EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE
S. B. NO. 710
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Introduced by SENATOR JOEL VILLANUEVA
AN ACT
PROVIDING FOR THE MAXIMIZATION OF BENEFITS FROM 
FINITE MINERALS AND MINERAL PRODUCTS AND QUARRY 
RESOURCES AND FOR OTHER PURPOSES
EXPLANATORY NOTE
The Filipino people are the inherent owners of the mineral resources of 
the country. Unfortunately, the country’s existing fiscal regime for the mineral 
sector does not provide for the adequate and equitable payment by mining 
companies for the extraction and use of these resources.
Mining companies, just like any other businesses operating in the 
Philippines, are required to pay taxes (including income taxes, value added 
tax, local government taxes, etc.). On top of these taxes, mining companies 
are required to pay 5% royalty taxes. The royalty serves as a unique payment 
for the use of mineral resources.
However, since not all mining companies are required to pay the 
royalty, the Filipino people are not sufficiently compensated for the mineral 
resources that they own and the revenues earned by mining companies are 
unusually disproportionate to the revenues generated by the government from 
these companies. For example, royalty paid to the government amounted to 
less than one percent of the total proceeds of the mineral industry in 2018 -  
the government collected at most Php1.73 Billion in royalties from the total 
mining gross production value of Php179.6 Billion. Considering the negative 
social and environmental impacts of mining to the country, this small amount 
of taxes is barely enough to compensate the Filipino people for these finite 
resources


In addition, the mining industry also falls short in terms of other 
contributions to the economy. For example, the mining sector is not a huge 
employment generator. Data from the Mines and Geosciences Bureau shows 
that the total employment contribution of mining in 2018 was only 207,000 or 
0.46% of total employment in the country. 
To maximize the employment 
potential of the mining industry, the country should encourage the 
development of mining downstream industry in the Philippines. This will not 
only expand the employment opportunity in the said industry but also allow 
the country to maximize the value of our minerals at different stages of the 
value chain.
In line with the objective to increase the public benefits from mineral 
extraction in the country, this bill proposes the following measures:
(a) 
Requirement of royalty payment from all mineral mining operations in 
the country;
(b) 
The imposition of an export tax on raw ore from 2020 to 2022 
(increasing gradually from 20% to 60%) to discourage companies from 
exporting unprocessed minerals, and encourage ore processing 
domestically;
(c) 
The prohibition to export of raw ore by 2023 to further strengthen the 
link of mineral extraction to manufacturing in the long-run;
(d) 
The establishment of the Mining Downstream Coordinating Council 
tasked to help govern the development of the mining downstream 
industry in the Philippines;
(e) 
The increase in the share of local government units from 40% to 50% 
of the proceeds derived from the utilization and development of the 
national wealth. This will ensure that local governments hosting the 
mining operation will receive an equitable share from the extraction of 
resources in their respective areas; and
(f) 
The creation of a Natural Resource Trust Fund using a fraction of the 
proceeds of mining activities, which may be used by the national and 
local governments to support educational programs, technological 
research programs of national and local relevance, and health services 
deemed to benefit future generations of Filipinos.
As such, the passage of this important measure is earnestly sought to en£±)le 
the country to maximize of benefits from finite minerals and mineral products 
and quarry resources.
SENATOR ZlOEL VILLANUEVA


