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Tuesday, June 27, 2006

Philippine Mining Policy: Whose Development Counts? (Third World Studies Center Policy Dialogue Series 2006: Towards a Human Security Framework)

27 June 2006 (Tuesday)
1:00-4:30 p.m.
Balay Kalinaw
University of the Philippines
Diliman, Quezon City

SPEAKERS

Leo Jasareno
Mining Tenement Division
Mines and Geosciences Bureau
Department of Environment and Natural Resources

Gerardo Sicat
Professor Emeritus
School of Economics
University of the Philippines

Carlos Primo David
Associate Professor
National Institute of Geological Sciences
University of the Philippines

Marvic M.V. Leonen
Associate Professor
College of Law
University of the Philippines

Moderator
Ma. Ela Atienza
Associate Professor
Department of Political Science

RATIONALE

Development is a universal right that assures people of leading a quality of life that engenders freedom from want–one of the freedoms constituting human security. The road to development, however, is a thorny path particularly on issues where one dimension of human security runs contrary to another. Development initiatives in the mining industry illustrates such as case. On one hand, mining advocates iterate that it will bring about economic security; on another end are communities decrying the threat that activities related to mining pose to the environmental security of local communities.

In its pursuit for economic development through the revival of the Philippine mining industry, the government has time and again articulated its intent to maximize the industry’s potential contribution in terms of revenue generated from local and foreign investments (but primarily the latter), as well as providing solution to the problem of unemployment in the country. This was clearly enunciated during President Gloria Macapagal Arroyo’s state-of-the-nation address in 2004–that economic growth can be achieved through the creation of a favorable investment climate for local entrepreneurs and foreign capitalists, particularly in the mining industry.

However, local communities, environmental groups, and other development stakeholders belie the promise of extracting the country’s mineral resources. The right to community-directed development and the preservation of the integrity of communities’ resource rights have been asserted by these groups. The battle was partially won in January 2004 when the Supreme Court declared the Mining Act of 1995 as unconstitutional based on its clause on foreign ownership of natural resources, only to be reversed a year later. Some claim that the highest tribunal’s December 2005-decision was in consideration of the fiscal crisis declared by non-other-than the President herself.In this context, one is compelled to ask, “Whose development counts?” While the answer may be obvious, it is imperative upon development actors (state and non-state alike) to locate human security in the development blueprint of the state. The case of the Philippine mining policy illustrates divergent views on how development goals should be pursued.


OBJECTIVES

The first installment of the Third World Studies Center’s (TWSC) Policy Dialogue Series 2006 seeks to bring to fore development issues vis-à-vis the pursuit of human security. Specifically, the discussion will:

  1. Review the Philippine Mining Act of 1995;
  2. Assess the law in terms of how it has affected the different sectors;
  3. Identify the various values, processes, and actors that constitute development and human security; and,
  4. Look into how these factors come into play in the development-human security nexus.

DISCUSSION QUESTIONS
  1. What are the salient points of the Mining Act of 1995?
  2. How has implementation of the Mining Act affected the different sectors in the development process? What has the Act achieved in so far as promoting human security in communities where mining activities are undertaken?
  3. What values are promoted under the development-human security nexus?
  4. What processes are undertaken in the development process using a human security framework?
  5. Who are the actors involved and what roles do they play?
  6. Is human security possible in mining as a development track? How can a human security framework be integrated in the prevailing development framework of government, particularly in the case of the Mining Act of 1995?
PROCEEDINGS

CARLOS PRIMO DAVID (Associate Professor, National Institute of Geological Sciences, College of Science, University of the Philippines [UP]-Diliman):

Mining as an industry is composed of the downstream and upstream industries. The upstream industry is based on the world metal prices. Since 2001, metal prices–mostly of heavy metals and base metals–were going up. The price of gold in 2004 has reached a value of around USD 450. Currently, the value of an ounce or 31 grams of gold is at USD 660. The second base metal is copper, which has also increased in its world price since the year 2000, followed by nickel. All these three metals are available in the Philippines—that is why we are a mineral exploration hub.


You can also see in the second graph that exploration for these metals have also increased in proportion to world metal prices. In 2004 alone, gold, for example, was explored in 1,800 sites all over the world. For the base metal, copper, there were 390 new active copper exploration sites.

It is a misconception that mining activities are confined to the Philippines or other Third World countries. As the next graph shows, exploration sites are distributed around the world. Most of these sites are located in Latin America, Canada, and the United States (US). In fact, the contribution of explorations and succeeding mines in the Asia Pacific region such as the Philippines only accounts for less than 10 percent. In most years, it is only 5 percent. The figures have changed along with the world metal prices.

In the graphs above, we can see the increasing trend of global prices of gold, copper, and nickel, which the Philippines have an abundance. Secondly, as mentioned, the development of mineral resources is not confined in Third World countries but also in First World nations. The US is the leading producer of coal. Canada produces a lot of gold, and South Africa produces most of our chrome.

The economic benefits of all these operations come with the downside of mining. Everyone knows that in any natural resource-based industry, mining takes a toll on the environment. While we see the need for mining as an economic platform, there is also a need to protect the environment. We have to do a very delicate balancing act.


The Downside of Mining

Mine tailings are the waste materials coming from mining operations. In 1993 and 1996, the Marcopper Mining Corporation in Marinduque Island was the source of major mine-tailing spills in the Mogpog River and in the Boac River, respectively. The two spills resulted in the degradation of river-water quality, which consequently led to the loss of livelihood. The Mogpog River remains idle until today because of the contamination. The Boac River, on the other hand, has been partially recovered because of the natural healing process of the river. Other consequences of the mine-tailing spills are the contamination of aquatic habitats, and various skin diseases contracted by residents of the area.

Last year, we also saw two spills in the mine operated by Lafayette Philippines Incorporated in Rapu-Rapu Island, Albay. Unlike the case of Marcopper in Marinduque, Lafayette saw two spills after only a few weeks in operation. The mine spill caused cyanide leakage and fishkills in Rapu Rapu.


As mentioned earlier, it is a very delicate balancing act. We need mining and we have the resources to do that. What I want to see is the sustainable development of our mineral resources without compromising the environment. This can be attained by the implementation of our existing laws and provisions. We have so many environmental laws; the main problem is we are not implementing them.


Responsible mining means the use of “best practices” in the mining industry. These methods should start from the extraction of minerals to its processing, and even to the disposal of the waste materials. In addition, existing technologies that do not compromise the environment should be employed.


The balancing act for mining can be attained if there is participation of all stakeholders. All stakeholders should have a significant role to play, from the development of the mine to the monitoring of its operations. Lastly, the technical people, or our scientists, also need to be updated on innovations and latest technologies in the field, so we can also contribute to the development of our local communities.


The Comprehensive Monitoring Plan


Let us now look into the Comprehensive Monitoring Plan (CMP) proposal. The first and most salient point of the CMP is that it streamlines most of the regulatory provisions on mining activities. In the current system, when a mining company operates or submits a proposal to operate, most of the environmental regulations are provided for in our Environmental Impact Statement system. Mining companies are subject to this system and the resulting document is the Environmental Compliance Certificate (ECC), which permits the mining company to operate. The environmental impact assessment is simply an estimate, an educated guess, of the damage it can cause. The problem is that such an assessment only happens prior to the actual conduct of the mining activity.


The CMP proposes to actively involve stakeholders through a multi-billion monitoring program. We should not put all the responsibility in monitoring the operations of mining or any industry to the Department of Environment and Natural Resources (DENR). The local government, private citizens, and nongovernment organizations (NGOs) should be at the forefront of monitoring all these operations.


In the CMP it is also suggested that more stringent penalties be made for violations of existing environmental laws. For example, the company involved in the mine-tailing spill that happened last year was charged with a PHP 10.7 million fine. That does not even cover half of the damage. The case of the Marcopper mine spill is worse: there were no penalties imposed against Marcopper Mining Corporation. If there were, PHP 100,000 is an insufficient fine, if not unjust. The mining company can easily recover that kind of amount from profits.

The CMP proposes the use of conventional monitoring protocols and other measures to detect any pollution or contamination in the environment. To date, we have not adapted any standards for sediments quality, or standards for assessing aquatic habitats. The current procedure makes use of water quality assessment. Water quality assessment is inadequate, because there are cases when the river is clean and passes water quality standards but the sediments are actually dirty. Usually, when water in an area that is devoid of any aquatic life passes quality assessment procedure, the evaluators quickly conclude that the water is clean. A possible cause for this problem is metal that tends to settle in sediments and not in the water. Pollution is therefore not detected. Contaminated sediments affect, if not destroy, the entire habitat since all aquatic organisms, including those living in the water, feed on organisms living in the sediments. Our existing laws do not qualify contaminated sediments as basis for imposing fines or even closing down mines.

