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fe RECEIVED
3 DATE:DEC 09 ni

Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quejon City

EIGHTEENTH CONGRESS.
Second Regular Session

HOUSE BILL NO. 8184

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT
AMENDING CERTAIN PORTIONS OF REPUBLIC ACT NO. 7942, OTHERWISE
KNOWN AS THE “PHILIPPINE MINING ACT OF 1995” BY PROHIBITING
MINING IN WATERSHEDS, REQUIRING A LEGISLATIVE FRANCHISE FOR
MINING OPERATIONS, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

The Philippines is very rich in natural resources. With an estimated worth of
1.4 trillion US Dollars in minerals, it is among the top five most mineralized
countries in the world. From 2008 to 2014 alone, PhP 650 billion worth of minerals
were extracted with gold and nickel accounting for 70%. From 2012-2014, the oil
and gas sector contributed PhP 128 billion to the government treasury.

The challenge for government is to ensure proceeds translate into
sustainable development, environmental protection, and greater transparency and
accountability in the mining industry.

Watershed Protection

Watersheds serve a critical function for the environment and the Philippine society
as a whole. A mining disaster that affects a watershed creates a crisis of immense
proportion. Hence, it is imperative to adopt a preemptive approach in protecting
said watersheds. To allow mining in those areas is too risky.

There are different classifications of watersheds. The Mining Act of 1995 includes
proclaimed watersheds as an area closed to mining applications. In order to clarify
the extend of said protection, this bill explicitly includes watersheds, in general, as


well as critical watersheds, as part of the enumerated areas closed to mining
applications.

Legislative Franchise for Mining Operations

With the liberalization of the mining industry in the country, it is important to note
that it is among the least contributors to the country’s wealth which only peaked at
1.63% in 2007. The present mining companies are not performing at par with the
potential of the industry. By requiring mining firms to acquire a legislative franchise,
the people, through their elected representatives, would be able to scrutinize the
applicants, their capability and track record, in order to make sure that only
responsible mining firms are allowed to operate in the country.

Thus, the proposed measure requires the acquisition of a legislative franchise from
Congress for mining operations in the Philippines. Hopefully, this creates a more
rigid and transparent process which weeds out the underserving companies from
securing a mining permit. As a result, the country and its people shall be the first
to benefit from the extracted minerals.

Greater Transparency and Accountability

The mining industry can contribute more to the government in terms of providing
the latter its fair share in the revenue generated. This can only be achieved in an
atmosphere of transparency which facilitates accountability. Unfortunately, there
have been reports that permits and agreements have confidentiality clauses which
preclude watchdogs from examining the arrangements entered into by the
government with the mining firms.

To stop this practice, this bill clarifies that the contents of said permits and
agreements are considered public information. Further, confidentiality clauses
which shroud in secrecy the contents of the permits and agreements are null and
void.

Mandatory Domestic Processing of Mineral Ores

This bill seeks to provide for the mandatory domestic processing of all mineral ores
in the Philippines and banning of the exportation of unprocessed mineral ores, as.
determined by the Department of Environment and Natural Resources (“DENR’).

According to Economic Planning Secretary Ernesto Pemia, ‘the Philippines,
despite its relatively small land area, is one the world’s most well-endowed
countries in terms of mineral resources.” The Mine and Geosciences Bureau of
the DENR also reported that about 30% or 9 million hectares of the country's total
land area have high mineral potential. In addition, from 2011 to 2015, the mining
sector generated an average of 236,400 jobs annually. Despite this, the mining


sector’s contribution in terms of gross value-added remains relatively low at an
average of 0.7% of the country’s gross domestic product.

One of the reasons pointed out for the insignificant contribution of the mining
industry to the country's economy is the fact that mineral ores in the country after
being mined or extracted, while still unprocessed, are already exported directly to
foreign countries as raw materials. Downstream mining industry has not been
developed. Thus, the benefits of added value through the value-chain of mineral
processing from mining cannot be maximized.

This proposed measure requires the processing of all mineral ores, as determined
by the DENR, within the Philippines and in the province where the minerals were
extracted. As'a result, it imposes the ban on the export of unprocessed mineral
ores to help develop ‘the mineral processing industry in the Philippines and to
benefit the localities where the minerals came from.

The country and its people should be the first to benefit from the extracted minerals
through employment, business opportunities and share in the profits. This will
enable the mining sector to realize its full potential and increase its role in nation-
building

Repeal of Creditable Activities

Lastly, an area of reported abuses lies in the credited activities provided for in
Section 58 of the Mining Act of 1995. The value of these activities can easily be
bloated and then credited as an expenditure. As a result, the basis from which the
share of the government shall be computed is greatly reduced. To prevent this
from happening, this bill repeals Section 58.

