Republic of the Philippines

Congress of the Philippines

Metro Manila


Republic Act No. 7942

AN ACT INSTITUTING A NEW SYSTEM OF MINERAL RESOURCES EXPLORATION,
DEVELOPMENT, UTILIZATION AND CONSERVATION


CHAPTER I
INTRODUCTORY PROVISIONS

Secti on 1. Ti tl e. - This act shal l be known as the Phi li ppi ne Mi ni ng Act of 1995.

Secti on 2. Declarati on of Pol icy - Al l mi neral resources i n publ i c and pri vate
l ands wi thi n the terri tory and excl usi ve economi c zone of the Republ i c of the Phi l i ppi nes
are owned by the State. It shal l be the responsi bi l i ty of the State to promote thei r rati onal
explorati on, devel opment, uti l i zati on and conservati on through the combi ned efforts of
government and the pri vate sector in order to enhance nati onal growth i n a way that
effecti vel y safeguards the envi ronment and protect the ri ghts of affected communi ti es.

Secti on 3. Defini ti on of Terms - As used i n and for purposes of thi s Act, the
fol l owi ng terms, whether i n si ngul ar or pl ural , shal l mean:

(a) "Ancestral lands" refers to al l l ands excl usi vel y and actual l y possessed,
occupi ed, or uti l i zed by i ndi genous cul tural communi ti es by themsel ves or
through thei r ancestors i n accordance wi th thei r customs and tradi ti ons si nce
ti me i mmemori al , and as may be defi ned and del ineated by l aw.
(b) "Bl ock" or "meri di onal bl ock" means an area bounded by one-hal f (1/2)
mi nute of l ati tude and one-hal f (1/2) mi nute of l ongi tude, contai ni ng
approxi matel y ei ghty-one hectares (81 has).
(c) "Bureau" means the Mi nes and Geosci ences Bureau under the Department
of Envi ronment and Natural Resources.
(d) "Carryi ng capaci ty" refers to the capaci ty of natural and human envi ronments
to accommodate and absorb change without experi enci ng condi ti ons of
i nstabi l i ty and attendant degradati on.
(e) "Conti guous zone" refers to water, sea bottom and substratum measured
twenty-four nauti cal mi l es (24 n.m.) seaward from the base l i ne of the
Phi li ppi ne archi pel ago.
(f) "Contract area" means l and or body of water del i neated for purposes of
explorati on, devel opment, or uti l i zati on of the mi neral s found therei n.
(g) "Contractor" meansa qual ifi ed person acting al one or i n consorti um who i s a
party to a mi neral agreement or to a fi nanci al or techni cal assi stance
agreement.
(h) "Co-producti on agreement (CA)" meansan agreement entered i nto between
the Government and one or more contractors i n accordance wi th Secti on
26(b) hereof.
(I) "Department" means the Department of Envi ronment and Natural Resources.
(j ) "Devel opment" means the work undertaken to expl ore and prepare an ore
body or a mi neral deposi t for mi ni ng, i ncl udi ng the constructi on of necessary
i nfrastructure and rel ated faci l i ti es.
(k) "Di rector" means the Di rector of the Mi nes and Geosci ences Bureau.
(l ) "Ecol ogi cal profi l e or eco-profil e" refers to geographic-based i nstruments for
pl anners and deci si on-makers whi ch presents an eval uati on of the
environmental quali ty and carrying capaci ty of an area.
(m) "Envi ronmental compl i ance certi fi cate (ECC)" refers to the document i ssued
by the government agency concerned certi fyi ng that the proj ect under
consi derati on wi l l not bri ng about an unacceptabl e envi ronmental i mpact
and that the proponent has compl i ed wi th the requi rements of the
environmental i mpact statement system.
(n) "Envi ronmental i mpact statement (EIS)" i s the document whi ch ai ms to
i denti fy, predi ct, i nterpret, and communi cate i nformati on regardi ng changes
i n envi ronmental qual i ty associ ated wi th a proposed proj ect and whi ch
exami nes the range of al ternati ves for the obj ecti ves of the proposal and
thei r i mpact on the envi ronment.
(o) "Excl usi ve economi c zone" means the water, sea bottom and subsurface
measured from the basel i ne of the Phi l i ppi ne archi pel ago up to two hundred
nauti cal mi les (200 n.m.) offshore.
(p) "Existi ng mini ng/quarryi ng ri ght" means a val i d and subsisti ng mi ni ng cl ai m
or permi t or quarry permi t or any mi ni ng l ease contract or agreement
coveri ng a mi neral i zed area granted/i ssued under perti nent mi ni ng l aws.
(q) "Expl orati on" means the searchi ng or prospecti ng for mi neral resources by
geologi cal , geochemi cal or geophysi cal surveys, remote sensi ng, test pi tting,
trenchi ng, dri l l i ng, shaft si nki ng, tunnel i ng or any other means for the
purpose of determini ng the exi stence, extent, quanti ty and qual i ty thereof
and the feasi bi l i ty of mi ni ng them for profi t.
(r) "Fi nanci al or techni cal assi stance agreement" means a contract i nvol vi ng
fi nanci al or techni cal assi stance for l arge-scal e expl orati on, devel opment,
and uti l i zation of mi neral resources.
(s) "Force maj eure" means acts or ci rcumstances beyond the reasonabl e control
of contractor i ncl udi ng, but not l i mi ted to, war, rebel l i on, i nsurrecti on, riots,
ci vi l di sturbance, bl ockade, sabotage, embargo, stri ke, l ockout, any di spute
wi th surface owners and other l abor di sputes, epidemi c, earthquake, storm,
fl ood or other adverse weather condi ti ons, expl osi on, fi re, adverse acti on by
government or by any i nstrumental i ty or subdi vi si on thereof, act of God or
any publ i c enemy and any cause that herei n descri be over whi ch the
affected party has no reasonabl e control .
(t) "Forei gn-owned corporati on" means any corporati on, partnershi ps,
associ ati on, or cooperative dul y registered in accordance wi th l aw i n whi ch
l ess than fi fty per centum (50%) of the capital i s owned by Fi l i pi no ci ti zens.
(u) "Government" means the government of the Republ i c of the Phi li ppi nes.
(v) "Gross output" means the actual market val ue of mi neral s or mineral
products from i ts mi ni ng area as defi ned i n the Nati onal Internal Revenue
Code.
(w) "Indi genous cul tural communi ty" means a group or tri be or i ndi genous
Fi l i pi nos who have conti nuousl y l i ved as communi ti es on communal l y-
bounded and defi ned l and si nce ti me i mmemori al and have succeeded i n
preservi ng, mai ntaini ng, and sharing common bonds of l anguages, customs,
traditi ons, and other di sti ncti ve cul tural trai ts, and as may be defi ned and
del i neated by l aw.
(x) "Joi nt venture agreement (JV)" means an agreement entered i nto between
the Government and one or more contractors i n accordance wi th Secti on
