10/7/22, 1:17 PM Republic Act No.

5092

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REPUBLIC ACT No. 5092

An Act to Promote and Regulate the Exploration, Development, Exploitation and Utilization of Geothermal
Energy, Natural Gas and Methane Gas; to Encourage its Conservation; and for Other Purposes

Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:

Section 1. Short title of Act.— The short title of this Act shall be "Geothermal Energy, Natural Gas and Methane Gas
Law."

Section 2. Definition of terms.— When used in this Act, the following terms shall, unless the context otherwise
indicates, have the following respective meanings:

(a) "Act" means this "Geothermal Energy, Natural Gas and Methane Gas Law."

(b) "Bore" means any well, hole, pipe, or excavation of any kind which is bored, drilled, sunk or made in the
ground for the purpose of investigating, prospecting, obtaining, or producing geothermal energy, natural gas
and methane gas, or which taps or is likely to tap geothermal energy, natural gas and methane gas and
includes any hole in the ground which taps geothermal energy, natural gas and methane gas.

(c) "Geothermal energy" means energy derived or derivable from and produced within the earth by natural
heat phenomenon: and includes all steam, and water vapor, and every mixture of all or any of them that has
been heated by natural underground energy, and every kind of matter derived from a bore and for the time
being with or in any such stead, water, water vapor, or mixture.

(d) "Government" means the Government of the Philippines.

(e) "State" means the Republic of the Philippines.

(f) "Person" includes a natural person, corporation, or partnership.

Section 3. State ownership.— All geothermal sources or occurrences of geothermal energy, natural gas and
methane gas in public and/or private lands in the Philippines, whether found in, on or under the surface of dry lands,
creeks, rivers, lakes, or other submerged lands within the territorial waters of the Philippines belong to the State,
inalienable and imprescriptible and their exploration for, tapping and utilization shall be governed by the provisions
of this Act.

Section 4. Title to land.— The ownership or the right to the use of lands for agricultural, industrial, commercial,
residential, mining, petroleum, or for any other purposes other than for the exploration, tapping or use of geothermal
energy, natural gas and methane gas, does not include ownership of, nor the right to explore for, tap, or utilize the
geothermal energy, natural gas and methane gas in, on or under the surface of such land.

Section 5. Granting of geothermal energy, natural gas and methane gas rights.— The right to explore for, tap, or
utilize geothermal energy, natural gas and methane gas may be obtained and exercised only by means of permits
and/or leases granted to duly qualified persons in accordance with the provisions of this Act: Provided, That no such
permit shall be required if the exploration is undertaken by the owner of the land himself or by his agent: Provided,
further, That where geothermal energy, natural gas and methane gas is already being used for any domestic
purpose whatever (including cooking, heating, washing, and bathing) at the time this Act takes effect, the user
thereof may continue using the same to similar or lesser extent without the need of securing a permit or lease under
this Act unless the Director of Mines, having regard to the public interest, otherwise directs.

The Government reserves the right to undertake the exploration for, tapping, or utilization of geothermal energy,
natural gas and methane gas either by itself or through its instrumentalities, or through competent persons qualified
to undertake such work as independent contractor or contractors.
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Section 6. Qualifications of applicants.— Applicants for permits or leases under this Act shall have the following
qualifications:

In case of an individual, he shall be a citizen of the Philippines, be of legal age, and have the capacity to contract
obligations.

In case of an association of individuals, it shall either a partnership or a corporation duly organized and constituted
under the laws of the Philippines, at least sixty per centum of the capital of which is and shall at all times be owned
and held by citizens of the Philippines.

Any applicant shall present evidence showing that sufficient finance, organization, resources, technical competence,
skills, and experience necessary to conduct the operations to be undertaken under the permit and/or lease being
applied for, in a manner which is in accordance with the best method known to the industry, are available to the
applicant.

Section 7. Lands covered by permits, leases are subject to public easements.— All lands covered by permits and/or
leases granted under this Act shall be subject to public easements established or recognized by existing or future
laws.

Section 8. Operations of permittees/lessees subject to mining rights.— The operations of permittees and/or lessees
under the provisions of this Act shall be subject to existing mining or petroleum rights, grants, permits, leases, and
concessions and the same shall not adversely affect the operations of the latter. Any question in this regard shall be
decided and settled by the Director of Mines.

