• 
SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S. B. No. 
2086 
Introduced by Senator Maria Lourdes Nancy S. Binay 
EXPLANATORY NOTE 
!&lIrtlltr 
l.n,;. "I tilt .~m't"'~ 
'14 
JAN 21 P 453 
IHX'I<;IVED HY:._)c; 
Section 2, Article XII of the 1987 Constitution clarifies that all natural resources are owned 
by the State. As owner of natural resources, the State may directly undertake the exploration, 
development and utilization of natural resources through co-production, joint venture, or 
production-sharing agreements with Filipino citizens, or corporations or associations at least 
60 per centum of whose capital is owned by such citizens. The President may enter into 
agreements with foreign-owned corPorations involving either technical or financial assistance 
for large-scale exploration, development, and utilization of minerals, petroleum, and other 
mineral oils according to the general terms and conditions provided by law. 
Republic Act No. 7942 or the Philippine Mining Act of 1995 implements Section 2, Article 
XII of the Constitution has adopted the first-to-file system in the availment of mining rights 
therein. This system however, probably an unintended consequence, has resulted in filing of 
applications for purposes of speculation. Companies with dubious capability of exploring, 
developing and utilizing mineral resources have applied and acquired priority under the 
Mining Act of 1995 over vast areas in the country. These companies peddle these mining 
rights to large mining companies all over the world. In the meantime, there are no 
developments ongoing in the areas covered by existing applications for mineral rights. 
This situation has led the Department of Environment and Natural Resources (DENR) to 
espouse a Use it or. Lose it J;'olicy in respect of mining applications. While this policy would 
weed out speculators in the mining industry, the first-to-file system does not address the need 
to maximize benefits to the State. 
One of the best practices all over the world is public bidding of mineral rights. Public 
bidding is' the best method of assuring the government of the best price in the market for its 
natural resources. During the pre-qualification process, the Government can effectively weed 
out speculators or mining companies with no technical capability to develop mines. 
Although Section 6 of Executive Order No. 79 series of 2012 mandated competitive public 
bidding in the grant of mineral rights and~ining tenements over areas with known and 
verified mineral resources and reserves, the legality of said provision is questionable in view 
of the express provisions under the Mining Act supporting the first-to-file rule. 
Moreover, to recognize and encourage initiatives from the private sector, public bidding 
schemes such as Swiss Challenge for unsolicited proposals may work to the best interest of 
the government. 


• 
To ensure that public bidding is observed as binding law even beyond the Aquino 
administration, the passage of this Bill is earnestly requested. 
~u 
Senator 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
• 
J8 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
, 
, 38 
SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
S. B. No. 2086 
Introduced by Senator Maria Lourdes Nancy S. Binay 
~l;'nllh 
ttll,;. "f HI' j."rt"'~ 
'14 
JAN 27 P 4 :53 
fUX'EIVEU By:_rlfJ 
AN ACT MANDATING THE CONDUCT OF COMPETITIVE PUBLIC BIDDING OF 
MINING RIGHTS AND TENEMENTS, PROVIDING FOR SWISS CHALLENGE 
PROCEDURES AND AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7942 OR 
THE PHILIPPINE MINING ACT OF 1995 
Be it enacted by the Senaie and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Section 18 of Republic Act No. 7942 is hereby amended to read as follows: 
Section 18 
Areas Open to Mining Operations 
Subject to any existing rights or reservations and prior agreements of all parties, all 
mineral resources in public or private lands, including timber or forestlands as defined 
in existing laws, shall be open to mineral agreements or financial or technical 
assistance agreement applications. Any conflict that may arise under this provision 
shall be heard and resolved by the panel of arbitrators. 
THE GRANT OF MINING RIGHTS AND MINING TENEMENTS OVER AREAS 
WITH KNOWN AND VERIFIED MINERAL RESOURCES AND RESERVES, 
INCLUDING THOSE OWNED BY THE GOVERNMENT AND ALL EXPIRED 
TENEMENTS, SHALL BE UNDERTAKEN THROUGH COMPETITIVE PUBLIC 
BIDDING. THE MINES AND GEOSCIENCES BUREAU (MGB) SHALL 
PREPARE 
THE 
NECESSARY 
COMPETITIVE 
BID 
PACKAGES 
AND 
FORMULATE THE PROPER GUIDELINES AND PROCEDURES TO CONDUCT 
THE SAME, WHICH SHALL INCLUDE ENSURING THAT THE SOCIAL 
ACCEPTABILITY OF THE PROPOSED PROJECT HAS BEEN SECURED. 