26(c) hereof.
(y) "Mi neral processi ng" means the mi l l i ng, benefi ciati on or upgradi ng of ores
or mi neral s and rocks or by si mi l ar means to convert the same into
marketabl e products.
(z) "Mi ne wastes and tai l i ngs" shal l mean soi l and rock materi al s from surface or
underground mi ni ng and mi l l i ng operati ons wi th no economi c val ue to the
generator of the same.
(aa) "Mi neral s" refers to al l natural l y occurri ng i norgani c substance i n sol i d, gas,
l i quid, or any i ntermedi ate state excl udi ng energy materi al s such as coal ,
petrol eum, natural gas, radi oacti ve materi al s, and geothermal energy.
(ab) "Mi neral agreement" means a contract between the government and a
contractor, i nvol vi ng mi neral producti on-shari ng agreement, co-producti on
agreement, or j oi nt-venture agreement.
(ac) "Mi neral l and" means any area where mi neral resources are found.
(ad) "Mi neral Resource" means any concentration of mi neral s/rockswi th potenti al
economi c val ue.
(ae) "Mi ni ng area" means a porti on of the contract area i denti fi ed by the
contractor for purposes of devel opment, mi ni ng, uti l i zati on, and si tes for
support faci li ti es or i n the i mmedi ate vi ci nity of the mi ni ng operati ons.
(af) "Mi ni ng operati on" means mi ni ng acti vi ti es i nvol vi ng explorati on, feasi bil i ty,
devel opment, uti l i zati on, and processi ng.
(ag) "Nongovernmental organi zati on (NGO)" i ncl udes nonstock, nonprofi t
organi zati ons i nvol ved i n acti vi ti esdeal i ng wi th resource and envi ronmental
conservati on, management and protecti on.
(ah) "Net assets" refers to the property, pl ant and equi pment as refl ected i n the
audited fi nanci al statement of the contractor net of depreci ati on, as
computed for tax purposes, excl udi ng apprai sal i ncrease and constructi on i n
progress.
(ai ) "Offshore" means the water, sea bottom, and subsurface from the shore or
coastl i ne reckoned from the mean l ow ti de l evel up to the two hundred
nauti cal mi l es (200 n.m.) excl usi ve economi c zone i ncludi ng the
archi pel agi c sea and conti guous zone.
(aj ) "Onshore" means the l andward si de from the mean ti de el evati on, i ncl udi ng
submerged l ands i n l akes, ri vers and creeks.
(ak) "Ore" means a natural l y occurri ng substance or materi al from whi ch a
mi neral or el ement can be mi ned and/or processed for profi t.
(al ) "Permi ttee" means the hol der of an expl orati on permi t.
(am) "Poll uti on control and i nfrastructure devi ces" refers to infrastructure,
machi nery, equi pment and/or i mprovements used for i mpoundi ng, treati ng
or neutral i zi ng, preci pi tati ng, fi lteri ng, conveying and cl eansi ng mi ne
i ndustri al waste and tai l i ngs as wel l as el i mi nating or reduci ng hazardous
effects of sol i d parti cl es, chemi cal s, l i qui ds or other harmful byproducts and
gases emi tted from any faci l i ty uti l i zed i n mini ng operati ons for thei r
di sposal .
(an) "Presi dent" means the Presi dent of the Republ i c of the Phi l i ppi nes.
(ao) "Pri vate l and" refers to any l and bel ongi ng to any pri vate person whi ch
i ncl udes ali enabl e and di sposabl e l and bei ng cl ai med by a hol der,
cl ai mant, or occupant who has al ready acqui red a vested ri ght thereto under
the l aw, al though the correspondi ng certi fi cate or evi dence of ti tle or patent
has not been actual l y i ssued.
(ap) "Publ i c l and" refers to l andsof the publ i c domai n whi ch have been cl assi fi ed
as agri cul tural l ands and subj ect to management and di sposi ti on or
concessi on under exi sti ng l aws.
(aq) "Qual i fi ed person" means any ci tizen of the Phi l i ppi nes wi th capaci ty to
contract, or a corporati on, partnershi p, associ ati on, or cooperati ve organized
or authori zed for the purpose of engagi ng i n mi ni ng, wi th techni cal and
fi nanci al capabi l i ty to undertake mi neral resources devel opment and dul y
regi stered in accordance wi th l aw at l east si xty per centum (60%) of the
capital of whi ch i s owned by ci ti zens of the Phi l ippi nes: Provi ded, That a
l egal l y organi zed forei gn-owned corporati on shal l be deemed a qual i fi ed
person for purposes of granti ng an expl orati on permi t, fi nanci al or techni cal
assi stance agreement or mineral processi ng permi t.
(ar) "Quarryi ng" means the process of extracti ng, removi ng and di sposi ng quarry
resources found on or underneath the surface of pri vate or publ i c land.
(as) "Quarry permi t" means a document granted to a qual i fi ed person for the
extracti on and uti l i zati on of quarry resources on publ i c or pri vate lands.
(at) "Quarry resources" refers to any common rock or other mi neral substances as
the Di rector of Mi nes and Geosci ences Bureau may decl are to be quarry
resources such as, but not l i mi ted to, andesi te, basal t, congl omerate, coral
sand, di atomaceous earth, di orite, decorati ve stones, gabbro, grani te,
l i mestone, marbl e, marl , red burning cl ays for potteri es and bri cks, rhyol i te,
rock phosphate, sandstone, serpenti ne, shal e, tuff, vol cani c cinders, and
vol cani c gl ass: Provi ded, that such quarry resources do not contain metals or
metal l i c consti tuents and/or other val uabl e mi neral s i n economi cal l y
workabl e quanti ti es: Provi ded, further, That non-metal l i c mi neral s such as
kaoli n, fel dspar, bul l quartz, quartz or si li ca, sand and pebbl es, bentoni te,
tal c, asbestos, bari te, gypsum, bauxi te, magnesi te, dol omi te, mi ca, precious
and semi-preci ous stones, and other non-metal l i c mi neral s that may l ater be
di scovered and which the Di rector decl ares the same to be of economi cal l y
workabl e quanti ti es, shal l not be cl assi fied under the category of quarry
resources.
(au) "Regi onal di rector" means the regi onal director of any minesregional offi ce
under the Department of Envi ronment and Natural Resources.
(av) "Regi onal offi ce" means any of the mi nes regi onal offi cesof the Department
of Envi ronment and Natural Resources.
(aw) "Secretary" means the Secretary of the Department of Envi ronment and
Natural Resources.
(ax) "Speci al al lowance" refers to payment to the cl ai m-owners or surface right-
owners particul arl y duri ng the transi ti on peri od from Presidenti al Decree No.
463 and Executi ve Order No. 279, seri es of 1987.
(ay) "State" means the Republ i c of the Phi l i ppines.
(az) "Uti li zati on" means the extracti on or di sposi ti on of mi nerals.