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE
S. B. NO. 710
o( tl)f SrciTtiirp
•19 
JUL24 A 9 SO
R E C u. . J lii.
Introduced by SENATOR JOEL VILLANUEVA
AN ACT
PROVIDING FOR THE MAXIMIZATION OF BENEFITS FROM FINITE 
MINERALS AND MINERAL PRODUCTS AND QUARRY RESOURCES
AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
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SECTION 1. Title. -  This Act shall be known as “Maximizing Benefits from
Mineral and Mineral Products and Quarry Resources Act.”
SEC. 2. Declaration of Principles. -
a) All mineral resources within the territory and exclusive economic zones of 
the Republic of the Philippines are owned by the State. It shall be the 
responsibility of the State to promote their rational exploration, 
development, utilization and conservation through the combined efforts of 
government and the private sector in order to enhance national growth in 
a way that effectively safeguards the environment and protect the rights of 
affected communities.
b) The state must establish a fiscal regime that ensures that present and 
future generations of Filipinos benefit extensively from mining operations 
and other extractive activities not just on the national level, but also on the 
local level. This fiscal regime must also encourage the development of a 
downstream industry to pave the way for the generation of more jobs for 
the Filipinos.
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SEC. 3. Definition of Terms. -
a) 
Arm’s Length Debt Amount, in relation to a mining contractor, means 
the amount of debt that a bank that is not an associate of the contractor 
would be prepared to lend to the contractor;
b) 
Cash Flow Surcharge refers to a surcharge to be imposed on the 
cash flows of each mining area for each taxable fiscal year;
c) 
Contract Area means the land or body of water delineated under a 
mineral agreement or a financial or technical assistance agreement 
(FTAA) of the Contractor and properly defined by longitude and 
latitude;
d) 
Contractor means a Qualified Person, as defined in Department Order 
2012-21 of the Department of Environment and Natural Resources 
(DENR), acting alone or in consortium who is party to a Mineral 
Agreement or FTAA;
e) 
Debt, in relation to a mining contractor, means the greatest amount, at 
any time, during a taxable fiscal year, of the debt obligations of a 
contractor on which interest is payable as defined according to 
international financial reporting standards;
f) 
Extractive Industries refer to the mining, oil, gas and coal sectors and 
all other sectors that require the extraction of non-renewable natural 
resources for commercial use;
g) 
Financial or Technical Assistance Agreement (FTAA) means a 
contract involving financial or technical assistance for large-scale 
exploration, development and utilization of mineral resources;
h) 
Gross Output means the actual market value of minerals or mineral 
products from each mine or mineral land operated as a separate entity, 
without any deduction for mining, processing, refining, transporting, 
handling, marketing or any other expenses;
i) 
Mineral Agreement means a contract between the Government and a 
Contractor, involving Mineral Production Sharing Agreement, Co- 
Production Agreement or Joint Venture Agreement;
j) 
Mining Area refers to a portion of the contract area identified by the 
Contractor as defined and delineated in a Survey Plan duly approved 
by the 
Director/Regional 
Director concerned 
for purposes of 
development and/or utilization, and sites for support facilities;
k) 
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;


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l) 
Mineral Products mean materials derived from ores, minerals and/or 
rocks and prepared into a marketable state by mineral processing;
m) 
Mining Operations means mining activities involving exploration, 
feasibility study, development, and utilization;
n) 
Quarry Resources refers to any common rock or other mineral 
substances as the Director of Mines and Geosciences Bureau may 
declare to be quarry resources such as, but not limited to, andesite, 
basalt, 
conglomerate, 
coral 
sand, 
diatomaceous earth, 
diorite, 
decorative stones, gabbro, granite, limestone, marble, marl, red 
burning clays for potteries and bricks, rhyolite, rock phosphate, 
sandstone, serpentine, shale, tuff, volcanic cinders, and volcanic glass: 
Provided, That such quarry resources do not contain metals or metallic 
constituents and/or other valuable minerals in economically workable 
quantities: Provided, further. That non-metallic minerals such as kaolin, 
feldspar, bullquartz, quartz or silica, sand and pebbles, bentonite, talc, 
asbestos, barite, gypsum, bauxite, magnesite, dolomite, mica, precious 
and semi-precious stones, and other non-metallic minerals that may 
later be discovered and which the Director declares the same to be of 
economically workable quantities, shall not be classified under the 
category of quarry resources;
o) 
Separate Taxable Person or Personality refers to an independent 
taxable entity as determined by business operations in a specific 
mining area;
p) 
State means the Republic of the Philippines;
q) 
Taxable Fiscal Year means an accounting period of twelve (12) 
months depending on the accounting method of the Contractor; and
r) 
Utilization means the extraction, mineral processing and/or disposition 
of minerals.
SEC. 4. Interpretation. -  Nothing in this Act shall be construed as a 
diminution of the rights and privileges of local government units presently 
enjoyed under existing laws such as Republic Act No. 7160 or the Local 
Government Code of 1991. Further, nothing in this Act shall be construed as a 
diminution of the rights enjoyed by indigenous peoples under Republic Act 
No. 8371 of 1997 or The Indigenous Peoples Rights Act of 1997.
CHAPTER II
SCOPE AND APPLICATION
SEC. 5. Scope and Application. -  This Act shall apply to new Mineral 
Agreements and FTAAs covering large-scale mineral mining operations that 
shall be entered into after the effectivity of this Act.


