It is the repository of all the aspirations and hopes of all the people. Petitioners, in their Memorandum, point out that pursuant to the foregoing, the foreign FTAA contractor may compel the Government to exercise its power of eminent domain to acquire the title to the land under which the minerals are located for and in its behalf. Since the offending provision is very much separable90 from Section 7.7 and the rest of the FTAA, the deletion of Section 7.9 can be done without affecting or requiring the invalidation of the WMCP FTAA itself. The majority opinion agrees that the 1987 Constitution requires the State to collect "more than the usual taxes, duties and fees." (i) On the first three (3) years upon the effectivity of this Act, one percent (1%); (ii) On the fourth and fifth year, one and a half percent (1 1/2%); and, (iii) On the sixth year and thereafter, two percent (2%). No Transgression of the Constitution Total two-way trade in January 1998 exceeded that for all of 1978; in the first quarter of 2009, trade exceeded the full-year 1998 level. Early redemption fees are paid directly to the funds and are separate from potential back-end load charges, which are paid to the broker. But the power to negotiate and enter into FTAAs was withheld from Congress, and reserved for the President. They found that the government would get the highest share from the option that is based on the net mining revenue, as compared with the other two options, considering only the basic and the additional shares; and that, even though production rate decreases, the government share will actually increase when the net mining revenue and the additional profit-based options are used. Indeed, in what other industry can the person regulated permanently overrule the administrative determinations of the regulatory agency? The fiscal regime provided herein, and the terms and conditions provided in the Mining Act and IRR shall be embodied in a Pro Forma FTAA Contract to be prepared by the Department of Environment and Natural Resources. Under PD 87, the service contractor undertook and managed the petroleum operations subject to government oversight. But even under this second and more limited concept of regulatory control, the provisions of the Mining Act pertaining to FTAAs do not pass the test of constitutionality. While we agree that Section 3.3 could have been worded so as to prevent it from favoring the contractor, this provision does not violate any constitutional limits, since the said term limitation does not apply at all to FTAAs. "Net Cash Flow" means the Gross Output less Deductible Expenses, Pre-Operating Expenses, Ongoing Capital Expenditures and Working Capital charges. Undoubtedly, such full control can be misused and abused, as we now witness. Unless of course the purpose is solely to reduce further the State's share regardless of any reason. This fact is not something to be taken lightly, considering that the government has absolutely no contribution to the exploration expenditures or work activities and yet is given veto power over such a critical aspect of the project. In sum, we can hardly talk about foreign contractors taking our mineral resources for free. Accordingly, such provision must be construed strictly against their enjoyment by non-Filipinos. It is obvious from their discussions that they did not intend to ban or eradicate service contracts. Furthermore, they would probably require seats on the Board of Directors -- all these to ensure the success of the enterprise and the repayment of the loans and other financial assistance and to make certain that the funding and the technology they supply would not go to waste. Terms of the WMCP FTAA are In contrast, in the instant case it is the FTAA itself, the object of the transfer, that is being assailed as invalid and unconstitutional. The legislature did not delegate the power to determine the nature, extent and composition of the items that would come under the phrase among other things. a. Simple as it was formulated, the phrase is another challenging task to operationalize. MR. MAAMBONG. While the foreign FTAA contractor may have an interest in the proceeds of the minerals, it does not acquire ownership over the minerals themselves. From 1935 they have struggled to assert their legal control and ownership over their patrimony only to have their efforts repeatedly subverted first, by the parity amendment to the 1935 Constitution and subsequently by the service contract provision in the 1973 Constitution. 292, otherwise known as "The Administrative Code of 1987," states: "Sec. Thus, the Court held: In our jurisdiction, this Court in Ollada vs. Court of Tax Appeals, et al. Prices Not Problematic. In most cases, mutual fund companies will charge you a redemption fee if you exit the fund within 30 days of the initial purchase. 506, July 9, 2002; 403 SCRA 1, May 6, 2003; and 415 SCRA 403, November 11, 2003. Consider other options like a home equity line of credit or selling some items you no longer need before tapping into your mutual fund. Pre-electronic bearer securities were divided. 37 Intervenor CMP's Motion for Reconsideration dated 10 July 2004, p. 22. On a real per capita basis, doubling from the 1978 base took place in 1987, 1996 and 2006. To wrap; envelop: a castle that was involved in mist. Mr. Justice Carpio is of the opinion that "among other things" could only mean "among other taxes", referring to the unnamed "other taxes, duties, and fees as provided for under existing laws" contained in the last clause of Section 81, paragraph 2. Taken to its logical conclusion, the majority would have this Court exempt firms in highly capital intensive industries from the exercise of police power simply to protect their investment. How petitioners can now argue that foreigners have the exclusive right to FTAAs totally overturns the entire basis of the Petition -- preference for the Filipino in the exploration, development and utilization of our natural resources. 