power of eminent domain is the inherent right of the state (and of those
entities to which the power has been lawfully delegated) to condemn private property
to public use upon payment of just compensation. 1 7 On the other hand, police power is
the power of the state to promote public welfare by restraining and regulating the use
of liberty and property. 1 8 Although both police power and the power of eminent
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 domain have the general welfare for their object, and recent trends show a mingling 1 9
of the two with the latter being used as an implement of the former, there are still
traditional distinctions between the two.
Property condemned under police power is usually noxious or intended for a
noxious purpose; hence, no compensation shall be paid. 2 0 Likewise, in the exercise of
police power, property rights of private individuals are subjected to restraints and
burdens in order to secure the general comfort, health, and prosperity of the state.
Thus, an ordinance prohibiting theaters from selling tickets in excess of their seating
capacity (which would result in the diminution of pro ts of the theater-owners) was
upheld valid as this would promote the comfort, convenience and safety of the
customers. 2 1 In U.S. v. Toribio , 2 2 the court upheld the provisions of Act No. 1147, a
statute regulating the slaughter of carabao for the purpose of conserving an adequate
supply of draft animals, as a valid exercise of police power, notwithstanding the
property rights impairment that the ordinance imposed on cattle owners. A zoning
ordinance prohibiting the operation of a lumber yard within certain areas was assailed
as unconstitutional in that it was an invasion of the property rights of the lumber yard
owners in People v. de Guzman . 2 3 The Court nonetheless ruled that the regulation was
a valid exercise of police power. A similar ruling was arrived at in Seng Kee S Co. v.
Earnshaw and Piatt 2 4 where an ordinance divided the City of Manila into industrial and
residential areas. DaCTcA

A thorough scrutiny of the extant jurisprudence leads to a cogent deduction that

where a property interest is merely restricted because the continued use thereof would
be injurious to public welfare, or where property is destroyed because its continued
existence would be injurious to public interest, there is no compensable taking. 2 5
However, when a property interest is appropriated and applied to some public purpose,
there is compensable taking. 2 6
According to noted constitutionalist, Fr. Joaquin Bernas, SJ, in the exercise of its
police power regulation, the state restricts the use of private property, but none of the
property interests in the bundle of rights which constitute ownership is appropriated
for use by or for the bene t of the public. 2 7 Use of the property by the owner was
limited, but no aspect of the property is used by or for the public. 2 8 The deprivation of
use can in fact be total and it will not constitute compensable taking if nobody else
acquires use of the property or any interest therein. 2 9
If, however, in the regulation of the use of the property, somebody else acquires
the use or interest thereof, such restriction constitutes compensable taking. Thus, in
City Government of Quezon City v. Ericta , 3 0 it was argued by the local government that
an ordinance requiring private cemeteries to reserve 6% of their total areas for the
burial of paupers was a valid exercise of the police power under the general welfare
clause. This court did not agree in the contention, ruling that property taken under the
police power is sought to be destroyed and not, as in this case, to be devoted to a
public use. It further declared that the ordinance in question was actually a taking of
private property without just compensation of a certain area from a private cemetery to
bene t paupers who are charges of the local government. Being an exercise of eminent
domain without provision for the payment of just compensation, the same was
rendered invalid as it violated the principles governing eminent domain.
In People v. Fajardo , 3 1 the municipal mayor refused Fajardo permission to build
a house on his own land on the ground that the proposed structure would destroy the
view or beauty of the public plaza. The ordinance relied upon by the mayor prohibited
the construction of any building that would destroy the view of the plaza from the
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 highway. The court ruled that the municipal ordinance under the guise of police power
permanently divest owners of the bene cial use of their property for the bene t of the
public; hence, considered as a taking under the power of eminent domain that could not
be countenanced without payment of just compensation to the affected owners. In this
case, what the municipality wanted was to impose an easement on the property in
order to preserve the view or beauty of the public plaza, which was a form of utilization
of Fajardo's property for public benefit. 3 2
While the power of eminent domain often results in the appropriation of title to or
possession of property, it need not always be the case. Taking may include trespass
without actual eviction of the owner, material impairment of the value of the property or
prevention of the ordinary uses for which the property was intended such as the
establishment of an easement. 3 3 In Ayala de Roxas v. City of Manila , 3 4 it was held that
the imposition of burden over a private property through easement was considered
taking; hence, payment of just compensation is required. The Court declared:
And, considering that the easement intended to be established, whatever
may be the object thereof, is not merely a real right that will encumber the
property, but is one tending to prevent the exclusive use of one portion of the
same, by expropriating it for public use which, be it what it may, can not be
accomplished unless the owner of the property condemned or seized be
previously and duly indemni ed, it is proper to protect the appellant by means of
the remedy employed in such cases, as it is only adequate remedy when no other
legal action can be resorted to, against an intent which is nothing short of an
arbitrary restriction imposed by the city by virtue of the coercive power with which
the same is invested. IDcAHT

And in the case of National Power Corporation v. Gutierrez , 3 5 despite the NPC's
protestation that the owners were not totally deprived of the use of the land and could
still plant the same crops as long as they did not come into contact with the wires, the
Court nevertheless held that the easement of right-of-way was a taking under the power
of eminent domain. The Court said:
In the case at bar, the easement of right-of-way is de nitely a taking under
the power of eminent domain. Considering the nature and effect of the
installation of 230 KV Mexico-Limay transmission lines, the limitation imposed by
NPC against the use of the land for an inde nite period deprives private
respondents of its ordinary use.