Another method to assess contaminated water habitats is biomonitoring. More than looking at the water content, we in the environmental science and geology disciplines actually look at the organisms themselves. If one of the organisms is not present, something must be wrong. If only one species is present, something is wrong. The quality of the aquatic habitat is monitored by looking at the conditions of the inhabitant life forms.


We have submitted the CMP to the former and present secretaries of the DENR: Elisea Gozun, Michael Defensor and now, Angelo Reyes. Hopefully, we will see the importance of having regulations during and after the life of our mines through the passage of the Comprehensive Monitoring Plan.


LEO JASARENO (Mining Tenement Division, Mines and Geosciences Bureau, Department of Environment and Natural Resources [DENR]):


The Mining Act was approved in 1995 by former President Fidel V. Ramos. It superceded Executive Order 279, the transitory mining law at that time. The Mining Act was originally equipped with Implementing Rules and Regulations (IRR) under Administrative Order 95-33. This was eventually superceded by Department Administrative Order (DAO) 96-40. The moment that the Mining Act had the basic IRR, DAO 96-40 was amended.


The Mining Act requires the state to “promote (the mines’) rational exploration, development, utilization, and conservation” (Philippine Mining Act of 1995 Declaration of Policy). This will be undertaken through the “combined efforts of government and the private sector in order to enhance national growth in a way that effectively safeguards the environment and protect the rights of affected communities” (Philippine Mining Act of 1995 Declaration of Policy). The development of mineral resources will be done within the guiding principles of sustainable development.


One of the more important provisions of the Mining Act is to identify the agencies of government that will be given authority to manage mineral resources development. The DENR, which is the primary government agency responsible for the conservation, management, development, and use of mineral resources, is one of those agencies. The DENR is supported by the Mines and Geosciences Bureau (MGB), which is in charge of the administration and disposition of mineral lands.


I wish to raise a point of clarification that the Mining Act covers non-fuel minerals. Fuel minerals, on the other hand, are under jurisdiction of the Department of Energy.


In granting mining rights, the Mining Act follows the framework that emphasizes active engagement of the state in the development of our resources. Mining rights may also be awarded to a private party. When the state exercises the right to mine, the DENR can enter into a Memorandum of Agreement with Qualified Persons.


In the executive branch, the issuing authority is shared by two agencies–the national government and the local government. The national government issues mining tenements, which are bigger in scale compared to small mining tenements issued by the provincial governor and the city mayor. One example of a mining tenement issued by the national government is the Mineral Production Sharing Agreement (MPSA), while a mining tenement issued by the local government is the Small-Scale Mining Permit in Mineral Reservations.


The right to mine expressed under a mining permit or a mining contract can be issued only to a Qualified Person. A Qualified Person can be a citizen of the Philippines or a corporation, partnership, association, or cooperative, which has to be duly organized for the purpose of engaging in mining, and has to have the technical and financial capability to engage in mining. More importantly, it has to be a Filipino corporation, which means that the ownership of foreigners must not exceed the limit of 40 percent. There is an exception when the mining tenement involved is an Exploration Permit, a Financial or Technical Assistance Agreement (FTAA), or a Mineral Processing Permit where foreign ownership can be allowed up to 100 percent.


Mining tenements granted by the national government can be divided into major and minor types. Major types of mining tenements include Exploration Permit, which gives the right to explore to a Qualified Person; MPSA, which gives the right to explore, develop, utilize, and market the minerals; and, lastly, the FTAA for bigger scale exploration, development, and utilization of minerals, which may be given to foreigners. Minor mining tenements, on the other hand, include the Temporary Exploration Permit, Special Mines Permit, Mineral Processing Permit, Industrial Sand and Gravel Permit, Special Mineral Extraction Permit, Government Seabed Quarry Permit (GSQP), Government Dredging Permit, Special Exploration Permit (which can be given to a GSQP Applicant), Small-Scale Mining Permit in Mineral Reservations, Ore Transport Permit/Delivery Receipt, and Treasure Hunting Permit. In all, we have fourteen types of major mining tenements issued by the national government. As to the mining tenements issued by the provincial government, there are nine: Quarry Permit, Sand and Gravel Permits, Gratuitous Permit, Guano Permit, Gemstone Gathering Permit, Pebble Picking Permit, Small-Scale Mining Permit outside Mineral Reservations, and Ore Transport Permit.


The Mining Act also specifies areas that are closed to mining. These are grouped into six. First, there are government reservations like military reservations, civil reservations, and forest reservations, except when the agency concerned gives a prior written clearance to allow a mining application. The second area closed to mining is near or under built-up areas, archaeological or historical sites, infrastructures, and plantations of valuable crops except when the agency concerned will give a prior consent to allow a mining application. The third are areas already covered by an approved mining tenement. In such cases, no other mining application will be accepted. The fourth are areas prohibited by law. There are laws that explicitly prohibit mining in certain areas; for instance, laws that ban the extraction of minerals along the beach. Small-scale miners’ areas are also closed to mining application unless the small-scale miners give their consent to the mining applicant. Finally, all old growth virgin forests, proclaimed watersheds, wilderness areas, mossy forests, provincial and municipal forests, greenbelts, and all protected areas under the National Integrated Protected Areas System law.


The Mining Act also lists several environmental protection measures, but we focus on two major programs–the Environmental Protection and Enhancement Program (EPEP) and the Final Mine Rehabilitation and/or Decommissioning Plan (FMR/DP). The EPEP is a program that embodies all the progressive mine rehabilitation work that the mining contractor is supposed to undertake during the life of the mine. It contains such mitigating measures to address the impact of mining. Its major requirements include at least 10 percent of initial capital for environment-related infrastructures during development/pre-operation stage; an allocation of at least 3 to 5 percent of direct mining and milling cost for environmental protection; the establishment of the Mine Rehabilitation Fund to ensure availability of funds for mine rehabilitation; and, the creation of a Multipartite Monitoring Team, which is a multisectoral team. It is the monitoring arm of a committee that takes charge of the implementation of the EPEP.


The second document is the FMR/DP, which provides for a comprehensive approach in planning for mine closure where environmental, social, and economic considerations associated with a mining project are integrated into every stage of the mining operation. This is required from the mining operator at least five years before the mine closes operation. One of the features of this plan is the front loaning of at least 20 percent of the budget for mine closure at the beginning of the mining operation. This makes available at least 20 percent of the amount needed to close the mine and bring back another land use fund, which we call the Final Mine Rehabilitation and Decommissioning Fund. This is a new amendment of the IRR passed by former DENR Secretary Defensor.


The Mining Act also requires the mining operator to put up a Social Development and Management Program (SDMP). The document embodies the obligation of the mining contractor for community development. It requires the allocation of at least 1 percent of the direct mining and milling cost for the implementation of the program. It also requires the designation of a community relations officer. It gives preference to local workers and employment in the mine and, in the case of ancestral domain or ancestral lands, it requires the allocation of at least 1 percent of the annual gross output to indigenous peoples (IP) communities. In summary, SDMP takes charge of the social responsibilities of the mining companies, while the EPEP and the FMR/DP take charge of the environmental responsibilities of the same mining company.


In terms of the fiscal provisions, the Mining Act provides for the payment of taxes and fees to the government from the contractor. These taxes start with the payment of an excise tax and other direct taxes, including royalties to IPs in the case of ancestral lands and ancestral domains, and royalties to the government in case the area is inside a mineral reservation.


The IRR of the Mining Act also clarifies the role of local government units with respect to the management of mineral lands. This includes the issuance of small-scale mining permits or small-mining permits.


Another provision of the Mining Act is the protection of the rights of IPs, which can be summarized in two major provisions. If the concerned IP or indigenous cultural community refuses, then government cannot issue the mining rights or the mining tenements. We call that the “prior, informed consent” under the Mining Act, which later on was modified by the Indigenous Peoples’ Rights Act (IPRA) to become “free and prior informed consent.” The DENR has been strictly implementing this provision of the Mining Act and the IPRA. Second, in case where there is an indigenous cultural community, the Mining Act mandates that there has to be an agreement with the IPs concerned. Without the agreement, the mining rights or the mining tenements cannot be issued by the government. In the case of small-scale mining development, the Mining Act provides that small-scale mining shall continue to be governed by the existing small-scale mining laws, namely Republic Act 7076 and Presidential Decree 1899.


The Mining Act also contains what we call the social acceptability provision. It is consistent with provisions on the issuance of the ECC, as well as provisions of the Local Government Code, particularly sections 26 and 27 which require, among others, the endorsement of the Sanggunian (local council) for the approval of a mining project. The DENR cannot issue or cannot allow mining projects without the endorsement of the Sangguniang Panlalawigan (provincial council), the Sanggunian Bayan (city or municipal council), and the Sangguniang Barangay.


