Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. _°905

Introduced by CIBAC Party-List Representatives
Eduardo “Bro. Eddie” C. Villanueva and Domingo C. Rivera

AN ACT
PROVIDING FOR THE CREATION OF PHILIPPINE EXTRACTIVE
INDUSTRIES TRANSPARENCY INITIATIVE AND FOR OTHER
PURPOSES

EXPLANATORY NOTE

The extractive industries have the capacity to contribute to the national growth
and development, especially in resource-rich countries like the Philippines. They
have the potential to provide livelihood opportunities, create jobs, and channel
additional government resources to host communities. The gains from the oil, gas,
and mineral resources, nevertheless, do not always translate to benefits for the
general public. Across the globe, extractive industries are marred with various
issues on environmental degradation, fiscal misconduct, poverty, and corruption.

In response to these issues, the Extractive industries Transparency Initiative
(EIT!) was launched to allow for full disclosure of and public access to information
regarding the extractive industry. The EITI is an internationally recognized
framework and practice that monitors revenue and public benefit from mining and
other extractive resources. Composed of representatives from the government,
extractive industry players, and civil society organizations, EITI provides a platform
for the regular and systematic reporting, review, and assessment of information
Concerning the industry. It also strengthens multi-sectoral participation in crafting
and implementing regulatory policies governing the extractive industry.

In the Philippines, the EIT! was established on November 26, 2013 pursuant
to Executive Order No. 147 entitled “Creating the Philippine Extractive Industries


Transparency Initiative.” Since its inception, the Philippine EIT! (PH-EITI) served as
an effective platform for public disclosure of information on fees, taxes and other
payments made by mining companies. The later expansion of PH-EITI enabled the
coverage of oil and gas industries. Furthermore, regular reports published by the
PH-EITI also later expanded to include publicly disclosed information on social and
environmental impact of the extractive industries.

Among the impacts of this initiative, the PH-EITI strengthened the capacity of
local government units (LGUs) — as well as other stakeholders such as community
groups, civil society organizations, and indigenous people — in monitoring the mining
activities in their respective areas through regular disclosure of the share of LGUs in
the revenues from extractive industries. Over the years since its inception, PH-EIT!
data collection and reporting provided different stakeholders the instrument and
proper platform to formulate real governance reforms on the ground.

To ensure the continuation of the reforms introduced and established by the
said initiative, this bill seeks to institutionalize the creation of the Philippine EITI.
Institutionalizing the PH-EITI will enable the multi-sectoral initiative not only to
continue its efforts but also pursue other reforms that will allow the country to further
maximize the benefits from the extractive industry.

The immediate passage of this bill is earnestly sought.

ee, Jle—__

HON. EDUARDO “BRO. EDDIE” C. VILLANUEVA



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 6295

Introduced by CIBAC Party-List Representatives
Eduardo “Bro. Eddie” C. Villanueva and Domingo C. Rivera

AN ACT
PROVIDING FOR THE CREATION OF PHILIPPINE EXTRACTIVE
INDUSTRIES TRANSPARENCY INITIATIVE AND FOR OTHER
PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

CHAPTER |
GENERAL PROVISIONS

SECTION 1. Title. - This Act shall be known as the “Philippine Extractive Industries
Transparency Initiative Act.”

SECTION 2. Declaration of Principles. — All natural resources are owned by
Filipinos represented by the State. It shall be the responsibility of the State to ensure
that the present and future generations benefit from these finite resources. The State
must then establish a mechanism by which the Filipino people are fully aware of how
Proceeds from their finite resources are being utilized.

SECTION 3. Definition of Terms. —
@) Agreement means a contract between the Government and a Contractor,
involving financial or technical matters;
b) 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


°)

Extractive Industries refer to the mining, oil, gas and coal sectors and all
other sectors that require the extraction of non-renewable natural resources
for commercial use;

Financial or Technical Assistance Agreement (FTAA) means a contract
involving financial or technical assistance for large-scale exploration,
development and utilization of mineral resources;

Independent Firm refers to an accounting or auditing firm that has no
existing relationship with either the Government or any of the companies that
are part of the Philippines-Extractive Industries Transparency Initiative (PH-
EITI);

) ea Production Sharing Agreement (MPSA) means an agreement
where the government grants to the contractor the exclusive right to conduct
mining operations within a contract area and shares in the gross output. The
contractor provides the financing, technology, management and personnel
necessary for the implementation of the agreement;

Multi-stakeholder Group (MSG) shall have the meaning given to it under
Section 14 of this Act; and

h) State refers to the Republic of the Philippines.

d)

e)

9)

CHAPTER II
ESTABLISHMENT OF THE PHILIPPINE.
EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATITVE

SECTION 4. Creation of PH-EITI. — There is hereby created the Philippine
Extractive Industries Transparency Initiative (hereinafter referred to as PH-EITI).

