MINERAL LANDS

The Philippine Mining Act of 1995 (RA 7942)

July 16, 2013

History
1) Spanish regime the concept of jura regalia applied, by which royal grants by the king allowed people to own undertake mining activities or own minerals and mineral lands American regime - under the Philippine Bill of 1902, there was open and free exploration, occupation, and purchase of mineral deposits and the land where they may be found by citizens of the US or of said lands.EDU belonged to Filipinos and Americans through recording and location of mining claims with corresponding performance of annual work obligation and improvements on the mining claims 1935 Constitution all natural resources belonged to the State, but those rights, grants, leases, or concessions granted earlier were excluded from the contemplation of jura regalia

2)

3)

4) The Mining Act (CA 137, 11/7/1936) adopted the jura regalia doctrine; granted only lease rights to mining claimants 5) Parity Rights Ordinance Appended to the Constitution (3/11/47) although aliens were proscribed from participating in the EDU of the countrys natural resources, US citizens were allowed as well as US enterprises were allowed for period July 4, 1946-July 3, 1974 5) Mineral Resources Decree of 1974 (PD 463) EDU through licenses, concessions, or leases 6) 1987 Constitution State has full control and supervision subject to certain agreements; licenses, concessions, or leases disallowed 7) Philippine Mining Act of 1995

Mineral Reservations
RA 7942 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 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 percent (25%) of such mineral reservation, subject to valid existing mining/quarrying rights as provided under Section 112 Chapter XX hereof. All submerged lands within the contiguous zone and in the exclusive economic zone of the Philippines are hereby declared to be mineral reservations.

Other Reservations
RA 7942 Sec. 5

Mining operations in reserved lands other than mineral reservations may be undertaken by the Department, subject to limitations as herein provided. In the event that the Department cannot undertake such activities, they may be undertaken by a qualified person in accordance with the rules and regulations promulgated by the Secretary. The right to develop and utilize the minerals found therein shall be awarded by the President under such terms and conditions as recommended by the Director and approved by the Secretary: Provided, That the party who undertook the exploration of said reservation shall be given priority. The mineral land so awarded shall be automatically excluded from the reservation during the term of the agreement: Provided, further, That the right of the lessee of a valid mining contract existing within the reservation at the time of its establishment shall not be prejudiced or impaired.

Requirements for Exploration of Other Reservations

1) A prospecting permit from the agency that has jurisdiction over the area; 2) An exploration permit from the Mines and Geosciences Burea (MGB); 3) If the exploration reveals the presence of commercial deposit, the permittee applies with the MGB for the exclusion of the area from the reservation; 4) Issuance of a Presidential Proclamation excluding the area from the reservation; 5) A mining agreement approved by the DENR Sec.

Definition
b. Block or meridional block means an area bounded by one-half (1/2) minute of latitude and one-half (1/2) minute of longitude, containing approximately eightyone hectares (81 has.). c. Bureau means the Mines and Geosciences Bureau under the Department of Environment and Natural Resources. f. Contract area means land or body of water delineated for purposes of exploration, development, or utilization of the minerals found therein. h. Co-production agreement (CA) means an agreement entered into between the Government and one or more contractors in accordance with Section 26(b) hereof.

j. Development means 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. k. Director means the Director of the Mines and Geosciences Bureau. m. Environmental compliance certificate (ECC) refers to the document issued by the government agency concerned certifying that the project under consideration will not bring about an unacceptable environmental impact and that the proponent has complied with the requirements of the environmental impact statement system. n. Environmental impact statement (EIS) is the document which aims to identify, predict, interpret, and communicate information regarding changes in environmental quality associated with a proposed project and which examines the range of alternatives for the objectives of the proposal and their impact on the environment.

q.

Exploration means the searching or prospecting for mineral resources by geological, geochemical or geophysical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quantity and quality thereof and the feasibility of mining them for profit.
Financial or technical assistance agreement means a contract involving financial or technical assistance for large-scale exploration, development, and utilization of mineral resources.

r.

x. Joint venture agreement (JVA) means an agreement entered into between the Government and one or more contractors in accordance with Section 26(c) hereof.

y. Mineral processing means the milling, beneficiation or upgrading of ores or minerals and rocks or by similar means to convert the same into marketable products.
aa. Minerals refers to all naturally occurring inorganic substance in solid, gas, liquid, or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials, and geothermal energy. ab. Mineral agreement means a contract between the government and a contractor, involving mineral production-sharing agreement, co-production agreement, or joint-venture agreement.

ad. Mineral resource means any concentration minerals/rocks with potential economic value.

of

ak. Ore means a naturally occurring substance or material from which a mineral or element can be mined and/or processed for profit.
al. Permittee means the holder of an exploration permit. aq. Qualified person means any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or cooperative organized or authorized for the purpose of engaging in miring, with technical and financial capability to undertake mineral resources development and duly registered in accordance with law at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines: Provided, That a legally organized foreignowned corporation shall be deemed a qualified person for purposes of granting an exploration permit, financial or technical assistance agreement or mineral processing permit.

ar. Quarrying means the process of extracting, removing and disposing quarry resources found on or underneath the surface of private or public land. as. Quarry permit means a document granted to a qualified person for the extraction and utilization of quarry resources on public or private lands. at. 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, bull quartz, 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.