To settle mining conflicts, the Mining Act has created two quasi-judicial bodies: the panel of arbitrators in every region of the DENR, and the Mines Adjudication Board (MAB). The panel of arbitrators and the MGB have the exclusive and original jurisdiction to decide on mining disputes. In case of appeals, the decision of the panel of arbitrators may be appealed through the MAB. There is only one board holding office in the DENR central office.


Lastly, the Mining Act provides for a set of penalties in case of violations of the Mining Act and the terms and conditions of the mining tenements. To quote, “[t]he mining act has set a new regime of mineral resources development following the principle of responsible mining and it is government policy to promote the use of minerals under the terms of responsible mining.”



GERARDO SICAT (Professor Emeritus, School of Economics, UP-Diliman):


The main issue, in my view, is to determine how best we can harness the natural resources for the benefit of the nation–the Filipino people. It is not for the benefit of small groups; it is not for the benefit of communities where the mines are because these communities are part of the nation. It is in that context that they have to be sharers of the bounty but natural resources are the bounty given to us as a nation. This, I think, was the essence of the Constitutional framework that the patrimony for natural resources belongs to the nation and not to any particular group of people in the country. Whose development counts? It is the nation’s development; not the development of little communities or small portions of the country but the development of the nation. Policy, then, should define who should benefit from the country’s mining resources.


Mining resources are part of the nation’s natural resources. How are we going to look at the benefits that we should derive from natural resources for the benefit of our country and its people? We should determine how we can earn dollars and generate other sources of income for the good of the nation rather than for special groups.


Second, the income generated from rents, and the taxes that we collect from natural resources, belong to the nation. Of course, those who are helping to extract these resources to generate income deserve a minimum share. The problem, however, is that people think that when some participants try to extract resources, they have vested interests. But rents and taxes go to the state, and the state’s revenues oftentimes go back to the local communities.


If we have resources that are exploited and taxed, we must see to it that the proper rents are derived. The rents from the resources that we can extract after production cost and all other costs are the net incomes derived by operators.

The maximization of our mineral resources would generate income and employment for the labor force. People get employed and earn, which allows them to support their families.

Indirect incomes are also very important. The indirect incomes are the incomes derived by bystanders to the process of mining–nearby communities and the people who make business out of those earning from the mines. This is where the whole economy gets in. How does this strengthen the economy? How does it raise export earnings? How does it prop up the capacity of the nation to incur other obligations involving foreign monies? There are revenues from rents arising from exploitation of natural resources. What do we get from them? We get increases in government revenues from taxes, the provision of additional resources to support national programs for development, and the strengthening of the fiscal position of the government.


It is very easy to see that the first impact of operations–whether mining, forestry, fishery, or any operation that involves large-scale activities–would be on local communities. In some cases, however, these activities cause conflicts, and thus are not beneficial to the community. However, we have to look at the total net effect. The net benefits are greater than the cost that you receive. Can we correct the cost incurred so that we can minimize them and then we maximize the benefits that we can see? These are the problems that people should think about.


I have said the country’s natural resources are for all Filipinos and the Constitution of our country says this. That is a very sound principle. What went wrong? Our leaders who framed the 1935 Constitution made the mistake of making rules that are rigid and impractical for a young nation lacking in capital. Perhaps they–Recto and Quezon–had good intentions, but failed in the process of implementation. Unfortunately, we had to pay for the outcomes of their action.

To define how the beneficiaries of the nation will get the appropriate results from our natural resources, we ought to have Congress debate over the issue and pass the proper laws. Later on, Congress could amend it if needed. If they are wrong from the very start though, how could we expect them to amend the Constitution? I call this “the iron laws of Quezon and Recto” in the Constitution. If you look at the section on Patrimony, it says that the citizenship of corporations that can engage in natural resource development should be 60 percent Filipino. What they did was to write specific laws in the Constitution, rather than write the principle and let Congress decide on doing it.

In our country, legislations covering this issue have to comply with the “iron laws” that I talked about, with the specific requirements that are found in the Constitution. Every law that we pass regarding this issue have to go into a circumlocuted situation trying to refer to this basic statements of our Constitution and then adjusting our laws. If we know they made a mistake and we cannot do anything about it, we try to work out the second best solution. This is what we have done for the last 70 years, from the first fifteen years up to the Commonwealth period. But if you examine what the other countries do on this very same issue, they have no such rules in their constitution. They have laws that are passed by the parliament, which the parliament can amend if needed.


Our hands are tied on issues dealing with very important development aspects. The first few years [of the republic] were not so bad because capital was available. It was capital that we were driving out. During those years up to 1973, American capital was treated as if it were Filipino capital. Although all of us hated the Parity Amendment, there was capital available to help our mining industry. That is why between the independence and the 1970s, the mining industry was one of the leading sectors of Philippine development. It was after 1975, especially after the mid-1980s, when the mining industry became very weak.


Our public utilities are very bad because we prevented foreign capital from entering. We encourage local individuals to become the owners of these utilities. There is nothing wrong with that except we gave it to them on a silver platter. They did not have money but they had the power, so they were able to charge a higher cost for public utilities. They withdrew the expansion of their business because they had no capital and they found it difficult to borrow funds from abroad.


How did our forests become denuded? Since only Filipinos can manage and control the forests, our leaders allocated our resources to friends for exploitation and profit. Many parts of our land were divided into logging concessions. We could not impose the reforestation policy on them because they had padrinos (patrons) in government. The padrinos protect them so all they do was to cut up the forest. In some countries, people have forest power because government protects them on certain rules and because government can control people who have forestry concessions.


Today Filipinos go abroad seeking higher wages. There is a lot of capital accumulation in other countries and because of that, a carpenter can have a very productive enterprise, while the carpenter here remains poor because the only tool he has is the hammer.


In 1935, our ideology was framed along the iron laws of the economic restrictions on foreign capital by those who thought they were serving the nation well. Over the years, our development policy focused on how to restrict capital and competition from coming in. We try to exclude production that would jolt our industries to become more competitive because we want our industries to profit. With this rationale for the liberalization of the economy, I believe we will keep lagging behind our neighbor countries.



MARVIC MV LEONEN (Associate Professor, College of Law, UP-Diliman):


My standpoint comes from the perspective of the communities that have been affected by mining corporations. True, they are not the entire Filipino people, but they are Filipinos. I agree that development should benefit everyone, not only a single group, but the people coming from the communities are very significant stakeholders in this process.


There is something wrong with the allocation of our rights. It still comes from the general colonial idea that the state owns everything. The Regalian doctrine is a historical farce, a legal fiction that began in 1935 for two reasons: At that time, the Regalian doctrine only applies to the conquered but unoccupied land. Second, Magellan came here not to conquer but to search for the Spice Islands. As pointed out by Dr. Sicat, it was in 1935 when the Constitutional Convention introduced the idea of the Regalian doctrine, which they called by a Spanish name. The United States Supreme Court said that, “The Regalian doctrine applies perhaps to the Spanish sovereign. But to the American sovereign when we came in 1900s, in the case of Cariño vs. Insular government, it does not apply.”


Today, we still follow that doctrine. The idea is: command and control. The persons that are supposed to have, by principle, the best knowledge of how resources are to be allocated is just a single individual who has an office in the DENR office. The Secretary of the DENR decides who will get a permit. There are laws but in the ultimate analysis, the system is still first-come-first-served to a Qualified Person.


Allow me to correct the impression on the exemption of foreigners from operating and managing our local mines. That is the general rule today, as in the case of La Bugal-Blaan Tribal Association vs. Western Mining Corporation, which was decided in December 2004. In spite of the provisions stated in Article 12, section 2, paragraph 4 of the Constitution, the Supreme Court said that “Foreign corporations may only participate via financial or technical assistance.” On the other hand, the Constitution states “either financial or technical,” and then it included the word “assistance.”


The 1973 Constitution states, “A service contractor may participate by operating, managing, providing financial, technical and other arrangements.” The 1987 Constitution was more restrictive, yet the Supreme Court in La Bugal-Blaan Tribal Association vs. Western Mining Corporation declares that the foreign-owned corporation may not only provide financial assistance or technical assistance. It may, like Western Mining Corporation in Mindanao, operate and manage mining activities. It cannot also be the exception because a maximum of 1,000 meridional blocks can be awarded to them, which, if I am not mistaken, is 81,000 hectares. With a stroke of a pen, they can be awarded that much land and an MPSA holder can be awarded much less.