A case exemplifying an instance of compensable taking which does not entail

transfer of title is Republic v. Philippine Long Distance Telephone Co . 3 6 Here, the
Bureau of Telecommunications, a government instrumentality, had contracted with the
PLDT for the interconnection between the Government Telephone System and that of
the PLDT, so that the former could make use of the lines and facilities of the PLDT. In
its desire to expand services to government o ces, the Bureau of Telecommunications
demanded to expand its use of the PLDT lines. Disagreement ensued on the terms of
the contract for the use of the PLDT facilities. The Court ruminated:
Normally, of course, the power of eminent domain results in the taking or
appropriation of title to, and possession of, the expropriated property; but no
cogent reason appears why said power may not be availed of to impose only a
burden upon the owner of the condemned property, without loss of title and
possession. It is unquestionable that real property may, through expropriation, be
subjected to an easement right of way. 3 7
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 In Republic v. Castellvi , 3 8 this Court had the occasion to spell out the requisites
of taking in eminent domain, to wit:
(1) the expropriator must enter a private property;
(2) the entry must be for more than a momentary period.
(3) the entry must be under warrant or color of legal authority;

(4) the property must be devoted to public use or otherwise informally

appropriated or injuriously affected;

(5) the utilization of the property for public use must be in such a way as to
oust the owner and deprive him of beneficial enjoyment of the property.

As shown by the foregoing jurisprudence, a regulation which substantially

deprives the owner of his proprietary rights and restricts the bene cial use and
enjoyment for public use amounts to compensable taking. In the case under
consideration, the entry referred to in Section 76 and the easement rights under Section
75 of Rep. Act No. 7942 as well as the various rights to CAMC under its FTAA are no
different from the deprivation of proprietary rights in the cases discussed which this
Court considered as taking. Section 75 of the law in question reads:
Easement Rights. — When mining areas are so situated that for purposes
of more convenient mining operations it is necessary to build, construct or install
on the mining areas or lands owned, occupied or leased by other persons, such
infrastructure as roads, railroads, mills, waste dump sites, tailing ponds,
warehouses, staging or storage areas and port facilities, tramways, runways,
airports, electric transmission, telephone or telegraph lines, dams and their normal
ood and catchment areas, sites for water wells, ditches, canals, new river beds,
pipelines, umes, cuts, shafts, tunnels, or mills, the contractor, upon payment of
just compensation, shall be entitled to enter and occupy said mining areas or
lands. AcHaTE

Section 76 provides:
Entry into private lands and concession areas — Subject to prior
noti cation, holders of mining rights shall not be prevented from entry into private
lands and concession areas by surface owners, occupants, or concessionaires
when conducting mining operations therein.

The CAMC FTAA grants in favor of CAMC the right of possession of the
Exploration Contract Area, the full right of ingress and egress and the right to occupy
the same. It also bestows CAMC the right not to be prevented from entry into private
lands by surface owners or occupants thereof when prospecting, exploring and
exploiting minerals therein.
The entry referred to in Section 76 is not just a simple right-of-way which is
ordinarily allowed under the provisions of the Civil Code. Here, the holders of mining
rights enter private lands for purposes of conducting mining activities such as
exploration, extraction and processing of minerals. Mining right holders build mine
infrastructure, dig mine shafts and connecting tunnels, prepare tailing ponds, storage
areas and vehicle depots, install their machinery, equipment and sewer systems. On top
of this, under Section 75, easement rights are accorded to them where they may build
warehouses, port facilities, electric transmission, railroads and other infrastructures
necessary for mining operations. All these will de nitely oust the owners or occupants
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 of the affected areas the bene cial ownership of their lands. Without a doubt, taking
occurs once mining operations commence.
Section 76 of Rep. Act No. 7942 is a Taking Provision
Moreover, it would not be amiss to revisit the history of mining laws of this
country which would help us understand Section 76 of Rep. Act No. 7942.
This provision is rst found in Section 27 of Commonwealth Act No. 137 which
took effect on 7 November 1936, viz:
Before entering private lands the prospector shall rst apply in writing for
written permission of the private owner, claimant, or holder thereof, and in case of
refusal by such private owner, claimant, or holder to grant such permission, or in
case of disagreement as to the amount of compensation to be paid for such
privilege of prospecting therein, the amount of such compensation shall be xed
by agreement among the prospector, the Director of the Bureau of Mines and the
surface owner, and in case of their failure to unanimously agree as to the amount
of compensation, all questions at issue shall be determined by the Court of First
Instance.

Similarly, the pertinent provision of Presidential Decree No. 463, otherwise known
as "The Mineral Resources Development Decree of 1974," provides:
SECTION 12. Entry to Public and Private Lands. — A person who
desires to conduct prospecting or other mining operations within public lands
covered by concessions or rights other than mining shall rst obtain the written
permission of the government o cial concerned before entering such lands. In
the case of private lands, the written permission of the owner or possessor of the
land must be obtained before entering such lands. In either case, if said
permission is denied, the Director, at the request of the interested person may
intercede with the owner or possessor of the land. If the intercession fails, the
interested person may bring suit in the Court of First Instance of the province
where the land is situated. If the court nds the request justi ed, it shall issue an
order granting the permission after xing the amount of compensation and/or
rental due the owner or possessor: Provided, That pending nal adjudication of
such amount, the court shall upon recommendation of the Director permit the
interested person to enter, prospect and/or undertake other mining operations on
the disputed land upon posting by such interested person of a bond with the court
which the latter shall consider adequate to answer for any damage to the owner
or possessor of the land resulting from such entry, prospecting or any other
mining operations.

Hampered by the di culties and delays in securing surface rights for the entry
into private lands for purposes of mining operations, Presidential Decree No. 512 dated
19 July 1974 was passed into law in order to achieve full and accelerated mineral
resources development. Thus, Presidential Decree No. 512 provides for a new system
of surface rights acquisition by mining prospectors and claimants. Whereas in
Commonwealth Act No. 137 and Presidential Decree No. 463 eminent domain may only
b e exercised in order that the mining claimants can build, construct or install roads,
railroads, mills, warehouses and other facilities, this time, the power of eminent domain
may now be invoked by mining operators for the entry, acquisition and use of private
lands, viz:
SECTION 1. Mineral prospecting, location, exploration, development and
exploitation is hereby declared of public use and bene t, and for which the power
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 of eminent domain may be invoked and exercised for the entry, acquisition and
use of private lands. . . . .