SECTION 5. Composition. - The PH-EITI shall be composed of a broad coalition of
stakeholders, including representatives from the government, the private sector, the
indigenous community, and non-governmental organizations. The PH-EIT! shall be
governed by a multistakeholder body (hereinafter referred to as PH-EITI MSG),
which shall be constituted in accordance with the provisions of Chapter V of this Act.

CHAPTER III
OBJECTIVES OF THE PH-EITI

SECTION 6. General Objectives. - The general objective of the PH-EITI is to
improve governance and management of the natural resources in the country and
ensure that all of what is due to the Filipino people and the Government on account
of the exploitation and/or extraction of the country’s mineral, oil, gas and other
natural resources are (a) verifiably paid; (b) duly accounted for; and (c) judiciously
utilized for the benefits of all Filipinos and on the basis of intergenerational equity
and sustainability.

SECTION 7. Specific Objectives. - The specific objectives of the PH-EITI shall

include, but not be limited, to the following:

a) Ensure sustained political commitment for the initiative and mobilize
resources to sustain its activities and goals;

b) Require all companies engaged in the extraction of natural resources to
Participate in such initiative;


Secor moHMsens

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c) Promote genuine participation of civil society in the design, implementation,
evaluation and modification of policies and actions of the Government
associated with resource governance in the Philippines;

4) Implement and ensure compliance to the standards and policies of the global
initiative;

e) Ensure that the initiative is effectively integrated in other related government
reform agenda; and

f) Promote better understanding of the public on the nature of extractive
industries and the benefits of transparent and accountable governance of our
natural resources.

CHAPTER IV
SCOPE AND FOCUS OF THE PH-EITI

SECTION 8. Applicability. - This Act shall apply to all extractive industries,
government agencies at the national and local level in the country. National and local
governments shall be mandatorily required to participate in reporting relevant data
pursuant to this Act.

SECTION 9. Scope. — The scope of the PH-EITI shall include:

a) Revenue transparency, which means the timely disclosure, reconciliation or
audit and publication of all data of material national and local payments and
revenues sourced from the extractive activities covered by the scope of the
PH-EITI;

Contract transparency, which means public accessibility of all concessions,
contracts/licenses, agreements and joint ventures that the Government enters
into related to the extractive sectors within the scope of the PH-EITI including
related documents and attachments to the contracts; and

Accessibility of data, information and reports on the extractive industries,
which means public release of data, documents, and information in a format
that allows the public to freely use, re-use and redistribute them, for any
purpose, without restrictions.

b)

°)

SECTION 10. Sectors Covered. - For the purpose of this Act, the following sectors
shall be covered by and within the scope of the PH-EITI: (a) the mining sector; (b)
the oil and gas sector; (c) the coal sector; and (d) such other sectors as the multi-
stakeholder group may subsequently determine and deem necessary. The covered
sectors shall submit relevant data, including, but not limited, to the cost of their
operations, amount minerals sold, which shall be disaggregated per transaction, and
include such information as the name of the buyer/s, country of destination, among
others, and other related costs, which shall also be disaggregated.

SECTION 11. Annual Report. - The PH-EITI shall submit an annual report to the
President and Congress, in any case not later than April 30 of each year.

The annual report to be prepared, submitted and published by the PH-EITI shall
comply with the international standards of EIT! and include additional reporting
requirements as agreed upon by the PH-EITI MSG

SECTION 12. Monitoring of Payments. - The Payment and utilization of taxes,
fees, surcharges, and similar charges made by extractive companies and/or


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contractors shall be closely monitored by the PH-EITI. All fiscal payments and
mandatory expenditures by contractors shall be disclosed to the PH-EIT| MSG for
the production of the annual EITI report. National and local governments shall also
submit a report on how the proceeds from the extraction of resources were utilized

CHAPTER V
CREATION OF MULTI-STAKEHOLDER GROUP

SECTION 13. Composition. — \n accordance with the EITI International Standards
and with due regard to the Philippine context, there shall be created a multi-
stakeholder group (MSG) that will be in charge of PH-EITI

The PH-EITI MSG shall be headed by a Chairperson to be appointed by the
President of the Philippines, who must be either: (1) a Cabinet secretary, (2) the
head of the interagency coordinating council on the extractive sector, or (3) a
presidential adviser. The functions of the Chairperson shall include convening the
group and organizing a secretariat.

The PH-EITI MSG shall consist of representatives from the following sectors:

a) Government Representatives. The government representatives shall be
composed of (1) senior officials from concerned agencies appointed by the
President of the Philippines, (2) representatives from local government units,
which shall be the president of the leagues of various local government units;
and (3) representatives from the Congress, to ensure that the findings of the
EITI will be used for more effective and more responsive policies;

Industry Representatives. The industry representatives shall be composed of
Officials from the extractive industries included in the EITI;

Civil Society Organizations (CSOs) Representatives. The civil society shall
independently select their representatives in the EITI; and

Indigenous Peoples (IPs) Representatives. The IP representative shall be
selected by a caucus of IP organizations affected by mining operations.
Provided, That groups representing items (b), (c) and (d) above shall designate a
permanent and alternate representative to PH-EITI MSG. Each organization, upon
the decision of its members and through its independent process, can replace their
representatives in the MSG any time following their own governance mechanism.

b)

°)

dq)

SECTION 14. Regular Meeting of PH-EITI MSG. - The PH-EITI MSG shall meet
once a quarter or as often as necessary.