Classification of Minerals
1) First group Metals or metalliferous ores. Those which contain any of the metallic elements or minerals, or their combinations, such as gold, silver, platinum, tin, chromium, iron, manganese, copper, nickel, lead, zinc, cinnabar, tungsten, and the like. 2) Second group Precious stones. Those which contain minerals mainly used for ornamental purposes such as diamond, ruby, emerald, sapphire, topaz, amethyst, zircon, aquamarine, opal, jade, agate, tourmaline, beryl, garnet, turquoise and the like.

3) Third group Fuels. Those which contain combustible substances in solid, liquid, gaseous form, such as peat, coal, mineral oils, natural gas, oil shales, asphalt, and the like, but not the recent products of organic life.

4) Fourth group Salines and mineral waters. Those which contain surface or subterranean soluble substances or waters which by their mineral contents are classified as mineral waters, such as salt, nitrates, sulphurated, carbonated, sodic, calcic, and other waters. 5) Fifth group Building stone in place, clays, fertilizers, and other nonmetals.

Those which contain nonmetallic substances, such as:

(a) Those used for building or construction purposes, such as marble, granite, clay, and the like. (b) Asbestos, feldspar, lime, mica, guano, phosphate, potash, saltpeter, niter, and the like. (c) Other substances used in the manufacture of paints, ceramics and fertilizers and for other industrial purposes.

Areas Open to Mining Operations

RA 7942 Sec. 18 Subject to any existing rights or reservations and prior agreements of all parties, all mineral resources in public or private lands, including timber or forestlands as defined in existing laws, shall be open to mineral agreements or financial or technical assistance agreement applications. Any conflict that may arise under this provision shall be heard and resolved by the panel of arbitrators. PD 705 Sec. 47 Mining operations in forest lands (public forest, permanent forest or forest reserves, forest reservations) shall be regulated and conducted with due regard to protection, development and utilization of other surface resources.

Areas Closed to Mining Operations

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 subject to technical evaluation and validation by the Bureau; -unless authorized by the DENR Sec. with permission of the DPWH Sec.

c. In areas covered by valid and existing mining rights. - example: areas covered by FTAA apps which shall be opened for quarry resources mining applications upon written consent of the FTAA applicants
- sand and gravel permit apps , consent of FTAA. EP, MA apps not required but those covering sand, gravel and/or alluvial gold require consent

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 concerned;

g. DENR Project Areas upon prior consent from the concerned agency

Exploration Permit
An exploration permit grants the right to conduct exploration for all minerals in specified areas. The Bureau shall have the authority to grant an exploration Permit to a qualified person. An exploration permit shall be for a period of two (2) years, subject to annual review and relinquishment or renewal upon the recommendation of the Director. Notes: -Term shall be 2 years from issuance, renewable for like periods, but not to exceed 4yrs for non-metallic mineral exploration or 6yrs for metallic. -Transfer allowed subject to approval of the Sec. upon recommendation of the Dir

Notes: -exploration does not allow the extraction of the minerals that may be discovered, but only the location of the minerals -exploration may be directly undertaken by the DENR, however, if it cannot do so, any qualified person in specified areas determined by the Sec. -foreign-owned corporations may hold exploration permits -grantee spends its own funds without any right to recover anything should no minerals in commercial quantities be discovered

- if the grantee determines that the area has commercial viability, he may file with the MGB (within the term of the permit) a declaration of mining project feasibility and a work program for development, the approval thereof and compliance with other requirements of RA 7942 shall entitle him to a mineral agreement - A declaration of mining project feasibility means a document proclaiming the presence of minerals in a specific site, which are recoverable by socially acceptable, environmentally safe, and economically sound methods. - Exploration permits can be revoked by the State in the public interest.

