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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Seventeenth Congress
Second Regular Session

HOUSE BILL No,_6156

Introduced by Representative Maria Lourdes Acosta-Alba

EXPLANATORY NOTE

The Philippines is one of the most mineral-rich countries in the
world. The value of the country's mineral resources is estimated by the
Mineral Development Council to be around US$840 Billion. According
to the Mines and Geosciences Bureau (MGB), the country's metallic
mineral reserve is about 7.1 billion tons. However, the mining and
quarrying sector constitutes the smallest contribution to the total industry,
averaging 2.7 percent for the period 1998-2014. In fact, among the
economic sectors or industries, mining and quarrying contributed the least
to the total economy after forestry, averaging only about 0.9 percent to
total GDP during the same period. As of the first quarter of 2015,
according to Ibon Data Bank, the Philippine economy got only 3% of the
entire income of the mining industry in the country, A huge 97% went to
the US and China (http://www.manilatimes.net/mining-chips-in-only-3-
to-gdp-research-group/219466/),

In 2010, mining grew by 12% led by copper and gold which grew
by 27% to USS 1.87 billion from US$ 1.47 billion in 2009. Mining
contributed 4.3% to our total exports, a far cry from the 24% contribution
it had in the 1970s. With metal prices surging, however, mining is on its
way to recovering lost ground and making significant contributions to our
Gross Domestic Product (GDP)(Mining Industry Statistics released by
Mines and Geoscience Bureau, www.mgb.gov.ph).

Responsible mining channels foreign and domestic investments to
the countryside, providing access to a) employment and business
opportunities, b) education, c) medical services d) skills training


e) housing, f) infrastructure and 8) public utilities and generally
improving the standard of living of poverty-sticken people, who in all
probability, would never have the Opportunity of improving their standard
of living. National and local taxes, fees and imposts are likewise paid to
the Government, thereby enhancing the delivery of basic public services.
The country’s agriculture, industry and service sectors can benefit from
mineral products in construction Power, electronics, machinery and
transport.

Mining is a capital-intensive undertaking and a well-planned
exploration and a well-engineered and systematic development and
utilization of our mineral reserves require that the deficiencies and
limitations of our existing laws be addressed. A well-regulated mining
industry is therefore needed to allow mining to substantially increase its
contribution to the national economy while protecting the environment at
the same time.

The Mines and Geosciences Bureau (MGB) was originally
established as the Bureau of Mines on November 16, 1936 by
Commonwealth Act No. 136 and later amended under Presidential
Decree No. 1281 on January 16, 1978 and Executive Order No.192 dated
June 10,1987. Under Executive Order No. 192, the powers and functions
of the MGB were advisory in nature and this has remained the same
despite the conversion of the MGB from a staff bureau to a line bureau of
the Department of Environment and Natural Resources (DENR) under
Republic Act No. 7942.

The same Executive Order creating the Department of
Environment and Natural Resources does not also provide for any
professional or academic qualification standards for the Secretary and
Assistant Secretary of the MGB.

There is therefore a need not only for a new mining law but for a
Cabinet-level Government agency that can serve as a potent and effective
arm in the administration and supervision of our mineral resources which
is responsive to the needs of the Filipino people.

In view thereof, passage of this bill is urgently sought.

A Lo sovbha fe

LOURDES ACOSTA-ALBA


Republic ofthe Blippines
House of Representatives
@uevon City, Meteo Manila

Seventeenth Congress
First Regular Session

HOUSE BILL NO. 6156

Introduced by Representative Maria Lourdes Acosta-Alba

AN ACT
CREATING THE DEPARTMENT OF MINERAL RESOURCES,
DEFINING ITS POWERS AND FUNCTIONS AND APPROPRIATING
FUNDS THEREFOR

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

CHAPTER I
GENERAL PROVISIONS

SECTION. 1. Short Title. ~ This Act shall be known as the
“Department of Mineral Resources Act.”

SEC. 2. Declaration of Policy. ~ All mineral resources in public and
private lands, including ancestral lands and domains, within the territory and
exclusive economic zone of the Republic of the Philippines are owned by the
State. The exploration, development and utilization of mineral resources shall
be under the full control and supervision of the State. The State shall be
responsible for the rational exploration, utilization, extraction and

Bill Drafting Service


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conservation of mineral resources in partnership with the private sector in a
manner that safeguards the environment and protects the rights of affected
communities. The government adheres to the principle of sustainable
development which aims to meet the needs of the present without
compromising the ability of the future generations to meet their own needs,
with the view of improving the total quality of life, both now and in the future.

Mineral resource exploration, development, utilization and
conservation must lead to sustainable wealth creation and an improved quality
of life for impacted communities under the following terms:

a) Mining is a temporary land use which, when done responsibly,
leads to altemative land uses in the post-mining stage, through progressive
and engineered mine rehabilitation work done in cycle with mining
operations;

b) Mining activities must always be guided by current best
practices in environmental management committed to reduce the impacts of
mining and effectively and efficiently protect the environment;

c) The wealth accruing to the government and communities as a
result of mining must also lead to other wealth-generating opportunities for
people and to other environment-responsible endeavors;

d) Mining activities shall be undertaken with due and equal
emphasis on economic and environmental considerations, as well as health,

safety, social and cultural concerns;


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e) Conservation of minerals is effected not only through recycling
of mineral-based products to lengthen the usable life of mineral commodities
but also through the technological efficiency of mining operations;

f) Investments in commercial mining activities from both
domestic and international sources shall be promoted in accordance with State
policies and the principles and objectives of this Act; and

2) The grant of mining rights shall harmonize existing activities,
policies and programs of the government that promote self-reliance,
development and resource management. Activities, policies and programs that
promote community-based and community-oriented development shall be
encouraged, consistent with the principles of people empowerment and grass-
roots development.

SEC. 3. Definition of Terms. — As used in this Act:

a) Ancestral domains refer to all areas generally belonging to
indigenous cultural communities (ICCs) or indigenous peoples (IPs)
comprising lands, inland waters, coastal areas and natural resources therein,
held under a claim of ownership, occupied or possessed by ICCs or IPs, by
themselves or through their ancestors, communally or individually since time
immemorial, continuously to the present except when interrupted by war,
force majeure or displacement by force, deceit, stealth or as a consequence of
government projects or any other voluntary dealings entered into by

government and private individuals or corporations, and which are necessary

KS


to ensure their economic, social and cultural welfare. Ancestral domains
include ancestral lands, forests, pasture, residential, agricultural, and other
lands individually owned whether alienable and disposable, hunting grounds,
burial grounds, areas of worship, bodies of water, mineral and other natural
resources and lands which may no longer be exclusively occupied by ICCs or
IPs but from which they traditionally and historically had access to for their
subsistence and traditional activities, particularly the home ranges of ICCs or
IPs who are still nomadic or shifting cultivators;

b) Ancestral lands refer to all lands exclusively and actually
possessed, occupied or utilized by ICCs by themselves or through their
ancestors in accordance with their customs and traditions since time
immemorial and as may be defined and delineated by law;

c)  Beneficiation refers to a process wherein a large fraction of the
‘waste material is removed from the mineral ore;

d) Block or meridional block refers to an area, bounded by one-half
(1/2) minute of latitude and one-half (1/2) minute of longitude, containing
approximately eighty-one (81) hectares;

e) Consent refers to the free, prior and informed assent of the
relevant persons, ICCs or IPs, barangay assemblies, landowners, occupants or
possessors, given after fully disclosing the intent and scope, including the
positive and negative impacts of the mining activity in a language and
process understandable to the persons, communities or assemblies;

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f) Contiguous zone refers to the water, sea bottom and substratum
measured twenty-four (24) nautical miles seaward from the baseline of the
Philippine archipelago:

2) Contract area refers to the land or body of water delineated
under a mineral agreement or financial or technical assessment agreement
subject to the relinquishment obligations of the contractor and properly
defined by longitude and latitude;

h) Contractor refers to a qualified person acting alone or in
consortium;

i) Development refers to the work undertaken to explore and
prepare an ore body or a mineral deposit for mining, including the
construction of necessary infrastructure and related facilities:

j) Environmental Impact Assessment (EIA) refers to the process of
predicting the environmental consequences of projects or undertakings and
designing appropriate preventive, mitigating and enhancement measures;

k) Exclusive economic zone refers to the water, sea bottom and
subsurface measured from the baseline of the Philippine archipelago
up to two hundred (200) nautical miles offshore;

1) Exploration refers to the act of searching or prospecting for
mineral resources by geological, geochemical or geophysical surveys, remote

sensing, test pitting, trenching, drilling, shaft sinking, tunnelling or any other


means for the purpose of determining their existence, extent, quality and
quantity and the feasibility of mining them for profit;

m) — Foreign-owned corporation refers to a corporation, partnership,
association or cooperative duly registered in accordance with law in which
less than fifty percent (50%) of the capital is owned by Filipino citizens;

n) Free, prior and informed consent refers to the consensus of all
members of the ICCs or IPs to be determined in accordance with their
respective customary laws and practices, free from any extemal
manipulation, interference, coercion and other analogous acts and obtained
after fully disclosing the intent and scope, including the positive and negative

impacts, of all the activi

, in a language and process understandable and
acceptable to the community;

