philippine mining act of 1995 -report consolidated

7/29/2019 Philippine Mining Act of 1995 -Report Consolidated

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Philippine Mining Act of 1995

(Republic Act No. 7942)AN ACT INSTITUTING A NEW SYSTEM OF MINERAL

RESOURCES EXPLORATION, DEVELOPMENT,

UTILIZATION, AND CONSERVATIONSubmitted by:

Lyndon Cena

Nicole Bondad

Mary Ruth Datario

8/27/2013


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Philippine Mining Act of 1995 (Republic Act No. 7942)

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EVOLUTION OF PERTINENT MINING LAWS

1. ROYAL DECREE OF MAY 14, 1867 OR THE SPANISH MINING LAW

As provided by the Civil Code of Spain (Art. 339), mines and mineral lands could be susceptible of privateappropriation by means of grants from the State. Such being the case, the Regalian Doctrine wasfollowed.

Regalian Doctrine provides that minerals belong to the State wherever they may be found, whether inpublic lands or in private lands.

For the reason of prospecting on private property, the permission of the owner was necessary. In case ofrefusal by the owner, the government might be called upon to intervene.

2. ACT OF CONGRESS OF JULY 1, 1902 OR PHILIPPINE BILL OF 1902

It contained provisions for the open and free exploration, occupation and purchase of mineral depositsand the land where they may be found.

It declared all valuable mineral deposits in public lands in the Philippine Islands, both surveyed andunsurveyed to be free and open to exploration, occupation, and purchase, and the land in which they are

found to occupation and purchase by citizens of the United States, or of Philippine Islands.

The holder of the mineral claims so located is entitled to all the minerals which may lie within his claim,but he may not mine outside the boundary lines of his claims.

One of the continuing requirements for the subsistence of the mining claim is performance of not lessthan one hundred dollars worth oflabour or undertaking of improvements of the same value every year.

The locators failure to comply with which shall operate to open the claim or mine to relocation in thesame manner as if no location of the same had even been made.

3. ACT 624

The Regalian Doctrine was still recognized. The disposition of minerals of the public domain was reserved to the State. They were not open to exploration, occupation, and exploitation except only to citizens of the United

States and of the Philippines.

It prescribed regulations to govern the location and the manner of recording mining claims and theamount of work necessary to hold possession thereof.

Such regulations reinforced the annual work or labour requirement of not less than one hundred dollarsworth.

4. COMMONWEALTH CONSTITUTION

It declared all natural resources of the Philippines, including mineral lands and minerals, to be propertybelonging to the State.


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However, not really all of the Philippines natural resources were considered part of the public domain.5. CA No. 137 or Mining Act

It expressly adopted the Regalian Doctrine following the provisions of the 1935 Constitution. It granted only lease rights to mining claimants who are proscribed from purchasing the mining claim

itself.

The said provisions of Mining Act were expressly inapplicable to mining claimants who had located andrecorded their claims under the Philippine Bill of 1902.

6. EO 141

It established the status of such unpatented mining claims which have not complied with the annual work

requirement, as having been abandoned and open for relocation, their declarations of location being accordingly

cancelled.

7. PD 463

It declared that all mineral deposits in public or private lands belong to the State, inalienable andimprescriptively.

It recognized whatever rights or reservations had already been existing with respect to certain mininglands, apparently alluding to the rights of mining claim holders under the Philippine Bill of 1902.

The possessory rights of mining claim holders under the Philippine Bill of 1902 remained effective for aslong as said holders complied with the actual work requirement.

8. PD 1214

It required all the holders of unpatented mining claims to secure mining lease contracts under PD 463. Holders of subsisting and valid patentable mining claims located under the Philippine Bill of 1902 were to

file mining lease applications therefor within one year from the effectivity of the said decree.

The filing of such mining lease applications was considered a waiver of the holders rights to the issuanceof mining patents for their claims.

Non-filing of applications for mining lease by the holders thereof within one-year period would cause theforfeiture of all their rights to their claims.

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REPUBLIC ACT No. 7942 OR THE PHILIPPINE MINING ACT OF 1995

It was enacted instituting a new system for the exploration, development, utilization and conservation ofthe natural resources of the country.

It defines the modes of agreements for mining operations, outlines the procedure for the filing andapproval, assignment or transfer and withdrawal and fixes their terms.

1Atok Big-Wedge Mining Co. v. Intermediate Appellate Court, G.R. No. 63528,Sept. 9, 1996,261 SCRA 528


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DENR ADMINISTRATIVE ORDER 96-40

Revised Implementing Rules and Regulations of Republic Act No. 7942 Otherwise Known as the Philippine Mining Act of

19952

Declaration of Policy

All minerals are owned by the State 3 To promote rational exploration, development, utilization and conservation Role of government and private sector To enhance national growth that effectively safeguards the environment and protect the rights of affected

communities4

Governing principle per DAO 96-40

Sustainable development Improving the total quality of life Principle of sustainable mining Pro-environment and pro-people mining Mining is temporary land use Optimum land use Progressive and engineered mine rehabilitation Current best practices Wealth-generating opportunities Environment-responsible endeavours Mining activities must be in accord with state policies.

IMPORTANT CONCEPTS

ANCESTRAL LANDS refers to all lands, exclusively and actually possessed, occupied, or utilized by indigenous cultural

communities by themselves or through their ancestors in accordance with their customs and traditions since timeimmemorial, and as may be defined and delineated by law.

BLOCK OR MERIDIONAL BLOCK means an area bounded by one-half (1/2) minute of latitude and one-half (1/2) minute of

longitude, containing approximately eighty-one hectares (81 has.).

2 La Bugal-Blaan Tribal Association, Inc. v. Ramos, GR No. 127882, Jan. 27,2004, 421 SCRA 148, per J. Carpio-Morales3Sec. 2, RA No. 7942.

4Sec. 1, Chapter 1, Title XIV, EO No. 292


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CARRYING CAPACITY refers to the capacity of natural and human environments to accommodate and absorb change

without experiencing conditions of instability and attendant degradation.

CONTIGUOUS ZONE refers to water, sea bottom and substratum measured twenty-four nautical miles (24 n.m.) seaward

from base line of the Philippine archipelago.

CONTRACT AREA means land or body of water delineated for purposes of exploration, development, or utilization of the

minerals found therein.

CONTRACTOR means a qualified person acting alone or in consortium who is a party to a mineral agreement or to a

financial or technical assistance agreement.

CO-PRODUCTION AGREEMENT (CA) means an agreement entered into between the Government and one or more

contractors in accordance with Section 26(b) hereof.

ECOLOGICAL PROFILE OR ECO-PROFILE refers to geographic-based instruments for planners and decision-makers which

presents an evaluation of the environmental quality and carrying capacity of an area.

ENVIROMENTAL COMPLIANCE CERTIFICATE (ECC) refers to the document issued by the government agency concerned

certifying that the project under consideration will not bring about an unacceptable environmental impact and that the

proponent has complied with the requirements of the environmental impact statement system.

ENVIRONMENTAL IMPACT STATEMENT (EIS) is the document which aims to identify, predict, interpret, and communicate

information regarding changes in environmental quality associated with a proposed project and which examines the range

of alternatives for the objectives of the proposal and their impact on the environment.

EXCLUSIVE ECONOMIC ZONE means the water, sea bottom and subsurface measured from the baseline of the Philippine

archipelago up to two hundred nautical miles (200 n.m.) offshore.

EXISTING MINING/QUARRYING RIGHT means a valid and subsisting mining claim or permit or quarry permit or any mining

lease contract or agreement covering a mineralized area granted/issued under pertinent mining laws.

EXPLORATION means the searching or prospecting for mineral resources by geological, geochemical or geophysical surveys,

remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining

the existence, extent, quantity and quality thereof and the feasibility of mining them for profit.

FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT means a contract involving financial or technical assistance for large-

scale exploration, development, and utilization of mineral resources.

FOREIGN-OWNED CORPORATION means any corporation, partnership, association, or cooperative duly registered in

accordance with law in which less than fifty per centum (50%) of the capital is owned by Filipino citizens.