CHAPTER II
GOVERNMENT MANAGEMENT

Secti on 4. Ownershi p of Mi neral Resources - Mi neral resources are owned by
the State and the expl orati on, devel opment, util i zati on, and processi ng thereof shal l be
under i ts full control and supervi si on. The State may di rectl y undertake such acti vi ti es or i t
may enter i nto mi neral agreementswi th contractors.

The State shal l recogni ze and protect the ri ghts of the i ndi genous cultural
communi ti es to their ancestral l ands as provi ded for by the Consti tuti on.

Secti on 5. Mi neral Reservati ons - When the nati onal i nterest so requi res, such as
when there i s a need to preserve strategi c raw materi als for i ndustri es cri ti cal to national
devel opment, or certai n mi neral s for sci enti fi c, cul tural or ecol ogi cal val ue, the Presi dent
may establ ish mi neral reservati ons upon the recommendati on of the Di rector through the
Secretary. Mi ni ng operati ons i n exi sti ng mi neral reservati onsand such other reservati ons as
may thereafter be establ ished, shal l be undertaken by the Department or through a
contractor: Provi ded, That a small -scal e mi ni ng cooperati ve covered by Republ i c Act No.
7076 shal l be gi ven preferenti al ri ght to appl y for a smal l -scal e mi ni ng agreement for a
maxi mum aggregate area of twenty-fi ve percent (25%) of such mi neral reservati on, subj ect
to val i d exi sti ng mini ng/quarryi ng ri ghts as provi ded under Secti on 112 Chapter XX hereof.
Al l submerged l ands wi thi n the conti guous zone and i n the exclusi ve economi c zone of the
Phi li ppi nes are hereby declared to be mi neral reservati ons.

A ten per centum (10%) share of al l royal ti es and revenues to be derived by the
government from the devel opment and uti l i zati on of the mineral resources wi thi n mi neral
reservati ons as provi ded under thi s Act shal l accrue to the Mi nes and Geosci ences Bureau to
be al l otted for speci al projects and other admi ni strati ve expensesrel ated to the expl orati on
and devel opment of other mi neral reservati ons menti oned i n Secti on 6 hereof.

Secti on 6. Other Reservati ons - Mi ni ng operati ons i n reserved l ands other than
mi neral reservati ons may be undertaken by the Department, subject to l imi tati ons as herei n
provi ded. In the event that the Department cannot undertake such acti vi ti es, they may be
undertaken by a qual i fi ed person in accordance wi th the rul es and regul ati ons promul gated
by the Secretary. The ri ght to devel op and util i ze the mi neral s found therei n shal l be
awarded by the Presi dent under such terms and condi ti ons as recommended by the Di rector
and approved by the Secretary: Provi ded, That the party who undertook the expl orati on of
sai d reservati on shal l be gi ven pri ori ty. The mi neral l and so awarded shal l be automati cal l y
excluded from the reservation duri ng the term of the agreement: Provi ded, further, That the
ri ght of the l essee of a val id mi ni ng contract exi sti ng wi thi n the reservati on at the ti me of i ts
establ i shment shal l not be prej udi ced or i mpai red.

Secti on 7. Periodi c Revi ews of Exi sti ng Mi neral Reservati ons - The Secretary
shall peri odi cal l y revi ew exi sti ng mi neral reservati ons for the purpose of determi ni ng
whether thei r continued exi stence i s consi stent wi th the nati onal i nterest, and upon his
recommendati on, the Presi dent may, by procl amati on, al ter or modify the boundari es
thereof or revert the same to the publ i c domai n wi thout prej udi ce to pri or exi sti ng ri ghts.

Secti on 8. Authori ty of the Department - The Department shal l be the pri mary
agency responsi bl e for the conservati on, management, devel opment, and proper use of the
State's mi neral resources i ncl udi ng those i n reservati ons, watershed areas, and lands of the
publi c domai n. The Secretary shal l have the authori ty to enter i nto mineral agreements on
behal f of the Government upon the recommendati on of the Di rector, promul gate such rul es
and regul ations as may be necessary to i mpl ement the i ntent and provi si ons of thi s Act.