0) Joint venture agreement refers to a contract wherein the
government and a qualified person organize a joint-venture company, with
both parties having equity shares, to develop and manage mineral resources
and the government is entitled to a share in the output computed at a certain
percentage mutually agreed upon by and beneficial to both parties;

p) Mill tailings refer to materials, whether solid or liquid or both,
segregated from the ores during concentration or milling operations which

have no present economic value to the generator of the same;


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q) Mine waste refers to the soil or rock materials from surface or
underground mining operations with no present economic value to the
generator of the same;

t) Mineral agreement refers to a contract between the government
and a contractor involving mineral production sharing agreement, co-
production agreement or joint venture agreement;

s) Mineral processing refers to the milling, beneficiation,
leaching, smelting, cyanidation, calcination or upgrading of ores, minerals,
rocks, mill tailings, mine waste or other metallurgical by-products or by
similar means to convert the same into marketable products;

i) Mineral products refer to the materials derived from ores,
minerals or rocks and prepared into a marketable state by mineral processing;

u) = Mineral reservations refer to areas established and proclaimed
by the President upon the recommendation of the Secretary of Mineral
Resources, including all submerged lands within the contiguous zone and
exclusive economic zone;

vy) Mineral resources refer to any concentration of ores, minerals or
rocks with proven or potential economic value;

w) Minerals refer to all naturally occurring inorganic substances in
solid, liquid, gas or any intermediate state excluding energy materials such as

coal, petroleum, natural gas, radioactive materials and geothermal energy;


x) Mining area refers to the portion of the contract area identified
by the contractor as defined and delineated in a survey plan duly approved by
the Regional Director of the Department of Mineral Resources having
jurisdiction over the area for purposes of development or utilization, and sites
for support facilities;

y) Mining operations refer to the mining activities involving
exploration, feasibility study, development and utilization;

2) — Mining right refers to the right to explore, develop or utilize
mineral resources;

aa) National industrialization refers to the primacy of mineral
production, processing and distribution for the benefit of the domestic
economy which includes creating favorable conditions for Filipino
entrepreneurs to engage in mining through various state-private agreements
that ensure that mining helps spur more domestic investments, increase
agricultural production and produce both consumer and producer goods and
manufactures;

bb) Non-metallic mineral refers to a mineral usually having a dull
luster, generally light-colored, transmitting light and usually giving either
colorless or light-colored streak from which a non-metallic element or

component may be extracted or utilized for a profit;


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ce) Offshore refers to the water, sea bottom and subsurface from the
shore or coastline reckoned from the mean low tide level up to the two
hundred (200) nautical miles of the exclusive economic zone;

dd) Onshore refers to the landward side from the mean low tide
level, including submerged lands in lakes, rivers and creeks;

ee) Ore refers to the naturally occurring substance or material from
which a mineral or an element is mined or processed or both for profit;

ff) Permittee means the holder of an exploration permit;

gg) Pollution refers to any alteration of the physical, chemical or
biological properties of any water, air or land resources of the Philippines; or
any discharge thereto of any liquid, gaseous or solid wastes; or any
production of unnecessary noise or any emission of objectionable odor, as
will or is likely to create or to render such water, air and land resources
harmful, detrimental or injurious to public health, safety or welfare, or which
will adversely affect their utilization for domestic, commercial, industrial,
agricultural, recreational or other legitimate purposes;

hh) Processing includes all treatment that an ore receives after its
extraction and beneficiation, which involves changes in the chemical nature
of the mined minerals;

ii) Protected areas refer to identified portions of land and water set

aside by reason of their unique physical and biological significance, managed


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to enhance biological diversity and protected against destructive human
exploitation;

ji) Qualified person refers to any Filipino citizen of legal age and
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
percent (60%) of the capital of which is owned by Filipino citizens. A legally
organized foreign-owned corporation is deemed a qualified person for
purposes of granting an exploration permit, financial or technical assistance
agreements or mineral processing permit only;

kk) Quarrying refers to the process of extracting, removing and
disposing quarry resources found on or underneath the surface of public or
private land; and

a1) Rehabilitation refers to the process by which the land is
returned to a form and productivity in conformity with a prior land-use plan,
including a stable ecological state that does not contribute substantially to
environmental deterioration and is consistent with surrounding aesthetic
values,

SEC. 4. National Industrialization Program. — The State shall
formulate a National Industrialization Program pursuant to the principles of

agricultural modernization, development of industrial and manufacturing

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industries, and rational, sustainable and equitable development of the national
economy. The State shall implement a Mineral Management Plan that
provides the framework for the utilization and management of the country’s
mineral resources, which addresses the needs of the domestic economy and
upholds the rights of industry workers, indigenous peoples and local
communities,
CHAPTER I
DEPARTMENT OF MINERAL RESOURCES

SEC. 5. Department of Mineral Resources, — There is hereby created
a Department of Mineral Resources, hereinafter referred to as the
Department, which shall be the primary government agency responsible for
the conservation, management, development and proper use of the country’s
mineral resources, as well as the licensing, permitting and regulation thereof.
The Department absorbs the powers and functions of the Mines and
Geosciences Bureau under the Department of Environment and Natural
Resources.

SEC. 6. Powers and Functions. - The Department shall have the

following powers and functior

a) — Exercise jurisdiction and take direct charge of the administration
and disposition of all mineral lands and mineral resources of the country,

ensuring their effective protection, development and management;


b) Grant mineral agreements or other mining permits to duly
qualified persons;

c) Recommend to the President of the Philippines the approval of
financial or technical assistance agreements;

d) Regulate and supervise the operations of all contractors and
permittees, including mineral processing permit holders;

e) Formulate policies, regulations and programs pertaining to the
mineral reserves and resources of the country, both onshore and offshore;

f) Develop technical standards and safety and operating procedures
for mineral resources and reserves and their exploration, development and
utilization which are not in conflict with the practice of mining engineering,
metallurgical engineering and geology as provided for under the professional
laws;

g) Issue subpoena and summon witnesses to appear in any
proceedings pending before the Secretary of Mineral Resources, and in
appropriate cases, hold witnesses for contempt, direct or indirect, in
accordance with pertinent provisions of the Rules of Court;

h) Impose fines and penalties for violation of the provisions of the
mining law or any other laws being implemented by the Department, its rules

and regulations;


i)  Confiscate surety, performance and guaranty bonds posted with
the Department after due notice and hearing in an order promulgated by the
Secretary of Mineral Resources;

5) Deputize, when necessary, any member or unit of the Philippine
National Police for purposes of implementing the mining law;

k) Require contractors or holders of an exploration, as part of their
mining activities, to keep in their office a complete set of books of accounts
showing all receipts and expenditures, the source of such receipts and the
object of such expenditures, and assign authorized representatives of the
Department to inspect such books of accounts;

1) Require contractors or permittees to submit to the Department a
semiannual report verified under oath containing:

i, An itemized account or balance sheet for the previous semester
embracing a full and complete statement of all disbursements and
receipts, showing from what sources such receipts were derived, and to
whom and for what object or purpose such disbursements or payments
were made;

ii. All indebtedness or liabilities incurred, or existing at the time,
and for what the same were incurred, and the balance of money, if any,

on hand;

A statement showing the number of men employed, and for what

purpose and the rate of wages paid to each; a full and complete

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statement of the work done in the mine, amount of ore extracted and

from what part of the mine taken, the amount sent to mill for

production, output of the mill and its assay value.

Every contractor or permittee shall likewise keep in its office a full
report, under oath, of all discoveries of ores made in the mine, whether by
boring, drifting, sinking or otherwise, together with the assay value thereof.
All discounts, reports and correspondences shall be filed with and shall be
subject to verification by the Secretary of Mineral Resources;

m) Conduct or undertake mining, metallurgical, geological,
chemical and other researches and prepare reports thereon and provide
laboratory and technical services to the general public;

n) Conduct geological and geophysical surveys of the Philippines
and its territorial waters, and prepare reports and maps therefor;

0) Conduct surveys of all mineralized areas, and inventory of
mineral resources of the Philippines and prepare reports, boundary plans and
maps therefor;

Pp) Disseminate information on the administration and disposition
of mineral lands, mining operations, utilization of minerals, mineral
economics, geological and other surveys, researches and other activities
through appropriate reports, bulletins and circulars;

q) Oversee the mining operations of contractors particularly on
mining practices and methods relating to protection of life and property,

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economy of operations, prevention of pollution, environmental protection and
mineral conservation, and order the suspension of any or all mining
operations or closure of the mines, if warranted;

r) Require the contractor or permittee to take necessary measures
to provide for the growth and development of any industry suitable for the
contract area, other than mining, in order that when the mine is exhausted or
becomes no longer profitable for mining purposes, the people residing therein
or those who used to work for the mine will have a substitute industry or
business activity to provide for their means of livelihood and place the mine
in a condition suitable for habitation or agriculture;

s) Keep records of mining agreements, licenses, and all other
documents and instrument related thereto;

t) Engage, if warranted, in mineral canvassing, exploration,
development and mining of mineral resources, whether found in mineral
reservations, in registered mining claims or in private or public lands:

u) Exercise complete management and control over areas embraced
by mineral reservations;

v) Cancel or recommend the cancellation of mining rights, mining
applications and mining claims for non-compliance with pertinent laws rules
and regulations; and

w) Formulate such rules and regulations as may be necessary for

the effective implementation of this Act.