In view of the foregoing, the passage of this bill is eamestly sought.

ai A

LUIS RAYMUND “LRay’ F. VILLAFUERTE JR.


Republic of the Philippines:
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL no8l84

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT
AMENDING CERTAIN PORTIONS OF REPUBLIC ACT NO. 7942, OTHERWISE
KNOWN AS THE “PHILIPPINE MINING ACT OF 1995” BY PROHIBITING
MINING IN WATERSHEDS, REQUIRING A LEGISLATIVE FRANCHISE FOR
MINING OPERATIONS, AND FOR OTHER PURPOSES

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

SECTION 1. Section 5 of Republic Act No. 7942 is hereby amended to read as
follows:

“SEC. 5. Mineral Reservations — When the national interest so requires,
such as when there is a need to preserve strategic raw materials for industries
critical to national development, or certain minerals for scientific, cultural or
ecological value, the President may establish mineral reservations upon the
recommendation of the Director through the Secretary. Mining operations in existing
mineral reservations and such other reservations as may thereafter be established,
shall be undertaken by the Department or through a contractor: Provided, THAT
PRIVATE CONTRACTORS MUCT FIRST SECURE A LEGISLATIVE FRANCHISE
AS A PREREQUISITE BEFORE THEY COULD APPLY FOR AN EXPLORATION
PERMIT, MINERAL AGREEMENT UNDER SECTION 26 OF REPUBLIC ACT.
7942, OR FINANCIAL AND/OR TECHNICAL ASSISTANCE AGREEMENT.
FURTHER, THE TERMS AND CONDITIONS OF SAID PERMITS AND
AGREEMENTS ARE CONSIDERED PUBLIC INFORMATION. ANY CLAUSE OR
PROVISION PROVIDING FOR THE CONFIDENTIALITY OF THE CONTENTS,
ESPECIALLY THE FINANCIAL TERMS AND CONDITIONS, ARE NULL AND
voID.


EXPLORATION PERMITS, MINERAL AGREEMENTS AS ENUMERATED
IN SECTION 26 OF REPUBLIC ACT. 7942, AND FINANCIAL AND/OR
TECHNICAL ASSISTANCE AGREEMENTS APPLIED FOR AND THEREAFTER
APPROVED WITHOUT FIRST SECURING A LEGISLATIVE FRANCHISE SHALL
BE NULL AND VOID.

PRIVATE CONTRACTORS PRESENTLY HOLDING EXPLORATIONS
PERMITS, MINERAL AGREEMENTS UNDER SECTION 26 OF REPUBLIC ACT
7942, AND FINANCIAL AND/OR TECHNICAL ASSISTANCE AGREEMENTS,
HAVE ONE (1) YEAR FROM THE TIME THIS LAW TAKES EFFECT TO SECURE
A LEGISLATIVE FRANCHISE OTHERWISE SAID PERMITS AND
AGREEMENTS SHALL EXPIRE.

PROVIDED, FURTHER, That a small-scale mining cooperative covered by
Republic Act No. 7076 shall be given preferential right to apply for a small-scale
mining agreement for a maximum aggregate area of twenty-five HECTARES
[(25%)] of such mineral reservation, subject to valid existing mining/quarrying rights
as provided under Section 112 Chapter XX hereof, AND PROVIDED THAT THERE
IS NO ENCROACHMENT INTO AREAS OUTSIDE THE MINING AGREEMENT.
All submerged lands within the contiguous zone and in the exclusive economic zone
of the Philippines are hereby declared to be mineral reservations.

Aten per centum (10%) share of all royalties and revenues to be derived by
the government from the development and utilization of the mineral resources within
mineral reservations as provided under this Act shall accrue to the Mines and
Geosciences Bureau to be allotted for special projects and other administrative
expenses related to the exploration and development of the other mineral
reservations mentioned in Section 6 hereof.”

