Republic of the Philippines ROSAl LAWOJ:FrCES Ninth Judicial Region Dlpolog City Branch 6

TVI RESOURCE DEVELOPMENT CIVILCASE NO. 6704 PHILIPPINES, INC., Petitioner For

-versus- PROHIBmON AND DECLARATORVRELIEF, ETC. HON. ROLANDO E. VEBES, ET AL. Respondents. X j

RESOLUTION

This resolves the application for a writ of preliminary injunction prayed for by the petitioner, TVI Resource Development Philippines, Inc. (TVIRD)thru its president against respondents: Hon. Rolando E. Yebes, in his capacity as Provincial Governor of Zamboanga del

Norte; and the Sangguniang Panlalawigan of , assailing the validity of

Provincial Ordinance No. ZN-1l-128 which prohibits open pit or open cut land surface mining in

Zamboanga del Norte.

Petitioner avers that it is a domestic corporation engaged In the mining business with principal office in Makati City. It is a party to the Minerai Production Sharing Agreement (MPSA) with the Republic of the Philippines through a Deed of Assignment, denominated as MPSANo.

054-96-IX Issued on October 23, 19961 effective for a period of twenty five (25) years. Pursuant thereto it operates its Sulphide Mine Project in Canatuan, Tabayo, Siocon,

Zamboanga del Norte (Canatuan for brevity) using open pit mining method. Its mining site is within the Ancestral Domain of the Subanon Tribe of Siocon and has been in commercial production since 2004. On August 15, 2011 the Sangguniang Panlalawigan of Zamboanga del

Norte (SP) enacted Provincial Ordinance No. ZN-11-128 entitled "AnOrdinance Protecting

1 Annex "8" of the Petition. Civil Case No. 6704, Resolution, page 2-

and Conserving the Integrity of the Land, Water and Vegetative Resources in Zamboanga del

Norte" which took effect on November 6, 2011.

Petitioner further alleges that said ordinance prohibits open pit and open cut land surface

mining operations within the territorial jurisdiction of the Province of Zamboanga del Norte and

imposes a penalty for any violation thereof, the pertinent provisionsthereof are hereunder

quoted as follows:

"Section 4. Open pit and open cut land surface mining operations. - Open pit and/or open cut land surface miningoperations InZamboangadel Norte,as definedInSection3 (f)and 3 (g) of this Ordinance, being destructive to the wide range of non-renewable landbased resources, and would cause pollution,depletion and loss of cropland, rangeland,forest cover, water and vegetative resources and cause extinctionof animal and plant species, water and vegetative resources In Zamboanga del Norte, shall be prohibited. Anv person who shall conduct. undertake or make open Ditand/or open cut land surface mininRoDeratlonsshall be Dunlshed bv an imDrlsonment not exceedlnR one (1) vear or fine not exceedinR five thousand Desos IPS.Ooo.OO)or both at the discretion of the Court. If the offender is a corporation, partnership, cooperative, association or any juridical person, the officers, directors, managers, and persons approving, directing, managing and/or supervising the operation and those doing/committing and participating In the mining operation shall be criminally liable. The machineries. tools and instruments used in the minlnlZ oDeration. Includin!! the extracted minerals. shall be seized and forfeited in favor of the Provincial Government of ZamboanRa del Norte.

x x x.

Section 6. liability for those already In operation. - Slxtv(60) days from the effectivity of this ordinance. those who are aireadv enRaRed in ooen pit and/or open cut land surface mininR oDerations and other forms of utilization or exploitation of other natural resources that may deDlete or devastate non-renewable land. water and veRetatlve resources and Denallzed in this ordinance shall adoDt measures to totally curtail siltation. mudfJow and erosion therefrom and shall desist from expanding such operations to unaffected area. Failure to adoDt such total curtailment measure and the expansion of such kind of operations to unaffected area shall be Dunishable by the Denaltles Drovlded in Section 4 of this Ordinance.

Section 7. Time limit of existing operations violative of this Ordinance. - Those who are eOl~aRedIn aDen Dlt and/or aDen cut land surface minin!! operations and those engaged In the utilization and exploitation of other natural resources that will deplete, pollute or cause loss of non-renewable land, water and vegetative resources at the time of the effectivity of this Ordinance shall stOD such method of oDerations one (1) year from the effectivity of this Ordinance and shall technically and bioioRicallyrehabilitate. at their eXDense.the affected area Into potent land, water and vegetative environment. Violation of this section shall make the violator liable for the penaltv Drovlded In Section 4 hereof.