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SEC. 7. Regional Offices. — The Department may establish regional

offices in the country as may be deemed necessary by the Secretary.
CHAPTER Ill
DEPARTMENT PROPER

SEC. 8. Composition. — The Department is composed of the Office of
the Secretary, the offices of the undersecretaries and assistant secretaries and
bureaus.

SEC. 9. Secretary. — The Department is headed by the Secretary of
Mineral Resources, hereinafter referred to as Secretary, who shall be
appointed by the President of the Philippines, subject to confirmation by the
Commission on Appointments.

No officer, external auditor, accountant or legal counsel of any private
company or enterprise primarily engaged in mining and quarrying shall be
eligible for appointment as Secretary within five (5) years from the date of
retirement, resignation or separation.

SEC. 10. Powers and Functions of the Secretary. — In addition to
those provided under Section 7, Chapter 2, Book IV of Executive Order No
292, Administrative Code of 1987, the Secretary shall have the following
powers and functions;

a) — Establish policies and standards for the effective, efficient and
economical operation of the Department in accordance with the programs of

the government;


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b) Exercise direct supervision and control over all functions and
activities of the Department, as well as its officers and personnel;

c) Devise a program of intemational information on the
technological and contractual conditions of the mining industry:

d) Create regional offices and such other service units and divisions
as may be necessary; and

e) Perform such other functions as may be necessary or proper to
attain the objectives of this Act.

SEC. 11. Undersecretaries. — The Secretary shall be assisted by three
(3) Undersecretaries, one for operations, one for policy and programs, and
one for administrative services. They shall all be appointed by the President
of the Philippines upon the recommendation of the Secretary. The
Undersecretaries shall have the powers and functions as provided for in
Section 10, Chapter 2, Book IV of the Administrative Code of 1987.

The Office of the Undersecretaries shall consist of the Undersecretaries
and their immediate staff.

SEC. 12. Assistant Secretaries. — There shall be five (5) Assistant
Secretaries who shall head the five (5) bureaus of the Department as provided
for under Section 15 of this Act. They shall all be appointed by the President
of the Philippines, upon recommendation of the Secretary.

SEC. 13. Qualifications. — No person shall be appointed Secretary,

Undersecretary for Operations or Assistant Secretary of the Bureau of Mining

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Regulations unless such person is a natural-born citizen of the Philippines, at
least forty (40) years of age, a holder of a Bachelor of Science in Mining
Engineering degree from any reputable university or college, a registered
mining engineer, a resident of the Philippines for the last ten (10) years, of
good moral character and of proven competence in any field of mining.

No person shall be appointed Undersecretary for Policy and Programs,
Undersecretary for Administrative Services or assistant secretary unless such
person is a natural-born citizen of the Philippines, at least thirty-five (35)
years of age, a resident of the Philippines for the last five (5) years, of good
moral character and a person with proven competence in the field of mining,
mettalurgical technology and geology.

The Assistant Secretary for the Bureau of Mining Technology must be
a registered mining engineer. The Assistant Secretary for the Bureau of
Geological Survey must be a registered geologist and the Assistant Secretary
for the Bureau of Metallurgical Technology must be a registered
mettalurgical engineer, The Assistant Secretary for the Bureau of Mineral
Economics must be knowledgeable in mining, metallurgy, geology, law,
management and economics.

No person who has publicly displayed hostility to mining shall be
appointed to any position in the Department, its bureaus and attached

agencies and corporations, including their subsidiaries.


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SEC. 14. Bureaus. — The Department shall have the following bureaus

with their respective powers and functions:

a) Bureau of Mining Regulations

1) Assist the Department, through the Undersecretary for
Operations, in the administration and disposition of all mineral lands
and mineral resources of the country;

2) Recommend to the Secretary, through the Undersecretary
for Operations, the grant of mineral agreements or other mining
permits, except mineral processing permits, to duly qualified persons;

3) Recommend to the Secretary, through the Undersecretary
for Operations, the approval of financial or technical assistance
agreements;

4) — Assist the Department, through the Undersecretary for
Operations, in the regulation and supervision of the operations of all
contractors and permittees, except those of mineral processing permit
holders;

5) Assist the Department in exercising complete
management and control over areas bound by mineral reservations;

6) — Assist the Department, through the Undersecretary for
Operations, in the formulation of policies, regulations and programs
pertaining to the mineral reserves and resources of the country, both

onshore and offshore. Such policies, regulations and programs must

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not conflict with the practice of mining engineering, metallurgical
engineering and geology, as provided for by the professional laws;

7) Assist in the formulation and implementation of policies
to develop the mineral reserves of the country;

8) Assist in the formulation of sectoral plans and programs
relative to the exploration, development and utilization of mineral and
reserves;

9) — Provide consultative training and advisory services to
practitioners and institutions in the areas of regulated activities; and

10) Assist in the formulation of such rules and regulations as

may be necessary for the effective implementation of this Act,
b) Bureau of Mining Technology

1) Assist the Department in overseeing the mining
Operations of contractors or permittees particularly on mining practices
and methods relating to protection of life and property, economy of
operations, prevention of pollution, environmental protection and

mineral conservation and social development;

2) Assist the Department in ensuring that contractors or
permittees take necessary measures to provide for the growth and
development of any industry suitable for the contract area, other
than mining, in order that when the mine is exhausted or becomes

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unprofitable for mining purposes the people residing therein or
those who used to work for the mine may have a substitute industry
or business activity to provide for their means of livelihood, and to
rehabilitate the mine in a condition suitable for habitation or

agriculture;

3) Assist the Department in enforcing rules and regulations
on environmental protection and enhancement, social development,

mineral conservation and mine safety;

4) Assist the Department in verifying every contractor or
permittee’s full report, under oath, of all discoveries of ores made in
their mines, whether by boring, drifting, sinking or otherwise, together

with the assay value thereof;

5) Develop technical standards, safety and operating
procedures for mineral resources and reserves exploration,
development and utilization, provided that such standards and
procedures do not conflict with the practice of mining engineering,
metallurgical engineering and geology as provided for by the

professional laws;

6) Conduct research on mine safety and technology; and


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7) Assist in the formulation of such rules and regulations as
may be necessary for the effective implementation of this Act.
) Bureau of Metallurgical Technology

1) Assist the Department in the issuance of mineral

processing permits;

2) Assist the Department in the regulation and supervision of
the operations of all mineral processing permit holders;

3) Conduct or undertake metallurgical, chemical and similar
researches and prepare reports thereon; and provide laboratory
services to the general public;

4) Develop technical standards, safety and operating
procedures for mineral processing and metallurgical operations, Such
standards and procedures must not be in conflict with the practice of
the metallurgical engineering, mining engineering and geology as
provided for by professional laws; and

5) Assist in the formulation of such rules and regulations as
may be necessary for the effective implementation of this Act.

d) Bureau of Geological Survey

1) Conduct geological and geophysical surveys of the
Philippines and its territorial waters, and prepare reports and maps
therefor;

2) Prepare geo-hazard maps for the entire country;

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3) Engage, if warranted, in mineral canvassing, exploration,
development and mining of the mineral resources of the country,
whether found in mineral reservations, in registered mining claims or
in private or public lands;

4) Conduct other kinds of surveys of all mineralized areas,
and inventory of the mineral resources of the Philippines and prepare
reports, boundary plans and maps therefor;

5) Develop technical standards, safety and operating
Procedures for mineral processing and metallurgical operations,
provided that such standards and procedures do not conflict with the
practice of the geology, mining engineering and metallurgical
engineering as provided for by the professional laws; and

6) Assist in the formulation of such rules and regulations
may be necessary for the effective implementation of this Act.
©) Bureau of Mineral Economics

1) Disseminate information conceming the administration
and disposition of mineral lands, mining operations, utilization of
minerals, mineral economics, other surveys and researches and such
other activities through appropriate reports, bulletins and circulars;

2) Require contractors or permittees, including mineral
processing permit holders, as part of their mining and processing
activities, to keep in their offices a complete set of books of accounts

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showing all receipts and expenditures, the source of such receipts, and

the object of such expenditures, and assign authorized representatives

of the Department to inspect such books of accounts; and

3) Assist in the formulation of such rules and regulations as
may be necessary for the effective implementation of this Act.
CHAPTER IV
ATTACHED AGENCIES AND CORPORATIONS

SEC. 15. All government agencies and corporations, whether created
by law or registered with the Securities and Exchange Commission, that are
involved in mining are transferred to the Department of Mineral Resources.
The Secretary, in a concurrent capacity, shall be the ex-officio chairperson of
these agencies and corporations. The Secretary shall, in no case, be the chief
executive officer or chief operating officer of these agencies and corporations
or their subsidiaries, any law to the contrary notwithstanding.

