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forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna,
and other natural resources are owned by the State. The same section also
states that, the exploration and development and utilization of natural
resources shall be under the full control and supervision of the State.
Conspicuously absent in Section 2 is the provision in the 1935 and 1973
Constitution authorizing the State to grant licenses, concessions, or leases for
the exploration, exploitation, development, or utilization of natural resources.
By such omission, the utilization of inalienable lands of the public domain
through license, concession or lease is no longer allowed under the 1987
Constitution.
Under the concession system, the concessionaire makes a direct equity
investment for the purpose of exploiting a particular natural resource within a
given area. The concession amounts to complete control by the
concessionaire over the countrys natural resource, for it is given exclusive
and plenary rights to exploit a particular resource at the point of extraction.
The 1987 Constitution, moreover, has deleted the phrase management or
other forms of assistance in the 1973 Charter. The present Constitution now
allows only technical and financial assistance. The management and the
operation of the mining activities by foreign contractors, the primary feature of
the service contracts was precisely the evil the drafters of the 1987
Constitution sought to avoid.
The constitutional provision allowing the President to enter into FTAAs is an
exception to the rule that participation in the nations natural resources is
reserved exclusively to Filipinos. Accordingly, such provision must be
construed strictly against their enjoyment by non-Filipinos. Therefore, RA
7942 is invalid insofar as the said act authorizes service contracts. Although
the statute employs the phrase financial and technical agreements in
accordance with the 1987 Constitution, its pertinent provisions actually treat
of
the
constitutionally
ordained
60-40%
capitalization
exclusive right to explore, exploit, utilize and dispose of all minerals and byproducts that may be produced from the contract area. Section 1.2 of the
same agreement provides that EMCP shall provide all financing, technology,
management, and personnel necessary for the Mining Operations.
These contractual stipulations and related provisions in the FTAA taken
together, grant WMCP beneficial ownership over natural resources that
properly belong to the State and are intended for the benefit of its citizens.
These stipulations are abhorrent to the 1987 Constitution. They are precisely
the vices that the fundamental law seeks to avoid, the evils that it aims to
suppress. Consequently, the contract from which they spring must be struck
down