MBMI Announces Philippine Court Decision; Receipt of Downpayment for the Second Agreement; and Sale of Philippine Equipment
17 Junho 2014 - 1:42AM
Marketwired Canada
MBMI RESOURCES INC. ("MBMI") (TSX VENTURE:MBR) announces that:
1. The Third Division of the Supreme Court in the Republic of the
Philippines has recently issued a decision dated April 21, 2014 in
G.R. No. 199580 (the "Decision").
The background of the case is as follows: On January 2, 2007, Redmont
Consolidated Mines Corporation ("Redmont") filed with the Panel of Arbitrators
("POA") verified petitions against the applications for Mineral Production
Sharing Agreements ("MPSAs") and Exploration Permits Applications ("EPs") of
Narra Nickel Mining and Development Corporation ("Narra Nickel"), McArthur
Mining Inc. ("McArthur Mining") and Tesoro Mining and Development Corporation
("Tesoro Mining"; collectively, the "Operating Companies"). Redmont asserted
that the Operating Companies are supposedly not qualified to engage in mining
activities because they are 100% owned by MBMI Resources, Inc., a Canadian
corporation. During this time, Redmont had already applied for an exploration
permit in the same area covered by the Operating Companies' MPSA applications.
On December 14, 2007, the POA rendered its Resolution where it disqualified the
Operating Companies for being foreign corporations and declared null and void
the MPSA granted to them. The POA gave due course to Redmont's application for
exploration permit.
The Operating Companies filed their Motion for Reconsideration, which the POA
denied in its February 7, 2008 Order. They then filed an appeal with the Mines
Adjudication Board ("MAB") which, in turn, reversed and set aside the December
14, 2007 Order of the POA.
The MAB ruled, among others, that the POA had no jurisdiction because the issue
on the nationality of a corporation and its qualification to apply for an MPSA
is not among the disputes within the POA's powers, and it is the Securities and
Exchange Commission ("SEC") which has the jurisdiction to determine a
corporation's nationality.
Redmont's Motion for Reconsideration of the MAB Order was denied. Thus, Redmont
filed an appeal with the Court of Appeals, docketed as CA-G.R. SP. No. 109703.
In its Decision dated October 1, 2010, the Court of Appeals upheld the ruling of
the POA rejecting the Operating Companies' MPSA applications, and ruled as
follows:
Wherefore, the Petition is PARTIALLY GRANTED. The assailed Orders, dated
September 10, 2008 and July 1, 2009 of the Mining Adjudication Board are
reversed and set aside. The findings of the Panel of Arbitrators of the
Department of Environment and Natural Resources that respondents
McArthur, Tesoro and Narra are foreign corporations is upheld and,
therefore, the rejection of their applications for Mineral Production
Sharing Agreement should be recommended to the Secretary of the DENR.
With respect to the applications of respondents McArthur, Tesoro and
Narra for Financial or Technical Assistance Agreement (FTAA) or
conversion of their MPSA applications to FTAA, the matter for its
rejection or approval is left for determination by the Secretary of the
DENR and the President of the Republic of the Philippines.
The Operating Companies moved for the reconsideration of the Court of Appeals'
decision, pointing out that the case had already been rendered moot as a result
of the execution of the Financial and Technical Assistance Agreement ("FTAA")
between them and the Republic of the Philippines on April 12, 2010. (The
Operating Companies converted their applications for MPSAs and EPs into an FTAA
application, and the latter was granted by the Government. Moreover, under
Philippine law, the Government may enter into FTAAs with wholly foreign-owned
companies.)
In a Resolution dated February 15, 2011, the Court of Appeals denied the
Operating Companies' motion for reconsideration.
Subsequently, the Operating Companies filed their petition for review with the
Supreme Court, docketed as G.R. No. 199580, where they argued that:
(1) the POA had no jurisdiction to determine their nationalities, as such
jurisdiction was vested in the SEC;
(2) they are, and have always been, Philippine nationals because 60% of
their outstanding capital stock was owned by the Holding Companies
(i.e., Sara Marie Mining, Inc., Patricia Louise Mining and Development
Corporation, and Madrilejos Mining Corporation), which were themselves
60% Philippine-owned; and
(3) the case has become moot with the execution of the FTAA.
Subsequently, the Operating Companies manifested that their Holding Companies
had become 100% Philippine-owned, with the sale of the Canadian/foreign equity
(previously held by MBMI Resources, Inc.) at that level to DMCI Mining
Corporation ("DMCI") in October 2012. Thus, this was a further reason to
consider the nationality issue moot.
In a November 27, 2013 Resolution, the Supreme Court ordered the consolidation
of SC GR. No. 205513 (the SEC case initiated by Redmont) with this case.