The Secretary may recommend to the President the reorganization of

these agencies and corporations.

CHAPTER V
MINERAL LANDS AND MINERAL DEPOSITS
SEC. 16. Ownership of Mineral Deposits. — All mineral deposits in
public or private land, including those in ancestral domains and ancestral

lands within the territorial limits of the Republic of the Philippines whether

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found in, on or under the surface of dry lands, beds of creeks, rivers, lakes or
other submerged lands within the territorial waters or on the continental or
insular shelf or its analogue in an archipelago seaward the shores of the
Philippines, belong to the State, inalienably and imprescriptively, and the
administration, disposition and utilization thereof is governed by this Act and
its rules and regulations and other mining laws. Minerals may not be the
subject of acquisitive prescription.

SEC. 17. Minerals Deposits in Public or Private Lands. — The
ownership or the right to use public or private land, ancestral domains and
ancestral lands, whether exposed or submerged, for agricultural, logging,
industrial, commercial, residential, petroleum exploration or utilization or
any purpose other than mining does not include the ownership of nor the
right to develop or utilize the mineral deposits found in, on or under the
surface of such lands. Subject to any existing rights or reservations, all
mineral deposits founded therein including timber or forestland as defined in
existing laws may be open to mineral agreements or financial or technical
assistance agreements.

CHAPTER VI
MINERAL RESERVATIONS

SEC. 18. Mineral Reservations. — The President, when the national

interest so requires, such as when there is a need to preserve strategic raw

materials critical to the national interest, national defense or development of

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certain minerals for scientific, cultural or ecological value, upon the
recommendation of the Secretary, may establish mineral reservations,
without prejudice to existing prior rights. All submerged lands within the
contiguous zone and the exclusive economic zone are hereby declared
mineral reservations. Mining operations within mineral reservations may be
undertaken by the Department or by private contractors. The President may
alter or modify the boundaries of any mineral reservation as the President
may deem proper or revert the same to the public domain.

SEC. 19. Maximum Area of Mineral Reservations. — The total area
of mineral reservations onshore that the President may proclaim shall not
exceed three million (3,000,000) hectares at any given time except during
times of national emergency officially declared by the President. In case of
national emergency, the President may proclaim such mineral reservations
without any limit as to the total area.

SEC. 20. Other Reservations. - Exploration, development or mining
operations in reservations other than mineral reservations may be undertaken
by the Department or through a qualified person selected through competitive
bidding under such terms and conditions as may be prescribed by the

Secretary, subject to the approval of the President.

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CHAPTER VII
MANAGEMENT OF MINING AREAS

SEC. 21. Processing of Applications, - The system of processing
applications for mining rights are prescribed in the rules and regulations
implemented pursuant to this Act.

SEC. 22. Survey, Charting and Delineation of Mining Areas. ~ A
sketch plan or map of the contract or mining area suitable for publication
purposes and prepared by a geodetic engineer duly deputized by the
Department shall be required during the filing of a mineral, financial or
technical assistance agreement. After all clearances have been granted, the
contract or mining area shall be surveyed and monumented by a deputized
geodetic engineer and the survey plan shall be approved by the Secretary or
by a duly authorized representative of the Secretary before the mineral
agreement or financial or technical assistance agreement is approved.

SEC. 23. Meridional Blocks. ~ For purposes of delineation of the
contract or mining areas under this Act, the Philippine territory and its
exclusive economic zone are divided into meridional blocks of one-half
minute (1/2) latitude and one-half minute (1/2) longitude.

SEC. 24. Recording System. — There shall be established a national
and regional titling and recording system. A mineral resource database
system shall be set up by the Department which includes, among others, a

mineral rights management system. The Department shall publish, at least

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annually, a mineral gazette of nationwide circulation containing, among
others, a current list of mineral rights, their locations in the map, mining rules
and regulations and other official acts affecting mining and other information
relevant to mineral resources development.

SEC, 25. Areas Open to Mining Operations, — Subject to existing
rights or reservations or prior agreements, all mineral resources in public or
private lands, ancestral domains, ancestral lands, including timber or
forestland as defined by law shall be open to mineral agreement or financial
or technical assistance agreement applications.

In ancestral domains or lands, consent of the ICs shall be secured by
the applicant before any mineral agreement or financial or technical
assistance agreement is approved.

SEC. 26. Areas Closed to Mining Applications. ~ Mineral agreement
or financial or technical assistance agreement applications are not allowed in
the following areas:

a) In military or other government reservations except upon prior
clearance of the appropriate government agency;

b) Near or under public or private buildings, cemeteries,
archaeological and historic sites, bridges, highways, waterways, railroads,
reservoirs, dams or other infrastructure projects, public or private works,
including plantations and areas with valuable crops, except upon written

consent of the appropriate government agency or private entity;

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c)  Inareas covered by valid and existing mining rights;

d) In areas expressly prohibited by law;

¢) In areas mortgaged to government financial institutions,
government-owned and-controlled corporations or government agencies,
regardless of whether the mining rights are expired or not, without the
consent of such government financial institution, government-owned and-
controlled corporations or government agencies; and

f) In old growth or virgin forests, proclaimed watershed forest
reserves, wilderness areas, mangrove forests, mossy forests, national parks,
provincial or municipal forests, parks, green belts, game refuge, bird
sanctuaries as defined by law and in areas expressly prohibited under
Republic Act No. 7586, as amended, otherwise known as the “National
Integrated Protected Area System Act (NIPAS) of 1992" and other laws.

CHAPTER VIII
MINERAL AGREEMENTS

SEC, 27. Modes of Mineral Agreements. — For purposes of
exploration, development and mining operations, a qualified person may
enter into any of the three (3) modes of mineral agreements with the
government:

a) — Mineral Production Sharing Agreement. - An agreement where
the government grants to the contractor the exclusive right to conduct

exploration, development and mining operations within a contract area and

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shares in the gross output. The contractor provides the financing, technology,
management and personnel necessary for the implementation of the
agreement.

b) Co-production Agreement. - An agreement between the
government and the contractor wherein the government provides inputs to the
mining operations other than the mineral deposit. The government earns a
rate of return on its inputs and shares in the gross output,

c) Joint Venture Agreement. - An agreement where a joint venture
company is organized by the government and the contractor with both parties
having equity shares. Aside from earnings in equity, the government also
shares in the gross output,

A mineral agreement grants the contractor the exclusive right to
conduct exploration, development and mining operations in the contract area
except in those areas within rivers, streams, creeks, lakes and other bodies of
water in which a separate sand and gravel permit or mineral agreement must
be secured, The contractor may be allowed to convert the agreement into any
of the modes of mineral agreements, financial or technical assistance
agreements covering the remaining period of the original agreement subject
to the approval of the Secretary.

SEC. 28. Maximum Areas for Mineral Agreement. — The maximum
area that a qualified person may apply for and hold at any given time under a

mineral agreement is as follows:

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a) — Onshore, in the entire Philippines —

1) For individuals — six (6) meridional blocks or four
hundred eighty six (486) hectares; and
2) For corporations and partnerships - sixty (60)

meridional blocks or four thousand eight hundred sixty (4,860)

hectares;

b) Offshore, in the entire Philippines, including the exclusive
economic zone —

1) For individuals — twelve (12) meridional blocks or nine
hundred seventy-two (972) hectares; and
2) For corporations and partnerships — one hundred twenty

(120) meridional blocks or nine thousand seven hundred twenty

(9,720) hectares.

The maximum areas that may be applied for as stated in paragraphs (a)
and (b) of this Section include contract areas covered by operating
agreements or other forms of contracts with other parties covering
exploration, development and mining operations and existing mineral
agreement applications.

SEC. 29. Mineral Agreements. — All proposed mineral agreements are
filed in the region where the subject minerals areas are located, except in
mineral reservations which are filed with the Department. The proposed

mineral agreement is subject to the approval of the Secretary.

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SEC. 30. Assignment or Transfer. — Except for financial or technical
assistance agreement, any assignment or transfer of rights and obligations
under the mineral agreement or permit shall be subject to approval of the
Secretary. The assignment or transfer is deemed automatically approved if
not acted upon by the Secretary or the duly authorized representative within
thirty (30) days from receipt thereof unless patently unconstitutional or
illegal.

No assignment or transfer shall be allowed unless the mineral
agreement or permit has been in existence for at least five (5) years. It may be
allowed if the assignee or transferee is a qualified person, has the technical
and financial capability to explore, develop or operate the mines and has also
been in existence for at least five (5) years. Subsequent assignments or
transfers may also be made only after five (5) years. The assignment may be
allowed if the contractor or transferee has not violated mining and
environmental laws and that proofs of payment of capital gains tax,
documentary stamps tax, transfer tax and other taxes have been submitted.

