SC rule on Mining Act won’t affect petroleum deals

The recent Supreme Court ruling on the Philippine Mining Act of 1995 will not affect the country’s petroleum service contract system, the Department of Energy (DOE) said.

"The DOE would like to affirm that petroleum service contracts issued in pursuance of the Oil Exploration and Development Act of 1972 remain valid," Energy Secretary Vincent S. Perez said.

In a landmark decision last week, the High Court declared as unconstitutional certain key provisions of the Mining Act, effectively voiding several mining permits and agreements already in place with foreign mining companies.

But Perez said after a review and evaluation of existing petroleum service contracts and the model contract for future projects including the 46 blocks covered by the first Philippine Contracting Round-1 (PCR-1), it was found that these contracts "substantially address the Supreme Court concerns considering that these contain provisions which amply protect and safeguard the interest and welfare of the nation and the Filipino people."

At the same time, he said the petroleum service contracts offer a fair balance of risks and rewards to the Filipino and/or foreign investor.

The SC decision stemmed from the petition filed by various sectors questioning the constitutionality of the Mining Act and its implementing rules and regulations formulated by the Department of Natural Resources (DENR).

The groups, which include farmers and affected residents, alleged in their petition that the said law and its IRR are unconstitutional because it allows the execution of service contracts with foreign-owned corporations for the exploration, development, exploitation, and use of country’s minerals, petroleum and other mineral oils.