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Supreme Court Decision on the Philippine Mining Act of 1995 |
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La
Bugal-B’laan Tribal Association, Inc., et. al., Petitioners,
versus Victor O. Ramos, Secretary, Department of Environment and
Natural Resources, Horacio C. Ramos, Director, Mines and Geosciences
Bureau, Ruben Torres, Executive Secretary, and WMC [Philippines],
Inc., Respondents; Filed February 7, 1987; G. R. No. 127882 |
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On
January 27, 2004, the Supreme Court nullified all provisions concerning
the Financial or Technical Assistance Agreement (FTAA) and other
permits that can be granted to foreign-owned corporations such as
the exploration permits, and mineral processing permits. The decision
also declared the FTAA of Western Mining Corporation (Philippines)
as unconstitutional and void. The pertinent Motion for Reconsideration
has been filed by the government, through the Office of the Solicitor
General, on February 20, 2004.
Nature
of the Case
1.
The case is entitled La
Bugal-B’laan Tribal Association, Inc., et. al., Petitioners,
versus Victor O. Ramos, Secretary, Department of Environment and
Natural Resources, Horacio C. Ramos, Director, Mines and Geosciences
Bureau, Ruben Torres, Executive Secretary, and WMC (Philippines),
Inc., Respondents. It was filed on February 7, 1987,
and docketed as G. R. No. 127882.
The
petition is mainly for the nullification of the Philippine Mining
Act of 1995 and the Financial or Technical Assistance Agreement
(FTAA) entered into by and between the Philippine Government and
WMC (Philippines), Inc., in 1995, for being unconstitutional.
2.
It is a celebrated case since the petition challenged the very
foundation of Government’s policy in the administration
and management of the country’s mineral lands and resources.
Experts have looked at the then petition as one of the major impediments
to the growth of the Philippine minerals industry.
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Highlights
of the Decision
1.
General – Declaring as unconstitutional and void all provisions
of Republic Act No. 7942, the Philippine Mining Act of 1995, which
allow the direct participation of foreign-owned corporations in
mineral resources exploration, development and utilization in
the country.
2. Specific – Declaring as unconstitutional and void the
following provisions of the Mining Act:
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All
provisions pertaining to the Financial or Technical
Assistance Agreement (FTAA) (Sections 33 to 41 and 81) |
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This
means that foreign-owned corporations are no longer eligible
for any mining contracts in the country. (Note: Foreign-owned
corporation is a duly registered corporation in which
less than 50% of the capital is owned by Filipino citizens.) |
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The
provisions pertaining to the rights and obligations
of an Exploration Permit holder (Sec. 23) |
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The
provisions pertaining to the grant of an Exploration
Permit were not assailed. But without Section 23, the
Mining Act will be silent on what rights are being granted
to, as well as the obligations of, the permittee. This
renders the grant of Exploration Permits untenable. |
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The
provision that allows the issuance of a Mineral Processing
Permit to foreign-owned corporations (Sec. 56) |
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With
this, mineral processing is now confined exclusively
to Filipinos/Filipino juridical entities. |
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The
provision that grants incentives as provided for in Executive
Order No. 226, the Omnibus Investments Code of 1987 (Sec.
90) |
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Incidentally,
this provision includes the grant of incentives to Mineral
Agreements, including the Mineral Production Sharing Agreements
(MPSAs). Thus, even Filipino mining contractors were adversely
affected. |
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The
proviso in the definition of a “qualified person,”
which qualifies foreign-owned corporations in the grant
of an FTAAs, Exploration Permits and/or Mineral Processing
Permits [Sec. 3(aq)] |
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This
disqualification right in the definition of who is and
who is not qualified sealed the fate of foreign-corporations. |
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Implications
of the SC Decision
1.
A setback to Her Excellency’s very recent Executive Order
No. 270 re: National Policy Agenda on Revitalizing Mining in the
Philippines.
2.
Endangering existing and forthcoming mineral development projects,
as follows:
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Hydrometallurgical Processing Plant Project of Coral Bay Nickel
Corporation
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Rapu-rapu Polymetallic Project of Lafayette Phils., Inc.
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Masbate Gold Project of Filminera Resources Corporation
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Boyongan Copper-Gold Project of Philex Gold Phils., Inc. and
Anglo- American Exploration Phils., Inc.
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Didipio Copper-Gold Project of Climax-Arimco Mining Corporation
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Tampakan Copper Project of Sagittarius Mines, Inc.
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Copper smelting project of PASAR
All the above projects are within the FTAA and/or Mineral Processing
Permit schemes.
3.
Also endangering existing and proposed energy and cement projects.
The Decision has consistently referred to the service contract
scheme as applied to the FTAA as unconstitutional. The service
contracts for energy projects are similar to the FTAA.
As to the cement projects, many cement manufacturers have either
secured or are applying for Mineral Processing Permits. This is
supposed to address the recent entry of big foreign cement corporations
in the local cement industry.
4.
Sending a negative signal to the international investment community,
to the disadvantage of the country in terms of competitiveness
and sovereign risk.
5.
Adversely affecting the country’s growth rate and export
targets due to a slowdown in investments, not only in the minerals
industry but also in other industries where foreign capital is
substantial.
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Dispositive
Portion of the SC Decision
"WHEREFORE,
the petition is GRANTED. The Court hereby declares unconstitutional
and void:
(1) The following provisions of Republic Act No. 7942:
(a)
The proviso in Section 3 (aq),
(b) Section 23,
(c) Section 33 to 41,
(d) Section 56,
(e) The second and third paragraphs of Section 81, and
(f) Section 90.
(2) All provisions of Department of Environment and Natural Resources
Administrative Order 96-40, s. 1996 which are not in conformity
with this Decision, and
(3) The Financial and Technical Assistance Agreement between the
Government of the Republic of the Philippines and WMC Philippines,
Inc."
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