Section 9. Rights to enter private land.— Holders of permits and/or leases granted under the provisions of this Act,
their men, contractors or operators, upon written notice sent to the owner on the land at least ten days in advance,
are granted the right to enter and re-enter from time to time upon private lands covered by their permits and/or
leases for the purpose of conducting geological and/or geophysical studies, make any bore therein, with the right to
use all instruments and apparatus necessary to carry out such studies, subject to the obligations to indemnify the
owner or legal occupant of the land for all material damage suffered by the property, its annexes or appurtenances
as a result of such studies: Provided, That in no case shall the occupancy of private buildings, yards or gardens be
authorized against the will of their owner.

In the event the right granted in this section shall be denied by the owner of the private land or by its legal occupant,
the permittee and/or lessee may apply for and, upon posting such bond as may be fixed and approved by the
municipal court of the municipality where the land is situated, the court shall issue an order allowing such right to
enter pending the final determination of the proper amount that shall be paid by the permittee and/or lessee to the
land-owner or legal occupant.

Section 10. Easements over private land.— When easements of temporary or permanent occupancy over private
lands are needed by a permittee or lessee for the purpose of carrying out any works essential to his operations
under the provisions of this Act, he may enter into necessary agreement with the owner or legal occupant of such
private land. If no agreement can be reached, or if the owner or legal occupant refuses to grant such easement, or
in general, when any obstacle of whatever nature exists to the immediate and certain acquisition of the necessary
surface area or of any right indispensable to the permittee or lessee for the purpose of concession, the municipal
court of the municipality where the land is situated shall, upon application of the permittee or lessee and posting of
the necessary bond, grant to the said, permittee or lessee authority to use and occupy the land needed by him in his
operations, pending final determination of the case which shall include among others the reasonable value or rental
of the land to be occupied and the compensation for any resulting damage that the land-owner or legal occupant
may suffer as a result of such occupation.

When the occupation of a private land is needed by the permittee or lessee in connection with his permit and/or
ease granted in this Act for the purpose of constructing, maintaining, operating, and drilling bores, tanks, reservoirs,
waterways, pipelines, roads, railroads, tramlines, telephone and telegraph lines; airfields, radio stations,
powerhouses, transmission lines, pumping stations, wharves, piers and terminals, which are hereby declared to be
for public use or benefit, the right of eminent domain may be exercised by the Government through the permittee or
lessee, in accordance with the applicable laws on the matter.

In all cases, whether it be an order of the court or a voluntary agreement between the permittee and/or lessee and
the private landowner, as referred to in this section, a copy of such order or agreement shall be furnished to the
Director of Mines.

For the purpose of this section the necessity of the work will presumed in the cases of bore drilling and auxiliary
works, construction of pipelines, tanks, pumping plants, power systems, warehouses, shops, and means of transport
and communication.

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Section 11. Right to enter public land and easement over the same.— Except lands covered by armed forces
reservations, all public lands may be entered into by the holder of a permit and/or lease issued under this Act if the
same is covered by said permit and/or lease.

When easement or right of temporary or permanent occupancy over said public land is needed by said holder of a
permit and/or lease for the purpose of carrying any work essential to his operations under this Act, except in areas
covered by military reservation, such right may be granted by the Director of Mines with due regard to prior rights of
third parties and to the purpose for which the reservation had been established.

The presumption of necessity stated in Section ten applies likewise in this case.

Section 12. Application for permit.— Application for permit shall be accompanied by a plan showing the bearings
and distances of the boundaries and latitude and longitude to the nearest second of the corner 1. It shall be filed
with the Director of Mines who shall examine an act upon the same as well as upon the qualification, and authorize
the publication of a notice thereof at least once a week for three consecutive weeks in the Official Gazette and in a
newspaper of general circulation published in English in the City of Manila, notwithstanding any provision of law to
the contrary.

At any time during the period of publication of said notice, an adverse claim stating the nature and grounds thereof,
may be filed with the Director of Mines. If no adverse claim is filed within the said period of publication, it shall be
conclusively presumed that no such adverse claims exists and thereafter no adverse claim for third parties shall be
heard; and the permit shall be issued by the Director of Mines for the Republic of the Philippines which shall state
the principal rights and obligations of the permittee.