GROSS OUTPUT means the actual market value of minerals or mineral products from its mining area as defined in the

National Internal Revenue Code.

INDIGENOUS CULTURAL COMMUNITY means a group or tribe of indigenous Filipinos who have continuously lived as

communities on communally-bounded and defined land since time immemorial and have succeeded in preserving,

maintaining, and sharing common bonds of languages, customs, traditions, and other distinctive cultural traits, and as may

be defined and delineated by law.


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JOINT VENTURE AGREEMENT (JVA) means an agreement entered into between the Government and one or more

contractors in accordance with Section 26(c) hereof.

MINERALS refers to all naturally occurring inorganic substance in solid, gas, liquid, or any intermediate state excluding

energy materials such as coal, petroleum, natural gas, radioactive materials, and geothermal energy.

MINERAL AGREEMENT means a contract between the government and a contractor, involving mineral production-sharing

agreement, co-production agreement, or joint-venture agreement.

MINERAL LAND means any area where mineral resources are found.

MINERAL RESOURCE means any concentration of minerals/rocks with potential economic value.

MINING AREA means a portion of the contract area identified by the contractor for purposes of development, mining,

utilization, and sites for support facilities or in the immediate vicinity of the mining operations.

MINING OPERATION means mining activities involving exploration, feasibility, development, utilization, and processing.

OFFSHORE means the water, sea bottom, and subsurface from the shore or coastline reckoned from the mean low tide

level up to the two hundred nautical miles (200 n.m.) exclusive economic zone including the archipelagic sea and

contiguous zone.

ONSHORE means the landward side from the mean tide elevation, including submerged lands in lakes, rivers and creeks.

PERMITTEE means the holder of an exploration permit.

POLLUTION CONTROL AND INFRASTRUCTURE DEVICES refers to infrastructure, machinery, equipment and/or

improvements used for impounding, treating or neutralizing, precipitating, filtering, conveying and cleansing mine industria

waste and tailings as well as eliminating or reducing hazardous effects of solid particles, chemicals, liquids or other harmful

by products and gases emitted from any facility utilized in mining operations for their disposal.

PRIVATE LAND refers to any land belonging to any private person which includes alienable and disposable land being

claimed by a holder, claimant, or occupant who has already acquired a vested right thereto under the law, although the

corresponding certificate or evidence of title or patent has not been actually issued.

QUALIFIED PERSON means any citizen of the Philippines with capacity to contract, or a corporation, partnership,

association, or cooperative organized or authorized for the purpose of engaging in mining, with technical and financial

capability to undertake mineral resources development and duly registered in accordance with law at least sixty per cent

(60%) of the capital of which is owned by citizens of the Philippines: Provided, That a legally organized foreign-owned

corporation shall be deemed a qualified person for purposes of granting an exploration permit, financial or technical

assistance agreement or mineral processing permit.

QUARRYING means the process of extracting, removing and disposing quarry resources found on or underneath the surface

of private or public land.

QUARRY PERMIT means a document granted to a qualified person for the extraction and utilization of quarry resources on

public or private lands.

QUARRY RESOURCES refers to any common rock or other mineral substances as the Director of Mines and Geosciences

Bureau may declare to be quarry resources such as, but not limited to, andesite, basalt, conglomerate, coral sand,


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diatomaceous earth, diorite, decorative stones, gabbro, granite, limestone, marble, marl, red burning clays for potteries

and bricks, rhyolite, rock phosphate, sandstone, serpentine, shale, tuff, volcanic cinders, and volcanic glass: Provided, That

such quarry resources do not contain metals or metallic constituents and/or other valuable minerals in economically

workable quantities: Provided, further, That non-metallic minerals such as kaolin, feldspar, bullquartz, quartz or silica, sand

and pebbles, bentonite, talc, asbestos, barite, gypsum, bauxite, magnesite, dolomite, mica, precious and semi-precious

stones, and other non-metallic minerals that may later be discovered and which the Director declares the same to be ofeconomically workable quantities, shall not be classified under the category of quarry resources.

5

IMPORTANT FEATURES

1. non-impairment of existing mining / quarrying rights 2. recognition of valid and existing mining claims and lease / quarry applications

I. Organisational Structure

a) Primary Agency

The Department of Natural Resources (DENR) shall be the primary agency responsible for the observation,

management, development, and proper use of the States mineral resources including those in reservations,

watershed areas, and lands of public dominion. The Secretary of the DENR shall have the authority to enter in

mineral agreements on behalf of the government upon the recommendation of the Director of the Mines and

Geosciences Bureau (MGB), and promulgate such rules and regulations in order to implement the intent and

provisions of RA 7942.

The Secretary of the DENR has rule-making authority pursuant to RA 7942. Such rule-making power was

sustained by the Supreme Court in the Miners Association of the Philippines v. Factoran (G.R. No. 98332, January

16, 1995, 240 SCRA 100). In the said case, the Supreme Court held that DENR Administrative Order No. 57 (DAO

No. 57) applies to all existing mining leases or agreements which were granted after the effectivity of the 1987

Constitution. The exploration, development and utilisation of the countys natural resources are vital to the public

interest and general welfare of the people. Hence, it is subject to alterations by the State in the exercise of its

police powers. Thus, the constitutional restriction on non-impairment of contracts and obligations cannot

preclude the State from altering, modifying, or amending mining leases or agreements.

b) Authority of the Mines and Geosciences Bureau (MGB)

The MGB shall advise the Secretary of the DENR on matters pertaining to geology and mineral resources

exploration, development, utilisation and conservation.6

Hence, the MGB shall have the following authority,

among others:

a. To have direct charge in the administration and disposition of mineral lands and mineral resources;b. To undertake geological, mining, metallurgical, chemical and other researches, as well as mineral

exploration surveys: provided that, for areas closed to mining applications, the MGB can undertake

studies for purposes of research and development;

c. To confiscate, after due process, surety, performance and guaranty bonds after notice of violation;5Sec. 3, RA No. 7942

6Section 16, Chapter 3, Title XIV, EO No. 292


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d. To recommend to the Secretary of the DENR the granting of Mineral Agreements or to endorse tothe Secretary of the DENR for action by the President to grant FTAAs and to monitor its compliance

by the contractor;

e. To cancel or to recommend cancellation, after due process, mining rights, mining applications andmining claims, for non-compliance with pertinent laws, rules and regulations;

f. To deputise, when necessary, any member or unit of the Philippine National Police (PNP) andbarangay, duly registered and DENR accredited NGO, or any qualified person to police mining

activities;

g. To assist the Environmental Management Bureau (EMB) under the DENR in the conduct ofenvironmental impact assessment in mining projects; and

h. To exercise such other authority vested by RA 7942 and its IRR.The Director of the MGB may delegate such authority and other powers and functions to the Regional

Director. There shall be as much regional offices in the Philippines as may be established by the Secretary of the

DENR, upon recommendation of the Director of the MGB.

The MGB shall establish a mineral resource database system which will include mineral rights management

system, among others. Also, the MGB shall publish a mineral gazette at least once a year containing a current list

of mineral rights, locations, and other mining information relevant to mineral resources development.

c) Quasi-Judicial Powers of the Mines and Geosciences Bureau (MGB)

The MGB as provided for by PD 2181 has exclusive and original jurisdiction to hear and decide cases

involving the cancellation and/or enforcement of mining contracts due to refusal of the claimowner/operator to

abide by the terms and conditions thereof. The adjudication of mining cases is a purely administrative matter. Thecourts do not have the competence to decide matters concerning activities relative to the exploration, exploitation

development and extraction of mineral resources. Hence, with respect to purely administrative matters, the

courts cannot interfere. However, the determination of whether or not a contract is void or voidable is a judicial

question and decisions on administrative matters falling under executive jurisdiction can be set aside by the courts

if there is proof of grave abuse of discretion, fraud or error of law.

d) Role of the Local Government

The local government shall have the following roles in mining projects within their respective jurisdictions

which are subject to RA 7942, pursuant to the Local Government Code and other pertinent laws:

a. Ensure public consultation and participation;b. Approve applications for small-scale mining in coordination with Bureau/Regional Office(s);c. Receive shares from the wealth generated by mineral resources;d. Facilitate community decision-making on social acceptability of the project;e. Participate as a member of the Multipartite Monitoring Team;