SECTION 2. Section 29 is hereby amended to read as follows: 
Section 29 
UNSOLICITED PROPOSALS TO ENTER INTO MINERAL AGREEMENTS 
AN UNSOLICITED PROPOSAL FOR MINERAL AGREEMENT MAY BE FILED 
IN THE REGION WHERE THE AREAS OF INTEREST ARE LOCATED OR 
DIRECTLY WITH THE BUREAU. 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
, 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
~33 
34 
35 
36 
37 
38 
39 
40 
41 
42 . 
43 
44 
45 
46 
• 
UPON RECEIPT OF SUCH PROPOSAL, THE BUREAU SHALL INVITE BY 
PUBLICATION, FOR THREE (3) CONSECWIVE WEEKS, IN A NEWSPAPER 
OF 
GENERAL 
CIRCULATION, 
COMPARATIVE 
OR 
COMPETITIVE 
PROPOSALS. SHOULD THERE BE NO OTHER PROPOSAL RECEIVED AFTER 
A PERIOD OF SIXTY (60) WORKING DAYS AFTER THE DATE OF THE LAST 
PUBLICATION, 
THE 
BUREAU 
SHALL 
EXECUTE 
THE 
MINERAL 
AGREEMENT WITH THE PROPONENT; PROVIDED, HOWEVER, THAT IN 
THE EVENT ANOTHER PROPONENT SUBMITS A SUPERIOR PROPOSAL, 
THE oRiGINAL PROPONENT SHALL HAVE THE RIGHT TO MATCH THAT 
PRICE WITHIN THIRTY (30) WORKING DAYS. 
SECTION 3. Section 37 is hereby amended to read as follows 
Section 37 
UNSOLICITED PROPOSALS FOR FTAAS 
UNSOLICITED PROPOSALS FOR FTAAS MAY BE FILED WITH THE 
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR). 
UPON RECEIPT OF SUCH PROPOSALS, THE DENR SHALL INVITE BY 
PUBLICATION, FOR FOUR (4) CONSECUTIVE WEEKS, IN A NEWSPAPER OF 
GENERAL CIRCULATION, COMPARATIVE OR COMPETITIVE PROPOSALS. 
SHOULD THERE BE NO OTHER PROPOSAL IS RECEIVED FOR A PERIOD OF 
SIXTY (60) 
WORKING DAYS 
AFTER THE DATE OF THE LAST 
PUBLICATION, THE DENR SHALL EXECUTE AN FTAA WITH THE 
PROPONENT, WHICH AGREEMENT SHALL BE APPROVED BY THE 
PRESIDENT OF THE PHILIPPINES TO BE BINDING AND EFFECTIVE. 
IN THE EVENT ANOTHER PROPONENT SUBMITS A SUPERIOR PROPOSAL, 
THE ORIGINAL PROPONENT SHALL HAVE THE RIGHT TO MATCH THAT 
PRlCE WITHIN THIRTY (30) WORKING DAYS. AFTER THE SAID PERIOD, 
THE DENR SHALL EXECUTE THE FTAA WITH THE WINNING BIDDER, 
WHICH AGREEMENT SHALL BE APPROVED BY THE PRESIDENT OF THE 
PHILIPPINES TO BE BINDING AND EFFECTIVE. 
SECTION 4. Implementing Rules and Regulations. The DENRlMGB shall issue the 
necessary implementing rules and regulations within ninety (90) days from the approval of 
this Act. 
SECTION 5. Separability Clause. Should any part or provision of this Act be declared 
unconstitutional or invalid; other parts or provisions hereof not otherwise affected thereby 
shall remain in fulJ force and effect. 
SECTION 6. Effectivity. This Act shall take effect fifteen (15) days after its publication in at 
least two (2) newspapers of general circulation. 
Approved, 
i, "