SUMMARY STATEMENT TO THE SENATE COMMITTEES ON THE ENVIRONMENT AND HEALTH, MARCH 19, 2013 By: Christian S. Monsod Climate Change Congress of the Philippines pp.1-5

2. SUMMARY STATEMENT TO THE SENATE COMMITTEES ON THE
ENVIRONMENT AND HEALTH, MARCH 19, 2013
By: Christian S. Monsod
Climate Change Congress of the Philippines
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The Climate Change Congress of the Philippines thanks the Senate
Committee on the Environment for the invitation to contribute to this
Hearing in aid of legislation.
My part of the presentation are our recommendations or comments
on amendatory or supplementary legislation on mining and for
addressing incidents such as the Padcal spillage as well as other
incidents related to mining.
I might make it clear from the start that our organization is not for a
ban on mining, not only because that position finds no traction in the
Constitution that allows it but also because we agree that mining can
make a significant contribution to our industrial development,
although that has not happened to date. Provided, of course, it is
“responsible” mining.
For purposes of this Hearing, we define responsible mining as mining
that is fully compliant with existing laws and regulations. Thus, the
questions to be asked are:
(1) Are existing laws and regulations adequate to the task of
fully taking into account the economic, social and
environmental factors in evaluating mining projects and its
operations?
(2) Is the country getting a full and fair share of the value of
the extracted resources?
(3) Are the institutional capabilities of government in place
to implement mining laws and regulations?
The simple answer to all three questions is NO. Hence, this Hearing is
both timely and urgent. For lack of time, I will only dwell here on four
selected policy issues although we are going to submit later a more
comprehensive Paper to the Committee for its consideration, namely:

3. (a) the legal efficacy or validity of EO 79 in relation
particularly to the new no-go areas and new environmental
standards;
(b) the perpetual liability condition;
(c) a proposal on the new fiscal regime;
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(d) pursuing the development of the institutional capability
of government.
With regard to the legal aspect, EO 79 and the six Directives
accompanying were precisely promulgated by the administration to
address the gaps in the present mining framework, particularly on
governance and the protection of the environment and prime
agricultural and fishing grounds. The administration should be
commended for its willingness to tackle tough mining issues, which
previous administrations avoided, and for the broad coverage of EO
79. That the mining industry had reservations about some of its
provisions and those of its IRR may be an indication that the
government is on the right track in reforming the country’s mining
framework.
Firstly, there is the issue of whether an EO can promulgate mining
policies when State policy-making is essentially a legislative function.
However, this consideration is irrelevant with respect to the new no-
go areas and new mining environmental standards because, even if
these were enacted by law and not by an EO, existing mining
operations might still raise the issue of their applicability under the
principle of “sanctity of contracts”. Against this position is the
sovereign right of the State to “full control and supervision” on the
grant of privileges to exploit natural resources. The decisions of our
Supreme Court are fortunately heavily in favor of upholding State
sovereignty as well as the valid exercise of its police power on this
issue. Unambiguous legislation by the Congress may, however, be
necessary in this regard. Otherwise, we might end up with two sets of
mining operations – those that are compliant with new
environmental standards and those that are not, when mining
incidents or geohazards and climate change effects do not
discriminate on the basis of when the mining operations started. Of
course, compensation for discontinued operations, where proper,
should be provided in the law.
Secondly, the perpetual liability condition. This is covered under
the Directive to MICC to explore the possibility of compulsory and

