MBMI Announces Philippine Court Decision; Receipt of Downpayment
for the Second Agreement; and Sale of Philippine Equipment
RICHMOND HILL, ONTARIO--(Marketwired - Jun 17, 2014) - MBMI
RESOURCES INC. ("MBMI") (TSX-VENTURE:MBR) announces that:
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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:
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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. |
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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; |
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(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 |
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(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; |
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(2) |
the conversion of the Operating Companies' MPSA applications to
FTAA applications is suspicious, improper and not in accord with
the law; |
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(3) |
applying the Grandfather Rule, the Operating Companies are foreign
corporations disqualified from holding MPSA applications; |
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(4) |
the POA has jurisdiction to determine the nationalities of the
Operating Companies; and |
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(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. |
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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. |
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B. The Decision readily but baselessly
accuses the Operating Companies of bad faith, but is itself unfair
to them. |
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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. |
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(2) |
The Decision's insistence on the Grandfather Rule is erroneous and
unjustified. |
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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. |
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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. |
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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). |
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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. |
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(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. |
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(4) |
The POA has no jurisdiction over the issue of the Operating
Companies' nationalities. The Decision erred in ruling
otherwise. |
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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.
Joseph ChanPresident and CEO647-299-9203mbmi@mail.com
Mbmi Resources Inc. (TSXV:MBR)
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