Mineral Agreements (MAs)

1) Mineral Production Sharing Agreement (MPSA) 2) Co-production Agreement (CA) 3) Joint-venture Agreement (JVA)

Notes: -the above are transferable with the approval of the DENR Sec upon recommendation of the Dir. -term is 25yrs renewable for same period

Pertinent Provision of the 1987 Constitution

Art. XII Sec. 2 xxx The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. xxxxx

Summary: 1) The State may directly undertake EDU; OR 2) The State may enter into: -co-production -joint venture -production-sharing agreements

With Filipino citizens or corp/assoc at least 60% Fil-owned

Mineral Production Sharing Agreement (MPSA)

-contract between the contractor and the Republic of the Philippines represented by the DENR Sec. -the total value of the production and sale of minerals derived from the mining operations shall be accounted for and divided between the govt and the contractor -Contractor-assumes the exploration risk such that if no minerals are found, he is not entitled to reimbursement

-govt share consists in excise taxes -the govt shares in the gross output, govt has least participation; -contractor provides the financing, technology, management, and personnel

Co-production Agreement (CA)

govt provides input to the mining operations - govt compensation consists in excise taxes, income taxes, allowance, withholding taxes, other duties/fees

Joint-venture Agreement (JVA)

- govt has the greatest participation - govt organizes a joint-venture company, in which, together with the contractor, it shares in the equity - govt also shares in the gross output aside from sharing in the equity - govt compensation consists in excise taxes, income taxes, allowance, withholding taxes, other duties/fees

Who are qualified to contract with the govt?

1) Individuals - Fil citizen, of legal age, with capacity to enter into a contract 2) Corp/partnership/assoc/coop - 60% Fil-owned - duly registered according to law

Application Process
1) File in the region where area is located 2) Approval by the DENR Sec. 3) Dir notifies contractor to register application with the MGB (inside mineral reservations) or with the Regional Office (outside reservations) within 15 working days from receipt of notice 4) President receives copies 5) President provides Congress with copies of approves MAs within 30 days from approval by Sec.

Maximum Areas Allowable for Mineral Agreements

Onshore
Individuals a) In any province b) Entire Phils Corp, et. al. a) In any province b) ) Entire Phils c) EEZ 100 200 Determinable by the DENR Sec 500 Determinable by the DENR Sec 10 blocks 20 50

Offshore

Financial or Technical Assistance Agreement (FTAA)

-applicable to large-scale EDU -govt share consist, among others, income tax, excise tax, special allowance, w/tax on dividends and interests, duties/fees -govt share same as with JVA and CA except that in FTAA, govt share commences only after contractor has fully recovered its pre-operating expenses, exploration, and development expenses -EDU of gold, copper, nickel, chromite, lead, zinc, etc. EXCEPT cement raw matls, marble, granite, sand, gravel, construction aggregates

-term is 25yrs renewable for another 25yrs -mine should have a profitable operating life of more than 10yrs to ensure the share of the govt, given a maximum 5-yr period to recover costs -may be transferred with the approval of the Pres. -contractor agrees to give preference to qualified Filipinos in employment and to transfer the technology to them; aliens may be hired for work requiring high specialized experience -contractor likewise agrees to give preference to goods and services produced locally

Pertinent Provision of the 1987 Constitution

Art. XII Sec. 2 xxx xxx xxx The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources. The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

Maximum Areas Allowable for FTAA

1) Onshore -1,000 meridional blocks 2) Offshore -4,000

3) Combination of the two without exceeding the limits for onshore and offshore

Mining Operations under FTAA

1) Exploration 2yrs from execution extendible for another 2yrs 2) Pre-feasibility study, if warranted up to 2yrs from expiration of exploration period 3) Feasibility study up to 2yrs from expiration of 1 and 2 or from declaration of mining project feasibility 4) Development, construction, utilization remaining term of FTAA

Application Process
1) application filed with the MGB, but if the app covers two or more regions, with the Regional Office with the largest area covered 2) Publication, posting, radio announcement 3) DENR Sec. recommends approval to the Pres. 4) Pres notifies Congress within 30 days from approval

La Bugal-Blaan Tribal Assoc., Inc. v Ramos

Issues 1) WON WMCP FTAA violates the 1987 Constitution considering that it allows foreignowned companies not only to provide financial and technical assistance, but allows them to operate and manage mining activities when the state should have full control/supervision over EDU of the countrys natural resources 2) WON either technical or financial assistance should be taken to mean technical and financial assistance

Ruling 1) Given the inadequacy of Fil capital and technology in large-scale EDU activities, the State may secure the help of foreign assistors. The assistor may be given reasonable management, operational, marketing, audit, and other prerogatives to protect its investments and to enable the business to succeed. The foreign contractors provide capital, technology, and technical know-how, and managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and the government, through the DENR and MGB actively exercises control and supervision over the entire operation

2) The use of the word involving implies that there agreements with foreign corporations are not limited to mere financial or technical assistance.

Quarry Resources
Quarry sand and gravel, guano, and gemstone resources in private and/or public lands may be extracted, removed, disposed and/or utilized. In large-scale quarry operations of cement raw matls, marble, granite, and sand and gravel and construction aggregates, any qualified person may apply for an MA.