4. mandatory insurance coverage as well as perpetual liability for the
maintenance and rehabilitation of post-mining sites. The policy gap
in this regard was raised by us in the Mining Conference of March
2012.
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In the Directive dated July 6, 2012 to the MICC, the DENR-MGB, DOF
and DILG were tasked to complete the study on the matter within 6
months of the Directive. Even before that, in April 2012, the MGB had
already suggested alternatives in the absence of a law or regulation.
Legislation is urgent because of the historical legacy of maintenance
costs and, in some cases, devastation costs wrought by
decommissioned mining structures still being borne by the taxpayers
and directly by the affected populations at the sites.
In the case of Tampacan, where perpetual liability is one of the
conditions for the ECC, SMI to its credit has reportedly accepted the
need “ to establish an appropriate funding mechanism to provide for
the perpetual closure costs of the mine including the operating costs
of on-going water treatment” and “promised that the Site
Management Plan that must be prepared and submitted before SMI
can satisfy its closure obligations under RA 7942.” This alternative to
a law was proposed in the MGB Memorandum of April 2012, and
underlines the urgency of legislation to avoid case-to-case solutions
in the future.
Thirdly, on fiscal matters, the EO rightly deferred to the Congress
the task of promulgating a new fiscal regime. Only Congress has the
power to tax. (That is why there is a case before the Supreme Court
scheduled for oral argument on April 16 on the constitutionality of the
Mining Law that delegates to the Executive the power to determine the
government “takes” on mining.)
We agree with the proposal to do away with all tax incentive schemes
for mining in addition to a higher take on mining revenues that also
considers both the boom and bust character of mining operations.
Mining is not a footloose industry, it goes where the minerals are
located, and is driven by other considerations than tax incentives. In
return, the requirements imposed on mining, such as royalties to
indigenous peoples and community social development projects
should be removed. They are not very large anyway and are tax
deductible. It’s the government that should be providing these
services, but for lack of resources, partly because it is not getting a

5. fair and full share of the mining revenues. The government can then
earmark and directly make available a large percentage of the higher
take for the economic and social development of the peoples in the
mining area. That way, the people will rightly appreciate their
government more and will not feel indebted to the mining companies
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and can, thus, express their true sentiments about mining. Hopefully,
the social divisions that money in the wrong places often engenders
in local communities will also be mitigated. This kind of
unadulterated feedback, both for or against mining, is important to
government for policy making and regulatory purposes.
Fourthly, on the institutional Capacity of Government to
Evaluate and Regulate Mining
The government admits in the Philippine Development Plan 2011-
2016, that it does not have the capability to carry out these tasks, to
wit:
(a) Page 310 of the PDP: “…currently, there is no standard
resource and environment valuation. There is a need
to have a cost-benefit analysis and standard
parameters that will consider all relevant values
(including non-market values)”;
(b) Moreover, in Pages 320-322, the PDP states:
“…institutional issues need to be addressed to ensure
sustainability of the country’s fragile environment and
natural resources…”
(c) “implementation is confused by overlapping and
conflicting policies,”
(d) “government capacity for resource management is
wanting”;
(e) “Enforcement of environmental laws and policies is
inadequate.....Relevant environmental laws,
specifically those regulating the utilization of natural
resources, i.e. NIPAS, etc. are poorly implemented.”
EO 79 and the Directives authorize (1) the adoption of analytical
tools to address the lack of standard resource and environmental
valuation with such tools as WAVES, an integrated mapping system,

6. full costs and benefits analysis, a centralized data bank, the use of
programmatic environmental impact assessment, etc. and (2) steps
to be taken to improve the government’s institutional capacity to
evaluate and regulate mining, including changes to increase the
sharing and its immediate payment to the LGUs. The Directives
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themselves give deadlines, mostly 6 months for completion of studies
or compliance with the mandates or for providing progress reports.
The Senate might want to request from the agencies, in aid of
possible legislation, an update on these tasks since more than 6
months have elapsed since the promulgation of the EO and the
Directives.
I will stop here to give others time to make their presentations and
will just submit to this Committee a Paper on all our
recommendations.
(Before closing, I want to convey to the Committee a suggestion for
what it is worth by somebody in the mining industry that the
Committee, might want to inquire, in aid of legislation, into the
possibility of under-declaration of volumes and/or of export
proceeds/pricing about which the DENR-MGB has raised questions in
the past partly on the basis of a discrepancy between exports and
reported production values of minerals of P277 billion from 2000-2009.
In fact, a Directive has been issued by the OP to the DOF to conduct a
similar review. )
Thank you.