People within the community are affected by it. Western Mining Corporation started with 95,000 hectares. Yearly, they should be able to release 4,000 hectares each, but to start with 95,000 hectares is really quite a big amount of land. I am not sure if my math is correct, but a surveyor told me that when you stand on a plain, you might be able to see 400 to 500 hectares of land as far as the eye can see on a clear day. The Dole plantation spans 8,000 hectares. The awarded area of Climax Arimco in Region 2 under an FTAA and Western Mining Corporation is close to 95,000 hectares in 1995. It was awarded before the Philippine Mining Act was enacted. My point, again, is that someone decides over this and, in the final analysis, it is really the Secretary of the DENR that recommends to the President, and the President signing that particular contract. It is still a form of command and control.


Does the local government have a choice? Yes, according to the Local Government Code. They have veto power but then, that veto power is being contested, especially if all three Sanggunians–at the barangay, municipality and provincial level—are involved. The Department of Interior and Local Government (DILG) and the Department of Justice (DOJ) say two-thirds of the vote is needed. Some members of the community, the politicians in the area, say the consent of all Sanggunians is needed. These people who are taking issue are not the owners of the land. These are not the people who made the land productive for years, whose lives are truly embedded in their lifeways revolving around the land.


This practice can be stopped, but then it will be government again telling the people what they should do. Let us suppose the land is privately owned. In the case of Didipio vs. DENR, the Supreme Court has already given the imprimatur of saying that any mining activity of a corporation is already public use and, therefore, the government may expropriate the land and pay just compensation. The legal definition of just compensation conflicts with the general idea that it is the people who decide on how to utilize mining areas in their communities.


The law says that there are areas closed to mining. But there is a collatilla unless the government agency accedes. Now, an FTAA of a foreign corporation is signed by the President. Every department of government, including the Department of National Defense (DND) is the alter ego of the President of the Republic of the Philippines. Therefore, when the President says, “I want to sign this land over to a mining company,” do you think that the government agency can say no?


Protected areas are also restricted and absolutely do not have qualifications in the law. In practice, the protected-areas boundaries are realigned. It is possible to have a protected area with a large gaping hole in the middle. Mount Apo’s protected area is shaped like a huge hole in the middle in order to allow geothermal activity and commercial activity to occur. That is our concept of a protected area. A protected area’s boundaries are not made final until it is legislated. Prior to that, the DENR through the President can reformulate the boundaries of a protected area. In effect, the law gives the executive branch the discretion to decide on which land to get.


There are other loopholes in the law. There are also Qualified Persons to be dealt with. “Qualified,” which is supposedly the exception, is now the general rule. Let me refer to La Bugal-Blaan Tribal Association vs. DENR. Why would a foreign company still get only 40 percent of an enterprise if, based on the court decision, they can already get a 100-percent share? We do not need to amend the Constitution then; it has been amended by interpretation.


The guaranteed share of government is not 60 percent of the net profit. That was the misconception before of many lawyers, including people from DENR. Sixty percent of net profit in foreign FTAAs should go to the government. The Supreme Court said that there is nothing in the Constitution that says that the government should get a minimum of 60 percent; it can be 30 or 20 percent.


Justice Panganiban’s 246-page decision proved that it is better economically or business wise to actually choose an FTAA rather than go for an MPSA. The share of government in an MPSA is only the excise tax, according to RA 7942, but the regulation says that it is the tax plus something else, but then regulations originate from the law. A good mining company’s lawyer can challenge that regulation and say that it is invalid and illegal. My point is that the law operates in a “first come, first served” basis. The people in government decides, not the people in the community.


When we were arguing for La Bugal-Blaan Tribal Association, the National Economic and Development Authority (NEDA) gave statistics to the Supreme Court without giving us copies. The Supreme Court, in their final opinion, came out with their final decision using the statistics. NEDA says that the total value of mineral wealth naturally occurring in organic material, as the law defines it, is PHP 4.73 trillion. We do not know how they computed that amount, since metal prices fluctuate, so that might not be the total value. The more staggering statistic that NEDA gave was what government will take out of the PHP 4.73 trillion, based on the regulation: PHP 157 billion. That means 3 percent of PHP 4.73 trillion will go to government. What about the 97 percent? It will go to the private enterprise that comes in as their share of the listed capital. Financial capital is valuable, but are not natural resources also a form of capital? Are not the people’s contributions to the land a form capital?


Is not voluntary removal of the people from their land a form of capital? People are at risk; when they transfer from one area to the other, they will suffer from dislocation. Is that computed in terms of business, for purposes of determining the incentives you give to a mining corporation? I don’t think so. I believe it is computed only as pre-operating cost. If you review the costs of relocation, the salary of social workers is not included in determining whether a mining company will be profitable for themselves and for the entire community in general.


The PHP 157-billion share of government is miniscule, which impelled four justices in the Supreme Court were prepared to declare that the law was inequitable and therefore unconstitutional. Where did the money go? Most likely, it went to tax collection and not to the community. It went to counterinsurgency programs. Later, we will find that PHP 1 billion is unaccounted for—lost to corruption probably.


Let me tell a horror story. A foreign corporation committed 1 percent of its gross revenue to the B’laan community. We looked at the corporate papers. The corporation created a B’laan foundation, which will receive the said amount. The directorship was divided into three seats: one for MGB, one for the corporation, and a third for the B’laans. I do not know why MGB and the corporation have to be represented, or even why the board of directors cannot reach a quorum in a meeting unless a corporate representative is present. Certainly, the full amount will not go to the B’laan community as promised by the corporation. The tripartite leadership will limit the shares of the B’laans.


These are the machinations happening on the ground. We have raised these problems several times since the term of former DENR Secretary Antonio Cerilles.

My third point is on corporate liability. Can you imagine how difficult it is to sue a powerful person? Can you imagine how difficult it would be to go through a Regional Trial Court and sue a foreign corporation? Can you imagine how difficult it would be if the foreign corporation did submit all the plans to DENR but then in the end repatriates? Because of the bilateral investment treaty, foreign companies from Australia, Canada, France, and Germany are guaranteed repatriation. If government stops repatriation in any form, it will be sued under the international commercial arbitration, as in the case of the Philippine International Air Terminals Company Incorporated (PIATCO) scandal. Our government will have to answer to international arbitration and because it is a signatory, the treat is enforced here in the Philippines. What is stopping a foreign corporation from just packing up? It contributes to a contingent liability rehabilitation fund, but that is just a percentage of their future liability. The point here is that it is difficult to sue foreign corporations in the Philippines, like the corporate hard shell Marcopper.

We encounter a lot of corporate layering in the Philippine mining industry. Let me give you a very concrete example. A PHP 16-million company buys all the shares of a foreign corporation to the tune of PHP 560 million. How can that be? Later, these foreign companies are presented to the Supreme Court as Filipino. How did these buy PHP 560 million worth of shares? The Deed of Sale, approved by the DENR secretary, states the mode of payment: “[T]he small corporation will pay the large transnational corporation only when the mining company becomes an ongoing concern and 24 months thereafter.” How can a good transnational company sell all its shares and pretend that it is a Filipino corporation? At the very start, the small corporation already had a PHP 560-million liability. The small corporation re-registers as a new corporation, so that the liabilities will not be reflected in its books. It registers under a new name. How can you make these corporations liable now, given that the Philippine law on limited liability is very much the same as that of a developed country?


Fourth: On national economy. There are three journal articles by Jeffrey Sachs and he, along with another economist, tried all sorts of correlation and concluded that there is a “natural resource curse” in resource economics. If my economics serves me correctly, the “natural resource curse” says that whenever an economy depends on its natural resources, the more the economy is dependent in extracting natural resource, the slower its growth. The Chair of the University of Montana’s Department of Environment was commissioned to do a study on the localities that are dependent on mining in the United States with one hundred counties, which was a very representative sample. His conclusions were simple. First, he found that the more that the county becomes dependent on mining, its growth becomes slower. Second, he found the phenomenon of high wage and high unemployment in these counties. Mining companies offer higher minimum wage, which will entice people in outlying low-wage areas to migrate. It does not matter whether the high wage is permanent, or whether work is seasonal. In an actual mining company operating in Region 2, the phenomenon of high wage and high unemployment exists. Unemployment figures are high especially on low-skilled jobs.


If we rush to open our country for mineral exploitation, the question is: Will our economy really grow as expected? We have to look at the economics, then wonder at what point will our economy slow down because we are too dependent on these industries. The law does not say what the limit is. Our law and our government promote mining. There seems to be no understanding of the scientific phenomenon that I just mentioned.


My next point is on incentives. Government gives incentives to mining companies. I hope that government would also consider these incentives from the point of view of the communities. Government seems to be only providing incentives to companies that do not have a track record of community responsibility or involvement. What kind of employment can be generated? Will these incentives allow companies offer regular, seasonal, or contractual, permanent or non-permanent jobs?