The evolution of mining laws gives positive indication that mining operators who
are quali ed to own lands were granted the authority to exercise eminent domain for
the entry, acquisition, and use of private lands in areas open for mining operations. This
grant of authority extant in Section 1 of Presidential Decree No. 512 is not expressly
repealed by Section 76 of Rep. Act No. 7942; and neither are the former statutes
impliedly repealed by the former. These two provisions can stand together even if
Section 76 of Rep. Act No. 7942 does not spell out the grant of the privilege to exercise
eminent domain which was present in the old law. DAHSaT

It is an established rule in statutory construction that in order that one law may
operate to repeal another law, the two laws must be inconsistent. 3 9 The former must
be so repugnant as to be irreconciliable with the latter act. Simply because a latter
enactment may relate to the same subject matter as that of an earlier statute is not of
itself su cient to cause an implied repeal of the latter, since the new law may be
cumulative or a continuation of the old one. As has been the ruled, repeals by
implication are not favored, and will not be decreed unless it is manifest that the
legislature so intended. 4 0 As laws are presumed to be passed with deliberation and
with full knowledge of all existing ones on the subject, it is but reasonable to conclude
that in passing a statute it was not intended to interfere with or abrogate any former
law relating to the same matter, unless the repugnancy between the two is not only
irreconcilable, but also clear and convincing, and owing necessarily from the language
used, unless the later act fully embraces the subject matter of the earlier, or unless the
reason for the earlier act is beyond peradventure removed. 4 1 Hence, every effort must
be used to make all acts stand and if, by any reasonable construction, they can be
reconciled, the latter act will not operate as a repeal of the earlier.
Considering that Section 1 of Presidential Decree No. 512 granted the quali ed
mining operators the authority to exercise eminent domain and since this grant of
authority is deemed incorporated in Section 76 of Rep. Act No. 7942, the inescapable
conclusion is that the latter provision is a taking provision.
While this Court declares that the assailed provision is a taking provision, this
does not mean that it is unconstitutional on the ground that it allows taking of private
property without the determination of public use and the payment of just
compensation.
The taking to be valid must be for public use. 4 2 Public use as a requirement for
the valid exercise of the power of eminent domain is now synonymous with public
interest, public benefit, public welfare and public convenience. 4 3 It includes the broader
notion of indirect public bene t or advantage. Public use as traditionally understood as
"actual use by the public" has already been abandoned. 4 4
Mining industry plays a pivotal role in the economic development of the country
and is a vital tool in the government's thrust of accelerated recovery. 4 5 The importance
of the mining industry for national development is expressed in Presidential Decree No.
463:
WHEREAS, mineral production is a major support of the national economy,
and therefore the intensi ed discovery, exploration, development and wise
utilization of the country's mineral resources are urgently needed for national
development.

CD Technologies Asia, Inc. 2019 cdasiaonline.com

 Irrefragably, mining is an industry which is of public benefit.
That public use is negated by the fact that the state would be taking private
properties for the bene t of private mining rms or mining contractors is not at all true.
I n Heirs of Juancho Ardona v. Reyes , 4 6 petitioners therein contended that the
promotion of tourism is not for public use because private concessionaires would be
allowed to maintain various facilities such as restaurants, hotels, stores, etc., inside the
tourist area. The Court thus contemplated:
The rule in Berman v. Parker [348 U.S. 25; 99 L. ed. 27] of deference to
legislative policy even if such policy might mean taking from one private person
and conferring on another private person applies as well in the Philippines.

". . . Once the object is within the authority of Congress, the means by
which it will be attained is also for Congress to determine. Here one of the
means chosen is the use of private enterprise for redevelopment of the
area. Appellants argue that this makes the project a taking from one
businessman for the benefit of another businessman. But the means of
executing the project are for Congress and Congress alone to determine,
once the public purpose has been established. . . ." 4 7

Petitioners further maintain that the state's discretion to decide when to take
private property is reduced contractually by Section 13.5 of the CAMC FTAA, which
reads:
If the CONTRACTOR so requests at its option, the GOVERNMENT shall use
its o ces and legal powers to assist in the acquisition at reasonable cost of any
surface areas or rights required by the CONTRACTOR at the CONTRACTOR's cost
to carry out the Mineral Exploration and the Mining Operations herein. AHEDaI

All obligations, payments and expenses arising from, or incident to, such
agreements or acquisition of right shall be for the account of the CONTRACTOR
and shall be recoverable as Operating Expense.