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This Act shall also cover existing Mineral Agreements and FTAAs where such 
agreements provide that any terms and conditions resulting from repeal or 
amendment of any existing laws or regulation or from the enactment of a law, 
regulation or administrative order shall be considered as part of said 
agreements. The renewal and renegotiation of existing Mineral Agreements 
and FTAAs shall also be governed by this Act.
CHAPTER III
TAXATION OF MINERALS, MINERAL PRODUCTS, AND QUARRY
RESOURCES
SEC. 6. Separate Taxable Personality. -  Each mining operation in a mining 
area shall be considered a separate taxable entity. If a mining contractor is 
party or holds more than one mineral agreement, he shall be treated as a 
separate person in respect of the business operations related to each mining 
area.
SEC. 7. Mining Royalty. -  Mining contractors within and outside mining 
reservation areas, whether large-scale or small-scale, 
shall pay to the 
government a mineral royalty of five percent (5%), levied, assessed and 
collected on minerals, mineral products and quarry resources, based on the 
market value of the gross output at the time of sale, or the value used by the 
Bureau of Customs in determining tariff and custom duties, whichever is 
higher.
SEC. 8. Cash Flow Surcharge. -  A surcharge of ten percent (10%) shall be 
imposed on the cash flows of each mining area for every taxable fiscal year.
For purposes of computing the cash flow surcharge (CFS), each mining area 
shall be considered a separate taxable entity. The tax base of the CFS (CFS 
tax base) is determined by adding back the depreciation and interest expense 
and other financing charges to the regular taxable income used for the 
purposes of the corporate income tax. In the event that CSF tax base is 
negative, such amount shall be carried over as a deduction from the CSF tax 
base for the next three (3) consecutive years immediately following the year of 
such loss.
SEC. 9. Limitation on Deductions for Purposes of Computing the CFS. -
When computing for the cash flow surcharge, mining companies must adhere 
to the following guidelines:
a) 
A deduction for the expenses or losses incurred, wholly or partly, by a 
contractor in undertaking mining operations in a mining area during a 
taxable fiscal year is allowed only against the income derived by the 
contractor from such operations in the mining area during the same 
taxable fiscal year;
b) 
If the total deductions in respect of the mining operations undertaken 
by the contractor in a mining area during a taxable fiscal year exceed 
the total taxable income derived from the same year, the excess may


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be carried forward and allowed as a deduction against the taxable 
income of the contractor from mining operations in the mining area for 
the next taxable fiscal year;
c) 
An amount that is not deducted under subsection (b) above may be 
carried forward to the next taxable fiscal year and allowed as a 
deduction in accordance with subsection (b) for that year and so on 
until the amount shall have been fully deducted, or until the mining 
operations in the mining area shall have ceased;
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d) 
If a contractor has an excess carried forward under subsection (b) for 
more than one fiscal year, the excess of the earliest period is allowed 
as a deduction first;
e) 
If a contractor has ceased mining operations in a mining area and the 
contractor has a loss under subsection (b) in relation to the mining 
area, the contractor may elect, by notice in writing to the Commissioner 
of the Bureau of Internal Revenue (BIR), to treat the loss as a loss 
under Subsection (b) in relation to another mining area operated by the 
contractor; Provided, That the latter mining area falls wholly within the 
same contract area of the first-mentioned mining area;
f) 
If a contractor has ceased mining operations in a mining area or if the 
contractor has a loss under Subsection (b) in relation to the mining 
area and subsection (e) does not apply to the Contractor, the 
Contractor may elect, by notice in writing to the BIR Commissioner, to 
treat the loss as a loss under subsection (b) in relation to mining 
operations undertaken by the contractor in another area.
SEC. 10. Limitations on the Interest Expense Deductions. -  The following 
are limitation on mining contractors for any interest expense deductions:
a) 
If a contractor has a debt-to-equity ratio in excess of 1.5 to 1 at any 
time during a taxable fiscal year, a deduction of the interest paid by the 
contractor in the portion of the debt which exceeds the 1.5 to 1 ratio for 
that same fiscal year shall not be allowed.
b) 
If the debt-to-equity ratio of a contractor exceeds the 1.5 to 1 ratio for a 
taxable fiscal year, subsection (a) above shall not apply; Provided, That 
during the said fiscal year, the total amount of the debt of the contractor 
shall not exceed the arm’s length debt amount.
SEC. 11. Export Tax on Raw Ore. -  Effective January 1, 2020, a twenty 
percent (20%) export tax on the gross value of raw ore shall be imposed; 
Provided, That effective January 1, 2021, a forty percent (40%) export tax on 
the gross value of raw ore shall be imposed; Provided further, That effective 
January 1, 2022, a sixty percent (60%) export tax on the gross value of raw 
ore shall be imposed.