Secti on 9. Authori ty of the Bureau - The Bureau shal l have di rect charge i n the
admi ni stration and di sposi ti on of mi neral l ands and mi neral resources and shall undertake
geologi cal , mi ni ng, metal l urgi cal , chemi cal , and other researchesas wel l as geol ogi cal and
mi neral expl orati on surveys. The Di rector shal l recommend to the Secretary the granti ng of
mi neral agreements to dul y quali fi ed persons and shall moni tor the compl i ance by the
contractor of the terms and condi ti ons of the mi neral agreements. The Bureau may
confi scate surety, performance and guaranty bonds posted through an order to be
promul gated by the Di rector. The Di rector may deputi ze, when necessary, any member or
uni t of the Phi l i ppi ne Nati onal Pol i ce, barangay, dul y regi stered nongovernmental
organi zati on (NGO) or any qual i fi ed person to pol ice al l mi ni ng activi ti es.

Secti on 10. Regi onal Offi ces - There shall be as many regi onal offi ces i n the
country as may be establ i shed by the Secretary, upon the recommendati on of the Di rector.

Secti on 11. Processi ng of Appl i cati ons - The system of processi ng appl i cati ons for
mi ning ri ghts shal l be prescri bed i n the rul es and regul ati ons of thi s Act.

Secti on 12. Survey, Charti ng and Del i neati on of Mi ni ng Areas - A sketch pl an or
map of the contract or mi ni ng area prepared by a deputized geodeti c engi neer sui table for
publi cati on purposes shal l be requi red duri ng the fi l i ng of a mi neral agreement or fi nanci al
or techni cal assi stance agreement appl i cati on. Thereafter, the contract or mi ni ng area shal l
be surveyed and monumented by a deputi zed geodeti c engi neer and the survey pl an shal l
be approved by the Di rector before the approval of the mi ni ng feasi bi l i ty.

Secti on 13. Meridi onal Bl ocks - For purposes of the del i neati on of the contract or
mi ning areas under thi s Act, the Phi l i ppi ne terri tory and i ts excl usi ve economi c zone shal l
be di vi ded i nto meri di onal bl ocks of one-hal f (1/2) mi nute of l ati tude and one-hal f (1/2)
mi nute of l ongi tude.

Secti on 14. Recordi ng System - There shal l be establ i shed a nati onal and
regi onal fi l ing and recordi ng system. A mi neral resource database system shal l be set up i n
the Bureau whi ch shal l i ncl ude, among others, a mi neral ri ghts management system. The
Bureau shal l publi sh at l east annual l y, a mineral gazette of nati onwi de ci rcul ati on
contai ni ng among others, a current l i st of mi neral ri ghts, thei r l ocati ons in the map, mi ni ng
rul es and regul ati ons, other offi ci al acts affecti ng mi ni ng, and other i nformati on rel evant to
mi neral resources devel opment. A system and publ i cati on fund shal l be i ncl uded i n the
regul ar budget of the Bureau.


CHAPTER III
SCOPE OF APPLICATION

Secti on 15. Scope of Appl i cati on - Thi s Act shal l govern the expl orati on,
devel opment, uti l i zati on and processi ng of al l mi neral resources.

Secti on 16. Openi ng of Ancestral Lands for Mi ni ng Operations - No ancestral
l and shal l be opened for mi ni ng operations wi thout the pri or consent of the i ndi genous
cul tural communi ty concerned.

Secti on 17. Royal ty Payments for Indi genous Cul tural Communi ti es - In the event
of an agreement wi th an i ndi genous cul tural communi ty pursuant to the precedi ng secti on,
the royal ty payment, upon uti l i zation of the mi neral s shal l be agreed upon by the parti es.
The sai d royal ty shal l form part of a trust fund for the soci oeconomi c wel l-bei ng of the
i ndi genous cul tural community.

Secti on 18. Areas Open to Mi ni ng Operati ons - Subj ect to any existi ng ri ghts or
reservati ons and pri or agreements of al l parti es, al l mi neral resources in publ i c or pri vate
l ands, i ncl udi ng ti mber or forestl ands as defi ned i n exi sting l aws, shal l be open to mi neral
agreements or fi nanci al or techni cal assi stance agreement appli cati ons. Any confl i ct that
may ari se under thi sprovi sion shal l be heard and resol ved by the panel of arbi trators.

Secti on 19. Areas Cl osed to Mi ni ng Appl i cati ons - Mineral agreement or
fi nanci al or techni cal assi stance agreement appl i cati ons shal l not be al l owed:

(a) In mi l i tary and other government reservati ons, except upon pri or wri tten
cl earance by the government agency concerned;
(b) Near or under publ i c or pri vate bui l di ngs, cemeteri es, archeol ogi cal and
hi stori c si tes, bri dges, hi ghways, waterways, rai l roads, reservoi rs, dams or
other i nfrastructure proj ects, publ i c or pri vate works i ncl udi ng pl antati ons or
val uabl e crops, except upon wri tten consent of the government agency or
pri vate enti ty concerned;
(c) In areas covered by val i d and exi sting mi ning ri ghts;
(d) In areas expressl y prohi bi ted by l aw;
(e) In areas covered by smal l-scal e mi ners as defi ned by l aw unl ess wi th pri or
consent of the smal l -scal e mi ners, i n whi ch case a royal ty payment upon the
uti l i zati on of mi neral s shal l be agreed upon by the parti es, sai d royal ty
formi ng a trust fund for the soci oeconomic development of the communi ty
concerned; and
(f) Ol d growth or vi rgi n forests, procl ai med watershed forest reserves, wi l derness
area, mangrove forests, mossy forests, nati onal parks, provi nci al /muni cipal
forests, parks, greenbel ts, game refuge and bi rd sanctuari es as defi ned by
l aw and i n areas expressl y prohi bi ted under the Nati onal Integrated
Protected Area System (NIPAS) under Republ i c Act No. 7586, Department
Admi ni strative Order No. 25, seri es of 1992 and other l aws.


CHAPTER IV
EXPLORATION PERMIT

Secti on 20. Explorati on Permi t - An expl orati on permi t grants the right to conduct
explorati on for al l mi neral s i n speci fi ed areas. The Bureau shal l have the authori ty to grant
an expl oration permi t to a qual i fi ed person.