SEC. 2. Section 19 is hereby amended to read as follows:
“Section 19.Areas Closed to Mining Application

Mineral agreement or financial or technical assistance agreement applications shall
not be allowed:

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

b. Near or under public or private buildings, cemeteries, archeological and historic
sites, bridges, highways, waterways, railroads, reservoirs, dams or other
infrastructure projects, public or private works including plantations or valuable
crops, except upon written consent of the government agency or private entity
concerned.


c. In areas covered by valid and existing mining rights;
d. In areas expressly prohibited by law;

e. In areas covered by small-scale miners as defined by law unless with prior
consent of the small-scale miners, in which case a royalty payment upon the
utilization of minerals shall be agreed upon by the parties, said royalty forming a
trust fund for the socioeconomic development of the community concemed; and

f. Old growth or virgin forests, WATERSHEDS, proclaimed watershed forest
reserves, CRITICAL WATERSHED, wilderness areas, mangrove forests, mossy
forests, national parks provincial/municipal forests, parks, greenbelts, game refuge
and bird sanctuaries as defined by law and in areas expressly prohibited under the
National Integrated Protected Areas System (NIPAS) under Republic Act No. 7586,
Department Administrative Order No. 25, series of 1992 and other laws.

PUBLIC OFFICERS OR EMPLOYEES WHO FACILITATE THE APPROVAL OF
PERMITS IN AREAS WHICH ARE CLOSED TO MINING OPERATIONS SHALL
SUFFER THE PENALTY OF IMPRISONMENT FOR A PERIOD NOT LESS THAN
‘SIX (6) YEARS BUT NOT MORE THAN TWELVE (12) YEARS, AND PAY THE
FINE AMOUNTING TO TWO MILLION PESOS (PHP 2,000,000.00) PER
VIOLATION. SAID PUBLIC OFFICER OR EMPLOYEE SHALL LIKEWISE BE
ABSOLUTELY AND PERPETUALLY DISQUALIFIED FROM HOLDING PUBLIC
OFFICE.

PRIVATE PERSONS ACTING IN CONSPIRACY WITH THE PUBLIC OFFICERS
OR EMPLOYEES DESCRIBED IN THE IMMEDIATELY PRECEEDING
PARAGRAPH, SHALL LIKEWISE SUFFER THE SAME PERIOD OF
IMPRISONMENT AND AMOUNT OF FINE.

SEC. 3. Section 27 of Republic Act No. 7942 is hereby amended to read as follows:

“SEC. 27. Eligibility. - A qualified person may enter into any of the three (3)
modes of minerals agreement with the government for the exploration, development
and utilization of mineral resources: Provided, THAT THE APPLICANT HAS
ACQUIRED A LEGISLATIVE FRANCHISE PRIOR TO ITS APPLICATION FOR A
MINERAL AGREEMENT: Provided further, That in case the applicant has been in
the mining industry for any length of time, he should possess a satisfactory
environmental track record as determined by the Mines and Geosciences Bureau
and in consultation with the Environmental Management Bureau of the Department.

SEC. 4. Section 30 of Republic Act No. 7942 is hereby amended to read as follows:


“SEC. 30. Assignment/Transfer - Any assignment or transfer of rights and
obligations under any mineral agreement [except a financial or technical
assistance agreement] shall be subject to the prior approval of CONGRESS AND
the Secretary. [Such assignment or transfer shall be deemed automatically
approved if not acted upon by the Secretary within thirty (30) working days
from official receipt thereof, unless patently unconstitutional or illegat.}

SEC. 5. Section 31 of Republic Act No. 7942 is hereby amended to read as follows:

“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, make continued mining operations no longer feasible or viable. The
Secretary shall consider the notice and issue its decision within a period of thirty
(30) days: Provided, That the contractor has met all its financial, fiscal and legal
obligations: PROVIDED, FURTHER, THAT THE SECRETARY SHALL INFORM
CONGRESS BEFORE ANY ACTION IS TAKEN WITH REGARD TO THE
WITHDRAWAL OR CANCELLATION OF A MINERAL AGREEMENT.”

PRIVATE CONTRACTORS MUST FULLY REHABILITATE THE AREAS THEY
UTILIZED AND/OR OPERATED IN BY RESTORING THE ENVIRONMENTAL
AND ECOLOGICAL BALANCE OF SAID AREA WITHIN TEN (10) YEARS
RECKONED FROM THE EXPIRATION DATE OF THE EXPLORATION PERMITS,
THE MINERAL AGREEMENTS, AND THE FINANCIAL AND TECHNICAL
ASSISTANCE AGREEMENT, WHICHEVER IS APPLICABLE.

VIOLATIONS OF THE IMMEDIATELY PRECEEDING PARAGRAPH SHALL BE
PUNISHABLE WITH THE PENALTY OF ONE HUNDRED MILLION PESOS (PHP
100,000,000.00) PER HECTARE THAT HAS NOT BEEN REHABILITATED. THE
MEMBERS OF THE BOARD OF DIRECTORS, PARTNERS, OR SOLE
PROPRIETOR OF THE PRIVATE CONTRACTORIS SHALL BE DIRECTLY
LIABLE FOR SAID PENALTY.