For purposes of computing the capital gains tax, documentary stamp
tax, transfer tax and other taxes, the mineral agreement shall be the subject of
a mine valuation by a private licensed mining engineer and a licensed mining
engineer of the Department. The higher of the two (2) valuations is the basis

for computing the taxes.

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The application for a mineral agreement or permit is not eligible for
assignment or transfer.

SEC. 31. Withdrawal from Mineral Agreements. — The contractor
may, by giving due notice at any time during the term of the agreement,
apply for the cancellation of the mineral agreement due to causes which, in
the opinion of the contractor, the continued mining operation is no longer
feasible or viable. The Secretary shall consider the notice and issue a decision
within a period of thirty (30) days from receipt thereof: Provided, That the
contractor has complied with all its technical, financial and legal obligations.

SEC. 32. Terms, — Mineral agreements shall have a term not
exceeding twenty five (25) years starting from the date of execution thereof
and renewable for another term not exceeding twenty five (25) years subject
to changes that may be mutually agreed upon by the parties. After the
renewal period, the operation of the mine site may be undertaken by the
government or through a contractor, The contract for the operation of a mine
shall be awarded to the highest bidder in a public bidding after due
publication of the notice thereof. The contractor shall have the right to equal
the highest bid upon reimbursement of all reasonable expenses of the highest

bidder,

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CHAPTER IX
FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT

SEC. 33. Who may Apply. — Any qualified person or foreign-owned
corporation with technical and financial capability to undertake large-scale
exploration, development and mining operation may enter into a financial or
technical assistance agreement with the government except for the areas
covered by rivers, streams, creeks, lakes and similar bodies of water. A
qualified person, but not a foreign-owned corporation, may secure a separate
sand and gravel permit or mineral agreement.

SEC. 34. Maximum Contract Area. ~ The maximum contract area
that may be granted per qualified person or foreign-owned is as follows:

a) Onshore, in the entire Philippines — sixty (60) meridional blocks
or four thousand eight hundred sixty (4,860) hectares; and

b) Offshore, in the entire Philippines, including the exclusive
economic zone — one hundred twenty (120) meridional blocks or nine
thousand seven hundred twenty (9,720) hectares.

The maximum areas that may be applied include contract areas
covered by operating agreements or other forms of contracts with other
parties covering exploration, development and mining operations and

existing mineral agreement applications.


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SEC. 35. Terms and Conditions. — The following terms, conditions
and warranties are incorporated in the financial or technical assistance
agreement:

a) A firm commitment in the form of a sworn statement of an
amount corresponding to the expenditure obligation that will be invested in
the contract area: Provided, That the amount shall be subject to changes as
may be provided for in the implementing rules and regulations of this Act;

b) A financial guarantee bond posted in favor of the government in
an amount equivalent to the expenditure obligation of the applicant for a
year;

c) Submission of proof of technical competence such as track
record in mineral resource exploration, development and mining operations,
details of technology to be employed in the proposed operation and details of
technical personnel to undertake the operation;

d) Representation and warranties that the applicant has all the
qualifications and none of the disqualifications for entering into the
agreement;

e) Representations and warranties that the contractor has access to
all the financing, managerial and technical expertise and if circumstances
demand, the technology required to promptly and effectively carry out the

objectives of the agreement with the undertaking to timely deploy these

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resources under its supervision pursuant to the periodic work programs and
budgets when proper;

f) For foreign-owned corporation, representations and warranties
that, except for payments for disposition for its equity, foreign investments in
local enterprises which are qualified for repatriation and local suppliers’
credits and such other generally accepted and permissible financial schemes
for raising funds for valid business purposes. The contractor shall not raise
any form of financing from domestic sources of funds, whether in Philippine
or foreign currency for conducting its exploration, development or mining
operations;

2) Conduct of the mining operations in accordance with the
provisions of this Act and its implementing rules and regulations;

h) Work programs and minimum expenditures commitments.

i) Preferential use of local goods and services to the maximum
extent practicable;

j) _ A stipulation that the contractors are obligated to give preference
to Filipinos in all types of mining employment for which they are qualified
and that technology are transferred to them;

k) Provision to effectively use appropriate _anti-pollution
technology and facilities to protect the environment and to restore or
rehabilitate mined-out areas affected by mine tailings and other forms of

pollution or destruction;

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1) Provision to furnish the government, upon demand, all records
pertaining to its mining operations and to open its books of accounts for
inspection;

m) Provision to dispose of the minerals and by-products produced
under a financial or technical assistance agreement at the highest price and
more advantageous terms and conditions as may be provided for under the
implementing rules and regulations of this Act;

n) Provision for consultation and arbitration with respect to the
interpretation and implementation of the terms and conditions of the
agreement; and

0) Such other terms and conditions consistent with the Constitution
and with this Act as the Secretary may deem necessary for the best interest of
the State and for the welfare of the Filipino people.

SEC. 36. Negotiations. — A financial or technical assistance
agreement shall be negotiated by the Department and executed and approved
by the President. The President shall notify the Congress of all financial or
technical assistance agreements within thirty (30) days from their execution
and approval.

SEC. 37. Technical Assistance Agreement Proposals. — A\\ financial
or technical assistance agreement proposals are filed with the Department
after payment of the required processing fees. If the proposal is found to be

sufficient and meritorious in form and substance, it shall be recorded by the

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Department to give the proponent the prior right to the area covered by the
proposal. Existing mineral agreements, financial or technical assistance
agreements and other mining rights shall not be impaired or prejudiced
thereby, The Secretary shall recommend its approval to the President.

SEC. 38. Term of Financial or Technical Assistance Agreement. — A
financial or technical assistance agreement shall have a term not exceeding
twenty five (25) years starting from its execution and, renewable for not more
than twenty-five (25) years under such terms and conditions as may be
provided by law.

SEC. 39. Conversion to Mineral Agreement. — The contractor shall
have the option to convert the financial or technical assistance agreement to a
mineral agreement at any time during the term of the agreement, if the
economic viability of the area is found to be inadequate to justify large-scale
mining operations, after proper notice to the Secretary as may be provided for
under the implementing rules and regulations of this Act: Provided, That the
mineral agreement is only for the remaining period of the financial or
technical assistance agreement.

In case of a foreign-owned corporation, it shall reduce its foreign
equity to no more than forty percent (40%) of its capital. Upon compliance
with this requirement, the Secretary may approve the conversion and execute

the mineral agreement.

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SEC. 40. Assignment or Transfer. — A financial or technical
assistance agreement may be assigned or transferred, in whole or in part, to a
qualified person or a foreign-owned corporation subject to the prior approval
of the President. The President shall notify Congress of every assigned or
converted financial or technical assistance agreement in accordance with this
provision within thirty (30) days from the date of approval thereof.

No assignment or transfer shall be allowed unless the financial or
technical assistance agreement has been in existence for at least ten (10)
years and the assignee or transferee is a qualified person or a foreign-owned
corporation, has the technical and financial capability to explore, develop or
operate the mines and has also been in existence for at least ten (10) years.
Subsequent assignments or transfers may be made only every ten (10) years
at a time. The assignment may be allowed if the contractor or transferee has
not violated mining and environmental laws and that proof of payment of
capital gains tax, documentary stamp tax, transfer tax and other taxes have
been submitted.

For purposes of computing the capital gains tax, documentary stamp
tax, transfer tax and other taxes, the financial or technical assistance
agreement is subject to mine valuation by a private licensed mining engineer
and a licensed mining engineer of the Department. The higher of the two (2)

valuations is the basis for computing the taxes.

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The application for financial or technical assistance agreement is not
eligible for assignment or transfer.

SEC. 41. Withdrawal from Financial or Technical Assistance
Agreement. — The contractor shall manifest in writing to the Secretary its
intention to withdraw from the financial or technical assistance agreement if,
in its judgment, the mining project is no longer economically feasible even
after it has exerted reasonable diligence to remedy the cause of the situation.
The Secretary may accept the withdrawal: Provided, That the contractor has
complied with all technical, financial or legal obligations.

CHAPTER X
SAND AND GRAVEL RESOURCES

SEC. 42. Sand and Gravel. ~ Sand and gravel utilization are covered
by the following types of permits unless they contain valuable minerals such
as gold, chromite, iron and other metals in which case they shall be covered
by a mineral agreement.

SEC. 43. Commercial Sand and Gravel Permit. — A qualified person
may be granted a commercial sand and gravel permit by the Secretary or the
duly authorized representative to extract sand and gravel and other loose or
unconsolidated materials which are used in their natural state, without
undergoing processing from an area of not more than five (5) hectares and in

such quantities as may be specified in the permit.


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SEC. 44. Industrial Sand and Gravel Permit. — A qualified person
may be granted an industrial sand and gravel permit by the Secretary or the
duly authorized representative to extract sand and gravel and other loose or
unconsolidated materials that necessitate the use of mechanical processing
covering an area of not more than twenty (20) hectares at a time. The permit
shall have a term of five (5) years, renewable for five (5) years but not to
exceed twenty-five (25) years.