For urgent matters where decision is needed, necessary information shall be
circulated through email so that decisions can be made electronically by consensus.
Fifty percent (50%) of the members, with at least one representative from the
government, CSOs, IPs, and business sector shall constitute a quorum for the
transaction of business of PH-EITI MSG. The MSG, shall, in good faith, make
decisions by consensus.

SECTION 15. Annual Meeting of PH-EITI MSG Members. - The members of PH-
EITI MSG shall hold their annual meeting on the month of April of each year. The
agenda of the meeting shall include, but not be limited to, the approval of the
activities, reports, accounts and the activity plan of the PH-EITI, and any other acts
or matters which may be brought to the attention of the PH-EITI in pursuit of its
mandate as provided under this Act and relevant regulations.


SECTION 16. Notice of Meetings. - The Chairperson shall call and preside over
the meetings. Notices shall be sent out by the PH-EITI secretariat at least one week
before the date of the meeting. The secretariat shall handle the documentation and
preparations of the minutes of the meeting.

SECTION 17. Review of the MSG. - The composition and number of
representatives shall be subject to regular review by the MSG. Other agencies may
form part of the MSG subject to the evolving needs and scope of the EITI
implementation; Provided, That all sectors should be adequately represented in the
MSG at all times; Provided further, That the existing PH-EITI created under
Executive Order No. 147, s. 2013 shall be henceforth constituted under the
provisions of this Act.

CHAPTER VI
SECRETARIAT OFFICE AND FUNDING

SECTION 18. PH-EITI Office. — There is hereby created the PH-EITI Office under
the Office of the President, to be headed by a National Coordinator selected by the
PH-EITI MSG.

The staffing pattern, including the duties, qualifications, responsibilities and
functions, and compensation scheme of the personnel of the PH-EITI Office shall be
determined by the MSG, upon the recommendation by the National Coordinator. For
this purpose, the creation of the corresponding plantilla positions is hereby
authorized

SECTION 19. Funding. ~ The Congress shall allocate adequate funding for the
implementation of PH-EITI in the General Appropriations Act: Provided, That the said
amount shall not be less than the amount equivalent to one percent to two percent
(1% to 2%) of the gross proceeds of the sectors covered by and within the scope of
the PH-EITI, as defined in Section 10 of this Act.

The PH-EITI Office shall have the authority to receive, disburse, and manage
financial aid or grants from foreign and domestic entities to be utilized for the
implementation of the objectives of PH-EITI, subject to the usual accounting and
auditing rules and regulations of the government.

CHAPTER VII
EXEMPTION FROM CONFIDENTIALITY CLAUSES

SECTION 20. Exemption from Confidentiality Clauses. — Confidentiality
Provisions stated under applicable laws, including, but not limited, to the provisions
of Section 270 of the National Internal Revenue Code, Article 81 of the Omnibus
Investments Code, among others, shall not be applicable to extractive companies
insofar as their participation in the PH-EITI process is concerned.

CHAPTER VIII
PENALTIES

SECTION 21. Penalties. - Failure to participate in PH-EITI shall be a ground for
Suspension of the contractor's permit to operate and blacklisting for future projects. A
contractor that, without justifiable cause, unreasonably delays or causes the delay of


submission of the reporting template within the deadline set by PH-EITI, shall be
imposed a fine of One Million Pesos (Php1,000,000.00). Sanctions provided under
this Act shall be imposed by the responsible regulatory agency, as the case may be,
pursuant to the concerned agency's internal rules and regulations.

CHAPTER IX
TRANSITORY AND MISCELLANEOUS PROVISIONS

SECTION 22. Implementing Rules and Regulations. — Within sixty (60) days from
the effectivity of this Act, the Secretaries of Finance, Budget and Management,
Environment and Natural Resources, Interior and Local Government, and Energy, in
consultation with relevant stakeholders, shall promulgate the necessary rules and
regulations for the effective implementation of this Act

SECTION 23. Separability Clause. — If any provision of this Act is declared
unconstitutional or invalid, other parts or provisions hereof not affected thereby shall
continue to be in full force and effect.

SECTION 24. Repealing Clause. — All laws, decrees, executive orders, rules and
regulations or parts thereof which are contrary to or inconsistent with this Act are
hereby repealed, amended or modified accordingly; provided, that nothing in this Act
shall be construed as a diminution of local autonomy or in derogation of ancestral
domain rights under the Indigenous Peoples’ Right Act of 1997.

SECTION 25. Effectivity. — This Act shall take effect fifteen (15) days after its
Publication in this Official Gazette or in any two newspapers of general circulation.

Approved,