How much do the people know about the employment? There is a world of difference between a farmer who gains dignity because he can pass on his knowledge on farming, and a person that carries rocks and is told by a foreman to carry a rock from one place to another. The summary differential is not enough. How would we measure the dignity of one who earns minimum wage–the one carrying the rocks, compared to the farmer who only earns half? That is a question that is fundamental to the security of the people within the community. When one does not feel secure, he may be vulnerable to others who are not from the area, who might be there only to mine but care nothing about the environment.


Mining can cause divisiveness in communities. One community has a pro-mining and an anti-mining basketball club. The same community has a pro-mining and an anti-mining youth organization. The division is no longer between rich and poor, but between pro- and anti-mining groups. Mining separates families. Do we have to sacrifice the community for the greater good—which is to get PHP 157 billion into the coffers of the Republic to modernize our army? Government requires the EP, the EPEP—all kinds of plans. A plan is a good starting point, yet it seems that if one plan is not enough the EPEP is requested for, then an Annual Environmental Protection and Enhancement Program (AEPEP), and later, social and post-rehabilitation plans.


How do we monitor the mining corporations? What are the expenses of monitoring? Who actually monitors? Is it the DENR, or the MGB that promotes the program? Is our environmental protection agency separate from the DENR, or is it subsumed under the office of the DENR secretary, includes in principle in the DENR’s major platforms that encourages mining?


My final point is on the bilateral investment treaty. When a transnational corporation is taken over, or a victim of something akin to expropriation (but not expropriation such as canceling the mining permit) that transnational corporation can bypass the entire legal system in the Philippines and sue the Philippine government under the International Commercial Arbitration or under the International Criminal Court (ICC). Can a community sue a transnational corporation at the international level, on the basis of this treaty? The answer is no. Bilateral investment treaties are signed for the protection of the investor. In Rapu-Rapu, what did the government do? They wanted to throw away the recommendation of the Rapu-Rapu Fact-Finding Commission, rather than having the legal staff of the DOJ to help the people file the case in order to get compensation. It did ask for PHP 10 million, but that is the fine that goes to government. Does money go to farmers in that area?


We should be able to litigate on a transnational level. If more foreign corporations come in, then we should be able to sue them in their own countries and litigate on a transnational level. Where do we get the resources? There seems to be no resources to help us assert our rights as a country. Meanwhile, government provides support to mining companies. The MGB goes around members of the Philippine Chamber of Mines promoting programs in their favor.



OPEN FORUM


PABLO ABUYEN (Community Organizer, Community Volunteers Missioner, Benguet):


Our experience in the mining community in Benguet is the same with other mining communities having been displaced and the environment polluted. The experience we had is the same as what was explained a while ago, although it was different for IPs. IPs rely on land as well as their communities.


Mining activities tend to bring about division. On the sixth year of mining operations in Sibungan, the community was divided into the pro-mining and the anti-mining camps. People from lowland areas such as Pangasinan, who were hired as permanent workers, displaced the local people, particularly the women. It took longer to transport the products made by our women to the market because the route they used to take is now part of the company’s heavily guarded premises, which they are not allowed to enter. As consequence, farmers had to get out of the mining territory.


Our personal lives and traditions were affected. Families were divided. In terms of tradition, we had to transfer our buried ancestors and spend for religious rituals that are part of the process.


Our communities are important to us. When the law was explained to us by the DENR, it seemed really good. We hope that it will be implemented as they had explained it.



ADONIS BRINGAS (Concerned Citizens of Abra for Good Governance):


There are three points I would like to share. When the Sangguniang Bayan (SB) does not agree with the Sangguniang Panlalawigan (SP) on which instruments to use to survey the land, as well as the policy on mining, who decides over these activities? Is it the policy of the SB or the SP or the owners of the land that is followed? There are instances when decisions are overturned because of “under-the-table” discussions and arrangements with companies. We also have instruments for protected areas but there are people within protected areas who also have to be protected. Protection is not only for the area but for the community as well.


My second comment is on the concept that “land is life”. Filipinos have been “commercialized” or made to think that land may be bought or sold. However, the real connection with land is still alive in IP communities. Families have an inherent obligation to care for the land and to pass it on to children and grandchildren. Land is more than property; it is life itself. Land is connected to the clan and to life. Unfortunately, the mining issue has since divided our community.


The third is the issue of rehabilitation. When you go to Baguio City, you will see that rehabilitation is still under way in the area the Philex Mining Corporation operated. However, the mountains are barren because of the operations of the mine.



RICARDO SATURAY (Samahan ng mga Nagtataguyod ng Agham at Teknolohiya sa Pilipinas [Advocates of Science and Technology for the People, AGHAM]):


The demise of the mining industry in the late 1970s and the 1980s was admittedly due to the decline in the price of metals in the international market, and not because of restrictive laws. Back then, foreign corporations were able to circumvent the so-called restrictive laws and profit from it.


We are not preventing capital from coming in. However, the liberalization policy allowed foreign companies to suck out capital from us. This capital is what we needed to build our own downstream industries, which would have fully integrated mining into our national economy.


As for the Philippine Mining Act, its most salient point, in my opinion, is to institutionalize the liberalization of Philippine mining.



NINA GALANG (Environmental Studies Institute, Miriam College):


First, I would like to ask the regional director from MGB. With regards remediation, is the company responsible only at the end of the contract or at the end of the exploration? I ask this because in the recent Lafayette spill, DENR Secretary Reyes said Filipino taxpayers will have to pay for the damages if they shut down the mine. What does that mean? We are left holding the bag when the government keeps assuring us that these miners will be responsible. Where is government responsibility?


The next question is for Dr. Sicat. You asked whether we should look at the general good versus the good of only small communities. I think we should look at it in another way. I believe that mining will benefit only a small group and these are the companies and probably their employees. But the greater majority will suffer because they lose the mountain, the forest and the rivers. The rivers are silted and polluted. It is really the majority that will suffer and only a few will benefit–the mining companies. The general population, including the IPs, will be at a disadvantage.


There is a general notion of economy versus environment. Some say mining activities are good for the economy, although we have to sacrifice the environment a little bit. I would like to point out that economically, corporate mining is not good at all. A research on some of our natural parks shows that mining will bring in about PHP 23 billion. We stand to gain PHP 50 billion without mining, so economically, it has no advantage. I think we have to look for developmental modes that will be both good for the environment and the economy.



ARZE GLIPO (Member, Sangguniang Panlalawigan of Sorsogon and Executive Director, Integrated Rural Development Foundation):


My concern is regarding the recent decision of the secretary of the DENR to allow the test running of the Rapu-Rapu mining facility. The position of the SP of Sorsogon against the operation of the Rapu-Rapu mining facility has been consistent as early as 2003. The SP asked why the DENR gave out this permit, despite the opposition of different sectors. Recently, we came up with a resolution denouncing the recent decision of Secretary Reyes to allow this test run. What is the role of communities, municipalities or provinces that are adjacent to a mining facility but also affected by, for example, the spillage of mining wastes?


Sorsogon fisherfolks were the ones expressing the destruction and the negative impact of the spill on their livelihoods. For the past two to three months, about 4,000 fisherfolks in our province do not have income anymore from fishing.


What is the role of local government units (LGUs) of other communities and provinces who are also affected by this spillage? What is the role of people’s organizations and NGOs? It seems to me that despite the resolutions that the LGU passed, they do not affect the decision of the national government. I think it is the voice of the corporate-driven mining industry that is being heard. What should be the participation of units, or coordinating bodies, that represent areas or communities affected by mining?



LEO JASARENO:


I would like to comment on remediation after the closing of a mining operation. During the mining operation, we implement the progressive mine rehabilitation process. Every area, every parcel of land within the mining area that is adversely affected physically or chemically by the mining operation, has to be addressed by the mining company in terms of any acceptable measure of mine rehabilitation. Once the mine is closed down, we then base a tax scheme to introduce a mechanism where the mined out area can be rehabilitated and used to maximize productivity.


Another existing policy regarding responsibilities of mining companies is that the mining contractor is mainly responsible in with the closure of mines. What the DENR Secretary was saying regarding the Lafayette case is that when the company leaves, no one will take care of the mine; government will still take care of it. The Secretary must be thinking that MGB has not front-loaded the fund for mine closure.


It is true that in the old mining law, once a mining company leaves, we are left with an empty bag because no funds are available for rehabilitation. Hence, we instituted the Final Mine Rehabilitation Fund. Last year, former DENR Secretary Defensor issued an amendment to the IRR, which requires all operating mines to front-load at least 20 percent of the budget for mine closure at the start of the mining project.