Subsequently, the Operating Companies filed another Manifestation dated April 4,
2014 disclosing that DMCI had also acquired MBMI's interests/equity in the
Operating Companies.
In its Decision dated April 21, 2014, the Supreme Court denied the Operating
Companies' petition for review on the following grounds:
(1) the case is not moot and academic;
(2) the conversion of the Operating Companies' MPSA applications to FTAA
applications is suspicious, improper and not in accord with the law;
(3) applying the Grandfather Rule, the Operating Companies are foreign
corporations disqualified from holding MPSA applications;
(4) the POA has jurisdiction to determine the nationalities of the
Operating Companies; and
(5) the sale/transfer of MBMI's shares to DMCI is immaterial to the
present case because this is not in issue and is already being tackled
in the SC GR. No. 202877 (i.e., the FTAA Case).
On April 21, 2014, the Supreme Court resolved to deconsolidate this case and the
SEC Case considering that both cases involve different causes of action.
The Operating Companies filed their Motion for Reconsideration on June 5, 2014
seeking the reversal of the Decision. Their grounds for reconsideration are:
(1) The Decision casts all sorts of aspersions on the Operating Companies
and accuses them of bad faith/ill motives. However, those aspersions
and accusations are all legally and factually baseless. They cannot
overcome the fundamental presumption of good faith in the Operating
Companies' favor.
A. The Operating Companies' actions (e.g., the conversion of their
MPSA applications to an FTAA application) and corporate structures are
regular, valid, and expressly allowed by law.
B. The Decision readily but baselessly accuses the Operating Companies
of bad faith, but is itself unfair to them.
Moreover, the Decision inexplicably does not even castigate or censure
Redmont for its blatant, willful, and deliberate forum shopping. The
Decision erred when it did not dismiss Redmont's cases precisely due
to its forum shopping.
(2) The Decision's insistence on the Grandfather Rule is erroneous and
unjustified.
A. The Grandfather Rule has no basis or support in the Constitution.
The Constitution only requires that a corporation engaged in a
nationalized and/or partially nationalized activity be at least 60%
Philippine-owned.
B. The Grandfather Rule has no statutory basis or support. The Foreign
Investments Act (Republic Act No. 7042, as amended) and the Mining Act
also only require the corporation engaged in a nationalized and/or
partially nationalized activity to be at least 60% Philippine-owned.
C. The 1967 SEC Rule cited in the Assailed Decision expressly states
that the Grandfather Rule will only apply if the percentage of
Philippine ownership in the corporation is less than 60% (which was
not the case here).
The Decision's insistence on the Grandfather Rule and espousal of
nebulous, undefined grounds for its application can only lead to
uncertainty and erosion of investor confidence.
(3) The Decision erred in stretching the application of Rule 130, Section
29 of the Rules of Court (the res inter alios acta rule) to joint
venturers.
(4) The POA has no jurisdiction over the issue of the Operating Companies'
nationalities. The Decision erred in ruling otherwise.
2. MBMI received the Downpayment under the Second Agreement with its
Philippine Partner
As disclosed in the press release dated March 24, 2014, MBMI has agreed to
transfer all of its interest in the DevCos to DMCI. MBMI is pleased to announce
that it has received the Downpayment of $750,000.00 from DMCI pursuant to the
Agreement signed by MBMI and DMCI for the transfer of the DevCo Shares. (For
further information regarding that transaction, please see the Company's press
release of March 24, 2014.)
3. MBMI Philippines sells heavy equipment in Philippines
On May 12, 2014, MBMI's affiliate in the Philippines, MBMI Resources Philippines
("MBMI Philippines"), entered into a Deed of Absolute Sale with Ivy Michelle
Trading and Construction for the sale of thirteen (13) units of heavy equipment.
The consideration of Nine Million Two Hundred Thousand Pesos (9,200,000.00) for
the sale has been received in full by MBMI Philippines.
For further information relating to MBMI or this release, please refer to MBMI's
website at www.mbmiresources.com.
Cautionary Statement:
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release. No stock exchange,
securities commission or other regulatory authority has approved or disapproved
the information contained herein.
The foregoing information may contain forward-looking statements relating to the
future performance of MBMI Resources Inc. Forward-looking statements,
specifically those concerning future performance, are subject to certain risks
and uncertainties, and actual results may differ materially from MBMI's plans
and expectations. These plans, expectations, risks and uncertainties are
detailed herein and from time to time in the filings made by MBMI with the TSX
Venture Exchange and securities regulators. MBMI Resources Inc. does not assume
any obligation to update or revise its forward-looking statements, whether as a
result of new information, future events or otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
Joseph Chan
President and CEO
647-299-9203
mbmi@mail.com
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