Secti on 21. Terms and Condi tions of the Expl orati on Permit - An expl orati on
permi t shal l be for a peri od of two (2) years, subj ect to annual revi ew and rel i nqui shment or
renewal upon the recommendati on of the Di rector.

Secti on 22. Maxi mum Areas for Expl orati on Permi t - The maxi mum area that a
quali fi ed person may hol d at any one ti me shal l be:

(a) Onshore, i n any one provi nce -
(1) For indi vi dual s, twenty (20) bl ocks; and
(2) For partnershi ps, corporati ons, cooperatives, or associ ati ons, two
hundred (200) bl ocks.

(b) Onshore, i n the entire Phi l ippi nes -
(1) For indi vi dual s, forty (40) blocks; and
(2) For partnershi ps, corporations, cooperatives, or associ ati ons, four
hundred (400) bl ocks.

(c) Offshore, beyond fi ve hundred meters (500 m) from the mean l ow ti de l evel -
(1) For indi vi dual s, one hundred (100) bl ocks; and
(2) For partnershi ps, corporati ons, cooperati ves, or associ ations, one
thousand (1,000) blocks.

Secti on 23. Ri ghts and Obl i gations of the Permi ttee - An expl orati on permi t shall
grant to the permittee, his hei rs or successors-i n-i nterest, the ri ght to enter, occupy and
explore the area: Provided, That i f private or other parti es are affected, the permi ttee shal l
fi rst di scuss wi th the sai d parti es the extent, necessi ty, and manner of his entry, occupati on
and expl orati on and i n case of di sagreement, a panel of arbi trators shal l resol ve the confl i ct
or disagreement.

The permi ttee shall undertake an expl orati on work on the area as speci fi ed by i ts
permi t based on an approved work program.

Any expendi ture i n excess of the yearl y budget of the approved work program may
be carri ed forward and credi ted to the succeeding yearscoveri ng the durati on of the permi t.
The Secretary, through the Di rector, shal l promulgate rul es and regul ati ons governi ng the
terms and condi ti ons of the permi t.

The permi ttee may appl y for a mineral producti on shari ng agreement, j oi nt venture
agreement, co-producti on agreement or fi nanci al or techni cal assi stance agreement over
the permi t area, whi ch appl i cati on shal l be granted i f the permi ttee meets the necessary
quali fi cati ons and the terms and condi ti ons of any such agreement: Provi ded, That the
explorati on peri od covered by the expl orati on permi t shal l be i ncl uded as part of the
explorati on peri od of the mi neral agreement or fi nanci al or technical assistance agreement.

Secti on 24. Declarati on of Mi ning Project Feasi bi l i ty - A hol der of an explorati on
permi t who determi nes the commerci al viabi l i ty of a proj ect coveri ng a mi ni ng area may,
wi thi n the term of the permi t, fi l e wi th the Bureau a decl arati on of mi ni ng proj ect feasi bi l i ty
accompani ed by a work program for devel opment. The approval of the mi ni ng proj ect
feasi bi l i ty and compl i ance wi th other requi rements provi ded i n thi s Act shal l enti tl e the
hol der to an excl usi ve ri ght to a mi neral producti on shari ng agreement or other mi neral
agreementsor fi nanci al or techni cal assi stance agreement.

Secti on 25. Transfer or Assi gnment - An expl orati on permi t may be transferred or
assi gned to a qual i fi ed person subj ect to the approval of the Secretary upon the
recommendati on of the Di rector.


CHAPTER V
MINERAL AGREEMENTS

Secti on 26. Modes of Mi neral Agreement - For purposes of mini ng operati ons, a
mi neral agreement may take the fol l owi ng forms as herei n defi ned:

(a) Mi neral producti on shari ng agreement - i s an agreement where the
Government grants to the contractor the excl usi ve ri ght to conduct mi ni ng
operati ons wi thi n a contract area and shares i n the gross output. The
contractor shal l provi de the fi nanci ng, technol ogy, management and
personnel necessary for the i mpl ementati on of thi sagreement.
(b) Co-producti on agreement - i s an agreement between the Government and
the contractor wherei n the Government shal l provi de i nputs to the mi ni ng
operati ons other than the mi neral resource.
(c) Joi nt-venture agreement - i s an agreement where a j oi nt-venture company i s
organi zed by the Government and the contractor wi th both parti es havi ng
equity shares. Aside from earni ngs i n equi ty, the Government shal l be
enti tl ed to a share in the gross output.

A mi neral agreement shall grant to the contractor the excl usi ve ri ght to conduct
mi ning operati ons and to extract al l mineral resources found i n the contract area. In
additi on, the contractor may be all owed to convert hi s agreement i nto any of the modes of
mi neral agreements or fi nanci al or technical assi stance agreement coveri ng the remai ni ng
peri od of the ori gi nal agreement subj ect to the approval of the Secretary.

Secti on 27. El i gi bi l i ty - A qual i fi ed person may enter i nto any of the three (3)
modes of mi neral agreement wi th the government for the explorati on, devel opment and
uti l i zati on of mi neral resources: Provi ded, That i n case the appl i cant has been i n the
mi ning i ndustry for any l ength of ti me, he shoul d possessa sati sfactory envi ronmental track
record as determi ned by the Mi nes and Geosci ences Bureau and i n consul tati on wi th the
Environmental Management Bureau of the Department.

Secti on 28. Maxi mum Areas for Mi neral Agreement - The maxi mum area that a
quali fi ed person may hol d at any ti me under a mi neral agreement shal l be:

(a) Onshore, i n any one provi nce -
(1) For indi vi dual s, ten (10) bl ocks; and
(2) For partnershi ps, cooperati ves, associ ati ons, or corporati ons,
one hundred (100) bl ocks.
(b) Onshore, i n the entire Phi l i ppi nes -
(1) For indi vi dual s, twenty (20) bl ocks; and
(2) For partnershi ps, cooperati ves, associ ati ons, or corporati ons,
two hundred (200) bl ocks.
(c) Offshore, i n the entire Phi l ippi nes -
(1) For indi vi dual s, fi fty (50) bl ocks;
(2) For partnershi ps, cooperatives, associ ati ons, or corporati ons,
fi ve hundred (500) bl ocks; and
(3) For the exclusi ve economi c zone, a l arger area to be determi ned by
the Secretary.