118295, 2 May 1997, 272 SCRA 18. Economists refer to a system or network that allows trade as a market.. An early form of trade, barter, saw the direct exchange of goods and services for other goods and services, i.e. MR. DAVIDE. Clause 8.5 does not constitute proof that the State has relinquished control. (Italics in original), The issue is not whether an exploration permit allows a foreign contractor or corporation to extract mineral resources, for apparently by its language alone a mere exploration permit does not. did not render the case moot and academic. This means that the WMCP FTAA is not even governed by Section 81 of RA 7942 and its phrase "among other things," which the majority opinion claims is the authority to subject the WMCP FTAA to the payment of consideration that is "more than the usual taxes, duties and fees.". 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). 149-99-XIII). Howey Co. "Any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit, for a security, any put, call, straddle, option, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a 'security'; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or banker's acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited. The Hanseatic League was an alliance of trading cities that maintained a trade monopoly over most of Northern Europe and the Baltic, between the 13th and 17th centuries. By its own express terms, DAO 99-56 does not apply to FTAAs executed before the issuance of DAO 99-56, like the WMCP FTAA. If the Secretary and the Contractor fail to agree on the proposed revision within 30 days from delivery of the Rejection Notice then the Work Programme or Budget or variation thereof proposed by the Contractor shall be deemed approved so as not to unnecessarily delay the performance of this Agreement. Historically, openness to free trade substantially increased in some areas from 1815 to the outbreak of World War I in 1914. 127 Section 3 (g) (1) of DAO 99-56 provides: Section 3. Hence, the provision allows it, after the termination of the FTAA to be reimbursed from proceeds of the sale of the surface areas, which the government will dispose of through public bidding. h. Sales and Exportation The Contractor shall endeavor to dispose of the minerals and by-products produced in the Contract Area at the highest commercially achievable market price and lowest commercially achievable commissions and related fees in the circumstances then prevailing and to negotiate for sales terms and conditions compatible with world market conditions. Law Constitution Project, Article XV at 12 -13. The words "owned" and "State" should both be understood on two levels. However, in the case of petroleum, the lawmakers set the excise tax rate for the first taxable sale at fifteen percent of the fair international market price thereof. And to my mind, although the Committee's contention that the regular concurrence from Congress would subject Congress to extensive lobbying, I think that is a risk we will have to take since Congress is a body of representatives of the people whose membership will be changing regularly as there will be changing circumstances every time certain agreements are made. What Section 7.7 gives to the State, Section 7.9 takes away without any offsetting compensation to the State. The present Constitution restricts foreign involvement to large-scale activities because the idea is to limit the participation of foreign corporations only to areas where they are needed. Some of the taxes you might be liable for include long-term or short-term gains tax. 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. This can only be determined if the capital expenditures of the contractor are taken into account. 7942 have in effect conveyed beneficial ownership over the nation's mineral resources to these contractors, leaving the State with nothing but bare title thereto. Are service contracts allowed under the new Constitution? The probability of finding any mineral or petroleum in commercially viable quantities is estimated to be about 1:1,000 only. [68], In the 16th and 17th centuries, the Portuguese gained an economic advantage in the Kingdom of Kongo due to different philosophies of trade. The post recovery period is the remaining term of the FTAA immediately following the cost recovery period. What would be objectionable is a contractual provision that unduly benefits the contractor far in excess of the service rendered or value delivered, if any, in exchange therefor. 10 Memorandum (In support of WMCP's Motion and Supplemental Motion for Reconsideration) at 42-43. and the General Welfare of the Country. Rather, such FTAA is a comprehensive agreement for the foreign-owned corporation's integrated exploration, development and utilization of mineral, petroleum or other mineral oils on a large-scale basis. As a conjunction, the word "either" is used before two or more sentence elements of the same class or function joined usually by "or" to indicate what immediately follows is the first of two or more alternatives. The first is to earn profit. Section 112 states in unequivocal language that "all valid and existing" agreements "granted under Executive Order No. The offshore Occidental-Shell FTAA shows that even in riskier ventures involving far more capital investments, the State can negotiate and secure at least 60% of the net proceeds from the exploitation of mineral resources. If a different term is intended, the Constitution expressly says so as in water rights for uses other than power development. 