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f. Participate as a member of the Mine Rehabilitation Fund (MRF) Committee;g. Receive social infrastructure and community development projects for the host and neighboring

communities;

h. Mediate between Indigenous Cultural Centers and Contractor(s) as may be requested;i. Coordinate with the Department and Bureau in implementing the Act and IRR, except that in areas

covered by the Southern Philippines Council for Peace and Development, Autonomous Region of

Muslim Mindanao and future similar units, their appropriate offices shall coordinate with the

Department and Bureau; and

j. Perform other powers and functions under applicable laws, rules, and regulations.7II. Scope of Application

a) Areas Open to Mining

Subject to any mining rights or reservations and prior agreements of all parties, all mineral resources in

public or private lands shall be open to mineral agreements or financial or technical assistance agreement

applications. Any conflict that may arise shall be heard and resolved by the panel of arbitrators.

b) Areas Closed to Mining

Mineral agreement or Financial or Technical Assistance Agreement Applications (FTAA) that shall not be

allowed:

i. In military and other government reservations, except upon prior written clearance by the governmentagency concerned;

ii. Near or under public or private buildings, commentaries, archaeological and historic sites, bridges,highways, waterways, railroads, reservoirs, dams or other infrastructure projects, private or public works

including plantations or valuable crops, except upon written consent of the government agency or private

entity concerned and upon validation of the MGB;

iii. In areas covered by valid and existing mining rights;iv. In areas expressly provided for by law;v. In areas covered by small-scale mining as defined by law unless prior consent of the small-scale miners, in

which case a royalty payment upon utilisation of minerals shall be agreed upon by the parties, and said

royalty forming a trust fund for the socioeconomic development of the community concerned;

vi. Old growth or virgin forests, proclaimed watershed forest reserves, wilderness area, mangrove forests,mossy forests, national parks, provincial/municipal forests, parks, greenbelts, game refuge and bird

7Section 8, DAO No. 96-40


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sanctuaries as defined by law and in areas expressly prohibited under the National Integrated Protected

Area System (NIPAS).

The following areas may be opened for mining applications, the approval of which is subject to certain

conditions which are as follows:

i. Areas covered by FTAA which shall be opened for quarry resources mining applications pursuant to RA7942, Section 53

8upon written consent of the FTAA applicants provided that, sand and gravel permit

applications shall not require consent from the FTAA, Exploration Permit, or Mineral Agreement applicant

except for Mineral agreement or Exploration Permit applications covering sand, gravel, or alluvial gold

and that the Director of the MGB shall formulate necessary guidelines to govern aforementioned

provision;

ii. DENR Project Areas upon prior consent from the concerned agency9; andiii. No ancestral land shall be opened for mining operations without prior consent of the indigenous cultural

community concerned.

III. Concept of Exploration

a) Exploration Permit

As exploration permit grants the right to conduct exploration for all minerals in specified areas. The MGB

shall have the authority to grant an exploration permit to a qualified person.10

Exploration activities may be directly undertaken by the DENR or by a qualified person in specified areas

as determined by the Secretary of the DENR. However, the conduct of mineral exploration by a qualified person in

all areas open to mining shall be initially undertaken through an exploration permit, subject to the provisions onthe FTAA.

In case an immediate technical study of an area is necessary, the DENR or any of its authorised

agencies/instrumentalities, and exploration permit applicant may enter into a memorandum of agreement to

jointly undertake the study.

b) Section 3(aq) of RA No. 7942 is not Unconstitutional

An exploration permit merely grants a qualified person the right to conduct exploration for all minerals in

specified areas. As such, the permit does not amount to an authorisation to extract and carry off the mineral

resources that may be discovered. Thus, the State risks nothing and loses nothing by granting the exploration

8A permit specifying the origin and quantity of non-processed mineral ores or minerals shall be required for their transport. Transport permits shall be

issued by the mines regional director who has jurisdiction over the area where the ores were extracted. In the case of mineral ores or minerals being

transported from the small-scale mining areas to the custom mills or processing plants, the Provincial Mining Regulatory Board (PMRB) concerned shall

formulate their own policies to govern such transport of ores produced by small-scale miners. The absence of a permit shall be considered asprimafacie

evidence of illegal mining and shall be sufficient cause for the Government to confiscate the ores or minerals being transported, the tools and equipment

utilized, and the vehicle containing the same. Ore samples not exceeding two metric tons (2 m.t.) to be used exclusively for assay or p ilot test purposes

shall be exempted from such requirement.9Section 15, Consolidated Implementing Rules and Regulations of RA No. 7942 (CIRR)

10Section 20, RA No.7942


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permits to local or foreign firms. In fact, the State stands to gain from the data gathered in the exploration

activities.

In La Bugal-Blaan Tribal Association v. Ramos11

, the Supreme Coured held that while the Constitution

mandates the State to exercise full control and supervision over the exploitation of mineral resources, nowhere

does it require the government to hold all exploration permits and similar authorisations. In fact, there is no

prohibition at all against foreign or local corporations or contractors to hold exploration permits.

c) Persons Qualified to Apply for a Exploration Permit

The qualifications are as follows:

i. Any Filipino citizen of legal age and with capacity to contract;ii. A Filipino-owned Corporation, Partnership, Association or Cooperative, at least sixty percent

(60%) of the capital is owned by Filipino citizens, organized or authorized for the purpose of

engaging in mining with technical and financial capability to undertake mineral resourcesdevelopment and duly registered in accordance with the law; or

iii. A foreign-owned Corporation, Partnership, Association or Cooperative duly registered inaccordance with law and in which less than fifty percent (50%) of the capital is owned by Filipino

citizens.

d) Term of Exploration Permit

The term of an exploration permit shall be for two (2) years from date of issuance, renewable for like

periods but not exceeding a total term of four (4) years for non-metallic mineral exploration or six (6) years for

metallic mineral exploration, provided that the permitee has complied with the terms and conditions of the

exploration permit and that the permitee has not been found guilty of violating the provisions of RA 7942 includingits CIRR. Furthermore, the conduct of a feasibility study and filing of the declaration of mining project feasibility

shall be undertaken during the term of the exploration permit.

e) Transfer of Exploration Permit

The exploration permit may to transferred or assigned to another person or entity who is qualified but

subject to the approval of the Secretary of the DENR as provided for in Section 25, RA No.7942. Said provision is a

safeguard from the permit from being transferred to another person or entity that might not be qualified and as

such prevents the circumvention of the law.

11GR No. 127882, December 1, 2004, 445 SCRA 1


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f) Maximum Area

The maximum area that a qualified person or entity may hold at any time shall be:

g) Rights and Obligations of the Permitee

The permittee, his heirs or successors-in-interest shall have the right to enter, occupy and explore the

permit area. If private or other parties are affected, the permittee shall first discuss with the said parties the

extent, necessity, and manner of his entry, occupation and exploration and in case of disagreement, a panel of

arbitrators shall resolve the conflict or disagreement.

The permittee shall undertake an exploration work on the area as specified by its permit based on an

approved work program.