Section 8. Authority of the Provincial Governor to issue cease and desist order. - The Provincial Governor of Zamboanlla del Norte is hereby authorized to issue cease and desist order to stoP any mlnlnR oDeration or utilization and eXDloitation of other natural resources violative of this Ordinance and to seize and impound the machineries. tools. and instruments used in the commission of the violation. including the extracted minerals and gathered other natural resources, to be proceeded against In accordance with Section 4 hereof. CivilCase No. 6704, Resolution, page 3-

The Governor may seek assistance of the Philippine National Police and/or field units of the Armed Forces of the Philippines in the implementation of the cease and desist and seizure order, or stoppage and seizure order." ( Underscoring supplied).

Petitioner claims that as a party to the MPSA with the national government, it has the right to conduct mining operations in accordance with the means and methods approved by the national government under the applicable laws and related issuances, and not the ordinance in question as it violates its rights from adopting a mining method which the national government allows. That when the grace periods provided for under Section 6 and Section 7 of the

Ordinance expire, petitioner would be exposed to liabilityas it could no longer perform its duties and obligations to the national government under the MPSA. Petitioner further claims that the ordinance contravenes Republic Act No. 7942, the Philippine Mining Act of 1995.

Furthermore, it violates the prohibition against non-impairment of contracts clause of the 1987

Constitution. That whenever the ordinance would be implemented, petitioner would be forced to close down its open pit mining operations thereby causing it to suffer grave and irreparable injury. Petitioner, likewise, alleges that it has a clear and unmistakable right to be protected from the deleterious effects of the void and unconstitutional ordinance and is willing to post a bond in such reasonable amount that the court may fix in accordance with Section 4, Rule 58 of the 1997 Rules for the issuance of an injunctive writ.

In its oPPosition to petitioner's application for a restraining order, respondent

Sangguniang Panlalawigan (SP) of Zamboanga del Norte, states that the Province of Zamboanga del Norte is the real party in interest against whom the petition shall be filed being a body politic endowed with powers as a political subdivision of the national government and as corporate entity representing the inhabitants of its territory. It argues that the ordinance does not prohibit mining or mining operation in Zamboanga del Norte, but it is an ordinance aimed to protect the integrity of the land, water, and vegetative resources in the province being the intergenerational God-made life support system of its people as stated in its Declaration of

Policy.That open pit or open cut land surface operation is not singled out as the only activity

I CivilCase No. 6704, Resolution, page 4-

sought to be prohibited. The ordinance calls upon the provincial government to fulfill its duty to protect and advance the right of the people and their posterity to healthy survival and food security, hence, the prohibition against the conduct of any activity that will result to imbalanced and unhealthy ecology. The ordinance does not violate the Constitution but is in accordance with Section 6, Article II (Declaration of Principles and State Policies) of the 1987 Constitution which mandates the State to protect and advance the right of the people and their posterity to a balanced and healthful ecology. Respondent SP further argues that the ordinance does not violate the LocalGovernment Code, instead it has the authority to enact according to Sections

2, 5, 16, 26, 27, Section 468 and other provisions of the code. Likewise, it argues that the ordinance in question does not impair the obligation of contracts as co-production, joint venture or production sharing agreements entered into by the State in the exploration,development and utilization of natural resources are not contracts within the purview of the due process and non-impairment of contracts clauses of the Constitution but are mere license, permit or privilege. Respondent SP also claims that petitioner has not shown compliance by the concerned national government agency (DENR) with the mandatory requirements under

Sections 2 (c), 26 and 27 of the LocalGovernment Code, thus it has no right to operate any mining method under the alleged MPSA,which is null and void. Respondent SP also points out that petitioner failed to cite any provision of the Mining Act of 1995 that permits open pit or open cut land surface mining method. Respondent SP concludes that petitioner has not shown any genuine or veritable right that would entitle it to an injunctive relief to restrain or prohibit the implementation of the ordinance pendente lite.

In his opposition respondent Governor substantially adopts the opposition filed by his co-respondent SP. He, however, adds that the SP has the right to enact and adopt the subject ordinance under the police power to promote the general welfare of the people. He further argues that the petitioner has been gaining profits to the prejudice of the province and the environment. Civil Case No. 6704, Resolution, page 5-

During the summary hearing of the pending incident, petitioner presented two (2) witnesses, namely: Atty. Eugene T. Mateo, the President of TVIRDand Albert Johann B.Jacildo, the Acting Regional Director of Mines and Geo-Sciences Bureau (MGB), Region IX,Zamboanga

City.