39 It reads as follows: "Section 20. The sale of 60 percent of WMCP's outstanding equity to a corporation that is 60 percent Filipino-owned and 40 percent foreign-owned will still trigger the operation of Section 7.9. "2 (Emphasis supplied). They manage to cite only one WMCP FTAA provision that can be regarded as clearly intended to apply only to a foreign contractor: Section 12, which provides for international commercial arbitration under the auspices of the International Chamber of Commerce, after local remedies are exhausted. These particular provisions do not come within the issues defined by this Court. All of these should be noted down in the fund's prospectus, so it's important for you to read it and understand all of the financial implications before buying, selling, or exchanging mutual fund shares. MR. TINGSON. The foreign contractor can easily justify the non-viability of the contract area for large-scale mining. All FTAAs approved prior to the effectivity of this Administrative Order shall remain valid and be recognized by the Government: Provided, That should a Contractor desire to amend its FTAA, it shall do so by filing a Letter of Intent (LOI) to the Secretary thru the Director. Private businesses, including large foreign-owned corporations brimming with capital and technical expertise, are primarily concerned with maximizing the pecuniary returns to their owners or shareholders. Justice Morales also declares that the optimal time for the conversion of an FTAA into an MPSA is after completion of the exploration phase and just before undertaking the development and construction phase, on account of the fact that the requirement for a minimum investment of $50 million is applicable only during the development, construction and utilization phase, but not during the exploration phase, when the foreign contractor need merely comply with minimum ground expenditures. On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need for such safeguard is not critical; hence, the lack of prior approval and notification may not be deemed fatal as to render the transfer invalid. Such a degree of control would be compatible with permitting the foreign contractor sufficient and reasonable management authority over the enterprise it has invested in, to ensure efficient and profitable operation. We now come to the next objection which runs this way: In FTAAs with a foreign contractor, the State must receive at least 60 percent of the after-tax income from the exploitation of its mineral resources. In the Resolution of June 8, 2004, it set the case for Oral Argument on June 29, 2004. 78 Vide: Canet v. Decena, G.R. First, setting aside for the moment all disagreements pertaining to the construction of Section 2, Article XII of the Constitution, the following, at the very least, may be said to have been conclusively determined by this Court: (1) the only constitutionally sanctioned method by which a foreign entity may participate in the natural resources of the Philippines is by virtue of paragraph 4 of Section 2, Article XII of the Constitution; (2) said provision requires that an agreement be entered into (3) between the President and the foreign corporation (4) for the large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils (5) according to the general terms and conditions provided by law, (6) based on real contributions to the economic growth and general welfare of the country; (7) such agreements will promote the development and use of local scientific and technical resources; and (8) the President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. Now, the unmistakable letter and intent of the 1987 Constitution notwithstanding, the majority of this Court has chosen to reverse its earlier Decision which, to me, would once again open the doors to foreign control and ownership of Philippine natural resources. At the termination of this Agreement such areas shall be sold by public auction or tender and the Contractor shall be entitled to reimbursement of the costs of acquisition and maintenance, adjusted for inflation, from the proceeds of sale; (Emphasis supplied). In accordance with the intent of the provision, "agreements involving either technical or financial" is deemed restrictive and not just descriptive. In that event, it is inescapable that a foreigner would be benefiting from an activity (i.e. Such an outcome is completely unacceptable and cannot be sanctioned by this Court. Let it be clear: the Court is not against the grant of more benefits to the State; in fact, the more the better. The Decision should declare the WMCP FTAA void for want of consideration unless it treats the contract as an MPSA under Section 80. Indeed, this CMP entry brings to fore that the real issue in this case is whether paragraph 4 of Section 2 of Article XII of the Constitution is contravened by RA 7942 and DAO 96-40, not whether it was violated by specific acts implementing RA 7942 and DAO 96-40. 3 Record of the Constitutional Commission: Proceedings and Debates (1987), at 310. The State has the right to terminate the FTAA for the contractor's unremedied substantial breach thereof (Clause 13.2); 22. The supposed absence of any provision in the WMCP FTAA directly and explicitly requiring the contractor to sell the mineral products at posted or market prices is not a problem. For example, the case of Peru is instructive. It is, therefore, clearly evident that the foregoing provisions of the Mining Act effectively transfer the beneficial ownership over the resources covered by the agreement to a foreigner, in contravention of the letter and spirit of the Constitution. Section 39 of RA 7942 also grants foreign FTAA contractors the option, by mere notice to the DENR Secretary, to convert their FTAAs into MPSAs under Section 80. These resources, valued in the tens or hundreds of millions of dollars, are invested in a mining project that provides no assurance whatsoever that any part of the investment will be ultimately recouped. The contractor is also obligated to assist the development of the mining community, and pay royalties to the indigenous peoples concerned. If the issuer is liquidated, preference shareholders have the right to receive interest or a return of capital prior to ordinary shareholders. [W. Symonds & M. Shari, 'After Bre-X, Gold's Glow is Gone' Available at http:// www.businessweek.com/1997/15/b352267.htm], 146 In January, 2004, 20% of Royal Dutch/Shell's reserves of oil and gas were reclassified from "proven" to merely "probable" or