SEC. 45, Exclusive Sand and Gravel Permit. — A qualified person
may be granted an exclusive sand and gravel permit by the Secretary or the
duly authorized representative to extract sand and gravel and other loose or
unconsolidated materials from public lands for use: Provided, That there is
no commercial disposition thereof.

A contractor under a mineral agreement, financial or technical
assistance agreement, may extract sand and gravel and other loose and
unconsolidated materials without a permit within its contract area for
exclusive use in the mining operations: Provided, That right is
coterminous with the term of the agreement.

Areas within rivers, streams, creeks, lakes and similar bodies of
water shall be covered by a separate sand and gravel permit.

SEC. 46. Government Gratuitous Permit.— Any government entity or
instrumentality may be granted a gratuitous permit by the Secretary or the

duly authorized representative to extract sand and gravel or loose and

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unconsolidated materials needed in the construction of public buildings or
other infrastructure for public use over an area of not more than five (5)
hectares for a period coterminous with the construction but not to exceed five
(S) years.

SEC. 47. Private Gratuitous Permit. — Any owner of private land may
be granted by the Secretary or the duly authorized representative a private
gratuitous permit over an area of not more than five (5) hectares for a period
not exceeding two (2) years.

SEC. 48. Guano Permit. — Any qualified person may be granted by
the Secretary or the duly authorized representative a guano permit to extract
and utilize unconsolidated guano deposits and other organic fertilizer
materials. The permit is for specific caves and for confined sites only.

SEC. 49. Gemstone Gathering Permit. — Any qualified person may be
granted a non-exclusive gemstone gathering permit by the Secretary or the
duly authorized representative to gather stones useful as gemstones in rivers
and other locations.

SEC. 50. Assignment or Transfer. — No assignment or transfer of any
type of permit under this chapter shall be allowed.

CHAPTER XI

TRANSPORT, SALE AND PROCESSING OF MINERALS

SEC. 51. Ore Transport Permit, — A permit specifying the origin and
quantity of non-processed ores or minerals shall be required for their

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transport. Transport permits are issued by the Secretary or a duly authorized
representative who has jurisdiction over the area where the ores or minerals
were extracted. Ore or mineral samples not exceeding one (1) metric ton to
be used exclusively for assay or pot test purposes are exempted from such
requirement.

SEC. 52. Mineral Trading Registration. — No person shall engage in
the trading of ores and minerals, either locally or internationally, unless
registered with the Department.

SEC. 53, Minerals Processing Permit. — No person shall engage in
the processing of minerals without a minerals processing permit issued by the
Secretary, The mineral processing permit is effective for a period of five (5)
years renewable every five years but not to exceed twenty-five (25) years, A
mineral agreement or financial or technical assistance agreement includes the
right to process ores or minerals, and contractors are no longer required to
secure a separate minerals processing permit.

SEC. 54. Eligibility of Foreign-Owned Corporations. — A foreign-
owned corporation may be granted a minerals processing permit.

CHAPTER XII
DEVELOPMENT OF MINING COMMUNITIES, SCIENCE AND
MINING TECHNOLOGY
SEC. 55. Expenditure for Community Development and Mining

Technology. — A contractor shall assist in the development of its mining

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community, the promotion of the general welfare of its inhabitants and the
development of mining technology.

SEC. 56. Credited Activities. — Activities that may be credited as
expenditures for the development of mining communities and mining
technology are the following:

a) Any activity or expenditure intended to enhance the
development of the mining and neighboring communities of a mining
operation other than those required or provided for under existing laws or
collective bargaining agreements and other contracts; and

b) Any activity or expenditure directed towards the development of
mining technology or geosciences such as institutional or manpower
development and basic and applied researches.

Appropriate supervision and control mechanisms shall be provided for
in the implementing rules and regulations of this Act.

SEC. 57. Training and Development. — A contractor shall maintain an
effective program of manpower training and development throughout the
term of the mineral agreement or the financial or technical assistance
agreement and shall encourage and train Filipinos to participate in all aspects
of the mining operations including the management thereof.

SEC. 58. Use of Local Goods, Services and Technology. — A

contractor shall give preference to the use of local goods, services and


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technical resources in the mining operations where the same are of equivalent
quality and are available on equivalent terms as their imported counterparts,
SEC. 59. Donation or Turn-Over of Facilities. — Prior to cessation of
mining operations occasioned by abandonment or withdrawal of operations
on public lands by the contractor, the latter shall have a period of one (1) year
therefrom within which to remove improvements, otherwise, all the social
infrastructure and facilities are turned over or donated tax-free to the local
government to ensure that these infrastructure or facilities are continuously

maintained and utilized by the host and neighboring communiti

SEC. 60. Employment of Filipinos. ~ A contractor shall give
preference to Filipino citizens in all types of mining employment within the
country insofar as such citizens are qualified to perform the corresponding
work with reasonable efficiency and without hazard to the safety of the
operations. A foreigner may be employed as mine general manager, resident
manager, mine superintendent, general superintendent, vice president for
operations, chief mining engineer, mine engineer or equivalent managerial
positions in charge of mining operations without passing the government
licensing examination for mining engineers,

CHAPTER XII
SAFETY AND ENVIRONMENTAL PROTECTION
SEC. 61, Mine Safety and Environmental Protection. — All

contractors and permittees shall strictly comply with all mines safety rules

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and regulations promulgated by the Secretary to ensure the safe and sanitary
upkeep of the mining operations and achieve waste-free and efficient mine
development.

SEC. 62. Mine Labor. — No person under sixteen (16) years of age
shall be employed in any phase of mining operations and no person under
eighteen (18) years of age shall be employed in any underground mine.

SEC. 63. Mine Supervision. — All mining and quarrying operations,
large or small, shall be supervised by at least one (1) licensed mining
engineer with five (5) years experience in mining operations and one (1)
registered mine foreman for every seventy-five (75) personnel involved in
actual mining operations.

SEC. 64. Mine Inspection. — All installations, surface or underground,
in mining operations shall be subject to safety inspection at reasonable hours
of the day or night. The inspection shall not impede or obstruct the work in
progress of a contractor or permittee.

SEC. 65. Power to Suspend. — The contractor is required to remedy
any practice connected with mining or quarrying operation which is not in
‘accordance with safety and environmental laws, rules and regulations. In case
of imminent danger to life or property, the Secretary or the authorized
representative may summarily suspend mining or quarrying operations until

the appropriate measures are taken by the contractor or permittee.

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SEC. 66. Report of Accidents. — In case of any accident or incident,
causing or creating the danger of loss of life or serious physical injuries, the
mining engineer in charge of operations shall immediately report the incident
to the regional office where the mining operations are situated. Failure to
report the same without justifiable reason is a cause for the imposition of
administrative sanctions as prescribed in the implementing rules and
regulations of this Act.

SEC. 67. Environmental Protection. — Every contractor shall
undertake an environmental protection and enhancement program covering
the period of the mineral agreement, financial or technical assistance
agreement or permit. Such environmental program shall be incorporated in
the work program which the contractor or permittee must submit as an
accompanying document to the application for a mineral agreement, financial
or technical assistance agreement or permit. The work program must include
not only plans relative to mining operations but also the rehabilitation,
regeneration, revegetation and reforestation of mineralized areas, slope
stabilization of mined-out and tailings-covered areas, aquaculture, watershed
development, water conservation and socioeconomic development.

SEC. 68. Environmental Impact Assessment. — Except during the
exploration period of a mineral agreement or financial or technical assistance
agreement, an environmental compliance certificate shall be required based

‘on an environmental impact assessment.

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SEC. 69. Rehabilitation. — Contractors and permittees shall technically
and biologically rehabilitate the excavated, mined-out, tailings-covered and
disturbed areas to the condition of environmental safety as provided in the
implementing rules and regulations of this Act.

‘A Mines Rehabilitation Fund shall be created based on the contractor's
approved work program and shall be deposited as a trust fund in a
government depository bank and used for physical and social rehabilitation of
areas and communities affected by mining activities and for research on the
social, technical and preventive aspects of rehabilitation. Failure to comply
with this obligation means immediate suspension or closure of the mining
activities of the contractor or permittee.

CHAPTER XIV
AUXILIARY MINING RIGHTS

SEC. 70. Timber Rights. — A contractor may be granted the right to
cut trees or timber within the mining areas as may be necessary for the
mining operations subject to forestry laws, rules and regulations. If the land
covered by the mining area is already covered by existing timber
concessions, the volume of timber needed and the manner of cutting or
removal thereof are determined upon consultation with the timber
concessionaire or permittee and the Forest Management Bureau of the
Department of Environment and Natural Resources. In case of disagreement,

the matter is submitted to the Secretary whose decision is final. The

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contractor shall perform reforestation work within the mining area in
accordance with forestry laws, rules and regulations.

SEC. 71. Water Rights. — A contractor shall have water rights for
mining operations upon the approval of the application with the authorized
government agency in accordance with the existing water laws, rules and
regulations: Provided, That water rights already granted or vested are not
impaired.

The appropriate agency shall regulate water rights and the reasonable
and equitable distribution of water supply so as to prevent monopoly of the
use thereof.