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SEC. 12. Ban on Export of Raw Ore. -  Export of raw ore shall be prohibited 
effective January 1,2023.
SEC. 13. Penalties. -  Any company proven to have violated Section 12 of 
this Act shall be subject to a fine ranging from Five Million Pesos 
(P5,000,000.00) to Ten Million Pesos (P10,000,000.00) plus five (5) times the 
gross value of raw ore illegally exported. In addition, the responsible officers 
of the erring company shall be punished by imprisonment of not less than one 
(1) year but not more than three (3) years.
SEC. 14. Incentives. -  Notwithstanding anything to the contrary, all tax 
incentives granted to mineral mining and quarry contractors shall be repealed 
immediately upon the effectivity of this Act.
CHAPTER IV
ALLOCATION OF PROCEEDS FROM THE DEVELOPMENT OF THE
NATIONAL WEALTH
SEC. 15. Share of Local Government Units. -  The local government unit 
hosting the mining area shall have an equitable share in the proceeds derived 
from the utilization and development of the national wealth, including sharing 
the same with its inhabitants by way of direct benefits.
A local government unit shall, in addition to the internal revenue allotment, 
have a share of fifty percent (50%) of the gross collection derived by the 
national government from the preceding fiscal year from excise taxes, 
royalties and such other taxes, fees or charges, including related surcharges, 
interests or fines, and from its share in any co-production, joint venture or 
production sharing agreement in the utilization and development of the 
national wealth within their territorial jurisdiction. The fifty percent (50%) share 
shall be distributed among LGUs in accordance with the provisions of the 
Local Government Code of 1991 and its implementing rules and regulations; 
Provided, That in the event that the operation is hosted by several local 
government units, the share shall be divided equitably among the host local 
government units based on the amount of ore extracted from the local 
government unit.
The BIR shall have the authority to inspect mining sites and monitor the 
amount of mineral resources extracted by companies. The BIR, the Mines and 
Geosciences Bureau (MGB) and the Philippine Port Authority (PPA) shall 
coordinate among themselves and reconcile the figures on the amount and 
value of minerals that were actually extracted and exported by companies 
which were reported to them. The reconciled figure shall be the basis for 
taxation and allocation of share among units of government.
With respect to payment of business tax, eighty percent (80%) of the gross 
sales/receipts of the business shall be taxable by the city or municipality 
hosting the mining operation, while the remaining twenty percent (20%) of the 
gross sales/receipts of the business shall be taxable by the local government 
unit where the main office of the business is located. If the mining operation is


