Bullying the state

Source: Business World Online
Date: 30 Sep 2021

THE CHAMBER of Mines is relentlessly campaigning against the implementing rules of the Aquino administration’s mining policy embodied in Executive Order No. 79. Their statement singled out Section 9 of the implementing rules as "patently illegal."

The Chamber cites section 32 of the Mining Act of 1995, as the basis of its complaint which provides in part that:

SECTION 32. Terms. -- Mineral agreements shall have a term not exceeding twenty-five (25) years to start from the date of execution thereof, and renewable for another term not exceeding twenty-five (25) years under the same terms and conditions thereof, without prejudice to changes mutually agreed upon by the parties…

The Chamber claims that under this section the terms of the agreements cannot be changed. Neither can the length of the agreement be reduced to less than 50 years. The Chamber is under the impression that it is entitled to a renewal of their agreements under the same terms for the same length of time.

The Chamber’s position is incorrect. There is nothing in the law that unconditionally preserves the original terms and conditions of a mineral agreement. Section 32 suggests the possibility of changing the terms of the agreement. The renewal will be under the same terms and conditions "without prejudice to changes mutually agreed upon by the parties." This clause alone implies that the renewal presupposes a reexamination of the terms, not a mechanical approval of the old terms.

If the government believes that the terms of the original agreement should be altered, then it has every right to negotiate the changes. If the parties cannot agree on the new terms, then no new agreement will be signed. This is the way contracts are written-they ought to be mutually agreed upon by the parties.

There is no guarantee either that the renewed terms will be for another 25 years. The law speaks of a maximum number of years. Logically, a renewal may be for a shorter period of time.

Philex Mining senior vice president Mike Toledo claims that mineral agreements could be automatically renewed for another 25 years and revised only if mutually agreed upon by the parties. Toledo claims, that the rules still reduce the length of the agreements and are allegedly inconsistent with the Mining Act and purportedly in clear violation of the Constitution.

Again, the flaw in this argument is that it incorrectly places the mining industry in a superior position in the negotiations for access to resources. It assumes that the review or renegotiation of the agreements can happen only if the mining industry agrees to it. This is a misrepresentation of the law.

The exploitation of our natural resources is within the discretion of the State. It has the power to determine who will be allowed to exploit resources and how it is to be done. It makes no guarantee that these agreements will be automatically renewed for the same length of time. It is not for the mining companies to say whether they wish to review or renegotiate the terms of the agreement.

Furthermore, mining contracts are not ordinary contracts. They have potential social and environmental impacts and are imbued with public interest. They should be subject to constant review by the government. Permits, agreements, or contracts regarding the exploitation of natural resources are not impervious.

Mining exploration permits do not grant any permanent or irrevocable rights within the purview of the non-impairment of contract and due process clauses of the Constitution, since the State, may alter, modify or amend the same, in accordance with the demands of the general welfare (G.R. No. 135190, April 3, 2022). The State may pursue the constitutional policy of full control and supervision of the exploration, development and utilization of the country’s natural mineral resources, by either directly undertaking the same or by entering into agreements with qualified entities. The State may not be precluded from considering a direct takeover of the mines, if it is the only plausible remedy generated by a gold rush. The State need be guided only by the demands of public interest in settling for this option, as well as its material and logistic feasibility (Id.).

In fact, the DENR (Department of Environment and Natural Resources) Secretary has the express power to approve mineral agreements or contracts and the implied power to cancel said agreements (G.R. No. 169080, December 19, 2021) for violations of the terms thereof.

Even the Financial or Technical Assistance Agreements do not involve mere contractual rights. They are impressed with public interest, and as such, the contractual provisions and stipulations must yield to the common good and the national interest (G.R. No. 127882, December 1, 2021).

The mining industry is asking the State to be allowed to exploit resources. It cannot make demands. Whatever concessions the State gives them should always be subject to the public interest.

That the government immediately relented and agreed to rewrite the rules to change Section 9 as well as two other provisions suggests that private interests can bully the State and public interest.

Dante Gatmaytan is an Associate Professor at the University of the Philippines College of Law.

Cielo Magno is a fellow of Action for Economic Reforms, Coordinator of Bantay Kita, a coalition for transparency and accountability in the extractive industry, and a member of the global steering committee of Publish What You Pay (PWYP).

Business World Online