The permittee may apply for a mineral production sharing agreement, joint venture agreement, co-

production agreement or financial or technical assistance agreement over the permit area, which application shall

be granted if the permittee meets the necessary qualifications and the terms and conditions of any suchagreement. However the exploration period covered by the exploration permit shall be included as part of the

exploration period of the mineral agreement or financial or technical assistance agreement.12

h) Terms and Conditions of Exploration Permit

An exploration permit shall contain the following terms and conditions:

i. The right to explore shall be subject to valid, prior and existing rights of any party(ies) withinthe subject area;

ii. The Permit shall be for the exclusive use and benefit of the permittee or its duly authorizedrepresentative and, shall under no circumstances, be used by the permittee for purposes other

than exploration;iii. The term of the Permit shall be for a period of two (2) years from date of issuance thereof,

renewable for like periods but not to exceed a total term of six (6) years for nonmetallic

minerals exploration or eight (8) years for metallic minerals exploration: Provided, that no

renewal of Permit shall be allowed unless the permittee has complied with the terms and

conditions of the Permit and has not been found guilty of violation of any provision of the Act

and these implementing rules and regulations: Provided, further, that in cases where further

12Section 23, RA 7942


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exploration is warranted and on condition that the permittee has substantially implemented

the Exploration and Environmental Work Programs as verified by the Bureau/concerned

Regional Office, the Secretary may further grant renewal of the Exploration Permit: Provided,

furthermore, that the permittee shall be required to set up a performance surety equivalent to

the expenditure requirement of the Exploration and Environmental Work Programs: Provided,finally, That the conduct of feasibility studies shall be included during the term of the

Exploration Permit;

iv. The permittee shall submit to the Bureau/concerned Regional Office within thirty (30) calendardays after the end of each semester a report under oath of the Exploration Work Program

implementation and expenditures showing discrepancies/deviations including the results of

the survey, labouratory reports, geological reports/maps subject to semi-annual inspection and

verification by the Bureau/concerned Regional Office at the expense of the permittee:

Provided, That any expenditure in excess of the yearly budget of the approved Exploration

Work Program may be carried forward and credited to the succeeding years covering the

duration of the Permit;

v. The permittee shall submit to the Bureau/concerned Regional Office within thirty (30) calendardays from the end of six (6) months after the approval of the Environmental Work Program

(EWP) and every six (6) months thereafter a status report on its compliance with the said EWP;

vi. The permittee shall annually relinquish at least 20% of the permit area during the first two (2)years of exploration and at least 10% of the remaining permit area annually during the

extended exploration period. However, if the permit area is less than five thousand (5,000)

hectares, the permittee need not relinquish any part thereof. A separate report of

relinquishment shall be submitted to the Bureau/concerned Regional Office with a detailed

geologic report of the relinquished area accompanied by maps at a scale of 1:50,000 and

results of analyses and corresponding expenditures, among others. The minimum exploration

expenditures for the remaining area after relinquishment shall be based on the approved

Exploration Work Program;vii. The Secretary of the DENR or his/her duly authorized representative shall annually review the

performance of the permittee;

viii. The permittee shall submit to the Bureau/concerned Regional Office a final report upon theexpiration or relinquishment of the Permit or its conversion into Mineral Agreement or FTAA in

a form and substance comparable to published reports of respected international

organizations and shall incorporate all the findings in the permit area, including locations of

samples, assays, chemical analyses and assessment of the mineral potential. Such report shall

include complete detailed expenditures incurred during the exploration;

ix. In case of diamond drilling, the permittee shall, upon request of the Director/concernedRegional Director, submit to the Bureau/concerned Regional Office a quarter of the core

samples which shall be deposited in the Bureau/concerned Regional Office Core Library forreference and safekeeping;

x. Offshore exploration activities shall be carried out in accordance with the United NationsConvention on the Law of the Sea (UNCLOS) and in a manner that will not adversely affect the

safety of navigation at sea and will ensure accommodation with other marine activities such as

fishing, aquaculture, transportation, etc.;

xi. Onshore exploration activities shall be carried out in a manner that will, at all times, safeguardthe environment;


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xii. If the permittee applies for a Mineral Agreement or FTAA over the permit area, the explorationperiod covered by the Exploration Permit shall be considered as the exploration period of the

Mineral Agreement or FTAA;

xiii. The permittee shall comply with pertinent provisions of the Act and these implementing rulesand regulations; and

xiv. Other terms and conditions which the Bureau/concerned Regional Office may deemappropriate.

13

i) Registration of Exploration Permit

Upon evaluation that all the terms and conditions and all pertinent requirements are in order and that the

subject area has been cleared from any conflict, the Director shall approve and issue the Exploration Permit, and

the permittee shall cause the registration of the same to the Bureau/Regional Office concerned within fifteen (15)

working days from receipt of the written notice and upon payment of the required fees provided, that if all the

mandatory and otherrequirements have been complied with and the Exploration Permit application is still

awaiting approval five (5) months after its date of filing, the said Exploration Permit application, upon submission

of an affidavit by the applicant attesting to the full compliance with all the pertinent requirements, shall be

deemed approved and the Director of the MGB shall issue the Exploration Permit within five (5) working days from

receipt of said affidavit, for registration and release. This is without prejudice to the DENR undertaking the

necessary investigation to determine any liability as to the non-issuance of the Exploration Permit within the

prescribed period. Furthermore, the permittee shall comply with the required consultation with the Sanggunian

concerned pursuant to the pertinent provisions of RA No. 7160, The Local Government Code, prior to the

implementation of the Exploration Work Program.14

j) Exploration Permit Revokable

The exploration, development and utilization of the countrys natural mineral resources are matters

impressed with great public interest. Like timber permits, mining exploration permits do not vest in the grantee

any permanent or irrevocable right within the purview of the non-impairment of contract and due process clauses

of the Constitution, since the State, under its all-encompassing police power, may alter, modify or amend the same

in accordance with the demands of the general welfare.15

A mining license, being a mere privilege, does not vest absolute rights in the holder. Thus, without

offending the due process and the non-impairment clauses of the Constitution, it can be revoked by the State in

the public interest.16

MINERAL AGREEMENT

What is a Mineral Agreement?

A Mineral Agreement is an agreement between a Contractor and the Government wherein the Government grants

to the Contractor the exclusive right to conduct mining operations within, but not title over, the contract area. Mining

13Section 22, CIRR, as amended by Section 4, DAO No. 99-57, Section 3, DAO No. 2003-46 and further by Sections 5 and 6, DAO No. 2005-15

14Section 23, CIRR, as amended by Section 7, DAO No. 2005--15

15Southeast Mindanao Gold Mining Corporation v. Balite Portal Mining Cooperative, G.R. No. 135190, April 3, 2002, 380 SCRA 145

16Republic of the Philippines v. Rosemoor Mining and Development Corporation, G.R. No. 149927, March 30, 2004, 426 SCRA 517


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operations that are allowed under Mineral Agreements include development/construction and utilization of minera

resources including the continuance of exploration works during the conduct of development/construction/utilization

activities. Mineral Agreements are classified into:

1) Mineral Production Sharing Agreement (MPSA) - a mineral agreement wherein Government shares in theproduction of the Contractor, whether in kind or in value, as owner of the minerals. In return, the Contractorshall provide the necessary financing, technology, management and personnel for the mining project.

2) Co-Production Agreement (CA) - a mineral agreement wherein the Government provides inputs to the miningoperations other than the mineral resources; and

3) Joint Venture Agreement (JVA) - a mineral agreement wherein the Government and the Contractor organize ajoint venture company with both parties having equity shares. For its share, the Government is entitled to a

share in the gross output of the mining project aside from its earnings in the equity of the company.

Who is qualified to apply for a Mineral Agreement?

The following Qualified Person may apply for a Mineral Agreement:

(1) Individual - a Filipino citizen of legal age and with capacity to contract; or(2) Corporation, Partnership, Association or Cooperative - organized or authorized for the purpose of

engaging in mining, duly registered in accordance with law, at least sixty percent (60%) of the capital

of which is owned by Filipino citizens.

How much area is granted for a Mineral Agreement?

Each Qualified Person is limited to the following maximum size of area17

to apply for or hold at any one time under

a Mineral Agreement:

I. Onshore

2. For metallic minerals Individual - Eight Hundred Ten (810) hectares Corporation/ Partnership/ Association/Cooperative - Five Thousand (5,000) hectares

3. For non-metallic minerals except for those in item nos. 3, 4, and 5 Individual - Eight Hundred Ten (810) hectares Corporation/ Partnership/ Association/Cooperative - Two Thousand (2,000) hectares

4. For sand and gravel Individual - Twenty (20) hectares Corporation/ Partnership/ Association/Cooperative - Fifty (50) hectares

17Section 28, Chapter V, RA 7942


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4. For marble, granite and construction aggregates Individual - Fifty (50) hectares Corporation/ Partnership/ Association/Cooperative - One Hundred (100) hectares

5. For cement raw materials such as limestone, shale and limestone Individual - Five Hundred (500) hectares Corporation/ Partnership/ Association/Cooperative - One Thousand (1000) hectares

II. Offshore

1. For metallic minerals - Five Thousand (5,000) hectares2. For non-metallic minerals - Two Thousand (2,000) hectares

What is the term of a Mineral Agreement?