SEC. 72. Right to Possess Explosives. — A contractor shall have the
right to possess and use explosives within the contract area as may be
necessary for the mining operations upon approval of an application with the
authorized government agency in accordance with existing laws, rules and
regulations promulgated.

‘The appropriate government agency reserves the right to regulate and
control the explosive accessories to ensure safe mining operations.

SEC. 73. Easement Rights. — When mining areas are so situated that
for purposes of more economical mining operations, it is necessary to build,
construct or install on the mining areas or lands owned, occupied or leased by
other persons such infrastructure as roads, railroads, mills, waste dump sites,
tailings ponds, warehouses, staging or storage areas, and port facilities,

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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, or tunnels, the
contractor shall, upon payment of just compensation, be entitled to enter the
mining areas or lands.

SEC. 74. 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, occupants 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 operation shall be properly compensated as provided in
the implementing rules and regulations of this Act. To guarantee such
compensation, the person authorized to conduct mining operations shall,
prior thereto, post a bond with the Secretary based on the type of properties
and the prevailing prices in and around the area where the mining operations
are to be conducted, with surety or sureties satisfactory to the Secretary.

CHAPTER XV
PROTESTS, ADVERSE CLAIMS AND APPEALS

SEC. 75. Protest and Adverse Claims. — Any protest or adverse claim
of any nature whatsoever involving the right to possession, exploration,
development or operation of any mining claim in any part of the Philippines
shall be filed before the office of the Secretary for investigation. The protest

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or adverse claims must be accompanied by plans, documents, and other data
upon which the protest or adverse claim is based.

All protests and adverse claims shall be filed not later than fifteen (15)
days after the date of the first publication of the application for mineral
agreement. When a protest or adverse claim is filed, all proceedings in
connection with the application for mineral agreement, financial or technical
assistance agreement or permits shall be stayed until the controversy is
settled and decided by the Secretary.

SEC. 76. Priority Rights. — In case of conflict on mining claims,
priority of recording shall determine the right to the area, notwithstanding
any defect in form or technicality. In case of discrepancy between the area
described in the application for mineral agreement, financial or technical
assistance agreement or permit and the actual area occupied in the ground,
the former prevails subject to any question in compliance with all the
requirements under this Act.

SEC, 77. Appeals. — Any party not satisfied with the decision or order
of the Secretary may, within fifteen (15) days from receipt thereof, appeal to
the Office of the President.

In all cases, the decision of the Secretary shall be executory
notwithstanding any appeal unless the President of the Philippines, the Court
of Appeals or the Supreme Court directs otherwise, and the prevailing party

has the right to immediately take possession and conduct exploration and

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mining operations: Provided, That the prevailing party shall deposit in
escrow in a government bank an amount to be fixed by the Secretary for the
protection of the interest of the party to whom the mining claims are
ultimately awarded.

A petition for review by certiorari and questions of law may be filed by
the aggrieved party with the Court of Appeals within thirty (30) days from
receipt of the decision or order of the President of the Philippines. Any party
not satisfied with the decision or order of the Court of Appeals may file an
appeal before the Supreme Court within thirty (30) days from receipt thereof.

CHAPTER XVI
FISCAL PROVISIONS

SEC. 78. Government Share. ~ The total government share in mineral
agreements is in the excise tax on mineral products as provided for in the
National Internal Revenue Code and a royalty equivalent to three percent
(3%) of the gross value of minerals sold for mineral agreements and other
types of permits and five percent (5%) of the gross value of minerals sold for
financial or technical assistance agreements. In the case of limestone,
pozzolan, shale or silica for cement manufacture and other industries
similarly situated in which local prices are not set, the gross value shall be the
higher of the values determined by a private licensed mining engineer with
more than five (5) years experience in the industry or mine valuation of the

Department of Mineral Resources. In co-production and joint venture

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agreements, government share in addition to that provided in this section,
shall be negotiated by the Secretary with the contractors: Provided, That the
government ears a reasonable rate of return on its investments.

SEC. 79. Occupation Fees. — There shall be collected from the
holders of mineral agreements, financial or technical assistance agreements
or permits, occupation fees in amounts prescribed by the Secretary and
provided in the implementing rules and regulations of this Act.

SEC. 80. Manner of Payment of Occupation Fees. ~The fees shall be
paid on the date the mineral agreement, financial or technical assistance
agreement or permit is registered with the appropriate mines regional office
and on the same date every year thereafter. It shall be paid to the treasurer of
the municipality or city where the onshore mining areas are located or to the
Secretary in case of offshore mining areas. If the fee is not paid on or before
the due date, a penalty of twenty-five percent (25%) of the fee shall be
imposed.

SEC. 81. Mine Waste and Tailings Fees. — A semi-annual fee to be
known as Mine Waste and Tailings Fee is hereby imposed on all operating
mines. This fee accrues to a reserve fund to be used exclusively for payment
‘on damages to:

a) Lives and personal safety;

b) Lands, agricultural crops, forest products, marine life and

aquatic resources and cultural resources; and

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c) Infrastructure and the revegetation and rehabilitation of silted
farmlands and other areas devoted to agriculture and fishing caused by
mining pollution.

This is in addition to the suspension or closure of the activities of the
contractor at any time and the penal sanctions imposed upon the contractor.

The Secretary is authorized to increase mine wastes and tailings fees
when public interest so requires.

SEC, 82. Filing Fees and Other Charges. ~The Secretary is
authorized to charge reasonable filing fees or other charges as the Secretary

may prescribe in the implementing rules and regulations of this Act.

CHAPTER XVII
INCENTIVES

SEC. 83. Mining Claims. — Except as provided in this Act, no other
taxes, fees or imposts may be imposed by the national or local governments
on mining claims involving mineral agreements, financial or technical
assistance agreements and permits.

SEC, 84. Environmental Protection and Enhancement Structures
and Equipment. — Environmental protection and enhancement structures and

equipment such as tailings dams, sedimentation ponds, pipelines, flumes and

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similar structures and equipment as may be determined by the Secretary are
not subject to real property or other taxes.
CHAPTER XVIII
GROUNDS FOR CANCELLATION, REVOCATION AND
TERMINATION

SEC. 85. Fixed Causes of Cancellation. — The causes of cancellation
provided for in this Act are considered inherent in all mineral agreements,
financial or technical assistance agreements or permits or other rights
hereunder, and no new cause or modification of such causes applies to the
agreement or permit existing at the time such new or modified causes are
made effective.

SEC. 86. Violations of Terms and Conditions of Agreements and
Permits. — Gross violation of the terms and conditions of the mineral
agreement, financial or technical assistance agreement or permit is sufficient
ground for the cancellation of the same.

SEC. 87. Falsehood and Omission of Facts. — All statements made in
the application for mineral agreement, financial or technical assistance
agreement or permit are considered as conditions and essential parts thereof
and any false statement or omission of facts which may alter, change or affect
substantially the facts set forth in the statements is a ground for the
termination of any mineral agreement, financial or technical assistance
agreement or permit.

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CHAPTER XIX
PENAL PROVISIONS

SEC. 88. False Statements.— Any person who knowingly presents or
causes to be presented 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, mineral agreements, financial or technical assistance agreements
or permits is guilty of perjury if such statement is made under oath and shall
be punished, upon conviction, in accordance with the provisions of the
Revised Penal Code. If the statement is not under oath, offender shall be
punished, upon conviction, with a fine of Ten Million Pesos
(P10,000,000.00).

SEC. 89. Intentional Overlapping. — Any person who intentionally
overlaps any mining claim knowing fully well that the area is already covered
by another valid and subsisting mining claim is guilty of falsification of
public documents punishable under the Revised Penal Code.

SEC. 90. Destruction of Claim Monuments and Marks. — Any person
who willfully and maliciously defaces, removes or disturbs any stake, post,
monuments, boundary line or any other mark lawfully placed on mining
claims or destroys, injures or defaces any rules or notices required under this
Act shall be punished, upon conviction, by a fine of One Million Pesos

(P1,000,000.00) apart from paying compensation for the expenses incurred in

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replacing the defaced altered, removed or disturbed stakes, posts,
monuments, boundary lines, notices or any other mark.

SEC. 91. Theft of Minerals. — Any person who, without a mineral
agreement, financial or technical assistance agreement or permit, extracts,
removes or disposes of for commercial purposes minerals belonging to the
Government or from a mining claim held by other persons without the
written permission of such claim owner is deemed to have stolen the ores or
the products therefrom from the mines or mills. The offender shall be
punished, upon conviction, by imprisonment for a period of six (6) months to
six (6) years or pay a fine of double the value of the minerals stolen or both,
at the discretion of the court, apart from paying the compensation for the
minerals extracted and disposed of, royalty taxes and the damage which may
have been caused thereby.

SEC. 92. Fraudulent Conveyance of Mining Interest. - Any person
who, with intent to gain, knowingly sells, transfers or conveys any false
mining claim or any false right, title or interest in such mining claims which
is not actually located on the ground and does not exist is guilty of estafa and
shall be punished, upon conviction, in accordance with the provisions of the
Revised Penal Code.