The maxi mum areas menti oned above that a contractor may hol d under a mi neral
agreement shal l not i ncl ude mi ni ng/quarry areas under operati ng agreements between the
contractor and a cl ai mowner/l essee/permi ttee/l i censee entered i nto under Presi denti al
Decree No. 463.

Secti on 29. Fi l i ng and Approval of Mineral Agreements - Al l proposed mi neral
agreements shal l be fi l ed i n the regi on where the areas of i nterest are l ocated, except i n
mi neral reservati onswhi ch shal l be fi l ed with the Bureau.

The fi l i ng of a proposal for a mi neral agreement shal l gi ve the proponent the pri or
ri ght to areas covered by the same. The proposed mi neral agreement wi l l be approved by
the Secretary and copi es thereof shal l be submi tted to the Presi dent. Thereafter, the
Presi dent shal l provi de a l i st to Congress of every approved mi neral agreement wi thi n thi rty
(30) days from i ts approval by the Secretary.

Secti on 30. Assi gnment/Transfer - Any assi gnment or transfer of ri ghts and
obl i gati ons under any mi neral agreement except a fi nancial or techni cal assi stance
agreement shal l be subj ect to the pri or approval of the Secretary. Such assi gnment or
transfer shall be deemed automatical l y approved i f not acted upon by the Secretary wi thi n
thi rty (30) worki ng days from offici al recei pt thereof, unl ess patentl y unconsti tuti onal or
i l l egal .

Secti on 31. Wi thdrawal from Mi neral Agreements. - The contractor may, by
gi vi ng due noti ce at any time during the term of the agreement, appl y for the cancel l ati on
of the mi neral agreement due to causes whi ch, i n the opini on of the contractor, make
conti nued mi ni ng operati ons no l onger feasi bl e or vi abl e. The Secretary shal l consi der the
noti ce and i ssue its deci si on wi thi n a peri od of thi rty (30) days: Provi ded, That the
contractor has met al l i ts fi nanci al , fi scal and l egal obl i gati ons.

Secti on 32. Terms - Mi neral agreements shal l have a term not exceedi ng twenty-
fi ve (25) years to start from the date of executi on thereof, and renewable for another term
not exceeding twenty-fi ve (25) years under the same terms and condi tions thereof, wi thout
prej udi ce to changes mutual l y agreed upon by the parties. After the renewal peri od, the
operati on of the mine may be undertaken by the Government or through a contractor. The
contract for the operati on of a mi ne shal l be awarded to the hi ghest bi dder i n a publ i c
bi ddi ng after due publ i cati on of the notice thereof: Provi ded, That the contractor shal l
have the ri ght to equal the hi ghest bi d upon rei mbursement of al l reasonabl e expenses of
the hi ghest bi dder.


CHAPTER VI
FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT

Secti on 33. El i gi bi l i ty - Any quali fi ed person wi th techni cal and fi nanci al
capabi l i ty to undertake l arge-scal e expl orati on, devel opment, and uti li zati on of mi neral
resources i n the Phi l i ppi nes may enter i nto a fi nancial or techni cal assi stance agreement
di rectl y wi th the Government through the Department.

Secti on 34. Maxi mum Contract Area - The maxi mum contract area that may be
granted per qual i fi ed person, subj ect to reli nqui shment shal l be:

(a) 1,000 meri di onal blocks onshore;
(b) 4,000 meri di onal blocks offshore; or
(c) Combi nati ons of (a) and (b) provi ded that i t shal l not exceed the maxi mum
l i mi ts for onshore and offshore areas.

Secti on 35. Terms and Conditi ons - The fol l owi ng terms, condi ti ons, and
warranti es shal l be incorporated i n the fi nanci al or techni cal assi stance agreement, to wi t:

(a) A firm commi tment i n the form of a sworn statement, of an amount
correspondi ng to the expendi ture obl i gati on that wi l l be i nvested i n the
contract area: Provi ded, That such amount shall be subj ect to changes as
may be provi ded for i n the rul es and regul ati ons of thi s Act;
(b) A fi nanci al guarantee bond shal l be posted i n favor of the Government i n an
amount equi val ent to the expendi ture obl i gati on of the appl i cant for any
year;
(c) Submi ssi on of proof of techni cal competence, such as, but not l i mi ted to, i ts
track record i n mi neral resource expl oration, devel opment, and uti l i zation;
detai l s of technol ogy to be empl oyed i n the proposed operati on; and detai l s
of techni cal personnel to undertake the operati on;
(d) Representati ons and warranti es that the appl i cant has all the qual i fi cations
and none of the di squal i fi cati ons for entering i nto the agreement;
(e) Representati on and warranti esthat the contractor hasor has access to al l the
fi nanci ng, manageri al and techni cal experti se and, i f ci rcumstances
demand, the technol ogy requi red to promptl y and effecti vel y carry out the
obj ecti ves of the agreement wi th the understanding to timely depl oy these
resources under i ts supervisi on pursuant to the peri odi c work programs and
rel ated budgets, when proper, provi di ng an expl orati on peri od up to two (2)
years, extendi bl e for another two (2) years but subj ect to annual revi ew by
the Secretary i n accordance wi th the i mpl ementi ng rul es and regul ati ons of
thi s Act, and further, subj ect to the rel i nquishment obl i gations;
(f) Representati ons and warranti es that, except for payments for di sposi ti on for
i ts equi ty, forei gn i nvestments i n l ocal enterpri ses whi ch are qual i fi ed for
repatri ati on, and l ocal suppl i er's credi ts and such other general ly accepted
and permi ssi bl e financi al schemes for rai si ng funds for val id busi ness
purposes, the contractor shal l not rai se any form of fi nanci ng from domesti c
sources of funds, whether i n Phi l i ppi ne or forei gn currency, for conducti ng i ts
mi ning operati ons for and in the contract area;
(g) The mi ni ng operations shal l be conducted i n accordance wi th the provi sions
of thi s Act and i ts i mpl ementi ng rules and regul ati ons;
(h) Workprograms and mi ni mum expendi turescommitments;
(I) Preferenti al use of l ocal goods and servi ces to the maxi mum extent
practi cabl e;
(j ) A stipul ati on that the contractors are obl i gated to gi ve preference to Fi l i pinos
i n al l types of mi ni ng empl oyment for whi ch they are qual i fied and that
technol ogy shal l be transferred to the same;
(k) Requi ri ng the proponent to effecti vel y use appropri ate anti -pol l uti on
technol ogy and faci l i ti es to protect the envi ronment and to restore or
rehabi l i tate mi ned out areas and other areas affected by mi ne tai l i ngs and
other forms of pol l uti on or destruction;
(l ) The contractors shal l furni sh the Government records of geol ogi c,
accounti ng, and other rel evant data for i tsmi ni ng operati ons, and that book
of accounts and records shal l be open for i nspecti on by the government;
(m) Requi ri ng the proponent to di spose of the mi nerals and byproducts produced
under a fi nanci al or technical assi stance agreement at the hi ghest pri ce and
more advantageousterms and condi ti onsas provi ded for under the rul es and
regul ati ons of thi s Act;
(n) Provi de for consul tati on and arbi trati on wi th respect to the i nterpretati on and
i mplementati on of the terms and condi ti ons of the agreements; and
(o) Such other terms and condi ti ons consistent with the Consti tuti on and wi th
thi s Act as the Secretary may deem to be for the best i nterest of the State
and the welfare of the Fi l i pi no peopl e.

