NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
fl«nate
of tjjf IfefffftR
•22 JUL28 P5 ®3
RECEIVED SK
SENATE 
S. B. NO. 927
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 experienced 
considerable expansion. However, it is still unclear whether the industry has 
made significant economic and social benefits. 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 ninety percent (90%) of the gross proceeds 
of coal as operating 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. For example, oil and 
natural gas operators are only allowed to deduct up to seventy percent (70%) 
of total proceeds of their extractions as expenses.
Compounding this situation is the reality that 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 “are also chargeable as Operating Expanses”, as explicitly 
stated in the “Guidelines for Coal Operations in the Philippines.”1
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, as amended by Presidential Decree No. 1174, to increase the 
public share from the coal proceeds, minimize the environmental impact of 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.
Thus, the immediate passage of this bill is earnestly sought.
SENATOR
L VILLANUEVA
1 Department of Energy, Detailed Description of Certain Accounts, DOE BED Circular 81-11-10, Detailed Description 
of 
Certain 
Accounts, 
Item 
5(s), 
accessible 
at
https://www.doe.gov.ph/sites/default/files/pdf/pecr5/coal_bed_circular_81_11_10.pdf (date last accessed; July 26, 
2022)
“(5) Operating Expenses.
(s) Cost ore expenses paid or incurred by the operator, which includes taxes and licenses such as privilege taxes of 
employees borne by the operator. Where the operator is not subject to pay a tax or duty but has such tax, the amount 
so paid shall not form part of the operating expenses. Income taxes of the operator are also chargeable as Operating 
Expenses.”


gwcretarf
NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
72 
f 5 ®3
RECEIVED BV:
SENATE
S. B. NO. 927
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
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22 
23
SECTION 1. Section 9 of Presidential Decree No. 972 (PD 972), as 
amended by Presidential Decree No. 1174 (PD 1174), is hereby further 
amended to read as follows:
“SEC. 9. Obligations of Operator in a Coal Operating Contract
“x X X
“On the other hand, the [Energy Development Board]
DEPARTMENT OF ENERGY shall:
(a) On behalf of the Government, reimburse the operator for all 
operating expenses not exceeding SEVENTY PERCENT 
(70%) of the gross proceeds from production in any year; 
Provided, That if in any year, the operating expenses exceed 
SEVENTY PERCENT (70%) of the gross proceeds from 
production, then the unrecovered expenses shall be 
recovered from the operation of succeeding years. Operating 
expenses means the total expenditures for coal operation 
incurred by the operator as provided in a coal operating 
contract. OPERATING EXPENSES TO BE DEDUCTED 
FROM THE GROSS PROCEEDS SHALL EXCLUDE TAXES,
FEES, OR CHARGES, INCLUDING RELATED


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
SURCHARGES, INTERESTS OR FINES, PAID TO THE 
NATIONAL AND LOCAL GOVERNMENT.”
SEC. 2. Section 10 of PD 972, as amended by PD 1174, is hereby 
REPEALED and a new Section 10 is provided to read as follows:
“SEC. 10. SOCIAL DEVELOPMENT. EACH CONTRACTOR 
SHALL ALLOT AT LEAST ONE AND A HALF PERCENT (1.5%)
OF ITS OPERATING COST TO ASSIST IN THE 
DEVELOPMENT OF ITS HOST COMMUNITY, AS WELL AS 
NEARBY COMMUNITIES, AND IN THE PROMOTION OF THE 
GENERAL WELFARE OF ITS INHABITANTS.”
SEC. 3. A new Section 10-A of PD 972, as amended by PD 1174, is 
hereby inserted 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 STATEMENT 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


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
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.
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 SHALL BE USED 
FOR THE 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;
SEC. 7. Implementing Rules and Regulations.-W\{h'm sixty (60) days 
from the effectivity of this Act, the Department of Energy (DOE), in consultation 
with the Department of Environmental and Natural Resources (DENR), Bureau 
of Internal Revenue (BIR) and other concerned stakeholders, shall promulgate 
the rules and regulations for the effective implementation of this Act.
SEC. 8. 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. 9. 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. 10. Effectivity. - This Act shall take effect fifteen (15) days after 
its publication in the Official Gazette or in two (2) newspapers of general 
circulation.
Approved,