EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE 
S. B. NO.
O f.-K 
■•-■‘fl'T
*19 JUL 18 P1 32
RECu. 
>1.
Introduced by SENATOR JOEL VILLANUEVA
AN ACT
AMENDING PRESIDENTIAL DECREE NO. 972, AS AMENDED 
BY PRESIDENTIAL DECREE NO. 1174, OTHERWISE KNOWN 
AS THE “ COAL MINING DEVELOPMENT ACT OF 1976” 
AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Over the decades, the Philippine coal mining industry has displayed a 
considerable expansion. 
Nevertheless, whether the industry has made 
significant economic and social benefits remains a question. Currently, coal 
mining contributes a measly share to the public sector. 
Under existing 
sharing scheme of the coal revenues, a coal mining company can deduct as 
much as 90% of the gross proceeds of coal as expenses. 
While such 
deductions are commonly allowed among government contracts with 
extractive industries, the proportion of recoverable cost for coal operators is 
among the highest; oil and natural gas operators, for example, are only 
allowed to deduct up to 70% of total proceeds of their extractions as 
expenses.
From the remaining 10% of gross proceeds, the company receives a 
share equal to 7%. This is tantamount to the sum of the company’s “basic 
fees” and “special allowances.” Thus, the state -  the inherent owner of these 
extracted resources -  is left with a measly share of 3% of the gross proceeds 
from coal.
As part of its incentives, coal mining operators are also exempted from 
payment of all national taxes, except income tax. However, a company’s 
income tax expense may be included in the total amount of expenditure to be 
deducted from the total sale of coal, as explicitly stated in the “Guidelines for 
Coal Operations in the Philippines.”


Moreover, the governing law on coal mining operation -  last amended 
in 1977 -  needs to be strengthened to minimize the unwanted environmental 
impact of coal mining operations. Lastly, like other mineral mining companies, 
coal operators need to directly contribute to the sustainable development of 
their host communities. This is to ensure that significant benefits from the use 
of the country’s finite resources are enjoyed by the current and future 
generations.
In consideration of these factors, this bill seeks to amend Presidential 
Decree No. 972 to increase the public share from the coal proceeds, minimize 
the environmental impact of the coal mining operations, and strengthen the 
role of coal operators to the development of communities:
a) Lower the proportion of allowable deduction from 90% to 70% of gross 
proceeds, and exclude taxes and fees from the items included in the 
operating expense to be deducted from the gross proceeds;
b) Repeal the 30% special allowance, thus leave the share of operators to 
40% of net proceeds;
c) Exclude excise taxes on coal and local taxes, fees, and charges from 
the incentives granted to operators;
d) Require operators to incorporate an Environmental Protection and 
Enhancement Program in the operators’ exploration and production 
programs;
e) Create a Mine Rehabilitation Fund to be used for physical and social 
rehabilitation of areas and communities affected by coal mining 
activities, among others; and
f) Require coal mining operators to allocate 1.5% of their operating 
expense for programs and projects designed to improve the well-being 
of host communities.
The immediate passage of this bill is earnestly sought.
SENATOR JOEL VILLANUEVA


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
C l **!•: thics'Ur:^
SENATE
S. B. NO. 613
'19 
JUL 18 PI 32
Introduced by SENATOR JOEL VILLANUEVA
AN ACT
AMENDING PRESIDENTIAL DECREE NO. 972, AS AMENDED BY 
PRESIDENTIAL DECREE NO. 1174, OTHERWISE KNOWN AS THE 
“ COAL MINING DEVELOPMENT ACT OF 1976”
AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
1 
SECTION 1. Section 9 of Presidential Decree No. 972 (PD 972), as amended
2 
by Presidential Decree No. 1174 (PD 1174), is hereby further amended to
3 
read as follows;
4 
“SEC. 9. Obligations of Operator in a Coal Operating Contract.
5 
“x  X X
6 
“On the other hand, the Energy Development Board shall;
7 
(a) On behalf of the Government, reimburse the operator for all
8 
operating expenses not exceeding SEVENTY PERCENT (70%) of
9 
the gross proceeds from production in any year; Provided, that if in
10 
any year, the operating expenses exceed SEVENTY PER CENT
11 
(70%) of the gross proceeds from production, then the unrecovered
12 
expenses shall be recovered from the operating of succeeding
13 
years. Operating expenses means the total expenditures for coal
14 
operating incurred by the operator as provided in a coal operating
15 
contract. 
OPERATING EXPENSES TO BE DEDUCTED FROM
16 
THE GROSS PROCEEDS SHALL EXCLUDE TAXES, FEES, OR
17 
CHARGES, INCLUDING RELATED SURCHARGES, INTERESTS
18 
OR 
FINES, 
PAID 
TO 
THE 
NATIONAL 
AND 
LOCAL
19 
GOVERNMENT.
20
x X X