According to petitioners, the government is reduced to a sub-contractor upon

the request of the private respondent, and on account of the foregoing provision, the
contractor can compel the government to exercise its power of eminent domain
thereby derogating the latter's power to expropriate property.
The provision of the FTAA in question lays down the ways and means by which
the foreign-owned contractor, disquali ed to own land, identi es to the government the
speci c surface areas within the FTAA contract area to be acquired for the mine
infrastructure. 4 8 The government then acquires ownership of the surface land areas on
behalf of the contractor, through a voluntary transaction in order to enable the latter to
proceed to fully implement the FTAA. Eminent domain is not yet called for at this stage
since there are still various avenues by which surface rights can be acquired other than
expropriation. The FTAA provision under attack merely facilitates the implementation of
the FTAA given to CAMC and shields it from violating the Anti-Dummy Law. Hence,
when confronted with the same question in La Bugal-B'Laan Tribal Association, Inc. v.
Ramos, 4 9 the Court answered:
Clearly, petitioners have needlessly jumped to unwarranted conclusions,
without being aware of the rationale for the said provision. That provision does
not call for the exercise of the power of eminent domain — and determination of
just compensation is not an issue — as much as it calls for a quali ed party to
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 acquire the surface rights on behalf of a foreign-owned contractor.
Rather than having the foreign contractor act through a dummy
corporation, having the State do the purchasing is a better alternative. This will at
least cause the government to be aware of such transaction/s and foster
transparency in the contractor's dealings with the local property owners. The
government, then, will not act as a subcontractor of the contractor; rather, it will
facilitate the transaction and enable the parties to avoid a technical violation of
the Anti-Dummy Law.
There is also no basis for the claim that the Mining Law and its implementing
rules and regulations do not provide for just compensation in expropriating private
properties. Section 76 of Rep. Act No. 7942 and Section 107 of DAO 96-40 provide for
the payment of just compensation:
Section 76. . . . Provided, that any damage to the property of the
surface owner, occupant, or concessionaire as a consequence of such operations
shall be properly compensated as may be provided for in the implementing rules
and regulations.
Section 107. Compensation of the Surface Owner and Occupant. — Any
damage done to the property of the surface owners, occupant, or concessionaire
thereof as a consequence of the mining operations or as a result of the
construction or installation of the infrastructure mentioned in 104 above shall be
properly and justly compensated.
Such compensation shall be based on the agreement entered into between
the holder of mining rights and the surface owner, occupant or concessionaire
thereof, where appropriate, in accordance with P.D. No. 512. (Emphasis supplied.)

Second Substantive Issue: Power of Courts to Determine Just

Compensation
Closely-knit to the issue of taking is the determination of just compensation. It is
contended that Rep. Act No. 7942 and Section 107 of DAO 96-40 encroach on the
power of the trial courts to determine just compensation in eminent domain cases
inasmuch as the same determination of proper compensation are cognizable only by
the Panel of Arbitrators.
The question on the judicial determination of just compensation has been settled
in the case of Export Processing Zone Authority v. Dulay 5 0 wherein the court declared
that the determination of just compensation in eminent domain cases is a judicial
function. Even as the executive department or the legislature may make the initial
determinations, the same cannot prevail over the court's findings. HSaCcE

Implementing Section 76 of Rep. Act No. 7942, Section 105 of DAO 96-40 states
that holder(s) of mining right(s) shall not be prevented from entry into its/their
contract/mining areas for the purpose of exploration, development, and/or utilization.
That in cases where surface owners of the lands, occupants or concessionaires refuse
to allow the permit holder or contractor entry, the latter shall bring the matter before
the Panel of Arbitrators for proper disposition. Section 106 states that voluntary
agreements between the two parties permitting the mining right holders to enter and
use the surface owners' lands shall be registered with the Regional O ce of the MGB.
In connection with Section 106, Section 107 provides that the compensation for the
damage done to the surface owner, occupant or concessionaire as a consequence of
mining operations or as a result of the construction or installation of the infrastructure
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 shall be properly and justly compensated and that such compensation shall be based
on the agreement between the holder of mining rights and surface owner, occupant or
concessionaire, or where appropriate, in accordance with Presidential Decree No. 512.
In cases where there is disagreement to the compensation or where there is no
agreement, the matter shall be brought before the Panel of Arbitrators. Section 206 of
the implementing rules and regulations provides an aggrieved party the remedy to
appeal the decision of the Panel of Arbitrators to the Mines Adjudication Board, and the
latter's decision may be reviewed by the Supreme Court by ling a petition for review on
certiorari. 5 1
An examination of the foregoing provisions gives no indication that the courts
are excluded from taking cognizance of expropriation cases under the mining law. The
disagreement referred to in Section 107 does not involve the exercise of eminent
domain, rather it contemplates of a situation wherein the permit holders are allowed by
the surface owners entry into the latters' lands and disagreement ensues as regarding
the proper compensation for the allowed entry and use of the private lands. Noticeably,
the provision points to a voluntary sale or transaction, but not to an involuntary sale.
The legislature, in enacting the mining act, is presumed to have deliberated with
full knowledge of all existing laws and jurisprudence on the subject. Thus, it is but
reasonable to conclude that in passing such statute it was in accord with the existing
laws and jurisprudence on the jurisdiction of courts in the determination of just
compensation and that it was not intended to interfere with or abrogate any former law
relating to the same matter. Indeed, there is nothing in the provisions of the assailed
law and its implementing rules and regulations that exclude the courts from their
jurisdiction to determine just compensation in expropriation proceedings involving
mining operations. Although Section 105 confers upon the Panel of Arbitrators the
authority to decide cases where surface owners, occupants, concessionaires refuse
permit holders entry, thus, necessitating involuntary taking, this does not mean that the
determination of the just compensation by the Panel of Arbitrators or the Mines
Adjudication Board is nal and conclusive. The determination is only preliminary unless
accepted by all parties concerned. There is nothing wrong with the grant of primary
jurisdiction by the Panel of Arbitrators or the Mines Adjudication Board to determine in
a preliminary matter the reasonable compensation due the affected landowners or
occupants. 5 2 The original and exclusive jurisdiction of the courts to decide
determination of just compensation remains intact despite the preliminary
determination made by the administrative agency. As held in Philippine Veterans Bank
v. Court of Appeals 5 3 :
The jurisdiction of the Regional Trial Courts is not any less "original and
exclusive" because the question is rst passed upon by the DAR, as the judicial
proceedings are not a continuation of the administrative determination.