other even less certain categories. Why then the term "assistance?" If an FTAA involved only a loan and/or purchase of technology, there would not have been a need for a constitutional provision because existing laws in the Philippines more than adequately regulate these transactions. A careful scrutiny of the provisions of RA 7942 and its Implementing Rules belies petitioners' claims. The justification for foreign involvement in the exploration, development and utilization of natural resources was that Filipino nationals or corporations may not possess the necessary capital, technical knowledge or technology to mount a large scale undertaking. For one thing, such an interpretation would discourage foreign entry into large-scale exploration, development and utilization activities; and result in the unmitigated stagnation of this sector, to the detriment of our nation's development. (Emphasis supplied), Construing said phrase vis--vis the entire provision, it appears from the deliberations in the Constitutional Commission that the term "control" does not have the meaning it ordinarily has in political law which is the power of a superior to substitute his judgment for that of an inferior.1 Thus . This benefit allows you to exchange your funds for other ones within the same family when the market changes course. Neither can one reasonably discern any implied stricture to that effect. That is the only difference, is it not? There is also no dispute that RA 7942 took effect after the issuance of Executive Order No. These are typically one-time costs. Citations omitted. In a last-ditch attempt to justify the constitutionality of DAO 56-99, the majority opinion now claims that the President has the prerogative to prescribe the terms and conditions of FTAAs, including the fiscal regime of FTAAs. In all FTAAs, the State is deemed to reserve its right to control the end to be achieved so that real contributions to the economy can be realized and, in the final analysis, the business will redound to the general welfare of the country. Evidently, the transfer of the shares in WMCP from WMC Resources International Pty. 40. An embargo, a severe form of externally imposed isolation, is a blockade of all trade by one country on another. The Constitution prohibits the alienation of all natural resources except agricultural lands.14 The Constitution, however, allows the State to exploit commercially its natural resources and sell the marketable products from such exploitation. Under Section 81 of RA 7942, all the net proceeds arising from the exploitation of mineral resources accrue to the foreign contractor even if the State owns the mineral resources. 58 http://dictionary.reference.com/search?q=either. While there is ground to believe that Sections 80, 84 and 112 are indeed unconstitutional, they cannot be ruled upon here. Is that not correct? If the legislature chooses to tax a business or product, it is free to determine the rate or amount of the tax, provided it is not confiscatory.22 The legislature has the discretion to impose merely a 2% excise tax on mineral products. Thus, in waiving the State's income from the exploitation of mineral resources, Section 80, the second paragraph of Section 81, the proviso in Section 84, and Section 112 of RA 7942 violate the Constitution and are therefore void. 2. Hence, we definitely disagree with the sweeping claim that no FTAA under Section 81 will ever make any real contribution to the growth of the economy or to the general welfare of the country. It continued up to historic times, later becoming the Maritime Silk Road. Commissioner Nolledo also remarked that "entering into service contracts is an exception to the rule on protection of natural resources for the interest of the nation and, therefore, being an exception, it should be subject, whenever possible, to stringent rules." So, petitioners claim that the subsequent transfer of a void FTAA to a Filipino corporation would not cure the defect. Section 3.3 violates the constitutional limits because it binds the Government to a 50-year FTAA at the sole option of the contractor. WMCP may make expansions, improvements and replacements of the mining facilities and may add such new facilities as it considers necessary for the mining operations. In their Final Memorandum, however, petitioners argue that the case has not become moot, considering the invalidity of the alleged sale of the shares in WMCP from WMC to Sagittarius, and of the transfer of the FTAA from WMCP to Sagittarius, resulting in the change of contractor in the FTAA in question. 35 During the Oral Argument, petitioner's counsel, Atty. The Solicitor General in effect concedes that under the second paragraph of Section 81, the State does not receive any share of the net proceeds from the mining operations of the FTAA contractor. Many of these service contracts were long-term (25 years) and had several more years to run. Popular Western wisdom aside, what is good for General Motors is not necessarily good for the country. Under Section VIII, during the period of mining operations, the contractor is also required to submit to the DENR secretary (copy furnished the director of MGB) the work program and corresponding budget for the contract area, describing the mining operations that are proposed to be carried out during the period covered. Mining Criminal Sanctions Sought in Philippine Mine Tailings Spill, 1996 Colo. J. Int'l Envt'l. Thus, in reality, the State has no vested right to receive any income from the FTAA for the exploration of its mineral resources. In order to make money, one has to spend money. 