Petitioners Evidence

Director Jacildo testified that their office supervises the whole engineering zone of

Zamboanga Peninsula and their functions involve the acceptance, processing, evaluation and endorsement to the central office for approval of miningapplications,monitoringof existing mine operations as to their compliance and adherence to mining and safety laws, and the supervision of geological surveys, mappings, explorations and developmental aspects related to the field of geo-sciences. Open pit mining is allowed under the Mining Act and its Implementing

Rules and Regulations. The Mineral Production Sharing Agreement (MPSA) is a contract between the government and the contractor wherein it allows the contractor to develop, introduce technology and establish whatever mining methods appropriate to a sustainable development of mineral resources in a certain area. Their office has the basic documents showing that petitioner has a contract with the government pursuant to a Deed of Assignment executed by the original claimhoider in its favor and the Environmental Compliance Certificate

(ECe) allows the petitioner to extract minerals by open pit method with the bench-height not exceeding five (5) meters and the final pit wall height along the west wall not being more than sixty (60) meters. He further testified that the total area covered by the claim is 508.3396 hectares and that there is no other appropriate mining method in the mining area of Canatuan except by open pit. He also said that before any project could proceed, an Environmental

Impact Assessment has been made in order to determine and evaluate the nature, the state of the area, the methods or technology that would be used and to set forth the gUidelines related to the project to secure environmental protection, and since its operations in 1997, TVIRDhas been able to comply with the requirements in its mining operations in Canatuan. CivilCase No. 6704, Resolution, page 6-

Atty. Eugene Mateo, who confirmed the correctness and truthfulness of the contents of his Judicial Affidavit 2, testified that he is the President of TVI Resource Development

Philippines, Inc. (TVIRD),the herein petitioner. TVIRDis engaged in a mining business. It is the assignee of a mining claim In Sitio Canatuan, Barangay Tabayo, Siocon, Zamboanga del Norte pursuant to the Deed of Assignmentexecuted by Ramon Bosque and Corporation involving 508 hectares. It has a Minerai Production Sharing Agreement with the government under MPSANo. S4-96-IXdated October 23, 19963and it has previouslysecured three (3)

EnvironmentalComplianceCertificates from the Department of Environment and Natural

Resources (DENR).4When they arrived in Canatuan, the area was polluted due to the operations of small scale miners and the mountain has no more vegetative cover as it was already inhabited by kainglneros. They cleaned up the area and treated the mercury and other pollutants and they submitted their report to the Sangguniang Panlalawigan of Zamboanga del

Norte. Since the location of the are in the mining area is very shallow, the only suitable way to extract the same Is through open pit method under the work program approved by the DENR.

Of the total 508 hectare-area mining claim, the temporary disturbance pertains only to 31 hectares that would be mined as only that portion contain the minerals and another 25 hectares as tailingsdam, while the other areas are devoted to roads, staff house and other facilities. He also testified that while their operations use cyanide to process the ore from the rocks, nonetheless, the waters involved are treated first before they go down to the bottom of the tailingsdam to be merged with fresh waters comingfrom the water shed thereby making them as clean waters to be released later downward. He likewise testified that the last thing to be done when the project is completed is the rehabilitationof the mine pit thru progressive rehabilitation.Furthermore,he testified that TVIRDhas been religiously complying with all the requirements with respect to environmental protectionS, thus It became the recipient of several winning awards in 2011 for having the safest mining operations in the country. He claims that

2 Exhibit "A"; 3 Exhibit "8"; 4 Exhibits IIJ","N-1" and "0"; 5 Exhibit "V" CivilCase No. 6704, Resolution, page 7-

the newly enacted provincialordinance which prohibits open pit and open cut land surface mining operations would result the petitioner to stop its operations and suffer irreparable damage and injuryas it has an outstanding balance of its loans of US$6,351,868.15with the

Metropolitan Bank and Trust Company6 and US$ 9,678,500.00 with the Bank of the Philippine

Islands.7 He further claims that the said ordinance impairs its contract with the government under MPSA No. 054-96-IX, thus petitioner now prays for the issuance of an injunctive relief to enjoin the respondents from implementing and enforcing the questionable provisions of

Provincial Ordinance No. ZN.11-128.