Third Substantive Issue: Su cient Control by the State Over Mining

Operations
Anent the third issue, petitioners charge that Rep. Act No. 7942, as well as its
Implementing Rules and Regulations, makes it possible for FTAA contracts to cede
over to a fully foreign-owned corporation full control and management of mining
enterprises, with the result that the State is allegedly reduced to a passive regulator
dependent on submitted plans and reports, with weak review and audit powers. The
State is not acting as the supposed owner of the natural resources for and on behalf of
the Filipino people; it practically has little effective say in the decisions made by the
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 enterprise. In effect, petitioners asserted that the law, the implementing regulations,
and the CAMC FTAA cede bene cial ownership of the mineral resources to the foreign
contractor. TIEHSA

It must be noted that this argument was already raised in La Bugal-B'Laan Tribal
Association, Inc. v. Ramos, 5 4 where the Court answered in the following manner:
RA 7942 provides for the state's control and supervision over mining
operations. The following provisions thereof establish the mechanism of
inspection and visitorial rights over mining operations and institute reportorial
requirements in this manner:
1. Sec. 8 which provides for the DENR's power of over-all supervision
and periodic review for "the conservation, management,
development and proper use of the State's mineral resources";

2. Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB)

under the DENR to exercise "direct charge in the administration and
disposition of mineral resources", and empowers the MGB to
"monitor the compliance by the contractor of the terms and
conditions of the mineral agreements", "con scate surety and
performance bonds", and deputize whenever necessary any member
or unit of the Phil. National Police, barangay, duly registered non-
governmental organization (NGO) or any quali ed person to police
mining activities;
3. Sec. 66 which vests in the Regional Director "exclusive jurisdiction
over safety inspections of all installations, whether surface or
underground", utilized in mining operations.

4. Sec. 35, which incorporates into all FTAAs the following terms,
conditions and warranties:

"(g) Mining operations shall be conducted in accordance with

the provisions of the Act and its IRR.
"(h) Work programs and minimum expenditures commitments.

xxx xxx xxx

"(k) Requiring proponent to effectively use appropriate anti-

pollution technology and facilities to protect the environment
and restore or rehabilitate mined-out areas.

"(l) The contractors shall furnish the Government records of

geologic, accounting and other relevant data for its mining
operation, and that books of accounts and records shall be
open for inspection by the government. . . . .
"(m) Requiring the proponent to dispose of the minerals at the
highest price and more advantageous terms and conditions.

xxx xxx xxx

"(o) Such other terms and conditions consistent with the
Constitution and with this Act as the Secretary may deem to
be for the best interest of the State and the welfare of the
Filipino people."
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 The foregoing provisions of Section 35 of RA 7942 are also re ected and
implemented in Section 56 (g), (h), (l), (m) and (n) of the Implementing Rules, DAO
96-40.

Moreover, RA 7942 and DAO 96-40 also provide various stipulations

confirming the government's control over mining enterprises:

The contractor is to relinquish to the government those portions of the

contract area not needed for mining operations and not covered by any
declaration of mining feasibility (Section 35-e, RA 7942; Section 60, DAO
96-40).SHDAEC

The contractor must comply with the provisions pertaining to mine safety,
health and environmental protection (Chapter XI, RA 7942; Chapters XV
and XVI, DAO 96-40).

For violation of any of its terms and conditions, government may cancel an
FTAA. (Chapter XVII, RA 7942; Chapter XXIV, DAO 96-40).

An FTAA contractor is obliged to open its books of accounts and records

for inspection by the government (Section 56-m, DAO 96-40).

An FTAA contractor has to dispose of the minerals and by-products at the

highest market price and register with the MGB a copy of the sales
agreement (Section 56-n, DAO 96-40).
MGB is mandated to monitor the contractor's compliance with the terms
and conditions of the FTAA; and to deputize, when necessary, any member
or unit of the Philippine National Police, the barangay or a DENR-accredited
nongovernmental organization to police mining activities (Section 7-d and -
f, DAO 96-40).
An FTAA cannot be transferred or assigned without prior approval by the
President (Section 40, RA 7942; Section 66, DAO 96-40).

A mining project under an FTAA cannot proceed to the

construction/development/utilization stage, unless its Declaration of
Mining Project Feasibility has been approved by government (Section 24,
RA 7942).

The Declaration of Mining Project Feasibility filed by the contractor cannot

be approved without submission of the following documents:

1. Approved mining project feasibility study (Section 53-d, DAO

96-40)

2. Approved three-year work program (Section 53-a-4, DAO 96-

40)
3. Environmental compliance certificate (Section 70, RA 7942)

4. Approved environmental protection and enhancement

program (Section 69, RA 7942)

5. Approval by the Sangguniang

Panlalawigan/Bayan/Barangay (Section 70, RA 7942;
Section 27, RA 7160)

CD Technologies Asia, Inc. 2019 cdasiaonline.com

 6. Free and prior informed consent by the indigenous peoples
concerned, including payment of royalties through a
Memorandum of Agreement (Section 16, RA 7942; Section
59, RA 8371)
The FTAA contractor is obliged to assist in the development of its mining
community, promotion of the general welfare of its inhabitants, and
development of science and mining technology (Section 57, RA 7942).

The FTAA contractor is obliged to submit reports (on quarterly, semi-

annual or annual basis as the case may be; per Section 270, DAO 96-40),
pertaining to the following:

1. Exploration

2. Drilling
3. Mineral resources and reserves

4. Energy consumption
5. Production DEHaAS

6. Sales and marketing

7. Employment
8. Payment of taxes, royalties, fees and other Government
Shares

9. Mine safety, health and environment

10. Land use

11. Social development

12. Explosives consumption

An FTAA pertaining to areas within government reservations cannot be
granted without a written clearance from the government agencies
concerned (Section 19, RA 7942; Section 54, DAO 96-40).