We are now starting to implement the new policy. We are calling the attention of all mining projects operating in the Philippines to comply with this requirement. We have just called the attention of Lafayette Mining, the company behind the Rapu-Rapu mining project, to submit the Mine Decommissioning and Rehabilitation Plan, which will include the company’s budget. We will require them to front–load by depositing the money in a government depository bank.


Whether the company really has money should not be a problem because under the existing policy it must have money. If the mining project fails to deposit at least 20 percent of the required budget for mine closure, then the DENR will have to close the mine. It is part of our regulation and, in fact, it is one of the more important measures in meeting the requirements of environmental protection. That is a policy gap that the existing mining law seeks to address in reference to the old regime, which did not contain a provision for a ready fund for any incident or accidents. The contingent liability rehabilitation fund, worth PHP 5 million, is not for the mine closure. This is just for the day-to-day requirement of mine rehabilitation of the mining operation.


On the point raised by Ms. Glipo, we have to understand that when the ECC was issued for the Rapu-Rapu mining project, only the primary impact area was defined. Unfortunately, Sorsogon is not included even in the secondary impact area. All the impact areas were determined within the province of Albay. This is one policy gap.


All measures and conditionalities imposed by the ECC were directed only to those impact areas. If we want Sorsogon to be part of the impact areas, we have to manifest to the DENR that the Environmental Management Bureau can amend the existing ECC of Lafayette. In this way, the province of Sorsogon, or even Camarines Sur and nearby islands, can be part of the impact area.


My advice to Sorsogueños is to file a complaint with the DENR and file a claim for compensation for damages, which may be paid after due investigation of the DENR. In the existing regulations, we have funds and assessment guidelines purposely formulated to address these kinds of issues.


The DENR issued a report based on the Rapu-Rapu Fact-Finding Commission’s report. The DENR also had other bases for its report, such as independent reports, and all others made by government agencies. DENR used scientific investigation and political decision was employed in coming up with an integrated report.



GERARDO SICAT:


All things have benefits and costs. We need to make a full account of the costs as well as the benefits. Mining should be a useful economic activity only if, in the end, we see that the benefits are large compared to the cost.


It has been said that some types of activities will lead to the depletion of the resources. The replacement of mineral resources will take billions of years. While resources are available, there should be proper management of the resources, so that we can derive additional benefits or value for the nation.


Our country had not really been able to take advantage of the enormous resources we have. When the Americans were running our country, the two most important units of the colonial administration were the Bureau of Lands and Bureau of Mines because there was strong interest in our mineral resources. An abundant amount of resources have been discovered. The Americans discovered enormous mineral wealth that were wasted over time.


One of the reasons our countrymen wanted to exclude foreigners was that they wanted to have control over the mining areas. More mining plains are being filed in the geological services than there are explorations. The ones taking hold of the mining plains are essentially those who are looking for opportunities for themselves. They are creating claims on the land without the capital to do so and they turn around once they have the claims.


With all the restrictions we have on capital and on participation, we can only turn to some mining companies. Our mineral companies are, basically, lacking in money. They are not the big players. None of the foreign mining companies are relocating and working in the Philippines because they have been excluded from exploration activities. They have not been able to discover resources.


Why do we have limited gas resources in the country? Exploration by foreign companies is limited by constitutional provisions. In other countries, foreign companies are asked by the states to locate and find resources. Once found, the companies can decide how these can be divided between the state and the ones who discovered. In other countries, you have exploration companies discovering large petroleum resources. As resources are depletable, other renewable resources are also sought for. Renewable resources can be expanded for maximum value, but because of our restrictions, we are not able to do so.


Let me give, as an example, a renewable resource such as forestry. In the Subic Export Processing Zone, there is a Japanese company processing forest products from a New Zealand concession. This agreement runs on a thirty-year period. Every year, they harvest a large portion of the land area, which is used for construction. Our country will not be able to work along these kinds of agreements because the constitution does not allow it yet. This is why I feel that we should liberalize a lot of industries, mining being one of them.


The issue here is how we use these resources. Liberalization will open opportunities to increase the resources of the nation. This will benefit other industries that are connected with mining, and even enable other industries to emerge. It is very unfortunate that in the 1950s to the 1960s, the Philippines was basically ran by the agricultural sector, led by the coconut industry, and the mineral sector. We were setting up other industries that were stocking up the foreign exchange earnings of the mineral, coconut, and sugar industries, instead of creating industries that were potentially competitive. We practically wasted some of the resources by pouring funds for protected industries. Many of these protected industries could not really run themselves once they face competition. We really should avoid that kind of management from now on.


I do not think that mining is bad. For one, it brings employment. There must be other opportunities, other kinds of industries that we should develop, but that depends on how we use our resources.



MARVIC LEONEN:


Two-thirds of the provisions of the Constitution are on mining. That showed the interest of the Americans. However, we need to look at the organic factors. We should not just focus on extraction. We should look at where the raw materials come from and, where they are actually processed. This is called the downstream side effect.


If I were the corporation that owns the Rapu-Rapu mining project, I will tell my company that Australia and the Philippines entered into a bilateral investment treaty, which ensures that the Philippines cannot expropriate the investment. Second, the Philippines cannot do anything tantamount to indirect expropriation. Hence, the Philippine government cannot cancel the mining permit. The Philippine government can sue us. If they do, we can go to the International Commercial Arbitrary Tribunal and we will be paid in full for all investments on the mining area.


In the case of PIATCO, the Supreme Court declared that the contract was null and void. Under domestic law, everyone suffers their losses. It is a loss for the French and the German investors, but because they had the bilateral investment treaty on their side they sued the Philippine government. The investors are gone because the Supreme Court declared that corruption was incurred. Now they are asking for USD 400 million in compensation for their investments. The DENR can cancel the mining permits, but the foreign corporation can sue the agency under international law and under the bilateral investment treaty. President Ramos signed it before he signed the FTAA with Western Mining Corporation.


Before government closes down a foreign investment due to environmental reasons, the company turns around and sues the government in commercial arbitration instead of an environmental arbitration. Since the treaty requires that 60 percent of the company should be Filipino-owned, the usual strategy of the mining company is to name their Filipino lawyers as the stockholders. Another strategy is to enter into a trust agreement with them, as reflected in the confidentiality clause in Republic Act 7942. The Filipino lawyer now cannot disclose the agreement to anyone, even the Supreme Court. The Supreme Court is compelled to uphold the trust agreement as well. If I were the mining company, I will come in as a fully foreign corporation, but register as a 100 percent subsidiary in the Philippines. I will put all Philippine assets under that name. If there is any threat of closure, I will pull out my stocks and investments. The Philippine government can go against the subsidiary and sequester whatever they can get from the office but that is all they can get.


The government cannot go against the mining company. The Philippine government, with lawyers coming from a regional trial court, cannot go to Canada and Australia and serve the subpoena. On the other hand, what will be our loss if we pack up and go? The mining company did not make any deposit from the beginning. Before they can deposit 20 percent of the budget, they have to submit the Mine Decommissioning and Rehabilitation Plan to the DENR. Of course, 20 percent will not be enough; the company will reflect a very limited budget on the plan. As we can see, the entire government is under the control of the company.

I do not fear foreign capital. I fear the way we treat them under our laws—limited liability, layering of corporations, nominal parties, etc. First of all, fisherfolks can sue Rapu-Rapu but how much will be spent for the lawyer? Pro bono. What about for the expert that will prove that there is a dispute? None. But even if it were free, the time spent by the expert is an opportunity cost. This means you have to get them on a full–time basis to be able to get quality results. Where do you get the money to fund that? Our laws on liability are made such that it is the plaintiff that proves every causation, every negligence of the corporation. Do they have access to the corporate records in the first place? No. The law guarantees confidentiality. You cannot even sue the DENR to get it. If they do, the company can sue them back. Where does justice stand under that setup?

There is an adjudication board that oversees mining cases in the country, which is based in the DENR’s head office. The chair is the DENR secretary. The MGB director is another member. The third one heads operations, if I am not mistaken. No Environmental Management Bureau (EMB) representative sits in that board. The board is supposed to be an independent investigative body. The problem now is: how can you file a complaint or a case against a mining company, when DENR technically allowed them to do the alleged violations? These cases should be settled in a trial court where the judge can be partial.


That is one of the pitfalls of the law. The Mining Act is progressive, in that compared to the law prior to the 1987 Constitution, the current Mining Act recognizes free, prior, and informed consent. But try to press charges under this law and you understand the frustration of lawyers. Many lawyers offering their services pro bono cannot win a case under this particular law. Even if we do not do it pro bono, pursuing the case is very tedious. If we go to the Regional Trial Court, will the judge listen to a farmer? To the mayor? Or will he listen to the president of the Republic of the Philippines who has endorsed a particular project? Or the DENR secretary, who happens to be very close to the administration?