SEC. 6. Section 32 of Republic Act No. 7942 is hereby amended to read as follows:

“SEC. 32. Terms. — Mineral agreements shall have a term not exceeding
TEN (10) [twenty-five (25)] years to start from the date of execution thereof, and
renewable for another term not exceeding TEN (10) [twenty-five (25)] years under
the same terms and conditions thereof, provided that no violations were committed,
without prejudice to changes mutually agreed upon by the parties. After the renewal
period, the operation of the mine may be undertaken by the Government or through
a contractor WITH A LEGISLATIVE FRANCHISE. 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: Provided, That the contractor shall have the right


to equal the highest bid upon reimbursement of all reasonable expenses of the
highest bidder.”

SEC. 7. Section 33 of Republic Act No. 7942 is hereby amended to read as follows:

“SEC. 33. Eligibility. — Any qualified person with technical and financial
capability to undertake large-scale exploration, development, and utilization of
mineral resources in the Philippines may enter into a financial or technical
assistance agreement directly with the Government through the Department:
PROVIDED, THAT A LEGISLATIVE FRANCHISE SHALL BE OBTAINED BY THE
PERSON PRIOR TO THE APPROVAL OF THE FINANCIAL AND TECHNICAL
ASSISTANCE AGREEMENT.”

SEC. 8. Section 39 of Republic Act No. 7942 is hereby amended to read as follows:

“SEC. 39. Option to Convert into a Mineral Agreement. — The contractor has
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 contract area is found to be inadequate to justify large-scale mining operations
after proper notice to the Secretary AND CONGRESS as provided for under the
implementing rules and regulations: Provided, That the mineral agreement shall only
be for the remaining period of the original agreement. In the case of a foreign
contractor, it shall reduce the equity to forty percent (40%) in the corporation,
partnership, association, or cooperative. Upon compliance with this requirement by
the contractor, the Secretary shall approve the conversion and execute the mineral
production sharing agreement, AND SHALL INFORM CONGRESS OF THE
CHANGE IN AGREEMENT,

SEC. 9. Sec. 41 of Republic Act No. 7942 is hereby amended to read as follows:

"SEC. 41. Withdrawal from Financial or Technical Assistance Agreement. —
The contractor shall manifest in writing to the Secretary AND CONGRESS his
intention to withdraw from the agreement, if in his judgement, the mining project is
no longer economically feasible, even after he has exerted reasonable diligence to
remedy the cause or the situation. The Secretary may accept the withdrawal:
Provided, That the contractor has complied or satisfied all his financial, fiscal or legal
obligations. PROVIDED, FURTHER, THAT THE SECRETARY SHALL INFORM
CONGRESS BEFORE ANY ACTION IS TAKEN WITH REGARD TO THE
WITHDRAWAL OR CANCELLATION OF A MINERAL AGREEMENT.”

THE LEGAL OBLIGATIONS AND LIABILITIES IMPOSED IN SEC. 31 OF
THIS ACT SHALL LIKEWISE BE APPLICABLE TO THE IMMEDIATELY
PRECEEDING PARAGRAPH.


SEC. 10. Sec 53. of Republic Act No. 7942 is hereby repealed.

SEC. 11. Section 55 of Republic Act No. 7942 is also hereby amended to read as
follows:

“SEC. 55. Minerals Processing Permit. — No person shall engage in the
processing of minerals without first securing a minerals processing permit from the
Secretary. Minerals processing permit shall be for a period of TEN (10) [five (5)]
years renewable for like period but not to exceed a total term of ~ TEN (10) [twenty-
five (25)] years. In the case of mineral ores or minerals produced by the small-scale
miners, the processing thereof as well as the licensing of their custom mills, or
processing plants shall continue to be governed by the provisions of Republic Act
No. 7076.”

MINERAL ORES EXTRACTED UNDER THE PROVISIONS OF THIS ACT SHALL

BE PROCESSED WITHIN THE PHILIPPINES AND IN THE PROVINCE WHERE

THE EXTRACTION OCCURRED AND THOSE GRANTED A MINING

PROCESSING PERMIT SHALL NOT EXPORT THE UNPROCESSED MINERAL
RES.”

SEC. 12. Section 58 of the same Act relating to “Credited Activities” is hereby
repealed.

