13. Power Relative to Natural Resources

Power Relative to Natural Resources

Concept

Natural resources belong to the State. Their exploration, development, and utilization remain under its full control and supervision, whether the State acts directly or enters into authorized agreements. Congress’s express role in this provision is to allow, by law, specified small-scale uses and cooperative fish farming. (Art. XII, Sec. 2, 1987 Const.)¹

Governing provisions

Article XII, Section 2 of the Constitution covers lands of the public domain, waters, minerals, forests, fisheries, wildlife, and other natural resources. Except for agricultural lands, natural resources may not be alienated. The State must also protect the nation’s marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens. (Art. XII, Sec. 2, 1987 Const.)¹

The Mining Act declares State ownership of mineral resources in public and private lands within Philippine territory and the exclusive economic zone. It calls for rational exploration, development, utilization, and conservation while safeguarding the environment and protecting affected communities. (Sec. 2, Rep. Act No. 7942)²

Requisites / Rules

• The State may undertake exploration, development, and utilization directly. Alternatively, it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens or entities at least 60% of whose capital is Filipino-owned. These agreements may last no more than 25 years, renewable for no more than 25 years. (Art. XII, Sec. 2, 1987 Const.)¹
• Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens and cooperative fish farming. Priority goes to subsistence fishermen and fish workers in rivers, lakes, bays, and lagoons. (Art. XII, Sec. 2, 1987 Const.)¹
• The Department of Environment and Natural Resources primarily implements the State’s natural-resources policy, subject to law and higher authority. The Mines and Geosciences Bureau directly administers and disposes of mineral lands and resources; its Director recommends mineral agreements to the Secretary and monitors contractor compliance. (Sec. 2, Exec. Order No. 292)³ (Sec. 9, Rep. Act No. 7942)⁴

Distinctions

State ownership is distinct from private participation: an agreement with a contractor does not remove State control and supervision. Likewise, a mineral agreement differs from an application for financial or technical assistance; the latter was not treated as a mineral agreement in Republic v. Apex Mining. (Sec. 4, Rep. Act No. 7942)⁵ (Diamond Drilling Corporation of the Philippines v. Crescent Mining and Development Corporation, G.R. No. 201785, 10 April 2019)⁶ (Republic v. Apex Mining Company Inc., G.R. No. 220828, 7 October 2020)⁷

Key doctrines

Government cannot be compelled to execute a particular mineral agreement in derogation of its constitutional power to undertake resource activities directly. Assignment or transfer of mineral-agreement rights also requires a discretionary, fact-specific determination by the DENR Secretary, including the proposed assignee’s technical and financial qualifications. (Republic v. Apex Mining Company Inc.)⁷ (Diamond Drilling v. Crescent Mining)⁶

The Environment Secretary may monitor compliance and cancel a mineral agreement for violations without first obtaining a recommendation from the Bureau Director. State control thus continues after an agreement is made. (Awayan v. Sulu Resources Development Corporation, G.R. No. 200474, 9 November 2020)⁸ (Sec. 4, Rep. Act No. 7942)⁵

Exceptions

The constitutional bar on alienation of natural resources expressly excepts agricultural lands. For water rights involving irrigation, water supply, fisheries, or industrial uses other than waterpower development, beneficial use may measure and limit the grant. (Art. XII, Sec. 2, 1987 Const.)¹

Bar tip

For a question on Congress’s specific power, identify the need for a law authorizing small-scale utilization or cooperative fish farming; for a mineral contract, separately test State control and the contractor’s qualifications. (Art. XII, Sec. 2, 1987 Const.)¹ (Diamond Drilling v. Crescent Mining)⁶