SEC. 93, Salting of Minerals and Mineral Lands. ~ Any person who
knowingly places or deposits or becomes accessory to the placing or
depositing of any mineral in any land for the purposes of “salting” or

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misleading other persons as to the value of the mineral deposits in such land,
or who knowingly co-mingles or causes to be co-mingled samples of
minerals with any other substance whatsoever which increases the value or in
any way changes the nature of the minerals for the purpose of deceiving,
cheating or defrauding any person, shall be punished, upon conviction, by
imprisonment not exceeding thirty (30) years apart from paying the
compensation for the damage which may have been caused thereby.

SEC. 94, Pollution from Mine Wastes and Mill Tailings. — Any
person who willfully causes or permits sludge or tailings and other mine and
mill wastes to accumulate in or flow from the area covered by the mineral
agreement, financial or technical assistance agreement or permit so as to
cause danger, injury or obstruction to any public road, river, stream or other
public property, shall be punished, upon conviction, by a fine not exceeding.
Five Million Pesos (P5,000,000.00) or imprisonment not exceeding six (6)
years, or both, at the discretion of the court, apart from paying the
compensation for the damage which may have been caused thereby,

SEC. 95. Interference with Mine Water Rights. — Any person who
willfully takes water from a mine, mill, dam, reservoir or from any other
source of mine water or prevents the water from entering the mine or mill,
dam, reservoir or any other source of mine water or in any way interferes in
the full enjoyment of water rights previously granted and lawfully held by

another person shall be punished, upon conviction, by a fine not exceeding

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Five Million Pesos (P5,000,000.00) or imprisonment not exceeding six (6)
months, or both, at the discretion of the court.

SEC. 96. Destruction of Mining Structures. — Any person who
willfully destroys or damages structure in contract areas under mineral
agreements, financial or technical assistance agreements or permits or on mill
sites shall be punished, upon conviction, by imprisonment not exceeding six
(6) years apart from paying compensation for the damage which may have
been caused thereby.

SEC. 97. Mine Arson. — Any person who willfully sets fire to any
mine, workings, mill or fittings shall be prosecuted in accordance with
Article 320 of the Revised Penal Code, as amended, apart from paying the
compensation for the damage which may have been caused thereby.

SEC. 98. Willfull Damage to a Mine. — Any person who willfully
damages and unlawfully causes water to flow into a mine, obstructs any shaft
or passage to a mine, damages or destroys or renders useless, any machine,
equipment, apparatus, rope, chain or any other thing used in a mine shall be
punished, upon conviction, by imprisonment not exceeding six (6) years apart
from paying the compensation for the damage which may have been caused
thereby.

SEC. 99. Illegal Obstruction to Government Officials. — Any

person who willfully obstructs, harasses or threatens the Secretary or the

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authorized representatives of the Secretary in the performance of duties
pursuant to this Act shall be punished, upon conviction, by a fine not
exceeding One Million Pesos (P1,000,000.00) or by imprisonment not
exceeding one (1) year, or both, at the discretion of the court.

SEC. 100, Ilegal Obstruction to Contractor or Permittee. — Any
person who, without justifiable cause, prevents or obstructs a contractor or
permittee from undertaking prospecting, exploration, development or
mining operations shall be punished, upon conviction, by a fine not
exceeding One Million Pesos (P1,000,000.00) or by imprisonment not
exceeding one (1) year, or both, at the discretion of the court,

SEC. 101. Delay in the Payment of Tax or Royalty. — Where the
amount of tax or royalty provided for under this Act is not paid on due date,
there shall be collected, as part of the amount due, a surcharge of five percent
(5%) per month compounded monthly from the due date until its full
payment.

SEC. 102. Offenses by Corporation. ~ Whenever any of the offenses
provided for under this Act is committed by a corporation or partnership, the
president of the corporation and all of its secretaries or managers or agents or
representatives of a foreign-owned corporation who directed or induced the

commission of the offense are criminally liable as principal thereof.


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CHAPTER XX
OTHER MISCELLANEOUS PROVISIONS

SEC. 103. Executive Officer. — The Secretary is the executive officer
charged with carrying out the provisions of this Act. Except as herein
provided, the Secretary shall issue the rules, regulations and orders
necessary to carry out the provisions and purposes of this Act.

SEC. 104. Conservation Measures. — All contractors and permittees
under this Act shall take appropriate measures and undertake researches in
accordance with the best practices to maximize recovery and utilization of
minerals and to stop or prevent wastes in mining and milling operations.
Rules and regulations may be issued which shall require contractors and
permittees to utilize in their exploration, development and mining operations
the latest and most improved methods and devices to prevent wastes, or from
causing pollution or otherwise damaging streams, surface and underground
water supply and valuable mineral deposits.

During the productive operation of any mine, the contractor or
permittee shall take the necessary measures to provide for the growth and
development of any industry suitable for the area, other than mining, in
order that when the mine is exhausted or becomes unprofitable for mining
purposes, the people residing therein or those who used to work for the
mine may have a substitute industry or business activity to provide for their

means of livelihood. The mine shall be placed in a condition suitable for

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habitation or agriculture and free from danger of cave-ins, slides and other
risks brought about by mining operations.

SEC. 105. Fixed Taxes and Fees. — Taxes and royalties which are
fixed by the provisions of this Act are considered as inherent in all mineral
agreements, financial or technical assistance agreements or permits and
remain at the rates and levels in force at the time such agreements or permits
were issued. Any increase in the amount or rate of taxes and royalties applies
only to agreements or permits subsequent to the effectivity of such increase.

SEC. 106. Minerals Not Included in Land Grants. — Land grants
to provinces, districts or municipalities to aid in the construction of
roads, or other public works do not include the minerals therein.

SEC. 107. Maps of Mine Workings Required. — Contractors and
permittees undertaking underground operations shall prepare and maintain a
map or maps of convenient scale showing their workings which shall be
updated and made available to the Secretary or the duly authorized
representative upon demand.

CHAPTER XXI
TRANSITORY AND FINAL PROVISIONS

SEC. 108. Abolition of the Mines and Geosciences Bureau. ~ The

Mines and Geosciences Bureau is hereby abolished subject to Section 110 of

this Act.

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SEC. 109. Transfer of Powers and Functions, ~ The powers and
functions of the Department of Environment and Natural Resources as far as
mineral resources are concerned, as well as all the powers and functions of
the Mines and Geosciences Bureau are hereby transferred to the Department
of Mineral Resources.

The foregoing transfer of power and functions includes all applicable
funds and appropriations. records, equipment, property and personnel as may
be necessary.

SEC. 110. Transfer of Rights, Assets and Liabilities. — The
Department shall, by virtue of this Act, be subrogated to all the rights and
assume all the liabilities of the Mines and Geosciences Bureau and all their
funds, records, property, assets, equipment and such personnel as necessary,
including unexpended appropriations or allocations. All contracts and
liabilities of the Mines and Geosciences Bureau are hereby transferred to and
assumed by the Department and shall be acted upon in accordance with the
Auditing Code and other pertinent laws, rules and regulations. The officers
and employees of the Mines and Geosciences Bureau shall continue in a
holdover capacity until such time that the new officers and employees of the
Department are appointed in accordance with this Act.

SEC. 111. Structure and Staffing Pattern. — The organizational
framework and staffing pattern of the Department shall be prescribed and

approved by the Secretary within sixty (60) days after the approval of this

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‘Act and the authorized positions created therein shall be filled by regular
appointments by the President or the Secretary as the case may be. In the
filling of positions created, preference shall be given to the personnel of the
Mines and Geosciences Bureau: Provided, That if such individuals possess
the same qualifications, seniority shall be given priority.

Any personnel of the Mines and Geosciences Bureau who is appointed
but fails to report for duty within fifteen (15) days from receipt of the
appointment is deemed to have declined the appointment, in which case the
position may be filled up by another qualified applicant. Those incumbents
whose positions are not included therein and who are not appointed to any
position in the Department or its bureaus within six (6) months from the
approval of the organizational framework and staffing pattern are deemed
separated from the service. Those separated from the service shall receive the
retirement benefits to which they may be entitled under existing laws, rules
and regulations. Otherwise, they shall be paid the equivalent of one (1) month
basic salary for every year of service in the government or a fraction thereof,
computed on the basis of highest salary received.

SEC. 112. Appropriations. — The amount necessary for the
implementation of this Act shall be taken from the current fiscal year’s
appropriations of the Mines and Geosciences Bureau and such other amounts
that the President may allocate from other resources provided that the total

amount shall not exceed Five Hundred Million Pesos (P500,000,000.00).

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‘Thereafter, the amount needed for the operation and maintenance of the
Department shall be included in the annual General Appropriations Act.

SEC. 113. Repealing Clause. — All laws, presidential decrees,
executive orders, rules and regulations contrary to or inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

SEC. 114. Effectivity. - This Act shall take effect fifteen (15) days.
after its publication in the Official Gazette or in a newspaper of general
circulation.

Approved,

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