2 
SEC. 2. Section 10 of PD 972, as amended by PD 1174, is hereby
3 
REPEALED and a new Section 10 is provided to read as follows:
4 
“SEC. 10. SOCIAL DEVELOPMENT. 
EACH CONTRACTOR SHALL
5 
ALLOT AT LEAST ONE AND A HALF PERCENT (1.5%) OF ITS
6 
OPERATING COST TO ASSIST IN THE DEVELOPMENT OF ITS HOST
7 
COMMUNITY, AS WELL AS NEARBY COMMUNITIES, AND IN THE
8 
PROMOTION OF THE GENERAL WELFARE OF ITS INHABITANTS.”
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
SEC. 3. A new Section 10-A of PD 972, as amended by PD 1174, is hereby 
amended to read as follow:
“SEC. 10-A. ENVIRONMENTAL PROTECTION. 
EACH CONTRACTOR 
SHALL 
UNDERTAKE 
AN 
ENVIRONMENTAL 
PROTECTION 
AND 
ENHANCEMENT PROGRAM COVERING THE PERIOD OF THE COAL 
OPERATING CONTRACT. SUCH ENVIRONMENTAL PROGRAM SHALL 
BE INCORPORATED IN BOTH THE EXPLORATION PROGRAM AND 
DEVELOPMENT 
AND 
PRODUCTION 
PROGRAM. 
THE
ENVIRONMENTAL PROGRAM SHALL INCLUDE NOT ONLY PLANS 
RELATIVE TO EXPLORATION AND PRODUCTION OPERATIONS BUT 
ALSO TO REHABILITATION, REGENERATION, REVEGETATION AND 
REFORESTATION 
OF 
COAL 
CONTRACT 
AREAS, 
SLOPE 
STABILIZATION 
OF 
THE 
COVERED 
AREAS, 
AQUACULTURE, 
WATERSHED DEVELOPMENT AND WATER CONSERVATION."
SEC. 4. A new Section 10-B of PD 972, as amended by PD 1174, is hereby 
inserted to read as follow:
“SEC. 
10-B. 
ENVIRONMENTAL IMPACT ASSESSMENT. 
EXCEPT 
DURING THE EXPLORATION PERIOD OF A COAL MINING CONTRACT, 
AN 
ENVIRONMENTAL 
CLEARANCE 
CERTIFICATE 
SHALL 
BE 
REQUIRED BASED ON AN ENVIRONMENTAL IMPACT ASSESSMENT 
AND PROCEDURES UNDER THE PHILIPPINE ENVIRONMENTAL 
IMPACT ASSESSMENT SYSTEM, AND SECTIONS 26 AND 27 OF THE 
LOCAL GOVERNMENT CODE OF 1991 WHICH REQUIRE NATIONAL 
GOVERNMENT 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 COAL 
CONTRACT 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 SHALL 
OBSERVE ALL THE 
REQUIREMENTS OF ENVIRONMENTAL PROTECTION.


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
SEC. 5. A new Section 10-C of PD 972, as amended by PD 1174, is hereby 
inserted to read as follow:
“SEC. 10-C. REHABILITATION. CONTRACTORS SHALL TECHNICALLY 
AND BIOLOGICALLY REHABILITATE THE COAL CONTRACT AREAS 
TO THE CONDITION OF ENVIRONMENTAL SAFETY, AS MAY BE 
PROVIDED IN THE IMPLEMENTING RULES AND REGULATIONS OF 
THIS ACT. A MINE REHABILITATION FUND SHALL BE CREATED 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 
COAL MINING ACTIVITIES AND FOR RESEARCH ON THE SOCIAL, 
TECHNICAL AND PREVENTIVE ASPECTS OF REHABILITATION. 
FAILURE TO FULFILL THE ABOVE OBLIGATION SHALL MEAN 
IMMEDIATE SUSPENSION OR CLOSURE OF THE COAL MINING 
ACTIVITIES OF THE CONTRACTOR CONCERNED.”
SEC. 6. Section 16 of PD 972, as amended by PD 1174, is hereby amended 
to read as follows:
“SEC. 16. Incentives to Operators.
(a) Exemption from all taxes except income tax, EXCISE TAXES, AND 
LOCAL TAXES, FEES, AND CHARGES IMPOSED BY LOCAL 
GOVERNMENT 
UNITS 
HOSTING 
THE 
COAL 
MINING 
OPERATION;
"x X X
SEC. 7. Implementing Rules and Regulations. -  Within sixty (60) days from 
the effectivity of this Act, the Department of Energy, in consultation with the 
Department of Environmental and Natural Resources, Bureau of Internal 
Revenue and other concerned stakeholders, shall promulgate the rules and 
regulations for the effective implementation of this Act.
SEC. 7. Separability Clause. -  If any provision of this Act is declared 
unconstitutional or invalid, other parts or provisions hereof not affected 
thereby shall continue to be in full force and effect.
SEC. 8. Repealing Clause. -  All laws, decrees, executive orders, rules and 
regulations or parts thereof which are contrary to or inconsistent with this Act 
are hereby repealed, amended or modified accordingly.
SEC. 9. Effectivity. -  This Act shall take effect fifteen (15) days after its 
publication in this Official Gazette or in any two newspapers of general 
circulation.
42 
Approved,