The applicant for a permit should prosecute his application with due diligence by seeing to it that his application is in
order and that he has submitted satisfactory evidence showing that he possesses the qualifications required by law
and regulations. In case of conflict of application for permit under the provisions of this Act, priority of the filing of
application shall determine as to who has the preferential right, provided that his application is put in order and
satisfactory evidence of the required qualifications is submitted within the period provided for by the regulations.

Any adverse claim filed during the period of publication of the notice shall be decided by the Director of Mines.

Section 13. Size and shape of permit areas.— A permit shall be granted in blocks rectangular in shape except
when allowed by the Director of Mines in cases where it is contiguous with the seas, bays, lakes or with other
permits or leases already granted; as much as possible, its longer dimension shall not be more than five times its
shorter dimension. Each permit area shall not be more than five thousand hectares.

No person shall acquire more than ten permits in the whole territory of the Philippines.

Section 14. Rights conveyed under a permit.— The permit conveys upon the holder thereof, his heirs and assigns,
from the date of its granting and during its term and any extension thereof, the exclusive right to explore the block
covered, to do geological and physical work, to conduct drilling operations, and to do such other work related to
explorations or that has for its object the discovery of geothermal energy, natural gas or methane gas. The actual
1avvphi1

production and utilization of any geothermal energy, natural gas or methane gas that may be discovered is not
included in the right granted under a permit.

Section 15. Exploration work obligations.— With the application for permit and before the start of each calendar
year thereafter during the life of the permit, the applicant/permittee shall submit to the Director of Mines a program of
exploration work to be undertaken by him within his permit during the year.

Beginning from the date of the granting of the permit and up to the first anniversary date thereof and every permit
year thereafter during the life of the permit, he is obligated to spend in the direct prosecution of exploration work
within his permit such as topographical or geological reconnaissance or detailed survey, mapping or cross
sectioning, geophysical surveys, core or exploratory drilling, or any combination of said work, not less than two
pesos per hectare per year or fraction thereof: Provided, That in no case shall the total amount for each permit be
less than one thousand pesos a year: Provided, further, That for purposes of renewal of the permit necessary drilling
as required in Section sixteen hereof, shall have been conducted therein.

The permittee or lessee shall give satisfactory evidence to the Government of such expenditures duly supported and
justified by technical report or reports prepared in accordance with the regulations which shall be submitted within
ninety days after the end of the corresponding calendar year.

An amount actually spent for the exploration work in excess of any minimum amount required for any year and duly
approved by the Bureau of Mines may be carried forward to exploration work obligations required for the succeeding
years: Provided, That such excess expenditures may not be carried forward to any period of renewal: Provided,
However, That should there be any unspent balance of the required work obligations for any year, the same shall be
forfeited in favor of the Bureau of Mines and shall form part of its Mines special Fund.

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Failure to comply with the minimum work obligations in any one year as hereinabove provided or to submit the
required technical report within the period given, shall be sufficient cause for the cancellation of the permit by the
Secretary of Agriculture and Natural Resources upon recommendation of the Director of Mines and termination of
the right of permittee without prejudice to collecting from the permittee whatever difference their is between the
minimum amount required and that actually spent for any year. An no new or additional areas and/or rights under
this Act shall be granted to a permittee who has thus failed to comply with his minimum work obligation in any of his
subsisting permit and/or lease under this Act until after he shall have corrected his defaults.

Section 16. Term of permit.— The initial term of a permit shall not be more than three years counted from the date
of its issuance: Provided, That if the permittee has drilled a well or wells within the area covered by his permit at any
time during the initial term with a total footage of not less than one thousand feet and has complied with the
provisions of this Act and the regulations and with the terms of the permit, the Secretary of Agriculture and Natural
Resources may grant an extension thereof for a term of two years, for its entire area or for any part thereof, upon
application made prior to the expiration of the original term of the permit: Provided, further, That if during the term of
the first extension the permittee has also drilled a well or wells within the area covered by the permit with a total
footage of two thousand feet and has complied with the provisions of this Act and the regulations and with the terms
and conditions of the permit, the Secretary of Agriculture and Natural Resources, upon the application of the
concessionaire made prior to the expiration of the first extension of the said permit, may grant an extension thereof
for its entire area or part thereof, for another term of two years. No further extension of any permit shall be granted
at the end of seven years from date of its original issuance: Provided, That should the permittee be still interested in
the area and he had drilled a well or wells therein during the period of the second renewal with the required total
footage and has complied with the provisions of this Act and the regulations and with the terms and conditions of the
permit, he may, if he is qualified to do so, file an application for a permit over the same area or portion thereof, which
shall be treated as any other new application for permit.