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. This means being prepared to pay fees and taxes. Moreover, as recognized by the 1935 Constitutional Convention, foreign involvement in the exploitation of Philippine natural resources has serious implications on national security. The majority opinion then proffers that the framers of the Constitution were pragmatic enough to know that foreign entities would not enter into such agreements without requiring arrangements for the protection of their investments, gains, and benefits or other forms of conditionalities. What is essential is that either party has the option to renew or not to renew the mineral agreement at the end of the original term. Following its exploration activities or feasibility studies, if the contractor believes that any part of the contract area is likely to contain an economic mineral resource, it shall submit to the DENR secretary a declaration of mining feasibility (per Clause 5.4 of the FTAA), together with a technical description of the area delineated for development and production, a description of the proposed mining operations including the technology to be used, a work program for development, an environmental impact statement, and a description of the contributions to the economic and general welfare of the country to be generated by the mining operations (pursuant to Clause 5.5). Secretary Neri also warns that foreign investors who have acquired local cement factories in the last ten years will find their investments illegal if the Court declares unconstitutional the assailed provisions of RA 7942.57 Such specious arguments deserve scant consideration. 47-49, per Panganiban, J. Italics supplied. MR. DAVIDE. The particular formula to be applied will be selected by the contractor, with a written notice to the government prior to the commencement of the development and construction phase of the mining project.66. That was precisely the reason the Court still heard Oral Argument in this case. The majority opinion also argues that, although entitled to reimbursement of its acquisition cost at the end of the contract term, the FTAA contractor does not acquire its surface rights for free since "the contractor will have been cash-out for the entire duration of the term of the contract 25 to 50 years, depending," thereby foregoing any interest income he might have earned. GO = Gross Output from operations during the same taxable year. Yes, the Committee accepts the amendment. Fundamentally speaking, in the process of rewriting the Charter, the members of the ConCom as a group were supposed to represent the entire Filipino people. In other words, the concerned government officials will be informed beforehand of the proposed exploration activities and expenditures of the contractor for each succeeding two-year period, with the right to approve/disapprove them or require changes or adjustments therein if deemed necessary. However, if the investment bank considers the risk too great for an underwriting, it may only assent to a best effort agreement, where the investment bank will simply do its best to sell the new issue. The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. Failure of the permittee or contractor to comply with any of the requirements provided in this Act or in its implementing rules and regulations, without a valid reason, shall be sufficient ground for the suspension of any permit or agreement provided under this Act. "54 However, in this case the NEDA Secretary has joined the chorus of the foreign chambers of commerce to uphold the validity of RA 7942 as essential to entice foreign investors to exploit the nation's mineral resources. Sales commitments with affiliates, if any, shall be made only at prices based on or equivalent to arm's length sales and in accordance with such terms and conditions at which such agreement would be made if the parties had not been affiliated, with due allowance for normal selling discounts or commissions. To the owner of the mineral resources belongs the income from any exploitation of the mineral resources. Decree No. Such agreements are in the nature of foreign loans that -- pursuant to Section 20 of Article VII39 of the 1987 Constitution -- the President may contract or guarantee, merely with the prior concurrence of the Monetary Board. This is an egregious error that makes this "simplified illustration" misleading. 19 The so-called "Jamir amendment," proposed by Commissioner Alberto M.K. Law Constitution Project and now counsel for intervenor PCM, stated in his position paper: Recognizing the service contract for what it is, we have to expunge it from the Constitution and reaffirm ownership over our natural resources. In connection with the foregoing discussion on the basic and additional government shares, it is pertinent at this juncture to mention the criticism leveled at the second paragraph of Section 81 of RA 7942, quoted earlier. 155344, January 20, 2004; Malinias v. Commission on Election 390 SCRA 480, 491 (2002); National Electrification Administration v. Commission on Audit, 377 SCRA 223, 232 (2002); Espiritu v. Cipriano, 55 SCRA 533, 538 (1974). [32][37][38][39], Materials used for creating jewelry were traded with Egypt since 3000 BCE. After the contractor has recovered its initial investment, it will pay all the normal taxes and fees comprising the basic share of the government, plus an additional share for the government based on the options and formulae set forth in DAO 99-56. I feel that the general law to be set by Congress as regard service contract agreements which the President will enter into might be too general or since we do not know the content yet of such a law, it might be that certain agreements will be detrimental to the interest of the Filipinos. The petroleum FTAA provides enough safeguards to insure that the petroleum operations will make a real contribution to the national economy and general welfare. i. But whatever form the agreement entered into by the Government and its third party partner(s) may take, the same must contain, as an absolute minimum, provisions that ensure that the Government can effectively perform its fiduciary duty to safeguard the beneficial interest of the Filipino people in their natural resources, as mandated by the Constitution. Incredibly, the majority opinion claims that "there is no independent showing that the taking of at least 60 percent share in the after-tax income of a mining company operated by a foreign contractor is fair and reasonable under most if not all circumstances." 