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hosted by several local government units, the tax due on the eighty percent 
(80%) of the gross sales/receipts of the business shall be shared equally by 
the said LCDs.
SEC. 16. Natural Resource Trust Fund. -  The national government shall 
create a National Natural Resource Trust Fund where all the proceeds from 
mining activities, excluding shares of local government units, shall accrue. 
Local government units shall also create a Local Natural Resource Trust Fund 
where shares from national government and locally collected taxes from 
mining and quarrying shall accrue.
The National Trust Fund shall be governed by a multi-stakeholder oversight 
body composed of representatives from the government, civil society, and the 
business sector. The oversight body shall conduct regular monitoring and 
annual audit of the utilization performance of the National Trust Fund and 
advise the concerned government agencies on fund operations and 
compliance with the fund’s mandate. It shall be independent, and shall have 
access to all relevant public information necessary to perform its mandates.
The Local Trust Funds shall be governed in accordance with the resolution 
passed by the local sanggunian concerned provided that transparency and 
accountability mechanisms are put in place, which shall include the oversight 
of a local multi-stakeholder oversight body composed of representatives from 
the LGU, civil society, indigenous community (if applicable), and the business 
sector.
The local oversight body shall conduct regular monitoring and annual audit of 
the utilization of the Local Trust Fund and the performance of the projects, 
activities and programs funded by the Local Trust Fund. The body shall also 
advise the concerned LGU on fund operations and compliance with the fund’s 
mandate. It, shall be independent, and shall have access to all relevant public 
information as may be necessary for the efficient and effective performance of 
its functions.
The governing bodies may invest up to sixty percent (60%) of the money in 
the trust and shall not be required to return the balance of the trust to the 
national government at the end of every fiscal year.
The funds which are not otherwise invested may be used by the national and 
local governments to support educational programs, technological research 
programs of national and local relevance, and health services deemed to 
benefit future generations of Filipinos.
The funds shall adhere to the accounting and auditing rules of the 
Commission on Audit, and shall be regularly audited by COA. The governing 
bodies of the funds shall also adhere to the reporting requirements of the 
Philippine Extractive Industries and Transparency Initiative.


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CHAPTER V
DOWNSTREAM INDUSTRY
SEC. 17. Mining Downstream Coordinating Council. -  There is hereby 
created the Mining Downstream Coordinating Council (MDCC). The DENR, 
in coordination with Department of Trade and Industry (DTI), Department of 
Science and Technology (DOST), National Economic Development Authority 
(NEDA), the mining industry and civil society, shall submit, within a period of 
six (6) months, a fifteen-year (15) strategic mining downstream development 
program and road-map based on the Philippine Development Plan and 
National Industrialization Plan for the development of downstream mining 
industries and creation of jobs for strategic metallic and nonmetallic minerals 
subject to review every five (5) years.
SEC. 18. Composition of MDCC. -  The MDCC shall be co-chaired by the 
Secretaries of DENR and DTI and shall have the following additional 
members: a representative from the mining industry, a representative from 
civil society organizations and the Chairperson of the Board of Investments
SEC. 19. Powers and Functions. -  The MDCC shall have the following
powers and functions:
(a) 
Submit a work plan within sixty (60) days from the effectivity of this Act 
for the development of the mining downstream industry;
(b) 
Conduct and facilitate the necessary capacity and institutional building 
programs for all concerned government agencies and instrumentalities 
and stakeholders;
(c) 
Request the assistance of any government agency or instrumentality, 
including government-owned and controlled corporations and LGUs, in 
the implementation of the mining downstream development program 
and road-map;
(d) 
Conduct quarterly meetings among members of the council;
(e) 
Submit quarterly progress reports to the President on the status of the 
implementation of the mining downstream development program and 
road-map; and
(f) 
Perform such other functions and acts as may be necessary, proper or 
incidental to the attainment of its mandates and objectives, or as may 
be directed by the Chairpersons.
CHAPTER VI
TRANSITORY AND MISCELLANEOUS PROVISIONS
SEC. 20. Implementing Rules and Regulation. -  The Secretaries of 
Environment and Natural Resources, Interior and Local Government, Finarxe, 
and Budget, in consultation with relevant stakeholders, shall promulgate the


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necessary rules and regulations for the effective implementation of this Act 
v/ithin sixty (60) days from the effectivity of this Act.
SEC. 21. 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. 22. Repealing Clause. -  All laws, decrees, executive orders, rules and 
regulations or parts thereof which are contrary to or inconsistent with this Act 
are hereby repealed, amended or modified accordingly; Provided, That 
nothing in this Act shall be construed as a diminution of local autonomy or in 
derogation of ancestral domain rights under the Indigenous Peoples’ Right Act 
of 1997.
SEC. 23. Effectivity. -  This Act shall take effect fifteen (15) days after its 
publication in this Official Gazette or in any two newspapers of general 
circulation.
Approved,