A Mineral Agreement shall have a term not exceeding twenty-five (25) years from the date of its execution, and

renewable for another term not exceeding twenty-five (25) years under the same terms and conditions, without prejudice

to changes mutually agreed upon by the Government and the Contractor.

After the 50 year term of the Mineral Agreement, the operation of the mine may be undertaken by the

Government or through a Contractor. The contract for the operation of a mine will be awarded to the highest bidder in a

public bidding after due publication of the notice thereof. However, the original Contractor shall have the right to equal the

highest bid upon reimbursement of all reasonable expenses of the highest bidder18

.

What are the mandatory requirements19

in the acceptance of an MPSA application?

An MPSA application shall be filed in the Mines and Geosciences Bureau (MGB) Regional Office (RO) concerned, for

mineral and non-mineral reservation areas, using the prescribed form (MGB Form No. 06-1) through payment of the filing

fee and submission of five (5) sets of the following mandatory requirements:

a. For an individual Location map/sketch plan of the proposed contract area showing its geographic coordinates/meridional block(s)

and boundaries in relation to major environmental features and other projects using a NAMRIA topographic map

in a scale of 1:50,000 duly prepared, signed and sealed by a deputized Geodetic Engineer;

Three-year Development/Utilization Work Program (MGB Form No. 6-2) duly prepared, signed and sealed by alicensed Mining Engineer or Geologist;

Proof of technical competence, including, among others, curricula vitae and track records in mining operations andenvironmental management of the technical personnel who shall undertake the activities in accordance with the

submitted Development/Utilization Work Program;

18Section 32, Chapter V, RA 7942

19Primer on Application for Mineral Agreements (http://www.mgb.gov.ph)


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Proof of financial capability to undertake the activities pursuant to the Development/Utilization Work Program,such as a copy of the income tax return for the preceding year and proof of bank deposit or credit line in the

amount of at least Two Million Five Hundred Thousand Pesos (PhP2,500,000.00);

Mining Project Feasibility Study (MGB Form No. 5-3); and Complete and final exploration report pertaining to the area.

b) For a corporation, partnership, association or cooperative - Duly certified Certificate of Registration, Articles of Incorporation/Partnership/Association and By-Laws issued by

the Securities and Exchange Commission or authorized Government agency concerned, or Certification from the

Bureau/Regional Office concerned that the said documents are duly registered in that Office;

Location map/sketch plan of the proposed contract area showing its geographic coordinates/meridional block(s)and boundaries in relation to major environmental features and other projects using a NAMRIA topographic map


Three-year Development/Utilization Work Program (MGB Form No. 6-2) duly prepared, signed and sealed by alicensed Mining Engineer or Geologist;


submitted Development/Utilization Work Program;

Proof of financial capability to undertake the activities pursuant to the Development/Utilization Work Program,such as latest audited financial statement and, where applicable, Annual Report for the preceding year, credit

line(s), bank guarantee(s) and/or similar negotiable instruments;

Affidavit of Undertaking for corporation, partnership, association or cooperatives (Annex A of DENR MemorandumOrder No. 99-10) declaring:

5. The list of applications filed and the Mining Permit(s)/Contract(s) granted to the applicants, including thecorresponding hectarage and location of the areas, disaggregated on a per province basis; and

6. The list of other Applicant(s)/Contractor(s)/Permittee(s) in which more than seventy percent (70%) of theauthorized capital stock is held by stockholders of the applicant, including the corresponding hectarage,

disaggregated on a per province basis.

Mining Project Feasibility Study (MGB Form No. 5-3); and Complete and final exploration report pertaining to the area.

c. For holders of valid and existing mining lease contracts, operating agreements, Quarry Permits/licenses or unperfected

mining/quarry claims, the following are additional requirements to the above requirements, whenever applicable:

Certification from the Regional Office concerned that the mining/quarry claims are valid and subsisting; Appropriate environmental report on the rehabilitation of mined-out and/or mine waste/tailings-covered areas

and anti-pollution measures undertaken during the mining operations;

Environmental Compliance Certificate (ECC) for any new phase outside of the originally approved operation underthe mining project;


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Mining Project Feasibility Study (MGB Form No. 5-3): Provided, That a Mineral Agreement applicant with existingmining operation may submit, in lieu of the Mining Project Feasibility Study, a Project Description and a detailed

financial statement of its operations incorporating therein the social and environmental expenditures, taxes and

fees paid (MGB Form No. 5-3A); and

Approved survey plan of the mining area.Please note that any application with incomplete mandatory requirements shall not be accepted.

What are the other additional requirements after an MPSA application is filed?

The following additional requirements shall be submitted after the acceptance of the application but prior to the

issuance of the Mineral Agreement:

Environmental Compliance Certificate (ECC); Environmental Protection and Enhancement Program(MGB Form No. 16-2); Certificate of Environmental Management and Community Relations Record (CEMCRR)/Certificate of Exemption

and Approved survey plan;

Certification Precondition from the National Commission on Indigenous Peoples attesting that a. The proposed permit area does not overlap any ancestral land/domain claim in case of non-

Indigenous People (IP) area; or

b. The Free and Prior Informed Consent (FPIC) has been issued by the Indigenous CulturaCommunity (ICC)/IP concerned.

For OFFSHORE applications, the following additional requirements shall be submitted:

Name, port of registry, tonnage, type and class of survey vessel(s) or platform(s). If a foreign vessel is to be used,the expected date of first entry or appearance and final departure of the survey vessel shall be provided and the

necessary clearances obtained

A certification from the Coast and Geodetic Survey Department of NAMRIA that the proposed Exploration WorkProgram was duly registered to provide update in the publication of Notice to Mariners together with a list of

safety measures to be regularly undertaken to ensure the safety of navigation at sea and prevent accident

An agreement to:1. Properly identify all installations, vessels and other crafts involved in exploration recognizable to

all vessels within reasonable distance;

2. Notify the Bureau 30 calendar days prior to the intention to remove all scientific installations oequipment and apparatus; and

3. Allow the Bureaus authorized personnel, the Philippine Coast Guard and other authorizedpersons during reasonable hours to board the vessel(s) while within the Exclusive Economic

Zone.


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Other supporting documents that may be required by the Mines and Geosciences Bureau.


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MINERAL AGREEMENT PROCESS FLOWCHART


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FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT (FTAA)

What is a financial or technical assistance agreement (FTAA)?

A Financial or Technical Assistance Agreement may be entered into between a Contractor and the Government fo

the large-scale exploration, development and utilization of gold, copper, nickel, chromite, lead, zinc and other mineralsexcept for cement raw materials, marble, granite, sand and gravel and construction aggregates.

Who is qualified to apply for an FTAA?

The following Qualified Person may apply for an FTAA:

(a) Any Filipino citizen of legal age and with capacity to contract;(b) A Filipino-owned Corporation, Partnership, Association or Cooperative, at least sixty percent (60%) of the

capital is owned by Filipino citizens, organized or authorized for the purpose of engaging in mining with

technical and financial capability to undertake mineral resources development and duly registered in

accordance with the law; or

(c) A Foreign-owned Corporation, Partnership, Association or Cooperative duly registered in accordance with lawand in which less than fifty percent (50%) of the capital is owned by Filipino citizens.

How much area is granted for an FTAA?

The maximum FTAA contract areas20

that may be applied for or granted per Qualified Person in the entire Philippines are

the following:

a. One thousand (1,000) meridional blocks or approximately eighty-one thousand (81,000) hectares onshore,b. Four thousand (4,000) meridional blocks or approximately three hundred twenty-four thousand (324,000

hectares offshore or

c. Combination of one thousand (1,000) meridional blocks onshore and four thousand (4,000) meridional blocksoffshore.

What is the term of an FTAA?