Secti on 36. Negoti ati ons - A financi al or techni cal assi stance agreement shal l be
negoti ated by the Department and executed and approved by the Presi dent. The Presi dent
shall noti fy Congress of all fi nanci al or techni cal assi stance agreements wi thi n thi rty (30)
daysfrom executi on and approval thereof.

Secti on 37. Fi l i ng and Eval uati on of Fi nanci al or Techni cal Assi stance
Agreement Proposal s - Al l fi nancial or techni cal assi stance agreement proposal s shal l be
fi l ed wi th the Bureau after payment of the requi red processi ng fees. If the proposal i s found
to be suffi cient and meri tori ous i n form and substance after eval uati on, i t shal l be recorded
wi th the appropri ate government agency to gi ve the proponent the pri or ri ght to the area
covered by such proposal : Provi ded, That exi sti ng mi neral agreements, financi al or
techni cal assi stance agreements and other mi ni ng ri ghts are not i mpai red or prej udi ced
thereby. The Secretary shal l recommend its approval to the President.

Secti on 38. Term of Fi nanci al or Techni cal Assi stance Agreement - A financi al or
techni cal assi stance agreement shal l have a term not exceedi ng twenty-fi ve (25) years to
start from the executi on thereof, renewabl e for not more than twenty-fi ve (25) years under
such terms and condi ti ons as may be provi ded by law.

Secti on 39. Option to Convert into a Mi neral Agreement - The contractor has the
opti on to convert the fi nanci al or techni cal assi stance agreement to a mi neral agreement at
any ti me duri ng the term of the agreement, i f the economi c vi abi l i ty of the contract area i s
found to be i nadequate to j usti fy l arge-scal e mi ni ng operati ons, after proper noti ce to the
Secretary asprovi ded for under the i mpl ementi ng rul es and regulati ons: Provi ded, That the
mi neral agreement shal l onl y be for the remai ni ng peri od of the ori gi nal agreement.

In case of a forei gn contractor, i t shal l reduce i ts equi ty to forty percent (40%) i n the
corporati on, partnershi p, associ ati on, or cooperati ve. Upon compl i ance wi th thi s
requi rement by the contractor, the Secretary shal l approve the conversi on and execute the
mi neral producti on-shari ng agreement.

Secti on 40. Assi gnment/Transfer - A financi al or techni cal assi stance agreement
may be assigned or transferred, i n whol e or i n part, to a qual i fi ed person subj ect to the pri or
approval of the Presi dent: Provi ded, That the Presi dent shall noti fy Congress of every
fi nanci al or techni cal assi stance agreement assi gned or converted i n accordance wi th thi s
provi si on withi n thi rty (30) days from the date of the approval thereof.

Secti on 41. Wi thdrawal from Fi nanci al or Techni cal Assi stance Agreement. - The
contractor shal l mani fest i n wri ti ng to the Secretary hi s i ntenti ons to wi thdraw from the
agreement, i f i n hi s j udgment the mi ni ng proj ect i s no l onger economi cal l y feasi bl e, even
after he has exerted reasonabl e di l i gence to remedy the cause or the si tuati on. The
Secretary may accept the wi thdrawal : Provi ded, That the contractor has compl i ed or
sati sfi ed al l hi s fi nanci al , fi scal or l egal obli gati ons.


CHAPTER VII
SMALL-SCALE MINING

Secti on 42. Smal l -scal e Mi ni ng. - Smal l -scal e mi ni ng shal l conti nue to be
governed by Republ i c Act No. 7076 and other perti nent l aws.


CHAPTER VIII
QUARRY RESOURCES

Secti on 43. Quarry Permi t - Any qual i fied person may appl y to the provi nci al /ci ty
mi ning regul atory board for a quarry permit on pri vatel y-owned l ands and/or publ i c l ands for
bui l di ng and constructi on materi al s such as marbl e, basal t, andesi te, congl omerate, tuff,
adobe, grani te, gabbro, serpenti ne, i nset fil l i ng materi al s, cl ay for cerami c ti l es and bui l di ng
bri cks, pumice, perli te and other si mi l ar materi al s that are extracted by quarryi ng from the
ground. The provinci al governor shal l grant the permi t after the appl icant has compli ed
wi th al l the requi rements asprescri bed by the rul esand regul ati ons.