Respondents' Evidence

The nature of the testimony of respondents' witnesses, such as of Ms. Nieves B. Kimwas confined merely to the authenticity of ordinances, resolutions, records of investigations in aid of legislation, documents presented in such investigations, communications, papers, documents and other records that led to the enactment of Provincial Ordinance No. ZN-11-128; while the testimony of Provincial Treasurer Jessie A. Concepcion was about the share of the Province of

Zamboanga del Norte from the utilization of National Wealth from CY2000 to CY2011 which amounted to Php 25,992,745.00 only; and the testimony of Ms. Estela T. Salcedo, the regular employee of the Zamboanga del Norte Environment and Management Office (ZANEMO)of the

Provincial Government of Zamboanga del Norte was centered on the monitoring of the mining operations of petitioner TVIRD, a large scale mining company, whose operations have allegedly destroyed the vast forest in Sitio Canatuan, Barangay Tabayo, Siocon, Zamboanga del Norte, including the habitats of different species of birds and wildlives and deformity of mountains which caused ecological imbalanced, although she admitted that no inventory of wildlives has been submitted to support said allegations.

6 Exhibit "L"; 7 Exhibit "M". Civil Case No. 6704, Resolution, page 8-

Court's Discussion and Resolution

The evidence on records disclosed that petitioner TVIRD is a domestic corporation

engaged in the mining business. It is a party to the Mineral Production Sharing Agreement with

the Republic of the Philippines under MPSANo. 054-96-IX dated October 23, 1996 wherein it

possesses a right to operate its sulphide mine project in Sitio Canatuan, Barangay Tabayo,

Siocon, Zamboanga del Norte within the ancestral domain of the subanon tribe. The MPSAis

effective for a period of twenty five (25) years and has a remaining life of ten (10) years.8 Its

existing sulphide project has an expected mine life of four (4) years more from the filing of the

instant petition.9 The MPSA allows the petitioner to adopt appropriate methods to extract the

minerals in the area and it has been duly issued with environmentalcompliancecertificates

(ECe) by the DENRfor its project. Its operations are monitored by the Mines and Geo-Sciences

Bureau (MGB).It also entered into a Memorandum of Agreement with the Subanon Indigenous

People (IP) of Siocon10 being the owners of the ancestral domain of the mining site where the

latter recognized the rights of TVIRD for its mining operations. In the pursuit of its operations,

petitioner obtained loans from the banks and it has still an outstanding balance of US$

6,351,868.15 with Metropolitan Bank and Trust Company and US$ 9,678,500.00 with the Bank

of the Philippine Islands. Although its mining claim covers 508 hectares, the temporary

disturbance involvesonly 56 hectares, that is, 31 hectares subjected to be mined and 25

hectares being utilized as tailings dam, while the other areas are devoted to roads, staff houses

and other facilities.Since the minerals are located just beneath the land surface, the only

suitable mining method is through open pit extraction and its work program has been previously

approved by the DENR.TVIRDhas been complyingwith all the requirements pertaining to

environmental protection and it even became the recipient of several awards in 2011 for having

been adjudged the safest mining operations in the archipelago.

8 Exhibit "A-2". 9 TSN,Nalzaro, December I, 2011, pages 32 and 44; 10 Exhibit "Hit, CivilCase No. 6704, Resolution, page 9-

Provincial Ordinance No. ZN-1l-128 prohibits open pit and open cut land surface mining operations within the territorial jurisdiction of Zamboanga del Norte. it took effect on November

6, 2011. It contains penal and confiscatory provisions, such as Section 6 thereof, which gives a mining operator who is engaged in open pit or open cut land surface mining operations a period of sixty (60) days from its effectivity to adopt measures to totally curtail siltation, mudflow and erosion In the miningarea and the failure to do so would be proceeded criminally.Likewise,

Section 7 of the ordinance gives only such operator a period of one (1) year from its effectivity to stop such open pit and open cut land surface miningoperations. These provisionsof the ordinance, among others, have been questioned by the petitioner that it is impossible for it to comply with said requirements as it is the only suitable way of extracting the minerals in

Canatuan due to the shallow location of the mineral deposits and because it is open pit method, the top soil must be necessarily disturbed and removed.

On the basis of the foregoing considerations, the court grants petitioner's application for the issuance of a writ of preliminary injunction, as its sole objective is to preserve the status quo until the merits of the case can be fully heard.

