MAC/20: Mines and Communities

Mining Act's Constitutionality to Deprive RP of Economic Gains - SC Urged to Reverse Ruling on R.A.

Published by MAC on 2006-04-24

Mining Act's Constitutionality to Deprive RP of Economic Gains - SC Urged to Reverse Ruling on R.A. 7942

Legal Rights and Natural Resources Center, Inc.- Kasama sa Kalikasan/Friends of the Earth-Philippines

24th April 2006

The Supreme Court's recent decision upholding the constitutionality of the Mining Act of 1995 will be detrimental to the economic interest of the government, the public and private landowners especially to the thousands of peoples who are losing their ancestral lands due to mining operations.

This was the contention of the Didipio Earth Savers' Multi-Purpose Association Inc. (DESAMA) as they filed today a motion for reconsideration urging the SC to set aside its March 30, 2006 decision which upheld the constitutionality of R.A. 7942 or the Mining Act of 1995.

The Mining Act according to DESAMA must be declared unconstitutional as it only intends to enrich mining contractors at the expense of the economic interest of the Philippine government and the Filipino people.

The Mining Act, DESAMA claims, intends to practically surrender the eminent domain power of the State to mining operators and also deprive individuals of their right to just compensation over their lands taken away from them for mining purposes.

Eminent domain

DESAMA argued that the SC ruling erroneously delegated the power of eminent domain -- or the forcible acquisition of private property for public use -- to mining operators.

"How could the Climax Arimco Mining Corp. (CAMC) be given the power of eminent domain when it is not a private entity operating a public utility but a foreign mining corporation whose primary interest is for private gain and not for public benefit? This is tantamount to the government voluntarily giving up its sovereign power to mining operators and relinquishing its obligation to protect the interest of the public" said Peter Duyapat Sr., a member of the Board of Directors of DESAMA.

Eminent domain, DESAMA noted, could only be exercised by the State and not by private mining operators except in public utilities operated by private entities. The power of eminent domain according to DESAMA may be delegated by Congress to a few exclusive bodies such as government entities, local government units and private entities operating public utilities.

"The law is clear. Only private entities that operate public utilities work as exception to the rule barring further delegation of an already delegated power," noted DESAMA in its petition.

Citing Presidential Decree No. 512, which the SC said was not expressly repealed by section 76 of R.A. 7942, the court earlier ruled that: "The evolution of mining laws gives positive indication that mining operators who are qualified to own lands were granted the authority to exercise eminent domain for the entry, acquisition and use of private lands in areas open for mining operations."

The SC decision upheld the Financial and Technical Assistance Agreement (FTAA) of CAMC thus allowing it to negotiate for the acquisition of lands which DESAMA claimed is "a clear violation of the exclusive sovereign right of the government to exercise the power of eminent domain."

Public purpose

The Mining Act is unconstitutional according to DESAMA because the law's provisions do not fully satisfy the requirements in the exercise of eminent domain. R.A. 7942 according to DESAMA lacks two essential provisions that would guarantee that (1) mining operations are for public purposes and that (2) landowners whose private properties will be used for mining activities should be justly compensated.

There are three requirements for a valid exercise of the power of eminent domain under section 9, Article III of the Constitution. These are: (1) taking (of a private property) whose purpose must be for (2) public use which should be made (3) upon payment of just compensation.

DESAMA noted that the Mining Act only satisfied "the taking" requirement but failed to comply with the "public use" and the "just compensation" requirements of eminent domain.

Instead of ensuring that mining operations will be for public purpose and hence for public benefit, the Mining Act, DESAMA noted "obliges the Philippine government to ensure that mining contractors do not come out of the mining venture poorer than when they came in."

If mining operations in the Philippines are indeed a direct undertaking of the State as the owner in trust of mineral resources, and is designed to benefit the public, DESAMA said the government, should have received the majority of the income or proceeds from the mining operations of CAMC.

"The Mining Act failed to provide the country of economic growth based on real contributions from mining operations that should have served the general welfare of the country. The law does not provide for the government's equitable share of the mining contractors' profit," said Atty. Melizel Asuncion, counsel of DESAMA. DESAMA said that Mining contractors enjoy incentives such as corporate tax and duty holidays from the Board of Investments. Corporations which hold FTAAs such as CAMC, are given the privilege to fully recover its pre-operating and property expenses before they give the government its share in the net revenue which are nothing but levies such as taxes, duties and other fees that are not part of investment return.

Just compensation

The Mining Act also lacks a provision on just compensation required to satisfy the legal exercise of eminent domain. In its Motion for Reconsideration, DESAMA argued that the SC erred in its interpretation of equating damage compensation to just compensation. The SC said in its decision that section 76 of the Mining Law and section 107 of Department Administrative Order (DAO) 96-40 of the Department of Environment and Natural Resources both provide for the payment of just compensation.

DESAMA countered the SC's pronouncement claiming that the Mining Act and its implementing rules and regulations only provide for damage compensation in actual mining operations and/or the installation of machineries and other mining facilities but not for the payment of just compensation.

Section 76 of the law only states that "any damage done to the property of the surface owner, occupant or concessionaire as a consequence of such operation shall be properly compensated as may be provided in the implementing rules and regulations."

According to DESAMA, just compensation pertains to the full payment of a property taken away from the owner based on its fair market value.

This, DESAMA said differs from the concept of damage compensation which only pertains to payment for the harm or injury to a property resulting in the loss of its value or impairment of its usefulness.

En banc decision

The group also argued that instead of dismissing their earlier petition in DESAMA vs. Elisea Gozun through affirming the First Division's earlier decision in La Bugal B'laan vs. Ramos which declared that section 76 of R.A. 7942 was not unconstitutional, the SC should have acted on DESAMA's petition en banc since the case involves the constitutionality of a law.

Section 4(2), Article VIII of the 1987 Constitution requires that all cases involving the constitutionality of a treaty, international or executive agreement or law have to be heard or decided by the SC en banc.

Legal Rights and Natural Resources Center, Inc.- Kasama sa Kalikasan/Friends of the Earth-Philippines

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