Section 17. Application for lease.— If and when a discovery of geothermal energy, natural gas and methane gas
has been made by a holder of a permit and he has determined that the same is of commercial value and that he is
ready to produce and utilize the same or put it into commercial use, he may at any time during the life of his permit
and subject to the limitation in Section eighteen of this Act, apply for a lease of the area or portion covered by his
permit by filing an application with the Director of Mines which shall be accompanied by a plan prepared from an
accurate transit and tape survey of the area indicating one corner of a claim tied by bearing and distance to a
recognized bench mark, permanent monument, or other registered points, and approved by the Director of Mines.

If and when the application for lease is found in order, the condition for the granting of the lease present and
applicant, qualified, the Director of Mines shall grant the lease to the applicant for the Republic of the Philippines
stating therein the principal rights and obligations of the lessee.

Section 18. Size and shape of the lease area.— The area that may be applied for lease shall be not more than one-
half of the original area covered by the permit and shall be in block rectangular in shape, except when allowed by
the Secretary of Agriculture and Natural Resources in cases where it is contiguous with seas, bays and lakes and
with other existing concessions, with its longer dimension not more than five times its shorter dimension. No person
shall be allowed to hold more than twenty-five thousand hectares under lease in the whole territory of the
Philippines.

Section 19. Rights conveyed under lease.— The lessee, his heirs and assigns have the exclusive right, under the
term of the lease, to drill within the boundaries projected vertically downward of the area covered by his lease to tap
and utilize the geothermal energy, natural gas and methane gas existing therein and/or to extract therefrom any kind
of matter derived from a bore and for the time being with or any steam, water, water vapor or mixture and to process
and market the same, subject to the provisions of this Act and the regulations that may be issued by the Secretary
of Agriculture and Natural Resources regarding conservation and prevention of waste, prevention of water and air
pollution, safety and health, and any other pertinent matter.

Section 20. Minerals mixed with steam.— Any mineral that may be found in or mixed with steam, water vapor, or
mixture thereof that has been heated by natural underground energy may be separated therefrom and produce
without the need of coming under the provisions of the Mining Act, if such separation and production of the mineral
is only incidental to or a by-product of the production and utilization for commercial purposes of the geothermal
energy, natural gas and methane gas.

Section 21. Work obligations of lessee.— With the application for lease and before the beginning of each calendar
year during the life of the lease, the applicant or lessee shall submit to the Director of Mines, a program of work
proposed to be undertaken by him within the lease during that year.

The lessee shall commence to tap and utilize the geothermal energy, natural gas and methane gas discovered
within one year from the date the lease is granted and shall continue such tapping and utilization until at least the
commercial requirement for such energy as determined by the lessee after consultation with the Director of Mines is
met: Provided, That the extent of such tapping and utilization is in accordance with good engineering practice:

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Provided, further, That unreasonable suspension or limitation of such production or utilization shall be a cause for
cancellation of the lease by the Director of Mines.

Section 22. Annual tax.— No annual tax on the lease shall be due until the lessee has commenced commercial
operation, but thereafter, a tax of two pesos per hectare per year or fraction thereof shall be due and payable to the
government.

Section 23. Term of lease.— The term of lease shall not exceed twenty- five years counted from the date of its
issuance renewable for another period not to exceed twenty-five years at the option of and upon application of the
lessee made prior to the expiration of the original term.

Section 24. Royalty.— Geothermal energy, natural gas and methane gas that may be produced and utilized for
commercial purposes shall be subject to the payment of royalty to the Government at the rate of one and one-half
per centum of the market value of the energy or gas so produced and utilized.

Section 25. Renunciation of areas covered by permit and/or lease.— The holder of a permit and/or lease may, at
any time during the existence of the permit and/or lease, renounce the whole or any part of the total area covered
thereby.