An FTAA has a term of twenty-five (25) years from the date of its issuance, and renewable for another term not

exceeding twenty-five (25) years. The following are the phase of mining operations of an FTAA:

a. Exploration - up to two (2) years from date of FTAA execution, extendible for another two (2) years;b. Pre-feasibility study, if warranted - up to two (2) years from expiration of the exploration period;c. Feasibility study - up to two (2) years from the expiration of the exploration/prefeasibility study period or from

declaration of mining project feasibility; and

d. Development, construction and utilization - remaining years of FTAA.

20Section 34, Chapter 6, RA 7942


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What are the mandatory requirements21 in the acceptance of an FTAA application?

An FTAA application shall be filed in the Mines and Geosciences Bureau (MGB)

Regional Office (RO) concerned, for mineral and non-mineral reservation areas, using the prescribed form (MGB Form No

07-1) through payment of the filing fee and submission of eight (8) sets of the FTAA proposal and five (5) sets of the

following:

a. Upon filing of the application, the following mandatory requirements Duly certified Certificate of Registration, Articles of Incorporation and By-Laws issued by the Securities and

Exchange Commission or authorized Government agency(ies) concerned, or Certification from the

Bureau/Regional Office concerned that the said documents are duly registered in that Office;

Location map/sketch plan of the proposed contract area showing its geographic coordinates/meridional block(sand boundaries in relation to major environmental features and other projects using a NAMRIA topographic map


Two-year Exploration Work Program (MGB Form No. 5-4) duly prepared, signed and sealed by a licensed MiningEngineer or Geologist;


submitted Exploration Work Program;

Proof of financial capability to undertake the activities pursuant to the Exploration Work Program, such as latestaudited financial statement and, where applicable, Annual Report for the preceding year, credit line(s), bank

guarantee(s) and/or similar negotiable instruments; and

Affidavit of Undertaking pursuant to DMO No. 99-10, as amended, declaring:1. The list of applications he/she/it has filed and the Mining Permit(s)/Contract(s) granted to him/her/it

including the corresponding hectarage and location of the areas, disaggregated on a per province basis;

and

2. The list of other Applicant(s)/Contractor(s)/Permittee(s) in which more than seventy percent (70%) ofthe authorized capital stock is held by stockholders of the applicant, including the corresponding

hectarage, disaggregated on a per province basis.

Note: Any application with incomplete mandatory requirements shall not be accepted.

b. After the acceptance of the application but prior to the approval of the FTAA: Posting of financial guarantee/performance bond and letter of credit or other forms of negotiable instruments

from any Government-accredited bonding company or financial institution, in favor of the Government upon

notification by the Secretary, which shall be in any foreign currency negotiable with the Bangko Sentral ng Pilipinas

or in Philippine Peso in such amount equivalent to the expenditure obligations of the applicant for any year;

Certificate of Environmental Management and Community Relations Record (CEMCRR)/Certificate of Exemption;21

Primer on Application for Financial and Technical Assistance Agreement (http://www.mgb.gov.ph)


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Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16-1A); Approved survey plan; Environmental Compliance Certificate (ECC); Environmental Protection and Enhancement Program(MGB Form No. 16-2); Social Development and Management Program;

For OFFSHORE applications, the following additional requirements shall be submitted:

Name, port of registry, tonnage, type and class of survey vessel(s) or platform(s) . If a foreign vessel is to be used,the expected date of first entry or appearance and final departure of the survey vessel shall be provided and the

necessary clearances obtained;

A certification from the Coast and Geodetic Survey Department of NAMRIA that the proposed Exploration WorkProgram was duly registered to provide update in the publication of Notice to Mariners together with a list ofsafety measures to regularly undertaken to ensure the safety of navigation at sea and prevent accident;

An agreement to:1. Properly identify all installations, vessels and other crafts involved in exploration recognizable to

all vessels within reasonable distance;

2. Notify the Bureau 30 calendar days prior to the intention to remove all scientific installations oequipment and apparatus; and

3. Allow the Bureaus authorized personnel, the Philippine Coast Guard and other authorizedpersons during reasonable hours to board the vessel(s) while within the Exclusive Economic

Zone.

Certification Precondition from the National Commission on Indigenous Peoples attesting that a. The proposed permit area does not overlap any ancestral land/domain claim in case of non-

Indigenous People (IP) area; or

b. The Free and Prior Informed Consent (FPIC) has been issued by the Indigenous CulturaCommunity (ICC)/IP concerned.

Other supporting documents that may be required by the Mines and Geosciences Bureau.c. After the approval of the FTAA but prior to registration - An authorized capital of at least Four Million U.S. Dollars(US$4,000,000.00) or its Philippine Peso equivalent; andd. In support of the application for approval of the declaration of mining project feasibility

Mining Project Feasibility Study; Three (3)-Year Development/Utilization Work Program;


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submitted Development/Utilization Work Program; and;

Proof of financial capability to undertake the activities pursuant to the Development/Utilization Work Program,such as latest audited financial statement and where applicable, Annual Report for the preceding year, creditline(s), bank guarantee(s) and/or similar negotiable instruments.


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FTAA PROCESS FLOWCHART


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QUARRYING RESOURCES

What are quarrying resources?

Quarrying resources are any common rock or other mineral substances as the Director of Mines and Geosciences

Bureau may declare to be quarry resources such as, but not limited to, andesite, basalt, conglomerate, coral sand

diatomaceous earth, diorite, decorative stones, gabbro, granite, limestone, marble, marl, red burning clays for potteries

and bricks, rhyolite, rock phosphate, sandstone, serpentine, shale, tuff, volcanic cinders, and volcanic glass: Provided, that

such quarry resources do not contain metals or metallic constituents and/or other valuable minerals in economically

workable quantities: Provided, further, That non-metallic minerals such as kaolin, feldspar, bull quartz, quartz or silica, sand

and pebbles, bentonite, talc, asbestos, barite, gypsum, bauxite, magnesite, dolomite, mica, precious and semi-precious

stones, and other non-metallic minerals that may later be discovered and which the Director declares the same to be of

economically workable quantities, shall not be classified under the category of quarry resources22

.

What is a Quarrying Permit?

A quarry permit is a document granted to a qualified person for the extraction and utilization of quarry resources

on public or private lands23

.

Who is qualified to apply for a Quarrying Permit?

Any qualified person may apply.

22Section 3(at) Chapter 1, RA 7942

23Section 3(as) Chapter 1, RA 7942


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How much area is granted for a Quarrying Permit?

The maximum area which a qualified person may hold at any one time shall be five hectares (5 has).

A large-scale quarry operation, including a sand and gravel operation, during the

development/construction/operating period under the mineral agreement, shall involve a mechanized operation and a fina

mining area not exceeding the following:

a. For sand and gravel Individual Twenty (20) hectares Corporation/ Partnership/ Association/Cooperative Fifty (50) hectares

b. For marble, granite, and/or construction aggregates Individual Eighty-one (81) hectares Corporation/ Partnership/ Association/Cooperative Two-hundred forty-three (243) hectares

c. For cement raw materials such as limestone, shale and silica Individual Four-hundred eighty-six (486) hectares Corporation/ Partnership/ Association/Cooperative One thousand four hundred fifty-eight (1,458

hectares

What is the term of a Quarrying Permit?

A quarry permit shall have a term of five (5) years, renewable for like periods but not to exceed a total term otwenty-five (25) years.

* No quarry permit shall be issued or granted on any area covered by a mineral agreement, or financial or

technical assistance agreement.

TRANSPORT, SALE, AND PROCESSING OF MINERALS ORE TRANSPORT PERMIT

A permit specifying the origin and quantity of non-processed mineral ores or minerals shall be required fortheir transport.

The mines regional director, who has jurisdiction over the area where the ores were extracted, has theauthority to issue transport permits.

The Provincial Mining Regulatory Board concerned shall formulate their own policies to govern such transportof ores produced by small-scale miners, in the case of mineral ores or minerals being transported from the

small-scale mining acres to the custom mills or processing plants.


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The absence of a permit shall be aprima facie evidence of illegal mining and shall be sufficient cause for thegovernment to confiscate the ores or minerals being transported, the tools, and equipment utilized, and the

vehicle containing the same.

Ore samples not exceeding two metric tons to be used exclusively for assay or pilot test purposes shall beexempted from such requirement.

