High court: 3 mining firms broke ownership law

MANILA, Philippines–The Supreme Court has affirmed with finality its April 2014 decision prohibiting three mining firms from operating in the country for violating the constitutional provision that limits foreign ownership in mining companies to 40 percent.

Voting 4-1, the high court’s Special Third Division recently denied the motion for reconsideration filed by petitioners Narra Nickel and Mining Development Corp., Tesoro Mining and Development Inc. and McArthur Mining Inc.

The high court affirmed that the three foreign companies were not allowed to enter into mineral production sharing agreements (MPSAs).

“We deny the motion for reconsideration with finality. No further pleadings shall be entertained. Let entry of judgment be made in due course,” the court said in the resolution dated Jan. 28 and written by Justice Presbitero Velasco Jr.

The case stemmed from a suit filed by Filipino-owned Redmont Consolidated Mines Corp. in the Department of Environment and Natural Resources (DENR). Redmont questioned the rights of Tesoro, McArthur and Narra to engage in mining activities through MPSAs, which are reserved for Filipino citizens.

Foreign companies barred

Redmont took an interest in mining and exploring certain areas in Palawan and, in 2006, discovered that the areas had pending applications for MPSAs in the names of Narra, Tesoro and McArthur covering more than 12,100 hectares in the island-province.

In December 2007, a DENR arbitration panel ruled that the three companies were foreign firms and therefore barred from engaging in local mining activities. The MPSAs were declared null and void while Redmont’s application for an exploration permit was granted.

The Mines Adjudication Board, however, reversed the panel’s ruling in September 2008, prompting Redmont to take the case to the Court of Appeals which granted a favorable ruling in October 2010.

Of the other division members, Justices Diosdado Peralta, Jose Mendoza and Francis Jardeleza concurred in the ruling, while Justice Marvic Leonen dissented.

The court did not give merit to the claim of the three mining firms that the tribunal’s 2014 decision was not in accord with the law and logic.

Nationality questioned

On April 21, 2014, the court upheld the ruling of the Court of Appeals that there was doubt as to the petitioners’ nationality since a 100-percent Canadian-owned firm, MBMI Resources Inc., effectively owned 60 percent of the common stocks of the petitioners by owning equity interest in their other majority corporate shareholders.

In the new ruling, the majority justices rejected the petitioners’ claim that the case had been rendered moot and academic since their MPSAs had been converted into financial technical assistance agreements and that MBMI had divested itself and sold all its shareholdings in the petitioners, as well as of their stockholders, to a Filipino company—DMCI Mining Corp.

The justices said that a final ruling on the controversy was needed because it involved a “blatant” violation of the Constitution’s provision on minimum Filipino ownership and that issues involved were “of paramount public interest.”

Describing the “corporate layering” strategy apparently adopted by the petitioners to circumvent the requirement as “deftly exceptional in character,” the justices said a “controlling principle” must be adopted to guide the courts, the legal profession and the public in future cases.