Businessworld: High Court upholds mining law

High Court upholds mining law
By Ma. ELISA P. OSORIO, Reporter

'The Constitution should be read in broad life-giving strokes. It should not be used to strangulate economic growth or to serve narrow, parochial interest...Rather, it should be construed to grant the President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign investment, as well as to secure for our people and our posterity the blessings of prosperity and peace.'

The Supreme Court yesterday, with a vote of 10 to 4 with one abstentation, effectively reversed itself as it declared the Philippine Mining Act as constitutional.

In a 246-page decision, the court en banc overturned its January decision that nullified the mining law (Republic Act 7942) as well as the Financial and Technical Assistance Agreement (FTAA) between the government and Western Mining Corporation Philippines, a wholly-owned subsidiary of Western Mining Corporation Holdings Limited of Australia.

Those who voted for the reversal of the January decision were Chief Justice Hilario G. Davide, Jr. as well as justices Artemio V. Panganiban, Reynato S. Puno, Leonardo A. Quisumbing, Angelina Sandoval-Gutierrez, Alicia Austria Martinez, Renato C. Corona, Dante O. Tinga, Minita V. Chico-Nazario and Cancio C. Garcia.

Those who dissented were justices Consuelo Ynares-Santiago, Antonio T. Carpio, Conchita Carpio-Morales, and Romeo J. Callejo. Justice Adolfo A. Azcuna abstained because he was a former lawyer of one of the parties.

The decision, penned by Justice Panganiban, ruled that the 1995 FTAA did not contravene the 1987 Constitution because the charter expressly allowed service contracts in "large-scale exploration, development, and utilization of minerals, petroleum and mineral oils."

'LIFE-GIVING STROKES'

"The Constitution should be read in broad life-giving strokes. It should not be used to strangulate economic growth or to serve narrow, parochial interest," the court said.

"Rather, it should be construed to grant the President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign investment, as well as to secure for our people and our posterity the blessings of prosperity and peace," it added.

The court also said the government may undertake mining activities through "agreements with foreign-owned corporations involving either technical or financial assistance."

The court also said there was nothing unconstitutional about the mining law's Implementing Rules and Regulations that were drafted by the Department of Environment and Natural Resources.

It noted that the State, through the President, still retained and exercised full control over mining operations despite FTAAs.

"The drafters [of the Constitution] in fact knew that the agreements with foreign corporations were going to entail not mere technical or financial assistance, but rather, foreign investment in and management of an enterprise for large-scale exploration, development, and utilization of minerals," the court decision read.

"Indeed, the Chief Executive is the official constitutionally mandated to enter into agreements with foreign owned corporations," it added.

The law also states that Congress may review the action of the President regarding "every contract entered into in accordance with this [constitutional] provision," the court said.

In reversing itself on earlier nullifying the mining law, the court also said "the judiciary should not inordinately interfere in the exercise of this presidential power of control over the EDU [exploration, development and utilization] of our natural resources."

The court also said its new decision would answer "the need to develop our stagnating mining industry and extract what NEDA [National Economic and Development Authority] Secretary Romulo Neri estimates is some $840 billion worth of mineral wealth lying hidden in the ground, in order to jump-start our floundering economy on the one hand, and on the other, the need to enhance our nationalistic aspirations, protect our indigenous communities, and prevent irreversible ecological damage."

"Verily, the mineral wealth and natural resources of this country are meant to benefit not merely a select group of people living in the areas locally affected by mining activities, but the entire Filipino nation," the court added.

The Supreme Court, last January 27 struck down as unconstitutional the provisions of the Philippine Mining Act of 1995 that allowed 100% foreign-owned firms to exploit the country's mineral resources.

In that 95-page ruling, the court en banc declared provisions of RA7942 void in so far as they pertained to the so-called FTAA.

That ruling likewise declared as void the FTAA between the government and Western Mining.
WELCOME NEWS

Reacting to the decision, the Chamber of Mines of the Philippines said "the knowledge and wisdom of the court in this landmark case [was] expected to draw support from the entire business community, locally and internationally."

In a separate statement, American Chamber of Commerce of the Philippines Executive Director Robert Sears said the court decision would help the government "create jobs, increase revenues from exports, and bring in needed foreign direct investments."

Stock market analysts said the decision would also bode well for the local market and the economy.

In telephone interview, Astro del Castillo of First Grade Holdings, Inc. noted that mining, being an untapped sector for some time, had plenty of potential.

"This will open the floodgates [for developments] that will impact the country's fiscal problems," he said.

"They [foreign and local companies] will complement each other and enhance competition, which will result in more efficient operations for the sector," he added.

The mining and oil indices were up in yesterday's trading.

Jose Vistan, Jr. of AB Capital Securities, Inc. also welcomed the court ruling. "This is good news, which brings into the country not only potential capital but also technology. Mining companies short in capital can now tap the technology of those foreign companies and help the economy," he said.

He added the ruling was a "much-needed shot in the arm" for the economy to take off.

"Oil and copper prices are high. The Philippines is rich in these resources so the decision of the Supreme Court is good news for the economy, the stock market and the country as well. It is pro-business for a change," he added.

Meanwhile, Environment and Natural Resources Secretary Michael T. Defensor said, "We would now be assured of investments [in the mining sector], the economy would surely benefit from it. Any decision otherwise would have been disastrous for us."

"We see a potential $2 billion to $3 billion worth of investments during the first three years, and about $2 billion annually after that," he added.

Mr. Defensor also said, "There are about 30 potential investments with pending process of implementation because of the issue on mining. Now it is all systems go." -- with reports from Roulee Jane C. Calayag and Rommer M. Balaba