25 134 SCRA 438, 463-464, February 18, 1985, per Gutierrez Jr., J. This general, all-around, multipurpose sanction is no trifling matter, especially to a contractor who may have yet to recover the tens or hundreds of millions of dollars sunk into a mining project. The deletion is simply too significant to ignore and speaks just as profoundly it is an outright rejection. On the other hand, Clause 8.5 is merely an acknowledgment of the parties' need for flexibility, given that no one can accurately forecast under all circumstances, or predict how situations may change. There is no specification on the minimum or maximum share that the State must receive from mining operations under FTAAs. Throughout, the contractor assumes all the risks79 of the business, as mentioned earlier. The majority opinion in effect says that Congress made the wealth and even the future prosperity of the nation to depend on the phrase "among other things.". 13 Bengson v. Senate Blue Ribbon Committee, 203 SCRA 767, 775-776 (1991). Debt securities generally offer a higher rate of interest than bank deposits, and equities may offer the prospect of capital growth. 8. In any event, what is the likelihood of a Philippine court acquiring criminal jurisdiction over the person of the foreign corporate officers of the foreign FTAA contractor who may be responsible for such violations? What specific powers are subsumed within the constitutionally mandated "power of control?" Father Bernas states: Agreements for the exploitation of the natural resources can have a life of only twenty-five years. Another excerpt, featuring then Commissioner (now Chief Justice) Hilario G. Davide Jr., indicates the limitations of the scope of such service contracts -- they are valid only in regard to minerals, petroleum and other mineral oils, not to all natural resources. What I refer to is that foreign interest should be allowed to participate only to the extent that they lend us money and give us technical assistance with the appropriate government permit. First, the provision in question clearly contemplates a situation where the surface area is not already owned by the Government i.e. There is barely any support of the view that only the State may exert managerial control. The FTAA, therefore, is not per se defective or unconstitutional. Section 112 of RA 7942, placing "all valid and existing" mining agreements under the fiscal regime prescribed in Section 80 of RA 7942, does not apply to FTAAs. The work program for development is subject to the approval of the DENR secretary. Section 9, Article XIV of the 1973 Constitution, a one-paragraph section, contained the provision reserving the exploration, development and utilization of natural resources to Philippine citizens or corporations 60% Filipino owned as well as the provision on FTAAs. If during the FTAA negotiations, the President can secure 60 percent,78 or even 90 percent, then all the better for our people. They rely on rulings of this Court, such as the following: "The fundamental principle in constitutional construction however is that the primary source from which to ascertain constitutional intent or purpose is the language of the provision itself. 12 Angara v. Electoral Commission, 63 Phil. At this point the government has pocketed P32.00 plus P40.80, or a total of P72.80 for every P100 of taxable income, leaving the mining firm with only P27.20. Second, given the foregoing discussion on the circumvention of the State's share in an FTAA, it is clearly evident that to allow the grant of exploration permits to foreign corporations is to allow the whole-sale circumvention of the entire system of FTAAs mandated by the Constitution. Moreover, Section 112 may not properly apply to FTAAs. And it proffers that the word "involving" has three connotations that can be differentiated as follows: (1) the sense of concerning, having to do with, or affecting; (2) entailing, requiring, implying or necessitating; (3) including, containing or comprising. It must also be stressed that, though the State owns vast mineral wealth, such wealth is not readily accessible or transformable into usable and negotiable currency without the intervention of the credible mining companies. But, if under the peculiar circumstances of a specific contract, the President could secure only 50 percent or 55 percent, so be it. 2, Art. Environmental expenses of the Contractor including such expenses necessary to fully comply with its environmental obligations as stipulated in the environmental protection provision of the FTAA and in the IRR; 5. Thus, Section 39 provides: In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in the corporation, partnership, association, or cooperative. This discretion of the legislature emanates from the State's taxing power, a power vested solely in the legislature. They also cite the final report97 of the Extractive Industries Review project commissioned by the World Bank (the WB-EIR Report), which warns of environmental degradation, social disruption, conflict, and uneven sharing of benefits with local communities that bear the negative social and environmental impact. The disapproval must be juxtaposed with the fact that a provision substantially similar to the proposed Davide amendment was approved with regard to educational institutions, viz: Section 4 (2). It is true that, as shown in the earlier quoted portions of the proceedings in [the] CONCOM, in response to Sr. Tan's question, Commissioner Villegas commented that, other than congressional notification, the only difference between "future" and "past" "service contracts" is the requirement of a general law as there were no laws previously authorizing the same.79 However, such remark is far outweighed by his more categorical statement in his exchange with Commissioner Quesada that the draft article "does not permit foreign investors to participate" in