Section 26. Application fee.— Every application shall be accompanied with an application fee of five hundred pesos
for a permit and one thousand pesos for a lease. In the event that no corresponding permit to lease is granted, the
sum paid shall be returned to the applicant less such amount of expenses incurred by the Government in connection
with the processing of said application in accordance with the regulations. Said fees shall form part of the trust fund
of the Bureau of Mines.

Section 27. Bond for performance.— Upon the issuance of a permit and/or lease, the permittee and/or lessee shall
post a bond in favor of the government in a sum to be fixed by the regulations and with surety or sureties
satisfactory to the Secretary of Agriculture and Natural Resources conditioned upon the faithful performance by the
permittee and/or lessee of all his obligations under the permit and/or lease to be issued to him.

Section 28. Employment of Filipinos.— Permittees and/or lessees and their contractors or operators are obligated
to give preference to Philippine citizens in all types of employment within the country, insofar as such citizens are
qualified to perform the corresponding work with reasonable efficiency and without hazard to the safety of the
operations; and are obligated likewise to maintain effective programs of training and advancement commensurate
with the demonstrated abilities of such citizens to perform satisfactorily the various types of operations involved. The
permittees and/or lessees, however, shall not be hindered from using employees of their own selection and without
restriction for executive or technical work which; in their judgment, and with the approval of the Director of Mines,
requires highly specialized training or long experience.

Each permittee and/or lessee and their contractors or operators shall submit to the Government annual report giving
statistical and descriptive information relevant to the provisions of this section as provided in the regulations, and
shall be obligated to demonstrate to the satisfaction of the Director of Mines upon request, that these provisions are
being complied with. In the event that in the opinion of the Director of Mines, such provisions are not complied with,
he is empowered to require the permittee and/or lessee to take such steps as may be necessary to effect such
compliance, without prejudice, however, to the right of the permittee and/ or lessee under the exception provided in
the last sentence of the first paragraph of this section.

Section 29. Submission of information and reports by permittee and/or lessee.— Holders of a permit and/or lease
issued under this Act shall submit to the Director of Mines all information that the latter may require from time to time
particularly but not limited to, reports on the results of geological and geophysical examination, including a complete
history on its well formation records, electric logs, and result of all tests production reports showing all pertinent
production data, etc., in the form and manner and at intervals prescribed by the regulations.

Section 30. Inspection of operations and examination of books and accounts.— The Director of Mines or his
representatives shall have authority to inspect any operations of the permittee and/or lessee at all reasonable times
and to examine the records of said operations as well as all the books and accounts pertaining thereto or related to
payment of taxes and royalties under this Act and to carry out any other inspection authorized by law or regulations.

The permittee and/or lessee shall furnish to said official or his representative all technical and actual data specified
in the regulations and shall give them authority and ample facilities and assistance to discharge their duties as such.

For the purpose of enabling proper examination as provided for in this section, the permittee and/or lessee is
obligated to retain within the country all original records or original carbon copies thereof which are essential for the
purpose of determining the amount of taxes and royalties due to the Government.

Section 31. Taxes and customs duties.— During the first five-year period following the granting of any lease, the
permittee and/or lessee may import, free of customs and tariff duties, compensating tax, and such other taxes that

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may be imposed on importation, such equipment, machineries, instruments, accessories and spare parts, chemicals
and supplies as may be certified by the Director of Mines to be essential to the operations of the permittee and/or
lessee.

These equipment, machineries, instruments, accessories and spare parts, chemicals and supplies, when no longer
needed in the operation of the permittee and/or lessee, may be exported or returned to point of origin without being
subject to any export tax: Provided, That when such equipment, machineries, instruments, accessories and spare
parts, chemicals and supplies are subsequently sold to any person not qualified under this law, the same shall be
subject to tax.

No exemption shall be allowed on goods imported by the permittee and/or lessee for his personal use or that of any
other; nor for sale or for purposes other than for the exploration, for production and utilization of geothermal energy,
natural gas and methane gas, and after any goods on which exemption has been allowed to be thus used or
disposed of the permittee and/or lessee is obliged to make a report to that effect to pay such duty or duties as due
thereon.