This is the reality that we are facing. Those are the conditions under which you are interpreting the law. We can talk about economics and about principles, but what about the realities on the ground? The odds are skewed under our own justice system, but it is hard to litigate here in our country. Litigation should be done in the international or transnational level. Are the policy gaps due to the individuals who occupy positions in the DENR? I believe the problem is in the structure of policy, which includes the law, and its governing and implementing agencies.



LUNA EULOGIO MANRIQUE (Municipal Planning and Development Officer, Municipality of Boac, Marinduque):


In reference to the Boac River case, I would like to emphasize the responsibility and accountability of mining companies, and even the national government. When disasters happen, LGUs are bearing the brunt of the problems. We deal with the violations of the mining companies. Until 1993, before the industrial accident took place, the mining company pays PHP 16,000.00 per year to the local government.



SHIRLEY BOLAÑOS (Executive Director, Coastal Core, Sorsogon, Sorsogon):


I would like to share the findings of our study on the economic benefits of mining in Rapu-Rapu. The economic benefits, which the government claims, far outweigh the social costs; in particular, the impact on health and environment. Also, based on the study conducted by Risk Asia Consulting Incorporated, the income generated by the municipal government of Rapu-Rapu has not improved. If this is the case, where are the economic benefits of the local government? Some related issues are also involved here, such as the accreditation for tax holiday given to mining companies.


My next question concerns chemical use in our mines. In a lot of mine sites, toxic chemicals are used to process ores. What are the specific outcomes of this, especially on our water aquatic systems? What is its impact on the soil? I hope that when we say we are looking for policy recommendations, we should include policy dealing with the use of chemicals.


A final issue I would like to raise is the full accountability of companies especially when they leave the mining site. How do they rehabilitate the areas? Do they just plant trees and vegetation? Are these activities sufficient to recover the ecosystems that were destroyed by the mining operation? In the end, the fisherfolks and the farmers, not the companies are paying the price of such destruction.



UNIDENTIFIED PARTICIPANT 1:


This is basically a security issue that affects a lot of IPs and communities where mining operations take place. The role of MGB is to implement programs based on the existing policy. Its role is to respond to issues of human security. I have been hearing a lot about compensation and rehabilitation, but is there any room at all to address issues as consequence of these programs?


My next question is for Professor Marvic Leonen. The trajectory of litigation seems to move upward, but in terms of policy advocacy in the Philippines and in terms of addressing human security concerns, what advice can you possibly give to policy advocates in the country so that we may also learn from you?



UNIDENTIFIED PARTICIPANT 2:

What can policy advocates do? Policy advocates should go to the communities where intrusions are being fended off. The law itself provides the implementation of rules. Many NGOs engage the DENR or Congress, but someone from those institutions should be working in the communities. You have to change how you look at mining in terms of our law. To do so is not simple, although I believe the Legal Rights and Natural Resources Center-Kasama sa Kalikasan (LRC-KsK [Friends of the Earth]) have already done that. They made a proposal that can be deliberated in Congress and the Senate, but we have to be able to change the government first.

Government should be made accountable in light of these issues. Government has to rethink the Constitution and reexamine the command-and-control system in natural resources. Ours is the only Constitution in the world that actually “constitutionalizes” the control of resources at the level of the chief executive and DENR secretary based on Regalian Doctrine.

There are many little things that can be done; for instance, restructuring the DENR. We should also debate on the Constitutional provisions over natural resources. All these will involve a rethinking of the Constitution.


LEO JASARENO:


Is there a room for human security or other policy recommendations? The answer is yes. The program of the DENR on policy development and policy studies are expanding. We want to engage stakeholders in order to learn more from them. From there, we can translate these learning points into policy and regulations. We are not against mining in general, but irresponsible mining. The key is to use the correct mining instruments. Correct mining instruments of our resources means economically, legally, and scientifically sound operations that will benefit everyone.



GERARDO SICAT:


All stakeholders have many responsibilities. I think that is the major point that has to be addressed. It is the responsibility of government to protect the rights of local communities, especially those that are adversely affected. However, I believe government should also balance the interest of the larger community since mining of resources takes place in localities.


Responsibilities are similar to accountabilities, and accountabilities are things that can be expected of mining companies that are in operation. The government should be able to implement the minimum necessary guidance for this. I suspect that this is the reason for the mining law.


The problem is the institution itself. We know how the politics of the system affects the way we operate. There are inequities and injustices that happen in any kind of transaction, including mining operations. It is up to the legal system and the local community to work out how inequities and injustices can be minimized. Certainly, stopping mining activities is not the solution. We know some of these inequities are part of the whole development process.


Let us relate the processing and creating of downstream industries to our Constitution. One of the problems in this context is that we choose locals to take part in the mining industry. We could have chosen the big players. We should also look at the long-term benefits if they set up large operations in the country.

The mining industry in the country has fallen from the peaks. What we need is a strong mining industry. The government, because of the largeness of the industry, can impose sanctions but when we do not allow major players to come in, we cannot profit.


MARIA ELA ATIENZA (Associate Professor, Department of Political Science, UP-Diliman):

Clearly, we see the connection between mining and human security because we have linked some important human security issues such as livelihood, health, and healthy and safe environment in much of the discussion. Human dignity is expressed by the ability of people to decide, especially those affected by mining policies. The issue of unity and the possible division of the community has been discussed in relation to the mining issue.

Much of the exchange focused on some very important human security issues related to the mining issue. Several actors are very important if we want to include the human security framework in the development policy. In the case of the mining policy, actors include the government, specifically the DENR and its support agencies; the academe, particularly in providing important policy studies and assessment; and NGOs and peoples organizations. The Filipino people, and in particular, specific communities affected by mining operations like IP communities, are also important actors. We also have to take into consideration the role of the private firms coming in, whether local or foreign.

One of the most important points mentioned was that there are enough laws and provisions that promote sustainable development. The problem, however, lies in implementation. Thus, we should focus on the side of implementation. The DENR talks about responsible mining, so there is a need to focus on what responsible mining means.


There is a need to properly manage our natural resources. The key is not to stop various activities, but to properly manage the resources available for the country. An example would be the imposition of proper rents and taxes, especially when extraction of resources is involved. In relation to the proper management of resources, there should be a review of the economic provisions in the Constitution. Indeed, as Professor Leonen mentioned, structural issues, such as in our laws have to be addressed.


An important point was raised regarding the rethinking of the development model that are safe both for the environment and the people. Such rethinking would be made effective with active participation of the people. Thus, it was suggested that participation of all stakeholders in the whole policy cycle should be maximized, from policy formulation, to policy implementation, as well as monitoring.


Finally, one of the most important themes that came out of this forum is to focus on the responsibility and accountability of all actors. There is an appeal from the different communities that have been affected by mining for the DENR to strictly implement various provisions of the Mining Act, particularly regarding social responsibility and the protection of the rights of the indigenous peoples.



POLICY BRIEF

(The data and insights in this brief are based, in whole or in part, from the proceedings of the forum on Human Security and Development (Balay Kalinaw, University of the Philippines-Diliman, 27 June 2006), the first installment in the Third World Studies Center’s Policy Dialogue Series 2006: Towards a Human Security Framework. This brief was prepared by Joel F. Ariate Jr., University Research Associate, Third World Studies Center, University of the Philippines-Diliman with the assistance of Karen O. Domingo, Project Assistant of the Policy Dialogue Series 2006.)

Are Laws and Terminologies Enough?

One of the more common definitions of human security states that it “means protecting people from severe and pervasive threats, both natural and societal, and empowering individuals and communities to develop capabilities for making informed choices and acting on their own behalf.” What remedy can the people afford for themselves, when their capabilities for making informed choices about their lives and livelihood are believed to be sacrificed by the state in the altars of capital? Should the safety of a community take precedence over the development of a country?


Development ensures freedom from want, a component of human security. Yet there are instances, like in mining, when the pursuit of development endangers lives and communities. To solve this dilemma, scholars have come up with phrases like “development-human security nexus,” “sustainable development,” “human development,” “responsible mining” and the like. These seemingly erudite terms are uttered by development and human security advocates in the hope of managing the mining mess.


Are there really viable ways that people affected by mining can use that would eventually make their lives less encumbered by fear and want? In the face of established national economic policies, laws, and jurisprudence that support large-scale exploration, development, and utilization of the country’s mineral resources as a means to attaining development, can Filipino communities adversely affected by mining still aspire for human security? Whose development counts? Whose human security matters?



The Philippine Mining Policy: Whose Development Counts?


During the Third World Studies Center’s policy dialogue on human security and development focusing on the Philippine mining policy held last June 27, 2006, two views were put forward to answer the crucial question: whose development counts?


