Case no. 437 LA BUGAL-BLAAN TRIBAL ASSOCIATION, INC. et al VS. RAMOS G.R. No.

127882 December 1, 2004 445 SCRA 1 FACTS: Petitioners challenged constitutionality of Republic Act No. 7942 (The Philippine Mining Act of 1995) and its Implementing Rules and Regulations and the Financial and Technical Assistance Agreement dated March 30, 1995, executed by the government with Western Mining Corporation (Philippines), Inc. On January 27, 2004, the Supreme Court en banc promulgated its decision declaring the unconstitutionality of certain provisions of RA 7942 as well as of the entire FTAA executed between the government and WMCP, mainly on the finding that FTAAs are service contracts prohibited by the 1987 Constitution. Subsequently, respondents filed separate Motions for Reconsideration. In a Resolution dated March 9, 2004, the Supreme Court required petitioners to comment. The case was set for Oral Argument on June 29, 2004. After hearing the opposing sides, the Court required the parties to submit their respective memoranda in amplification of their arguments. On the same day, the Court noted inter alia, the Manifestation and Motion for Intervention filed by the Office of the Solicitor General on behalf of public respondents. The OSG said that it was not interposing any objection to the Motion for Intervention filed by the Chamber of Mines of the Philippines, Inc. and was in fact joining and adopting the latters Motion for Reconsideration. Memoranda were accordingly filed by the intervenor as well as by petitioners, public respondents, and private respondent, dwelling at length on three issues, namely, (1) mootness of the case by the sale of WMC shares in WMCP to Sagittarius which 60% its equity is owned by Filipinos and by the subsequent transfer and registration of the FTAA from WMCP to Sagittarius; (2) constitutionality of the assailed provisions of the Mining Law, its Implementing Rules and Regulations and the WMCP FTAA; and, (3) proper interpretation of the phrase agreements involving either technical of financial assistance contained in paragraph 4 of Section 2 of Article XII of the Constitution. Among the assailed provisions of the Mining Law were Section 80 and the colatilla in Section 84, as well as Section 112. The petitioners alleged that these sections limit the States share in a mineral production-sharing agreement to just the excise tax on the mineral product and the WMCP FTAA contains a provision which grants the contractor unbridled and automatic authority to convert the FTAA into MPSA (mineral production-sharing agreements. However, the Court ruled that these were not argued upon by the parties in their respective pleadings. Also, the Court stated that these particular provisions do not come within issues that were defined and delineated by during the Oral Argument, particularly the third issue, which pertained exclusively to FTAAs.

Later, WMCP submitted its Reply Memorandum, while the OSG, in compliance to the order of the Supreme Court, filed a Compliance submitting copies of more FTAAs entered into by the government. ISSUE: Whether or not petitioners have a right to assail the statutory provisions (Sections 80, 84 and 112) for its unconstitutionality. RULING: The Supreme Court held that it cannot rule on mere surmises and hypothetical assumptions, without firm factual anchor, in relation to the assailed provisions. Stated in Article 1421, The defense of illegality of contracts is not available to third persons whose interests are not directly affected. The Court thus held that due process requires hearing the parties who have a real legal interests in the MPSAs (i.e. the parties who executed them) before the MPSAs can be reviewed, or worse, struck down by the Court. Thus, the petitioners have no right to question the assailed provisions.