Country
Philippines
Sources
InforMEA
Tagging
Contract
Abstract
This case dealt with questions around exploration, development and utilization of mineral resources in the Philippines with the help of foreign companies. There was a petition before the court challenging the constitutionality of corresponding parts of the Philippine Mining Act and related rules and regulations. The lower court had granted the petition and declared the unconstitutionality of certain provisions. The mineral resources service contracts were criticized for, inter alia, vesting in the foreign contractor exclusive management and control of the enterprise, control of production, expansion and development, nearly unfettered control over the disposition and sale of the products discovered/extracted, effective ownership of the natural resource at the point of extraction, and beneficial ownership of Filipino economic resources. Upon motion for reconsideration, the Supreme Court interpreted the relevant regulations as well as the corresponding parts of the Constitution providing that the President could enter into agreements with foreign-owned corporations for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils. It examined the extent of control of the state in implementing the said agreements. It emphasized that all mineral resources were owned by the State. Their exploration, development and utilization always had to be subject to the full control and supervision of the State. However, given the inadequacy of Filipino capital and technology, the State could secure the help of foreign companies in all relevant matters -- especially financial and technical assistance -- provided that, at all times, the State maintained its right of full control. The Constitution should not be used to strangulate economic growth. Rather, it should be construed to grant the President and Congress sufficient discretion to enable them to attract foreign investments and expertise, as well as to secure for Filipino people prosperity and peace. The regulations in question vested in the government more than a sufficient degree of control and supervision over the conduct of mining operations. This setup could not be regarded as disadvantageous to the State or the Filipino people; it did not convey beneficial ownership of Filipino mineral resources to foreign contractors. The Court upheld the constitutionality of the Philippine Mining Law and its implementing rules and regulations - insofar as they related to financial and technical agreements - as well as the Financial and Technical Assistance Agreement in question.