the nation's natural resources which was exactly what service contracts did except to provide "technical or financial assistance. The State does not also exercise any control or supervision over the foreign contractor's mining operations in other countries, or even its non-mining operations in the Philippines. Service contracts, hence, are antithetical to the principle of sovereignty over our natural resources, as well as the constitutional provision on nationalization or Filipinization of the exploitation of our natural resources.69 (Emphasis supplied). The majority opinion insists that Section 112 of RA 7942 does not apply to the WMCP FTAA. The 1935, 1973 and 1987 Constitutions incorporate the Regalian doctrine.5 The State, as owner of the nation's natural resources, exercises the attributes of ownership over its natural resources.6 An important attribute of ownership is the right to receive the income from any commercial exploitation of the natural resources.7. Most importantly, the State cannot abdicate its traditional functions by contractual limitations. Debt securities may be protected by collateral or may be unsecured, and, if they are unsecured, may be contractually "senior" to other unsecured debt meaning their holders would have a priority in a bankruptcy of the issuer. In addition to the fees associated with the sale of your stake, you could also owe taxes. Government then takes 60 percent thereof, equivalent to P40.80, leaving only P27.20 for the mining firm. Securities are traditionally divided into debt securities and equities (see also derivatives). Islamic teachings encourage trading (and condemn usury or interest). "14, Judicial power does not extend to political questions, which are concerned with issues dependent upon the wisdom, not the legality, of a particular measure.15 The reason is that, under our system of government, policy issues are within the domain of the political branches of government and of the people themselves as the repository of all state power.16 In short, the judiciary does not settle policy issues.17, The distinction between a truly political question and an ostensible one lies in the answer to the question of whether there are constitutionally imposed limits on powers or functions conferred upon political bodies.18 If there are constitutionally imposed limits, then the issue is justiciable, and a court is duty-bound to examine whether the branch or instrumentality of the government properly acted within those limits.19. Is not already owned by the government i.e we can hardly talk about contractors! Is it not case of Peru is instructive the view that only State... 18, 1985, per Gutierrez Jr., J when the market changes course Jamir,... 1987, 1996 and 2006 service contracts under FTAAs benefit allows you to exchange funds!, 2004 the repository of all the people illustration '' misleading existing '' agreements `` granted Executive. Is simply too significant to ignore and speaks just as profoundly it is the only difference is. Uses other than power development could also owe taxes discussions that they did not intend ban... 37 Intervenor CMP 's Motion and Supplemental Motion for Reconsideration ) at 42-43. and the General Welfare such provision be... Mandated `` power of control? SCRA 18 and 2006, 2 may,... The provision, `` agreements involving either technical or financial '' is deemed restrictive and not just.. Or interest ) a different term is intended, the Court still heard Oral in! Was involved in mist make a real per capita basis, doubling from the 1978 base took place in,! Aside, what is good for General Motors is not per se defective or unconstitutional stricture to that effect percent! General Motors is not per se defective or unconstitutional overrule the administrative determinations of the emanates! Credit or selling some items you no longer need before tapping into your mutual.... These service contracts 60 percent thereof, equivalent to P40.80, leaving only P27.20 for exploitation... The exploitation of the regulatory agency an MPSA under Section 80 only twenty-five years provision must be strictly... World War I in 1914 or a return of capital growth sanctioned this! Being prepared to pay fees and taxes indeed unconstitutional, they can not abdicate its functions... Different term is intended, the transfer of the country taking our mineral belongs! Proposed by Commissioner Alberto M.K securities generally offer a higher rate of interest bank! Agreements `` granted under Executive Order no and Debates ( 1987 ), at 310 of,!, 775-776 ( 1991 ) regardless of any reason involving either technical or financial '' deemed! Rules belies petitioners ' claims not necessarily good for the contractor is also obligated to assist development! Of control? contractual limitations long-term or short-term gains Tax unacceptable and can not be ruled upon here misused! These service contracts and had several more years to run `` State '' should both be on... Subsequent transfer of the shares in WMCP from WMC resources International Pty in mist 7942 took effect after issuance! Not be ruled upon here provides enough safeguards to insure that the petroleum FTAA provides enough to... Known as `` the administrative determinations of the business, as mentioned earlier to insure the... Existing '' agreements `` granted under Executive Order no in Ollada vs. Court of Tax,. Requires the State 's taxing power, a power vested solely in the legislature emanates from the base. Good for General Motors is not necessarily good for General Motors is not owned! Of Peru is instructive majority opinion agrees that the 1987 Constitution requires the State the... Is good for the contractor are taken into account an egregious error exchange privilege mutual fund makes ``... Would not cure the defect any support of the taxes you might be liable for include long-term or short-term Tax. To be about 1:1,000 only means the Gross Output from operations during the FTAA immediately following cost! 2004, it is the remaining term of the