24

MINERAL TRADING REGISTRATION

No person shall engage in the trading of mineral products, either locally or internationally, unless registered with

the Department of Trade and Industry and accredited by the Department, with a copy of said registration submitted to the

Bureau.25

MINERALS PROCESSING PERMIT

No person shall engage in the processing of minerals without first securing a minerals processing permit fromthe Secretary,

Minerals processing permit shall be for a period of five (5) years renewable for same periods but not to exceeda total term of twenty-five (25) years.

A foreign-owned or controlled corporation may be granted a mineral processing permit.26SAFETY AND ENVIRONMENTAL PROTECTION

All contractors and permittees shall strictly comply with all the mines safety rules and regulations concerning thesafe and sanitary upkeep of the mining operations and achieve waste-free and efficient mine development

9

Mine Labour: No person under 16 years of age shall be employed in any phase of mining operations and no personunder 18 years of age shall be employed underground in a mine

27

Powers of the Regional Director:4. Conduct mines inspection5. Issue orders requiring the contractor to remedy any practice connected with mining or

quarrying operations which is not in accordance with safety and anti-pollution laws and

regulations

6. Power to summarily suspend the mining or quarrying operations in case of imminentdanger to life or property

28

24Sec. 53, RA No. 7942

25Sec. 54, RA No. 7942

26Sec. 55, RA No. 7942

27Sec. 64, RA No. 7942

28Sec. 67, RA No. 7942


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Every contractor shall undertake an environmental protection and enhancement program covering the period ofthe mineral agreement or permit. Such environmental program shall be incorporated in the work program which

the contractor or permittee shall submit as an accompanying document to the application for a mineral agreement

or permit.

Contents of the Work Program

3. plans relative to mining operations4. rehabilitation, regeneration, revegetation and reforestation of mineralized

areas

5. slope stabilization of mined-out and tailings covered areas, aquaculture,watershed development and water conservation; and,

6. socioeconomic development Need to procure an ECC, after submission of an EIA, except during the exploration period of a mineral agreement

or FTAA

Requirement of rehabilitation. AUXILIARY MINING RIGHTS

the grant of auxiliary mining rights is merely incidental or necessary for the mining operation of a contractor. Itis, however, subject to forestry and water laws, rules and regulations. Under RA 7942 such auxiliary mining

rights are timber and water rights.

Timber rights A contractor may be granted a right to cut trees or timber within his mining area as may be necessary for his

mining operations subject to forestry laws, rules and regulations. The mines regional director has the authority

to determine the volume of the timber needed and the manner of cutting and removal thereof if in an

instance where the land covered by the mining area is already covered by existing timber concessions. Such

authority vested with the mines regional director should be coupled with consultation with the contractor, the

timber concessionaire/permittee and the Forest Management of the Bureau of the Department. Furthermore,

when disagreement arises between the contractor and the timber concessionaire, the matter shall be

submitted to the Secretary whose decision shall be final. The contractor shall perform reforestation work

within his mining area in accordance with forestry laws, rules and regulations.29

Water rights

A contractor shall be granted water rights for mining operations upon approval of the application thereof withthe appropriate government agency in accordance with existing water laws, rules, and regulations. Those

water rights which were already granted or vested through long use, recognized and acknowledge by local

customs, laws, and decisions f courts shall not be impaired. The Government reserves the right to regulate

29Sec. 72, RA No. 7942


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water rights and the reasonable and equitable distribution of water supply so as to prevent the monopoly of

the use thereof.30

Right to possess explosives A contractor or exploration permittee shall have the right to possess and use explosives within his contract or

permit area as maybe necessary for his mining operations upon approval of the application thereof with the

appropriate government agency. The Government reserves the right to regulate and control the explosive

accessories to ensure safe mining operations.31

Easement rights When mining areas are so situated that for purposes of more convenient mining operations it is necessary to

build, construct or install on the mining area or lands owned, occupied or leased by other persons, such as

infrastructure as roads, railroads, mills, waste dump sites, tailing ponds, warehouses, staging or storage areas

and port facilities, tramways, runways, airports, electric transmission, telephone or telegraph lines, dams and

their normal flood and catchment areas, sites for water wells, ditches, canals, new river beds, pipelines,

flumes, cuts, shafts, tunnels, or mills, the contractor upon payment of just compensation shall be entitled to

enter and occupy said mining areas or lands.32

Entry into Private Lands and Concession Areas Subject to prior notification, holders of mining rights shall not be prevented from entry into private lands and

concession areas by surface owners, occupant, or concessionaires when conducting mining operations therein

Any damage done to the property of the surface owner, occupant, or concessionaire as a consequence of such

operations shall be properly compensated as may be provided for in the implementing rules and regulations.

In order to guarantee such compensation, the person authorized to conduct mining operation shall, prior

thereto, post a bond with the regional director based on the type of properties, the prevailing prices in and

around the area where the mining operations are to be conducted, with surety satisfactory to the regional

directors.33

I. Government Share

a. Government Share in Mineral Production Sharing Agreement

The total government share in a mineral production sharing agreement shall be the excise tax on

mineral products as provided in Republic Act No. 7729, amending Section 151(a) of the National Internal

Revenue Code, as amended.

b. Government Share in Other Mineral Agreements

The share of the government in co-production and joint-venture agreements shall be negotiated

by the government and the contractor taking into consideration the following:

30Sec. 73, RA No. 7942

31Sec. 74, RA No. 7942

32Sec. 75, RA No. 7942

33Sec. 76, RA No. 7942


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i. Capital investment of the project;ii. Risks involved;iii. Contribution of the project to the economy; andiv. Other factors that will provide for a fair and equitable sharing between the government

and the contractor.

The government shall also be entitled to compensations for its other contributions which shall be

agreed uponby the parties, and shall consist, among other things, the contractor's foreign stockholders

arising from dividend or interest payments to the said foreign stockholders, in case of a foreign national,

and all such other taxes, duties and fees as provided for under existing laws.

The Government shares in financial or technical assistance agreement shall consist of, among

other things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due

from the contractor's foreign stockholders arising from dividend or interest payments to the said foreign

stockholder in case of a foreign nation al and all such other taxes, duties and fees as provided for under

existing laws.

The collection of Government share in financial or technical assistance agreement shall

commence after the financial or technical assistance agreement contractor has fully recovered its pre-

operating expenses, exploration, and development expenditures, inclusive.

II. Incentives

a. Fiscal and Non-Fiscal Incentives

The contractors in Mineral Agreements and FTAAs shall be entitled to the applicable fiscal and

non-fiscal incentives as provided for under Executive Order No. 226, otherwise known as the Omnibus

Investments Code of 1987, provided that, holders of exploration permits may register with the Board of

Investments and be entitled to the fiscal incentives granted under the said Code for the duration of the

permits or extensions thereof. Provided, further, that mining activities shall always be included in the

investment priorities plan.

b. Incentives for Pollution Control Devices

Pollution control devices acquired, constructed or installed by contractors shall not be

considered as improvements on the land or building where they are placed, and shall not be subject to

real property and other taxes or assessments, provided however that, payment of mine wastes and

tailings fees is not exempted.

c. Investment Guarantees


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The contractor shall be entitled to the basic rights and guarantees provided in the Constitution

and such other rights recognised by the government as enumerated hereunder:

i. Repatriation of investments - The right to repatriate the entire proceeds of theliquidation of the foreign investment in the currency in which the investment was

originally made and at the exchange rate prevailing at the time of repatriation.

ii. Remittance of earnings - The right to remit earnings from the investment in the currencyin which the foreign investment was originally made and at the exchange rate prevailing

at the time of remittance.

iii. Foreign loans and contracts - The right to remit at the exchange rate prevailing at thetime of remittance such sums as may be necessary to meet the payments of interest

and principal on foreign loans and foreign obligations arising from financial or technical

assistance contracts.

iv.

