Surigao del Sur Rep. Prospero Pichay accused Alvarez of violating the Constitution and the Anti-Graft and Corrupt Practices Act in connection with a co-production agreement the environment secretary entered into with Shannalyne Inc. and the governments of New Zealand and Finland in December 2001.
The agreement covers the rehabilitation and development of 110,790 hectares of logged-over areas in the Agusan provinces in Mindanao.
Commenting on the case, Alvarez said it arose from "Congressman Pichay’s lack of understanding of the deal and a co-production scheme that is sanctioned by the Constitution."
Alvarez said Pichay’s complaint was "miscalculated."
"What he (Pichay) is unable to appreciate is that we are pursuing a program that began with President (Fidel) Ramos, continued with President (Joseph) Estrada and carried on by us," he said.
In filing the case, Pichay said the agreement is disadvantageous to the government, making Alvarez liable under the anti-graft law.
He said Shannalyne is a foreign company since only two of its incorporators, Singaporeans Jean Tan and Cheou Teck Tan, paid their share of the firm’s capital amounting to P400,000.
The co-production scheme involves foreign governments, an arrangement that is prohibited by the Constitution in the exploitation of the country’s natural resources, he added.
Pichay, together with another Lakas congressman, Vicente Sandoval of Palawan, has doggedly opposed the confirmation of Alvarez, who ironically is the secretary general of the ruling party they belong to.
The two are facing possible investigation by the House ethics committee in connection with separate complaints related to their opposition to the Department of Environment and Natural Resources (DENR) boss.
Answering Pichay’s accusations, Alvarez said that contrary to Pichay’s allegations, the co-production agreement is advantageous to the government.
"The area covered is largely logged over, its timber stands having been wiped out by previous licensees. We have entered into a co-production arrangement with a company, which is 60 percent owned by Filipinos and assisted by two foreign governments with vast experience in forest management, to rehabilitate this area," he said.
Alvarez said the ownership structure of Shannalyne has been passed upon by both the Securities and Exchange Commission and the Department of Justice.
"We can defend this deal from all angles," he added. "Although it appears that the paid subscriptions of the corporation come from stockholders of foreign nationality, the Filipino stockholders still have the majority vote considering that the shares they hold have not been declared delinquent."
Alvarez pointed out that co-production agreements were started by former Secretary Victor Ramos during the Ramos administration and have not been questioned until now.
"It is an enduring program that began as early as 1996 to recover and rehabilitate almost 10 million hectares of denuded forests," Alvarez said.
He added that the contract forms part of the Philippine Master Plan for Forest Development (MPFD) designed with the Asian Development Bank.
The MPFD study envisions this will bring in much-needed investments and create substantial employment for the people in Mindanao and allow the country to be self-sufficient in wood.