An FTAA contractor is required to post a financial guarantee bond in favor

of the government in an amount equivalent to its expenditures obligations
for any particular year. This requirement is apart from the representations
and warranties of the contractor that it has access to all the financing,
managerial and technical expertise and technology necessary to carry out
the objectives of the FTAA (Section 35-b, -e, and -f, RA 7942).
Other reports to be submitted by the contractor, as required under DAO 96-
40, are as follows: an environmental report on the rehabilitation of the
mined-out area and/or mine waste/tailing covered area, and anti-pollution
measures undertaken (Section 35-a-2); annual reports of the mining
operations and records of geologic accounting (Section 56-m); annual
progress reports and final report of exploration activities (Section 56-2).
Other programs required to be submitted by the contractor, pursuant to
DAO 96-40, are the following: a safety and health program (Section 144);
an environmental work program (Section 168); an annual environmental
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 protection and enhancement program (Section 171).
The foregoing gamut of requirements, regulations, restrictions and
limitations imposed upon the FTAA contractor by the statute and regulations
easily overturns petitioners' contention. The setup under RA 7942 and DAO 96-40
hardly relegates the State to the role of a "passive regulator" dependent on
submitted plans and reports. On the contrary, the government agencies concerned
are empowered to approve or disapprove — hence, to in uence, direct and change
— the various work programs and the corresponding minimum expenditure
commitments for each of the exploration, development and utilization phases of
the mining enterprise.

Once these plans and reports are approved, the contractor is bound to
comply with its commitments therein. Figures for mineral production and sales
are regularly monitored and subjected to government review, in order to ensure
that the products and by-products are disposed of at the best prices possible;
even copies of sales agreements have to be submitted to and registered with
MGB. And the contractor is mandated to open its books of accounts and records
for scrutiny, so as to enable the State to determine if the government share has
been fully paid.
The State may likewise compel the contractor's compliance with
mandatory requirements on mine safety, health and environmental protection,
and the use of anti-pollution technology and facilities. Moreover, the contractor is
also obligated to assist in the development of the mining community and to pay
royalties to the indigenous peoples concerned. IaEASH

Cancellation of the FTAA may be the penalty for violation of any of its
terms and conditions and/or noncompliance with statutes or regulations. This
general, all-around, multipurpose sanction is no tri ing matter, especially to a
contractor who may have yet to recover the tens or hundreds of millions of dollars
sunk into a mining project.
Overall, considering the provisions of the statute and the regulations just
discussed, we believe that the State de nitely possesses the means by which it
can have the ultimate word in the operation of the enterprise, set directions and
objectives, and detect deviations and noncompliance by the contractor; likewise, it
has the capability to enforce compliance and to impose sanctions, should the
occasion therefor arise.
In other words, the FTAA contractor is not free to do whatever it pleases
and get away with it; on the contrary, it will have to follow the government line if it
wants to stay in the enterprise. Ineluctably then, RA 7942 and DAO 96-40 vest in
the government more than a su cient degree of control and supervision over the
conduct of mining operations.

Fourth Substantive Issue: The Proper Interpretation of the

Constitutional Phrase "Agreements Involving Either Technical or Financial
Assistance
In interpreting the rst and fourth paragraphs of Section 2, Article XII of the
Constitution, petitioners set forth the argument that foreign corporations are barred
from making decisions on the conduct of operations and the management of the
mining project. The first paragraph of Section 2, Article XII reads:
. . . The exploration, development, and utilization of natural resources shall
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 be under the full control and supervision of the State. The State may directly
undertake such activities, or it may enter into co-production, joint venture, or
production sharing agreements with Filipino citizens, or corporations or
associations at least sixty percentum of whose capital is owned by such citizens.
Such agreements may be for a period not exceeding twenty ve years, renewable
for not more than twenty ve years, and under such terms and conditions as may
be provided by law . . . .

The fourth paragraph of Section 2, Article XII provides:

The President may enter into agreements with foreign-owned corporations
involving either technical or nancial 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 . . . .

Petitioners maintain that the rst paragraph bars aliens and foreign-owned
corporations from entering into any direct arrangement with the government including
those which involve co-production, joint venture or production sharing agreements.
They likewise insist that the fourth paragraph allows foreign-owned corporations to
participate in the large-scale exploration, development and utilization of natural
resources, but such participation, however, is merely limited to an agreement for either
financial or technical assistance only.
Again, this issue has already been succinctly passed upon by this Court in La
Bugal-B'Laan Tribal Association, Inc. v. Ramos . 5 5 In discrediting such argument, the
Court ratiocinated:
Petitioners claim that the phrase "agreements . . . involving either technical
or nancial assistance " simply means technical assistance or nancial
assistance agreements, nothing more and nothing else. They insist that there is
no ambiguity in the phrase, and that a plain reading of paragraph 4 quoted above
leads to the inescapable conclusion that what a foreign-owned corporation may
enter into with the government is merely an agreement for either nancial or
technical assistance only , for the large-scale exploration, development and
utilization of minerals, petroleum and other mineral oils; such a limitation, they
argue, excludes foreign management and operation of a mining enterprise.
This restrictive interpretation, petitioners believe, is in line with the general
policy enunciated by the Constitution reserving to Filipino citizens and
corporations the use and enjoyment of the country's natural resources. They
maintain that this Court's Decision of January 27, 2004 correctly declared the
WMCP FTAA, along with pertinent provisions of RA 7942, void for allowing a
foreign contractor to have direct and exclusive management of a mining
enterprise. Allowing such a privilege not only runs counter to the "full control and
supervision" that the State is constitutionally mandated to exercise over the
exploration, development and utilization of the country's natural resources; doing
so also vests in the foreign company "bene cial ownership" of our mineral
resources. It will be recalled that the Decision of January 27, 2004 zeroed in on
"management or other forms of assistance" or other activities associated with the
"service contracts" of the martial law regime, since " the management or operation
of mining activities by foreign contractors, which is the primary feature of service
contracts, was precisely the evil that the drafters of the 1987 Constitution sought
to eradicate."

