CHAPTER 1

 
TITLE: “PETROLEUM ACT OF
1949”
Petroleum – any mineral oil, hydrocarbon
gas, bitumen, asphalt, mineral wax, and all
other similar or naturally associated
substances; with the exception of coal, peat
bituminous shale, and/or other stratified
mineral fuel deposits.
 
Crude oil - oil in its natural state before the
same has been refined or otherwise treated,
but excluding water and foreign substances.
 
Natural gas - gas obtained from boreholes
and wells and consisting primarily of
hydrocarbon.
 
Barrel - equivalent to 158.98 liters or 42 U.S.
gallons.
 Article 3: State Ownership
 All natural deposits or occurrences of petroleum or natural gas be it
on public or private lands, WITHIN THE TERRITORY OF THE
PHILIPPINES belong to the state and is INALIENABLE AND
IMPRESCRIPTIBLE.
 
 Article 4: Title to land

The ownership or the right to the use of lands for agricultural, industrial,
commercial, residential, mining, or for any purpose other than for
Theory 1 petroleum exploration, development or exploitation does not include the
ownership of, nor the right to explore for, exploit, or utilize the petroleum
or natural gas deposits in, on or under the surface of such land.

Article 5: Granting of petroleum rights

 
Petroleum rights include the right to Explore for, Develop, Exploit or Utilize
petroleum resources.
Theory 2
 
 Article 6: Granting of concession is discretionary with the GOVERNMENT
 
Exception: Upon fulfillment of formalities and requirements of this act, granting is OBLIGATORY not
discretionary.
 

Article 7: Petroleum operation a public utility

 
Exploration, exploitation, manufacture, refining, storage or transportation by special methods of
petroleum is in the nature of PUBLIC UTILITY.
 
 
Article 8: Concessionaire assumes risks
 Government does not guarantee the
existence of petroleum or undertake,
in any case, title warranty.
 

Article 9: Ownership not conferred.

 
Exploration and Exploitation Concessions =
rights to explore for, develop, exploit, and
utilize them for the period and under the
conditions determined by this Act.
BUT NOT: the ownership over the petroleum lands
and petroleum deposits.
 CHAPTER 2 – CONCESSIONS
 
Article 10: kinds of concessions
a. Non-Exclusive Exploration Permit, permittee’s nonexclusive right to conduct
geological or geophysical exploration on specified areas.
 
b. Exploration Concession, concessionaire’s exclusive right to explore for petroleum
within specified areas.
  
b. Refining Concession, concessionaire’s right to manufacture or refine petroleum, or
to extract its derivatives.
 
c. Pipe Line Concession, concessionaire’s right to provide and operate pipe line systems
for transporting petroleum.

 
Article 11: Obligatory Concessions

The following concessions shall be obligatory upon the government:

 
a. Exploitation concession – available to a holder of
- an EXPLORATION CONCESSION
- a PETROLEUM DRILLING LEASES (Act # 2932)
- a PETROLEUM MINING CLAIMS, existing at the time of effectivity of this act;
a. Refining Concession and/or Pipe Line Concession - available to a holder of an EXPLOITATION CONCESSION
when manufacturing or transportation is DIRECTLY related, although not necessarily restricted to exploitation
concession.
b. Refining Concession - available to a holder of a PIPELINE CONCESSION or
a PIPELINE CONCESSION to a holder of a Refining Concession when the two concessions are DIRECTLY,
not restrictively, related.
 Article 12: Designation of petroleum regions
DENR Secretary has the power to divide prospective petroleum
regions, delimit their extent and boundaries and issue order and
notice
  establishing such regions.
Article 13: Petroleum reservation
● 1. DENR Secretary’s recommendation President’s proclamation
● 2. Proposals by qualified persons to carry out work for the government as an independent
contractor Director of Mines and Geosciences. DENR Secretary President for execution for
approval of CONGRESS.

No petroleum reservation over areas covered by application for

EXPLORATION or EXPLOITATION concession already filed.
Article 14: Free areas
 
- open to application for exploration concession
- all lands within the territorial jurisdiction of the Philippines
- those NOT within the national reserve areas/petroleum
reservations
- those NOT covered by valid and existing exploration or
exploitation concession or petroleum drilling leases
- filed with Dir. Of M&G
 
Article 15: National reserve areas
 
Areas included in any exploration or exploitation concession but:
a. given up voluntarily by the concession
b. expired or have been cancelled
c. areas found in excess of the maximum areas for ER/EI cc.
 
These areas be may be applied either for ER/EI cc by duly qualified persons after a
PUBLIC ANNOUNCEMENT (Official Gazette in one daily English newspaper of
general circulation published in the City of Manila) that areas are available for
disposition.
 
Article 16: Lands covered by concessions are subject to public easements
 
The rights of the petroleum concessionaire to search, prospect, and drill for, produce, extract, transport,
store, process, and treat petroleum on, under, and from said lands, and other rights granted to him under this
Act are recognized: And provided, further, That in case public easement shall be established after the
effective date of the concession contract the concessionaire shall be paid just compensation for actual
damages that he may suffer as a consequence thereof.”
 
Article 17: Operations of concessionaire subject to:
- Existing mining rights, grants, permits, leases and concessions and concessions in respect of substances
other than petroleum and to existing petroleum right, grants, leases or concessions.
Article 18: Right of Government to establish reservations or grant rights
 
Concessions granted under this Act are subject to the right of the Government to
establish reservations other than petroleum reservations, to grant mining rights, permits,
leases, and concessions in respect of substances other than petroleum, and to grant rights
other than mining rights in, on, or under any of the lands covered by the concession granted
under this Act, provided that the rights of the petroleum concessionaire to search, prospect,
and drill for, produce, extract, transport, store, process, and treat petroleum on, under, and
from, said lands, and the other rights granted to him under this Act are not impaired or
unreasonably interfered with.
Article 19: Additional benefits to the Government in
certain cases
 
In case of conflicts of applications for concessions DENR
secretary may require additional benefits to the Government
OVER AND ABOVE the minimum requirements provided.
Such as: bonuses. Cash payments singly or in installments,
increased royalty on quantity of oil produced, etc.
Article 20: Right to enter private land.
 
- ER/EI CC’s are granted the right to enter upon private lands COVERED by their cc’s for the
purpose of conducting geological and geophysical studies, with the right to use all instruments
and apparatus necessary to carry out such studies.
- Private land owners are entitled to indemnification for all material damages suffered by the
property.
- No occupancy of private buildings, yards or gardens shall be authorized AGAINST the will of
their owner.
- When the right granted shall be denied by the owner of the land or legal occupant,
concessionaire may apply and, UPON POSTING A BOND, with the RTC for an order allowing
entry. An order shall be issued allowing such, right pending the final determination of the
proper amount that shall be paid to landowner or legal occupant.
 16

Article 21. Easements over private land.

 
A necessary agreement between the landowner and the concessionaire may be entered for easements
of temporary occupancy ESSENTIAL to his operations. When no agreement could be reached concessionaire may
apply and, UPON POSTING A BOND, with the RTC for an authorizing him to use and occupy the land needed
for his operations, pending the final determination of the case which involves reasonable value or rental of the
land to be occupied and the compensation for any resulting damage that the owner or legal occupant may suffer
as a result of such occupation.
 
Eminent domain may be exercised by the government through the CC when the occupation of a private land is
needed for purposes declared to be for public use or benefit.
 
A copy of voluntary agreement between the concessionaire and a private landowner shall be furnished to the
Secretary.
UP NEXT EASEMENT OVER PUBLIC
LAND