Notes -quarry license permit shall be filed with the Provincial Gov/City Mayor through the Provincial/City Mining Regulatory Board -area not more than five has. And a production rate of not more than 50,000 tons in a yr and/or project cost not more than P10M -term 5yrs renewable in like period but not to exceed 25yrs

Miscellaneous
Ore transport permit - specifies the origin and quantity of nonprocessed ores or minerals Mineral trading registration traders should be registered with the DTI and accredited by the DENR, copy sent to MGB Mineral processing permit issued by the Sec.; term of 5yrs renewable for like periods but not to exceed 25yrs Absence of the above-stated documents shall be prima facie evidence of illegal mining and will lead to the seizure of the materials and the conveyances and tools used pending investigation. If finally found to be obtained without documents, a complaint for theft of minerals may ensue. A person conducting mineral operations may enter into private lands upon agreement with surface owners and payment of just compensation. Disagreements may be brought before the Panel of Arbitrators (POA). Agreement as to entry shall be registered with the MGB.

Department of Environment and Natural Resources

RA 7942 Sec. 8 The Department shall be the primary government agency responsible for the conservation, management, development, and proper use of the States mineral resources including those in reservations, watershed areas, and lands of the public domain. The Secretary shall have the authority to enter into mineral agreements on behalf of the Government upon the recommendation of the Director, promulgate such rules and regulations as may be necessary to implement the intent and provisions of this Act. -Findings of facts of the DENR Sec. are conclusive.

Mines and Geosciences Bureau

1) The Bureau shall have direct charge in the administration and disposition of mineral lands and mineral resources; 2) shall undertake geological, mining, metallurgical, chemical, and other researches as well as geological and mineral exploration surveys. Provided, that for areas closed to mining application as provided under Section 15 hereof, the Bureau can undertake studies for purposes of research and development; 3) The Bureau may confiscate surety, performance and guaranty bonds posted through an order to be promulgated by the Director;

4) The Director shall recommend to the Secretary the granting of mineral agreements or to endorse to the DENR Sec. for action by the President the grant of FTAA to duly qualified persons; 5) shall monitor the compliance by the contractor of the terms and conditions of the mineral agreements. 6) The Director may deputize, when necessary, any member or unit of the Philippine National Police, barangay, duly registered non-governmental organization (NGO) or any qualified person to police all mining activities.

7) To cancel or recommend cancellation, after due process, mining rights, mining applications, and mining claims for noncompliance with pertinent laws, rules, and regulations. 8) To hear and decide cases involving, among others, cancellation/enforcement of mining contracts except those that involve judicial question.

The Local Government

Local Government Code Sec. 8 b. In coordination with the Bureau/Regional Office(s) and subject to valid and existing mining rights, to approve applications for small-scale mining, sand and gravel, quarry, guano, gemstone gathering and gratuitous permits and for industrial sand and gravel permits not exceeding five (5) hectares; h. To act as mediator between the Indigenous Cultural Community(ies) and the Contractor(s) as may be requested;

Jurisdiction and Review

A. Panel of Arbitrators (POA) has the exclusive and original jurisdiction to hear and decide as to questions of fact and of technical experience: 1) 2) 3) Disputes involving rights to mining areas Disputes involving MAs and permits Disputes involving surface owners, occupants, claimholders/concessionaires Disputes pending before the MGB and the DENR

and

4)

B. Appeal before the Mines Adjudication Board (MAB) within 15days from receipt of decision of POA

C. Court of Appeals under Rule 43

D. Supreme Court (via certiorari) within 30days from receipt of decision of MGB.

Peoples Small-Scale Mining Act of 1991 (RA 7076)

Pertinent Provision of the 1987 Constitution

Art. XII Sec. 2 xxxx xxxx The Congress may, by law, allow smallscale utilization of natural resources by Filipino citizens, xxxx Notes: -small-scale mining may be undertaken only by Filipino citizens

Small-scale mining refers to mining activities that rely heavily on manual labor using simple tools and methods. It does not use explosives or heavy mining equipment and requires only a small capital investment. Agreements; CA, JV, MPSA. Areas excluded: existing forest, tourist, marine parks and wildlife reservations Applications shall be filed with the Office of the Provincial/City Mayor through the Provincial/City Mining Regulatory Board for areas outside mineral reservations and in the regional office for those inside mineral reservations. Provincial/City Mining Regulatory Board awards contracts to qualified Filipino citizens individually or in the form of a cooperative of small-scale miners. The contract shall not be subcontracted, assigned, or transferred. Transport of ores/minerals/mineral products issued according to the rules of the Provincial/City Mining Regulatory Board.