CD Technologies Asia, Inc. 2019 cdasiaonline.com

 xxx xxx xxx

We do not see how applying a strictly literal or verba legis interpretation of

paragraph 4 could inexorably lead to the conclusions arrived at in the ponencia.
First, the drafters' choice of words — their use of the phrase agreements . . .
involving either technical or nancial assistance — does not indicate the intent
to exclude other modes of assistance. The drafters opted to use involving when
they could have simply said agreements for nancial or technical assistance , if
that was their intention to begin with. In this case, the limitation would be very
clear and no further debate would ensue. cCTAIE

In contrast, the use of the word "involving" signi es the possibility of the
inclusion of other forms of assistance or activities having to do with,
otherwise related to or compatible with nancial or technical assistance. The
word "involving" as used in this context has three connotations that can be
differentiated thus: one, the sense of "concerning," "having to do with," or
"affecting"; two, "entailing," "requiring," "implying" or "necessitating"; and three,
"including," "containing" or "comprising."
Plainly, none of the three connotations convey a sense of exclusivity.
Moreover, the word "involving," when understood in the sense of "including," as in
including technical or nancial assistance , necessarily implies that there are
activities other than those that are being included. In other words, if an agreement
includes technical or nancial assistance, there is apart from such assistance —
something else already in, and covered or may be covered by, the said agreement.
In short, it allows for the possibility that matters, other than those explicitly
mentioned, could be made part of the agreement. Thus, we are now led to the
conclusion that the use of the word "involving" implies that these agreements with
foreign corporations are not limited to mere nancial or technical assistance. The
difference in sense becomes very apparent when we juxtapose "agreements for
technical or nancial assistance" against "agreements including technical or
financial assistance." This much is unalterably clear in a verba legis approach.

Second, if the real intention of the drafters was to con ne foreign

corporations to financial or technical assistance and nothing more, their language
would have certainly been so unmistakably restrictive and stringent as to leave no
doubt in anyone's mind about their true intent. For example, they would have used
the sentence foreign corporations are absolutely prohibited from involvement in
the management or operation 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 and
deliberate decision to avoid the use of restrictive wording that bespeaks
an intent not to use the expression "agreements . . . involving either
technical or nancial assistance" in an exclusionary and limiting
manner .
Fifth Substantive Issue: Service Contracts Not Deconstitutionalized
Lastly, petitioners stress that the service contract regime under the 1973
Constitution is expressly prohibited under the 1987 Constitution as the term service
contracts found in the former was deleted in the latter to avoid the circumvention of
constitutional prohibitions that were prevalent in the 1987 Constitution. According to
them, the framers of the 1987 Constitution only intended for foreign-owned
corporations to provide either technical assistance or nancial assistance. Upon
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 perusal of the CAMC FTAA, petitioners are of the opinion that the same is a replica of
the service contract agreements that the present constitution allegedly prohibit.
Again, this contention is not well-taken. The mere fact that the term service
contracts found in the 1973 Constitution was not carried over to the present
constitution, sans any categorical statement banning service contracts in mining
activities, does not mean that service contracts as understood in the 1973 Constitution
was eradicated in the 1987 Constitution. 5 6 The 1987 Constitution allows the continued
use of service contracts with foreign corporations as contractors who would invest in
and operate and manage extractive enterprises, subject to the full control and
supervision of the State; this time, however, safety measures were put in place to
prevent abuses of the past regime. 5 7 We ruled, thus:
To our mind, however, such intent cannot be de nitively and conclusively
established from the mere failure to carry the same expression or term over to the
new Constitution, absent a more speci c, explicit and unequivocal statement to
that effect. What petitioners seek (a complete ban on foreign participation in the
management of mining operations, as previously allowed by the earlier
Constitutions) is nothing short of bringing about a momentous sea change in the
economic and developmental policies; and the fundamentally capitalist, free-
enterprise philosophy of our government. We cannot imagine such a radical shift
being undertaken by our government, to the great prejudice of the mining sector in
particular and our economy in general, merely on the basis of the omission of the
terms service contract from or the failure to carry them over to the new
Constitution. There has to be a much more de nite and even unarguable basis for
such a drastic reversal of policies.

xxx xxx xxx

The foregoing are mere fragments of the framers' lengthy discussions of
the provision dealing with agreements . . . involving either technical or nancial
assistance, which ultimately became paragraph 4 of Section 2 of Article XII of the
Constitution. Beyond any doubt, the members of the ConCom were actually
debating about the martial-law-era service contracts for which they were
crafting appropriate safeguards . HAaECD

In the voting that led to the approval of Article XII by the ConCom, the
explanations given by Commissioners Gascon, Garcia and Tadeo indicated that
they had voted to reject this provision on account of their objections to the
"constitutionalization" of the "service contract" concept.
Mr. Gascon said, " I felt that if we would constitutionalize any provision on
service contracts , this should always be with the concurrence of Congress and
not guided only by a general law to be promulgated by Congress." Mr. Garcia
explained, "Service contracts are given constitutional legitimization in Sec. 3,
even when they have been proven to be inimical to the interests of the nation,
providing, as they do, the legal loophole for the exploitation of our natural
resources for the bene t of foreign interests ." Likewise, Mr. Tadeo cited inter alia
the fact that service contracts continued to subsist, enabling foreign interests to
bene t from our natural resources. It was hardly likely that these gentlemen
would have objected so strenuously, had the provision called for mere
technical or financial assistance and nothing more .
The deliberations of the ConCom and some commissioners' explanation of
their votes leave no room for doubt that the service contract concept precisely
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 underpinned the commissioners' understanding of the "agreements involving
either technical or financial assistance."
xxx xxx xxx