Two speakers in the policy dialogue, Leo Jasareno of the Mining Tenement Division, Mines and Geosciences Bureau, Department of Natural Resources (DENR) and Gerardo Sicat, professor emeritus at the School of Economics, University of the Philippines-Diliman, argued for the promised bounty that a large-scale exploration, development, and utilization of the country’s mineral resources can give to the Filipino people as a whole. The National Economic Development Authority (NEDA) estimated that the Philippines can earn up to PHP 47 trillion (USD 840 billion) in tapping its mineral resources. Add to this is the supposed employment that mining operations can generate. Professor Sicat urged the participants in the dialogue to look at the total net effect that mining can bring to the country.


In the forum, supposed safeguards as prescribed by Republic Act 7942 or the Philippine Mining Act of 1995 and its implementing rules and regulations (IRR) (hereafter the Mining Act), like the Environmental Protection and Enhancement Program, the Final Mine Rehabilitation and Decommissioning Plan, and the Social Development and Management Program were emphasized. The Mining Act is said to ensure fiscal viability of the areas where mining activities will be conducted. If ancestral lands and ancestral domains will be used for mining, royalties will be paid to indigenous peoples (IP). If the concerned IP or indigenous cultural community refuses, then government cannot issue the mining rights or the mining tenements to the interested party.


The need for prior informed consent is prescribed in the Mining Act and was further strengthened in the Indigenous Peoples Rights Act (IPRA) that provides for free and prior informed consent. It is also argued that the Mining Act also contains am adequate social acceptability clause that guarantees social participation in deciding whether an area can be subjected to mining operations. There are also mechanisms in place to settle mining conflicts. The DENR is said to be strictly implementing this provision of the Mining Act and the IPRA.


If there is a problem with the current Philippine mining policy, observers say it is the policy’s restriction on foreign ownership of mines. Professor Sicat argues that for a greater influx of capital, the mining industry must be liberalized to the degree that will allow the free and unrestricted entry of foreign capital. He suggests doing away with the constitutional provision that limits foreign ownership of any business venture for up to 40 percent; the greater the capital, the greater the profit that the nation can gain from mining.


The other view, mainly argued by Marvic Leonen, associate professor at the College of Law, University of the Philippines-Diliman, and also of the Legal Rights and Natural Resources Center-Kasama sa Kalikasan-Friends of the Earth, gives preferential treatment to the communities that are directly affected by mining activities. In arguing for human security, the main weaknesses and limitations of the current Philippine mining policy as embodied by the Mining Act and its IRR were examined, namely:


  1. The current mining policy heavily favours foreign capital. Though the NEDA estimates PHP 47 trillion (USD 840 billion) in earnings, Professor Leonen, citing the December 2005 Supreme Court decision in La Bugal-B’laan Tribal Association, Inc., et al. v. Ramos, et al., argues that only 2 percent of this projected earning will be realized by the Philippine government. This is a result of the Supreme Court’s interpretation of the constitutional provision on Financial or Technical Assistance Agreement (FTAA). Through an FTAA, foreign entities can own a mine for as much as 100 percent. The Supreme Court also ruled in the same case that foreigners that entered into an FTAA are not required to remit 60 percent of their net profit to the government. They are only required to pay the excise tax and royalties–a mere pittance of what they will get from operating the mines. With this Supreme Court ruling, there is even no need to amend the Constitution just to entice foreign capital.
  2. There is no guarantee that exploiting the country’s natural resources will result in economic growth. Empirical data shows that the more a country becomes dependent on mining, the slower its growth–the “natural resource curse.” Slow growth is usually coupled with high wage and high unemployment. The employment generated by mining operations is on a short-term basis. As pointed out by Nina Galang of the Environmental Studies Institute, Miriam College, this argument belies the perception that in mining, the dichotomy is between the economy and the environment. In truth, both entities suffer.
  3. What the affected communities think of mining hardly matters. In the end, it is the decision of the secretary of the DENR and that of Philippine president that counts. They even have the power to open up protected areas to mining activities. Local government units (LGUs) can interpose a veto, but a veto will have an effect only if the three councils, barangay (village), municipal, and provincial will pass similar resolutions against mining in the area—an act of remote possibility. A participant in the dialogue, Arze Glipo, Sorsogon provincial board member and executive director of Integrated Rural Development Foundation, pointed out another weakness of the current mining policy. The Sorsogon provincial board has been protesting against the mine operating in Rapu-Rapu, a town that belongs to Albay. When a mine spill occurred in the Rapu-Rapu mine, the livelihood of fisherfolks in several Sorsogon towns was severely affected. However, since the towns were not considered part of the primary impact area designated in the Environmental Compliance Certificate issued to the mine in Rapu-Rapu, these towns cannot even claim any compensation. During the dialogue, there was also a very telling example of how authorities can muffle the voices from affected communities. When the DENR representative was asked why the DENR set aside the Rapu-rapu Fact Finding Commission’s report, he replied that there are political decisions to be made regarding the matter. A decision made alone by the DENR secretary.
  4. Communities adversely affected by mining can barely seek redress. The Philippines had signed the Bilateral Investment Treaty with most countries whose nationals operate mines in the country. This treaty assures total repatriation of their investment. If an individual or a community sues and wins its case against a foreign mining company, the company can simply pack up and leave the country. With the company’s assets safely repatriated, the individual or the community cannot claim any damages. Only by suing these companies in their home countries will it be possible to ask for actual compensation. Add to this the burden that Philippine laws on liability place on the plaintiff. The plaintiff must prove every instance of negligence of the corporation. Just how many individual and communities has the resources for this kind of protracted legal battle? With an arsenal of lawyer that can exploit many loopholes in Philippine corporate law, these foreign companies can safely come back again in the Philippines, sometimes in the guise of a new or even a Filipino-owned corporation.
  5. The current mining policy has no deep regard for the lives disrupted by mining in local communities. To comply with the Social Development and Management Program requirement under the Mining Act, mining companies usually have community relations officers to swathe a veneer of acceptability over its operations. Their main task is to rally support for the mining company in the local community where it is located. Rallying support for the mining company usually results in a community divided between those for and those against the mining operations. The division sometimes run within families. Displacement is another crucial issue. For most IP communities their land is their life. Can royalties compensate for a way of life lost?

The critical views expressed on the government’s current mining policy suggest a number of opportunities for making it more responsive to the plight of the communities affected by mining activities.


Interventions for Human Security


From the dialogue, several courses of action were mentioned in order to address human security in the context of the government’s vigorous effort to utilize the nation’s mineral resources to improve the economy:


1. Carlos Primo David, associate professor at the National Institute of Geological Sciences, University of the Philippines-Diliman calls for the implementation of a Comprehensive Monitoring Plan (CMP). Professor David explains: "The first and most salient point of the CMP is that it puts most of the regulatory provisions during the life of the mine…. The CMP also actively involves all stakeholders in monitoring through a multibillion monitoring program. In my mind, we should not put all the responsibilities in monitoring operations of mining or any industry to the DENR. The local government, private citizens, and nongovernment organizations (NGOs) should be at the forefront of monitoring all these operations."

Professor David pointed out some specific monitoring mechanisms CMP and how these can fill the gaps of our current laws:


The CMP also does not only use conventional monitoring protocols but also other measures to detect any pollution or contamination in the environment. We have not adapted any standards for sediments quality and no standards for aquatic habitats assessment . . . . Our existing laws do not permit us to say that the sediments are so dirty and that it should be a basis for fining or closing down the mines . . . . Another measure of contamination that can be used is called biomonitoring . . . . We monitor water quality by looking at life forms it contains.

Professor David sums up the value of the proposed plan thus: “Hopefully, we see the importance of having regulations during and after the mine life through the proposal of the CMP.”

2. The government should provide incentives to mining companies based on their records of accomplishment of how they deal with the communities affected by their mining operations.


3. Mining companies should be fully accountable not only during the mine’s operations, but even after. They should be made to undertake a full clean up and rehabilitation of the mining site. There should be stiffer fines for a mining company’s violation of environmental laws.


The following policy proposals were mentioned during the course of the discussion:

  1. Prior and informed consent of communities is not enough.
  2. The role of the national government in granting resource use rights should be re-defined (i.e. lesser role for the national/executive level) while stakeholders at the local level (e.g. LGUs, communities) should be given greater roles in deciding on resource use. This can be done by mapping protected areas with inputs from the communities and implementing the CMP.
  3. Stricter rules for private mining corporations should be implemented to prevent layering of corporations and the participation of nominal parties, and to extract accountability on private companies such as demanding transparency of corporate accounts.
  4. Redefining “just compensation.”
The letters of the law can provide human security. There is the trust that a government attuned to justice can give both development and security to its people.

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