Section 32. Work obligations, special taxes and royalties not to be changed.— Work obligations, special taxes and
royalties which are fixed by the provisions of this Act or by the terms of the permit and/or lease, are considered as
inherent on such permit and/or lease after they have been granted and shall not be increased or changed during the
life of the permit and/or lease to which they apply; nor shall any other special taxes or levies be applied to such
permit and/or lease; nor shall the permittee and/or lessee be subject to any provincial, municipal or other local taxes
or levies. All such permittees and lessees, however, shall be subject to such taxes as are of general application in
addition to taxes and levies specifically provided in this Act.

Section 33. Compulsory collection.— In the event of failure by a permittee and/or lessee to pay any tax, royalty or
unspent balance on his work obligations, due under the provisions of this Act, the same shall be subject to
surcharge of one per cent a month until paid and when such failure shall be for a period of six months from the date
when they become due and payable, the Government may resort to compulsory collection and in accordance with
the provisions of the National Internal Revenue Code.

Section 34. Officials in charge and powers and duties.— The Director of Mines shall be the executive officer
charged with carrying out the provisions of this Act. He shall prescribe rules and regulations and issue orders which
he may find necessary to carry out the provisions of this Act, which, among others, shall include the following:

(a) Prescribing any form that may be required for the purpose of this Act;

(b) Prescribing the financial and technical qualifications of applicants for permit or lease, and the conditions
upon or subject to which permits or leases, may be applied for, granted or renewed;

(c) Providing for the keeping of records and furnishing of information and returns by persons authorized by
permittee and/or lessee and prescribing the nature of records, information, and returns and the form, manner,
and times in or at which they shall be kept or furnished;

(d) Prescribing the duties of permittees and/or lessee and the operations to be carried out under said permits
or leases;

(e) Prescribing the qualifications of persons in charge in making, marking and closing bores and in particular,
of persons employed as bore managers and providing for the examinations of and grant certificates to
qualified persons;

(f) Preventing or abating nuisances in or about bores and industries using geothermal energy, natural gas and
methane gas;

(g) Prescribing safety precautions in the making and after completion of bores, and the treatment of the
ground about any bore and of water above and below the ground, and preventing waste or loss of geothermal
energy, natural gas and methane gas;

(h) Prescribing drilling machinery, materials and casts to be used in making of bores and to be available to
cope with any emergency in connection with any bore and prohibiting the use of other classes thereof;

(i) Prohibiting or regulating the making of bores near other bores;

(j) Regulating the cessation of boring operations and the abandonment and closing of bores and prescribing
precautions against loosening the earth in the vicinity of any bore;

(k) Providing for bores to be made with due diligence and by safe and satisfactory methods.

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Section 35. Orders, decisions and appeals.— Orders and decisions of the Director of Mines may be appealed to the
Secretary of Agriculture and Natural Resources within thirty days after receipt of such order or decision. In case any
of the parties concerned should disagree from the order or decision of the Secretary of Agriculture and Natural
Resources the matter may be taken to the Court of Appeals or to the Supreme Court, as the case may be, within
thirty days from receipt of such order or decision. Failure to take the necessary appeal within the period herein
prescribed shall render the order or decision final and binding upon the parties concerned. Findings of facts in the
decision of the Director of Mines when affirmed by the Secretary of Agriculture and Natural Resources shall be final
conclusively, and the aggrieved party or parties desiring to appeal from such order or decision shall file in the
Supreme Court within the period herein provided, a petition for review wherein only questions of law may be raised.

Section 36. Transfer and assignment.— Holders of permits and/or leases under this Act shall not, without previous
written approval of the Secretary of Agriculture and Natural Resources, transfer or assign, in whole or in part, the
rights under permits and/or leases: Provided, That no such transfer or assignment shall be made to a person who is
not qualified to acquire or hold a permit or lease under this Act, or who shall hold a total area under permit or lease,
including that to be assigned to him or more than the maximum areas allowed under this Act.

Section 37. Partial invalidity.— If any clause, sentence, provisions or article of this Act shall be held invalid or
unconstitutional, it shall not affect in anywise the remaining parts of this Act and such remaining part shall remain in
full force and effect.

Section 38. Repeal of laws, rules and regulations.— All Acts, laws, rules and regulations inconsistent with any of
the provisions of this Act are hereby repealed.

Section 39. Effective date.— This Act shall take effect upon its approval.

Approved: June 17, 1967.

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