From the foregoing, we are impelled to conclude that the phrase agreements
involving either technical or financial assistance, referred to in paragraph 4, are in
fact service contracts. But unlike those of the 1973 variety, the new ones are
between foreign corporations acting as contractors on the one hand; and on the
other, the government as principal or "owner" of the works. In the new service
contracts, the foreign contractors provide capital, technology and technical know-
how, and managerial expertise in the creation and operation of large-scale
mining/extractive enterprises; and the government, through its agencies (DENR,
MGB), actively exercises control and supervision over the entire operation.
xxx xxx xxx
It is therefore reasonable and unavoidable to make the following
conclusion, based on the above arguments. As written by the framers and rati ed
and adopted by the people, the Constitution allows the continued use of service
contracts with foreign corporations — as contractors who would invest in and
operate and manage extractive enterprises, subject to the full control and
supervision of the State — sans the abuses of the past regime. The purpose is
clear: to develop and utilize our mineral, petroleum and other resources on a large
scale for the immediate and tangible benefit of the Filipino people. 5 8

WHEREFORE, the instant petition for prohibition and mandamus is hereby

DISMISSED. Section 76 of Republic Act No. 7942 and Section 107 of DAO 96-40;
Republic Act No. 7942 and its Implementing Rules and Regulations contained in DAO
96-40 — insofar as they relate to nancial and technical assistance agreements
referred to in paragraph 4 of Section 2 of Article XII of the Constitution are NOT
UNCONSTITUTIONAL. DcTAIH

SO ORDERED.
Panganiban, C.J., Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.

Footnotes
1. Rollo, pp. 595-596.
2. Velarde v. Social Justice Society, G.R. No. 159357, 28 April 2004, 428 SCRA 283, 291.
3. PHILIPPINE POLITICAL LAW, Isagani Cruz, p. 23 (1995 ed.).
4. Article VIII, Section 1. . . . Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable and enforceable, and
to determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government.
5. Guingona, Jr. v. Court of Appeals, 354 Phil. 415, 425 (1998).
6. Board of Optometry v. Hon. Colet, 328 Phil. 1187, 1206 (1996).
7. Intregrated Bar of the Philippines v. Zamora, 392 Phil. 618, 632-633 (2000).
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 8. Dumlao v. Commission on Elections, G.R. No. L-52245, 22 January 1980, 95 SCRA 392,
402.

9. Integrated Bar of the Philippines v. Zamora, supra note 7, p. 633.

10. Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila, 128
Phil. 473, 480-481 (1967).
11. Cruz v. Secretary of Environment & Natural Resources, G.R. No. 135385, 6 December
2000, 347 SCRA 128, 256.
12. 391 Phil. 84 (2000).

13. Id., p. 107.

14. La Bugal-B'Laan Tribal Association, Inc. v. Ramos, G.R. No. 127882, 27 January 2004,
421 SCRA 148, 179.
15. 157 Phil. 329, 344 (1974). It defines "taking" under the concept of eminent domain as
entering upon private property for more than a momentary period, and, under the warrant
or color of legal authority, devoting it to a public use, or otherwise informally
appropriating or injuriously affecting it in such a way as substantially to oust the owner
and deprive him of all beneficial enjoyment thereof.
16. G.R. No. 60077, 18 January 1991, 193 SCRA 1, 7.
17. Robern Development Corporation v. Quitain, 373 Phil. 773, 792-793 (1999).
18. U.S. v. Toribio, 15 Phil. 85, 93 (1910); Rubi v. The Provincial Board of Mindoro, 39 Phil.
660, 708 (1919).
19. Association of Small Landowners of the Philippines, Inc. v. Secretary of Agrarian
Reform, G.R. No. 78742, 14 July 1989, 175 SCRA 343, 371.
20. U.S. v. Toribio, supra note 18, p. 370.
21. People v. Chan, 65 Phil. 611 (1938).
22. Supra note 18, p. 97.
23. 90 Phil. 132 (1951).
24. 56 Phil. 204 (1931).

25. THE 1987 CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES: A COMMENTARY,

Bernas, p. 420.
26. Id.
27. Id., p. 421.
28. Id.
29. Id.
30. 207 Phil. 648 (1983).

31. 104 Phil. 443 (1958).

32. THE 1987 CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES, supra note 24, p.
422.
CD Technologies Asia, Inc. 2019 cdasiaonline.com
 33. CONSTITUTIONAL LAW, Cruz, p. 66 (1995 ed.).

34. 9 Phil. 215, 221 (1907).

35. Supra note 16.
36. 136 Phil. 20 (1969).

37. Id., pp. 29-30.

38. Supra note 15, pp. 345-347.
39. Valera v. Tuason, Jr., 80 Phil. 823, 827 (1998).
40. United States v. Palacio, 33 Phil. 208, 216 (1916).
41. Id.
42. Heirs of Juancho Ardona v. Reyes, 210 Phil. 187, 197 (1983).
43. Id.
44. Id., p. 198.
45. Executive Order No. 211.
46. Supra note 42.
47. Id., p. 201.
48. La Bugal-B'Laan Tribal Association, Inc. v. Ramos, G.R. No. 127882, 1 December 2004,
445 SCRA 1, 228.
49. Id., p. 150.
50. G.R. No. L-59603, 29 April 1987, 149 SCRA 305, 312.
51. Section 211 of DAO 96-40 provides: The decision of the Board may be reviewed by
filing a petition for review with the Supreme Court within thirty (30) days from receipt of
the order or decision of the Board.
52. Philippine Veterans Bank v. Court of Appeals, 379 Phil. 141, 147 (2000).
53. Id., p. 149.
54. Supra note 48, pp. 132-137.
55. Id., pp. 101-105.
56. Id.
57. Id.
58. Id., pp. 105-128.

CD Technologies Asia, Inc. 2019 cdasiaonline.com