Freedom from expropriation - The right to be free from expropriation by theGovernment of the property represented by investments or loans, or of the property of

the enterprise except for public use or in the interest of national welfare or defense and

upon payment of just compensation. In such cases, foreign investors or enterprises shall

have the right to remit sums received as compensation for the expropriated property in

the currency in which the investment was originally made and at the exchange rate

prevailing at the time of remittance.

v. Confidentiality - Any confidential information supplied by the contractor pursuant tothis Act and its implementing rules and regulations shall be treated as such by the

Department and the Government, and during the term of the project to which it relates.

III. Grounds for Cancellation, Revocation and Termination

a. Late or non-filing of requirements

Failure of the permittee or contractor to comply with any of the requirements provided in this RA

7941 or in its implementing rules and regulations, without a valid reason, shall be sufficient ground from

the suspension of any permit or agreement provided under this RA 7942.

b. Violation of the terms and conditions of permits or agreements

Violations of the terms and conditions of the permits or agreements shall be a sufficient ground

for cancellation of the same.

c. Non-payment of taxes and fees

Failure to pay the taxes and fees due the Government for two (2) consecutive years shall cause

the cancellation of the exploration permit, mineral agreement, financial or technical assistance agreement

and other agreements and the re-opening of the area subject thereof to new applicants.


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d. Suspension or Cancellation of Tax Incentives and Credits

Failure to abide by the terms and conditions of tax incentives and credits shall cause the

suspension or cancellation of said incentives and credits.

e. Falsehood or Omission of Facts in the Statement

All statements made in the exploration permit, mining agreement and financial or technical

assistance shall be considered as conditions and essential parts thereof and any falsehood in said

statements or omission of facts therein which may alter, change or affect substantially the facts set forth

in said statements may cause the revocation and termination of the exploration permit, mining

agreement and financial or technical assistance agreement.

IV. Settlement of Conflicts

a. Panel of Arbitrators

There shall be a panel of arbitrators in the regional office of the DENR composed of three (3)

members, two (2) of whom must be members of the Philippine Bar in good standing and one a licensed

mining engineer or a professional in a related field, and duly designated by the Secretary of the DENR as

recommended by the MGB Director. Those designated as members of the panel shall serve as such in

addition to their work in the DENR without receiving any additional compensation. As much as

practicable, said members shall come from the different bureaus of the DENR in the region. The presiding

officer thereof shall be selected by the drawing of lots. His tenure as presiding officer shall be on a yearly

basis. The members of the panel shall perform their duties and obligations in hearing and deciding cases

until their designation is withdrawn or revoked by the Secretary. Within thirty (30) working days, after

the submission of the case by the parties for decision, the panel shall have exclusive and original

jurisdiction to hear and decide on the following:

i. Disputes involving rights to mining areas;ii. Disputes involving mineral agreements or permits;iii. Disputes involving surface owners, occupants and claimholders/concessionaires; andiv. Disputes pending before the MAB and the DENR at the date of the effectivity of RA 7942

1. Mining Dispute

The settlement of conflicts referred in the provisions in RA 7942 involves rights to

mining areas, mineral agreements, FTAAs, or permits, and those involving surface owners,

occupants and claim-holders/concessionaires. The panel of arbitrators has exclusive and

original jurisdiction to hear and decide on aforementioned disputes. However, the panels

jurisdiction is limited only to mining disputes which raise a question of fact or matters

requiring the application of technological knowledge and experience.

2. Appellate Jurisdiction


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The decision or order of the panel of arbitrators may be appealed by the party not

satisfied thereto to the Mines Adjudication Board within fifteen (15) days from receipt

thereof which must decide the case within thirty (30) days from submission thereof for

decision.

b. Mines Adjudication Board (MAB)

The MAB shall be composed of three (3) members. The Secretary of the DENR shall be the

chairman with the Director of MGB and the Undersecretary for Operations of the DENR as members

thereof. The Board shall have the following powers and functions:

i. To promulgate rules and regulations governing the hearing and disposition of cases before it, aswell as those pertaining to its internal functions, and such rules and regulations as may be

necessary to carry out its functions;

ii. To administer oaths, summon the parties to a controversy, issue subpoenas requiring theattendance and testimony of witnesses or the production of such books, papers, contracts,records, statement of accounts, agreements, and other documents as may be material to a just

determination of the matter under investigation, and to testify in any investigation or hearing

conducted in pursuance of this RA 7942;

iii. To conduct hearings on all matters within its jurisdiction, proceed to hear and determine thedisputes in the absence of any party thereto who has been summoned or served with notice to

appear, conduct its proceedings or any part thereof in public or in private, adjourn its hearings at

any time and place, refer technical matters or accounts to an expert and to accept his report as

evidence after hearing of the parties upon due notice, direct parties to be joined in or excluded

from the proceedings, correct, amend, or waive any error, defect or irregularity, whether in

substance or in form, give all such directions as it may deem necessary or expedient in the

determination of the dispute before it, and dismiss the mining dispute as part thereof, where it is

trivial or where further proceedings by the Board are not necessary or desirable:

1. To hold any person in contempt, directly or indirectly, and imposeappropriate penalties therefor; and

2. To enjoin any or all acts involving or arising from any case pendingbefore it which, if not restrained forthwith, may cause grave or

irreparable damage to any of the parties to the case or seriously affect

social and economic stability.

In any proceeding before the Board, the rules of evidence prevailing in courts of law or equityshall not be controlling and it is the spirit and intention of this Act that shall govern. The MAB shall use all

reasonable means to ascertain the facts in each case speedily and objectively and without regard to

technicalities of law or procedure, all in the interest of due process. In any proceeding before the MAB,

the parties may be represented by legal counsel. The findings of fact of the MAB shall be conclusive and

binding on the parties and its decision or order shall be final and executory.

A petition for review by certiorari and question of law may be filed by the aggrieved party with

the Supreme Court within thirty (30) days from receipt of the order or decision of the Board.


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1. Adjudication of Mining Cases an Administrative Matter

The Supreme Court has recognised a distinction between the primary powers

granted by pertinent provisions of law of an executive or administrative nature, such as

granting of license, permits, lease, or approving, rejecting, reinstating or cancelling

applications, or deciding conflicting applications and controversies or disagreements of civil

or contractual nature between litigants which are questions of a judicial nature that may be

adjudicated only by courts of justice. Hence, findings of fact by the MAB, which exercises

appellate jurisdiction over decisions or orders of the panel of arbitrators, shall be conclusive

and binding on parties, and its decision or order shall be final and executor. However, resort

to the appropriate court, through a petition for review by certiorari, involving questions of

law may be made within thirty (30) days from receipt of the order or decision of the MAB.

2. MAB has no Jurisdiction Over Pollution Cases

The scope of the authority of the panel of arbitrators and the MAB conferred by RA

No. 7942 clearly excludes adjudicative responsibility over pollution cases. They have no

authority to adjudicate cases involving violations of pollution laws and regulations in general

3. MAB Decisions are Appealable to the Court of Appeals

MAB, being a quasi-judicial body, its decisions should be appealed before the Court

of Appeals under Rule 43 of the Rules of Court notwithstanding the provision in Section 79 of

RA 7942 that petition for review can be brought directly to the Supreme Court. The

hierarchy of courts must be followed.

4. DENR is Devoid of Jurisdiction to Determine the Validity of Mining Contracts or

Disputes

A mining dispute is within the jurisdiction of the DENR, and authority to exercise its

technical knowledge or expertise over any mining operations dispute. However, it is devoid

of jurisdiction where the issue involves the validity of mining contracts as such is a judicial

question.. a judicial question is raised when determination of the question involves exercise

of a judicial function. The question involves the determination of what law and what legal

rights of the parties are applicable in relation to the controversy.

V. Penal Provisions

a. False Statements

Any person who knowingly presents any false application, declaration, or evidence to the

Government or publishes or causes to be published any prospectus or other information containing any

false statement relating to mines, mining operations or mineral agreements, financial or technical

assistance agreements and permits shall, upon conviction, be penalized by a fine of not exceeding Ten

Thousand Pesos (10,000.00).


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b. Illegal Exploration

Any person undertaking exploration work without the necessary exploration permit

shall, upon conviction, be penalized by a fine of not exceeding Fifty thousand pesos (50,000.00

c. Theft of Minerals

Any person e

philippine mining act of 1995 -report consolidated

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