Carpio’s dissent vs Mining Act

Is all mining, like logging, damaging? Or can it run, like forestry, in a way that also protects and restores the earth?

Catholic bishops want a total ban on mining, big or small, because "it destroys life." President Gloria Arroyo, after meeting with them last week, said she would compel all mining firms to set aside one-fifth of profits for nature’s care. That may not be tenable, for the Mining Act of 1995 does not allow such presidential ordering. Republic Act 7492 in fact dubiously limits only to usual taxes what government can levy from local or foreign miners. Despite stiff resistance, however, the Supreme Court had upheld it as constitutional in Dec. 2004. Speaker Jose de Venecia, present in the same meeting, may thus have a better approach: to amend the law’s lopsided provisos. In that work, Congress would do well to study Justice Antonio Carpio’s dissent from the majority ruling.

The 62-page dissent, prompted by a case of B’laan tribesmen against Australian-funded WMC-Philippines, is a virtual treatise on mining history and legislation. Carpio first shows that the rules on which the firm’s license was based – Dept. of Environment and Natural Resources Administrative Order No. 56 of 1999 (or DAO 56-99) – are defective. Then he proceeds to argue that the law itself is just as flawed.

DAO 56-99 offers mining firms three options to compute the State’s share of revenues. Carpio asks why they are given such right to begin with, and says they invariably will choose the second for its hollow conditions. Option B at first glance is good: government would get a hefty 25 percent of additional profits once the miner’s ratio of net income to gross output hits 40 percent for two consecutive years. In truth, government will never get a single cent.

Carpio presents a table of the ratios from 1995 to 2003 of the country’s six largest mining firms: Atlas, Benguet, Lepanto, Marcopper, Philex, and Rio Tuba. Not one ever reached the 0.40-mark in any year, much less for Option B’s requirement of two years in a row. The highest ever hit was 0.27 in 1997 and 0.23 in 1995, both by Rio Tuba.

Carpio also gives a 1995-2003 table of income-to-output ratios of the world’s top miners: Rio Tinto, Newmont, Placer Dome, Phelps Dodge, plus WMC-Philippines’ own mother company, WMC Resources Ltd. Again, not one ever hit 0.40 for any year or two. The highest ever was Rio Tinto’s 0.19 in 2000 and 0.17 in 1999. WMC Resources’ best marks were 0.24 in 2000 and 0.16 in 1996.

Clearly, no local or foreign miner would ever hit 0.40 even in the best of years when metal prices are at peak; government would never get any extra income.

Carpio then points to the culprit, not DAO 56-99 but the Mining Act itself, which clashes with constitutional safeguards on national patrimony. Article XII of the Constitution claims State ownership of all lands, waters, minerals, flora and fauna; and limits their use, under State control and terms provided by law, by Filipino citizens or 60-percent Filipino firms for 25 years, renewable for another 25. It also lets the President sign deals with excise tax, special allowance, foreign firms, in technical or financial help, for large-scale mining, again subject to conditions set by law and notification of Congress of any contract within 30 days of execution. And that law must strive for "real contributions to the economic growth and general welfare of the country." But what if that law does not aspire for such? Then, as Carpio says, the President stands on shaky ground; any deal arising from it would be void, notifying Congress would be for nothing.

The fault, Carpio submits, lies in Sections 39, 80, 81, 84 and 112 of the Mining Act. The provisos reinforce one caveat: government share in mining shall come only from corporate income tax, excise tax, special allowance, import duties, fees, and withholding tax on dividend or interest. They are the same taxes paid by any citizen or corporation without disturbing the environment or exploiting what all people co-own. Nowhere does the law provide for revenue shares, in violation of the Constitution’s aims as stated in the transcripts of the framers’ deliberations.

DAO 56-99 is itself unconstitutional, since it vainly seeks to correct the Mining Act by collecting extra revenues that the Act does not allow to begin with. Two further breaches of the Constitution make DAO 56-99 worse, Carpio says. It awards foreign miners one-time 50-year concessions, despite the limit to 25 years although renewable for another 25. And it requires the consent only of the Mines and Geosciences Bureau director, not the DENR Secretary, for income-sharing options. This removes from the picture the alter ego of the President, the officer specifically allowed by the Constitution to sign deals with foreign miners.

"The President cannot save the Mining Act from constitutional infirmity," Carpio says, by making them share revenues under any of the three options under DAO 56-99. From this finding, Ms Arroyo’s plan to exact 20 percent of mining profits for environment protection would be a pipe dream.

"Neither can the (Supreme) Court elevate DAO 56-99 to the status of a law to plug a fatal constitutional loophole in the Mining Act," Carpio adds. "Like the President, this Court cannot legislate" revenue sharing. That power resides only in Congress. The legislature must not commit the same mistake twice of forgetting to define by law the State’s share from logging before most of the forests were cut, and again failing to compute the State’s just share from mining.

Revising the Mining Act, for revenue sharing on top of tax collecting, may still not appease the bishops who believe that all mining destroys life. But it will allow government to derive funds from the estimated P47 trillion in metals waiting to be mined. The funds, combined with strict enforcing of environment laws, can be spent to replenish the earth while mining creates jobs.

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