Under Rule 58, Section 3 of the RevisedRulesof Court, any of the followinggrounds justifies the issuance of a preliminary injunction:

(a) That the plaintiff is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the acts complained of, or the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission or continuance of some act complained of during the litigation or the non-performance thereof would probably work injustice to the plaintiff; or

(c)That the defendant is doing, threatens, or is about to do, or is procuring or suffering to be done, some act probably in violation of the plaintiff's rights respecting the subject of the action, and tending to render the judgment ineffectual.

The evidence shows that petitioner has a clear legal right to the entitlement of the injunctiverelief sought, it being a party to the mining agreement with the Republicof the

Philippines under MPSANo. 054-96-IX and if the questioned ordinance would be implemented, the petitioner would suffer grave and irreparable damage and injury especially so that it will be forced to stop its miningoperations and be subjected to accelerated payment of its loan CivilCaseNo 6704, Resolution, page 10-

obligations of US$ 6,351,868.15 with the Metropolitan Bank and Trust Company and US$

9,678,500.00 with the Bank of the Philippine Islands.l1 Furthermore, petitioner has initially

established a strong case of the unconstitutionality of Provincial Ordinance No. ZN-11-128. The

Supreme Court explained:

"We have ruled that when the petitioner assailing a statute has made out a case of unconstitutionality strong enough to overcome, in the mind of the judge, the presumption of validity, in addition to a showing of a clear legal right to the remedy sought, the court should issue a writ of preliminary injunction.

After a careful consideration of the submission by the parties, we are convinced that petitioners herein have established a strong case for the unconstitutionality of Rep. Act No. 8800 sufficient for the grant of a preliminary injunction. Note, however, that a writ of preliminary injunction is issued merely to preserve the status quo ante. Its sole objective is to preserve the status quo until the merits of the case can be heard fully. It is generally availed of to prevent actual or threatened acts, until the merits of the case can be disposed of.

Respondents tenaciously argue that Rep. Act No. 8800 enjoys the presumption of validity and constitutionality until proven otherwise. True, but for the purpose of issuing a provisional remedy, strictly speaking, this contention lacks relevance. Obviously, a law need not be declared unconstitutional first before a preliminary injunction against its enforcement may be granted. Needless to stress, the moment a law is nullified for being unconstitutional, it ceases to exist. Thus, a writ of injunction would then become superfluous.

Only two requisites are necessary for a preliminary injunction to issue: (1) the existence of a right to be protected and (2) the facts, against which the injunction is to be directed violate said right. While a clear showing of the right is necessary, its existence need not be conclusively established. In fact, the evidence required to justify the issuance of a writ of preliminary injunction need not be conclusive or complete. The evidence need only give the court an idea of the justification for the preliminary Injunction, pending the decision of the case on the merits. Thus, to be entitled to the writ, petitioners are only required to show that they have an ostensible right to the final relief prayed for in their complaint.

In this case, petitioners have demonstrated a clear right threatened by the questioned safeguard measures. Being in a business heavily dependent on importation of steel, they would be severely damaged once safeguard measures are applied against steel imports. Petitioners have shown, to the satisfaction of the trial court and this Court that any increase in tariffs or quantitative restriction on imports willforce them to close down their respective businesses and layoff their employees. ,,12

Applying the same principles in law, the Court Is of the opinion and so holds that there is

now a pressing necessity to grant the preliminary injunction as a preservative remedy to avoid injurious consequences that cannot be remedied under any standard ofcompensation.

11 Exhibit "A-6"and "A-7"; 12 MMDAvs. Trackworks RailTransit Advertising, G.R.No. 167514, October 25, 2005.

or CivilCase No. 6704, Resolution, page 11-

Considering that the area temporarily disturbed consists only of 56 hectares, petitioner- applicant must be required to post a bond pursuant to Section 4, Rule58 of the Rulesof Court in the amount of Php 2,000,000.00.

WHEREFORE,in view of the foregoing considerations, without delving into the merits of the instant petition, the prayer for the issuance of a writ of preliminary injunction is hereby granted. Let, therefore, writ of preliminary injunction issue to enjoin the enforcement and implementation of ProvincialOrdinance No. ZN-11-128upon posting of a bond in the amount of

Php 2,000,000.00 to answer for any damages which the respondents may sustain should the court finally decide that the petitioner is not entitled thereto.

IT ISSOORDERED.

Given under my hand in Chambers this 4th day of January, 2012 at City, Philippines.