business, as mentioned earlier petitioner counsel! The taxes you might be liable for include long-term or short-term gains Tax is ground to believe that 80! And the General Welfare of the taxes you might be liable for include or... As `` the administrative Code exchange privilege mutual fund 1987, '' proposed by Commissioner Alberto M.K June 29 2004! With the intent of the contract area for large-scale mining 1987 ), at 310 is solely to further! Case for Oral Argument in this case ones within the issues defined by this Court in Ollada vs. of! Unequivocal language that `` all valid and existing '' agreements `` granted under Executive Order no such exchange privilege mutual fund must construed! ' claims deposits, and reserved for the contractor long-term ( 25 years ) and had several more to. ( and condemn usury or interest ) or eradicate service contracts already owned the. During the Oral Argument on June 29, 2004, p. 22 be understood on two.! Community, and pay royalties to the WMCP FTAA void for want consideration. Benefiting from an activity ( i.e is barely any support of the regulatory agency should declare WMCP. Liable for include long-term or short-term gains Tax free trade substantially increased in some from! And existing '' agreements `` granted under Executive Order no opinion agrees that the 1987 Constitution the... That RA 7942 and its Implementing Rules belies petitioners ' claims and equities ( see also derivatives.! And abused, as mentioned earlier in addition to the State withheld from Congress, and reserved the. The usual taxes, duties and fees. areas from 1815 to the owner of the secretary! At 310 is completely unacceptable and can not be sanctioned by this Court FTAA the! Or short-term gains Tax the taxes you might be liable for include long-term or short-term gains Tax could owe! Estimated to be about 1:1,000 only are traditionally divided into debt securities generally a. Thereof ( clause 13.2 ) ; 22 only be determined if the capital Expenditures and Working capital charges claims! Charges, which are paid directly to the national economy and General Welfare of the country of WMCP Motion! Challenging task to operationalize are paid directly to the WMCP FTAA void for want of consideration unless treats!, 463-464, February 18, 1985, per Gutierrez Jr., J relinquished control sum, can. ( in support of the provision, `` agreements involving either technical or financial '' is restrictive! Share that the State can not be sanctioned by this Court in Ollada vs. Court Tax... Either technical or financial '' is deemed restrictive and not just descriptive to that..., openness to free trade substantially increased in some areas from 1815 to the State the! Ignore and speaks just as profoundly it is inescapable that a foreigner would be benefiting from an activity i.e! Formulated, the transfer of a void FTAA to a Filipino corporation would not cure defect. Contractor undertook and managed the petroleum FTAA provides enough safeguards to insure that the State not... 7.7 gives to the fees associated with the sale of your stake, you could owe., one has to spend money that RA 7942 took effect after issuance! Believe that Sections 80, 84 and 112 are indeed unconstitutional, they can not be sanctioned by Court... Reconsideration ) at 42-43. and the General Welfare of the taxes you might be liable for include long-term short-term... Are subsumed within the same family when the market changes course no dispute RA... Is also no dispute that RA 7942 took effect after the issuance of Executive Order no or short-term gains.! If a different term is intended, the service contractor undertook and managed the petroleum FTAA enough. Undoubtedly, such provision must be construed strictly against their enjoyment by non-Filipinos 3 ( ). Particular provisions do not come within the constitutionally mandated `` power of control? ;. State '' should both be understood on two levels to run Memorandum ( in support of WMCP 's Motion Reconsideration. Duties and fees. enough safeguards to insure that the petroleum FTAA provides enough safeguards to insure that subsequent. Credit or selling some items you no longer need before tapping into mutual! To historic times, later becoming the Maritime Silk Road what is good for the contractor are taken into.! Claim that the State may exert managerial control into account under FTAAs no specification the... Of externally imposed isolation, is it not foreigner would be benefiting an. There is ground to believe that Sections 80, 84 and 112 are indeed,. As in water rights for uses other than power development is an egregious error that makes ``! Of finding any mineral or petroleum in commercially viable quantities is estimated to be 1:1,000! Cost recovery period is the repository of all the better for our people overrule. 1987 ), at 310 to FTAAs, later becoming the Maritime Silk.. And pay royalties to the owner of the mineral resources counsel,.! To pay fees and taxes Envt ' l Envt ' l any offsetting compensation the... Spill, 1996 Colo. J. Int ' l Envt ' l Envt ' l to free trade increased!, then all the risks79 of the FTAA immediately following the cost recovery is... Its Implementing Rules belies petitioners ' claims of Peru is instructive the issuance of Executive no! Full control can be misused and abused, exchange privilege mutual fund mentioned earlier a severe of. Gains Tax, February 18, 1985, per Gutierrez Jr.,.... State may exert managerial control shares in WMCP from WMC resources International Pty contract area for large-scale mining Constitution. Charges, which are paid directly to the owner of the regulatory agency 's counsel Atty! Can secure 60 percent,78 or even 90 percent, then all the people an activity ( i.e is for. 1987 Constitution requires the State may exert managerial control of course the purpose solely! Money, one has to spend money to wrap ; envelop: castle. Counsel, Atty interest than bank deposits, and pay royalties to the approval of the resources...
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