SEC. 13. Section 70 of the same Act is hereby amended to read as follows:

Section 70A. Environmental Impact Assessment (EIA) — Except during the
exploration period of a mineral agreement or financial or technical assistance
agreement or an exploration permit, an environmental clearance certificate shall be
required based on an environmental impact assessment and procedures under the
Philippine Environmental Impact Assessment System including Sections 26 and 27
of the Local Government Code of 1991 which require national agencies to maintain
ecological balance, and prior consultation with the local government units, non-
governmental and people's organizations and other concerned sectors of the
community: Provided, that a completed ecological profile of the proposed mining
area shall also constitute part of the environmental impact assessment. People’s
organizations and non-governmental organizations shall be allowed and
encouraged to participate in ensuring that contractors/permittees shall observe all
the requirements of environmental protection.

SECTION 70B. PERIODIC ASSESSMENT OF WASTE DISPOSAL - PRIVATE
CONTRACTORS SHALL SYSTEMATICALLY DISPOSE THEIR WASTE IN A
MANNER NOT HARMFUL TO THE ENVIRONMENT ANS SHALL SUBMIT
ANNUAL WASTE DISPOSAL RESPORTS TO THE ENVIRONMENTAL
MANAGEMENT BUREAU AND MINES AND GEOSCIENCES BUREAU OF
DENR. FURTHER, SAID PRIVATE CONTRACTORS ARE COVERED BY
REPUBLIC ACT 6969, ALSO KNOWN AS “AN ACT TO CONTROL TOXIC
SUBSTANCES AND HAZARDOUS AND NUCLEAR WASTE, PROVIDING


PENALTIES FOR VIOLATIONS THEREOF, AND FOR OTHER PURPOSES”
WHENEVER APPLICABLE.

SEC. 14. Section 103 of the same Act is hereby amended to read as follows:

“SEC. 103. Theft of Minerals; ILLEGAL EXPORT OF UNPROCESSED
MINERAL ORES. — Any person who, ALONE OR IN CONSPIRACY WITH
OTHERS, extracts minerals and disposes of the same without a mining agreement,
lease, permit, license, or steals minerals or ores or the products thereof from mines
or mills or processing plants shall, upon conviction, be imprisoned from six (6)
months to six (6) years AND pay a fine ranging from Five Hundred Thousand pesos
(Php 500,000.00) AND AN ADDITIONAL One Million pesos (Php 1,000,000.00)
PER TON OF ORE ILLEGALLY EXPORTED. THE SAME PENALTIES SHALL
APPLY FOR THOSE WHO ATTEMPT TO ILLEGALLY EXPORT THE
UNPROCESSED MINERAL ORES. In addition, he shall be liable to pay damages
and compensation for the minerals removed, extracted, and disposed of.
FURTHER, THE CORPORATION, AS WELL AS ITS DIRECTORS, PARTNERS
IN A PARTNERSHIP, OR THE REGISTERED OWNER OF THE SOLE
PROPRIETORSHIP, SHALL BE SOLIDARILY LIABLE FOR PENALTIES
APPLIED AGAINTS THEIR PERSONNEL WHO ENGAGED IN ACTS
PUNISHABLE UNDER THIS ARTICLE.

ANY PERSON WHO, ACTING ALONE OR IN CONSPIRACY WITH OTHERS,
WHO EXPORTS OR ATTEMPTS TO EXPORT UNPROCESSED MINERAL ORES
SHALL, UPON CONVICTION, BE PUNISHED BY IMPRISONMENT OF NOT
LESS THAN SIX (6) YEARS AND ONE (1) DAY BUT NOT MORE THAN TWELVE.
(12) YEARS, AND A FINE AMOUNTING TO THRICE THE HIGHEST MARKET
VALUE OF THE SEIZED UNPROCESSED MINERAL ORES, AS DETERMINED
BY THE COURT, BUT IN NO CASE LOWER THAN ONE MILLION PESOS (PHP
1,000,000.00) PER VIOLATION. IN ADDITION, SEIZED UNPROCESSED
MINERAL ORES SHALL BE CONFISCATED BY THE GOVERNMENT.

In the case of sole-proprietorships, associations, partnerships, or corporations, the
president and each of the directors, the partners, and the registered owner, shall be
SOLIDARILY responsible for the acts committed by their personnel who are
convicted under this section.”

SEC. 15. Separability Clause. If any provision of this law or the application
thereof to any person or circumstances is held invalid, the remainder of the law or
the application of such provision or part thereof to other persons or circumstances
shall not be affected thereby.

SEC. 16. Repealing Clause. All laws, decrees, orders, issuances, rules and
regulations or parts thereof inconsistent with the provisions of this Act are hereby
repealed or modified accordingly.


SEC. 17. Effectivity. This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,