The maxi mum area whi ch a qual i fi ed person may hol d at any one ti me shal l be fi ve
hectares (5 has): Provi ded, That i n l arge-scal e quarry operati ons i nvol vi ng cement raw
materi al s, marbl e, grani te, sand and gravel and constructi on aggregates, a qual ifi ed person
and the government may enter i nto a mi neral agreement as defi ned herei n.

A quarry permi t shal l have a term of fi ve (5) years, renewabl e for l i ke periods but not
to exceed a total term of twenty-fi ve (25) years. No quarry permi t shal l be i ssued or granted
on any area covered by a mineral agreement, or fi nancial or techni cal assi stance
agreement.

Secti on 44. Quarry Fee and Taxes - A permi ttee shal l , duri ng the term of his
permi t, pay a quarry fee asprovi ded for under the i mpl ementi ng rul es and regul ati ons. The
permi ttee shal l al so pay the exci se tax as provi ded by perti nent l aws.

Secti on 45. Cancel l ati on of Quarry Permi t - A quarry permi t may be cancel ed by
the provi ncial governor for vi ol ati ons of the provi si ons of thi s Act or i ts impl ementi ng rul es
and regul ati ons or the terms and condi tions of sai d permi t: Provi ded, That before the
cancel l ati on of such permit, the hol der thereof shal l be given the opportuni ty to be heard i n
an i nvesti gati on conducted for the purpose.

Secti on 46. Commerci al Sand and Gravel Permi t. - Any qual i fi ed person may be
granted a permi t by the provi nci al governor to extract and remove sand and gravel or other
l oose or unconsol i dated materi al s whi ch are used i n their natural state, wi thout undergoi ng
processi ng from an area of not more than fi ve hectares (5 has) and i n such quanti ti es as may
be speci fi ed i n the permi t.

Secti on 47. Industri al Sand and Gravel Permit - Any qual i fi ed person may be
granted an i ndustri al sand and gravel permi t by the Bureau for the extracti on of sand and
gravel and other l oose or unconsol i dated materi al s that necessi tate the use of mechani cal
processi ng coveri ng an area of more than fi ve hectares (5 has.) at any one ti me. The permi t
shall have a term of fi ve (5) years, renewabl e for a l i ke peri od but not to exceed a total term
of twenty-fi ve (25) years.

Secti on 48. Exclusi ve Sand and Gravel Permi t - Any qual i fi ed person may be
granted an excl usi ve sand and gravel permi t by the provi nci al governor to quarry and util i ze
sand and gravel or other l oose or unconsol i dated materi al s from publ i c l ands for hi s use,
provi ded that there wi l l be no commerci al di sposi tion thereof.

A mi neral agreement or a fi nanci al technical assistance agreement contractor shal l ,
however, have the ri ght to extract and remove sand and gravel and other l oose
unconsol i dated materi al s wi thout need of a permi t wi thi n the area covered by the mi ni ng
agreement for the excl usi ve use i n the mini ng operati ons: Provi ded, That monthl y reports
of the quanti ty of materi al s extracted therefrom shall be submi tted to the mi nes regi onal
offi ce concerned: Provi ded, further, That sai d ri ght shal l be cotermi nous wi th the expi rati on
of the agreement.

Hol ders of exi sti ng mi ni ng l eases shal l l ikewi se have the same ri ghts as that of a
contractor: Provi ded, That sai d ri ght shal l be cotermi nous wi th the expiry datesof the lease.

Secti on 49. Government Gratui tous Permi t - Any government enti ty or
i nstrumental i ty may be granted a gratui tous permi t by the provi nci al governor to extract
sand and gravel , quarry or l oose unconsol i dated materi al s needed i n the constructi on of
bui l di ng and/or i nfrastructure for publ i c use or other purposes over an area of not more than
two hectares(2 has.) for a peri od cotermi nous wi th sai d constructi on.

Secti on 50. Pri vate Gratui tous Permi t - Any owner of l and may be granted a
pri vate gratui tous permi t by the provi nci al governor.

Secti on 51. Guano Permi t - Any qual i fi ed person may be granted a guano permi t
by the provi nci al governor to extract and uti l i ze l oose unconsol i dated guano and other
organi c ferti l i zer materi al s i n any porti on of a muni cipal i ty where he has establ i shed
domi ci l e. The permi t shal l be for speci fi c caves and/or for confi ned si tes wi th l ocations
veri fi ed by the Department's fi el d offi cer i n accordance wi th exi sti ng rul es and regul ati ons.

Secti on 52. Gemstone Gatheri ng Permi t. - Any qual i fied person may be granted
a non-exclusi ve gemstone gatheri ng permi t by the provi nci al governor to gather l oose
stones useful as gemstones i n ri versand other l ocati ons.


CHAPTER IX
TRANSPORT, SALE AND PROCESSING OF MINERALS

Secti on 53. Ore Transport Permi t - A permi t speci fyi ng the origi n and quanti ty of
non-processed mi neral ores or mi neral s shall be requi red for thei r transport. Transport
permi ts shal l be i ssued by the mi nes regional director who has j uri sdi cti on over the area
where the ores were extracted. In the case of mi neral ores or mi neral s bei ng transported
from the smal l -scal e mi ni ng areas to the custom mi l l s or processi ng pl ants, the Provi nci al
Mi ning Regul atory Board (PMRB) concerned shal l formul ate thei r own pol i ci es to govern
such transport of ores produced by smal l-scal e mi ners. The absence of a permi t shal l be
consi dered as pri ma faci e evi dence of i l l egal mini ng and shal l be suffici ent cause for the
Government to confi scate the ores or mi neral s bei ng transported, the tool s and equi pment
uti l i zed, and the vehi cl e contai ni ng the same. Ore sampl es not exceedi ng two metri c tons
(2 m.t.) to be used excl usi vel y for assay or pi l ot test purposes shal l be exempted from such
requi rement.

Secti on 54. Mi neral Tradi ng Regi strati on - No person shal l engage i n the tradi ng
of mi neral products, ei ther l ocal l y or i nternati onal l y, unl ess regi stered wi th the Department
of Trade and Industry and accredi ted by the Department, wi th a copy of sai d regi strati on
submi tted to the Bureau.

Secti on 55. Mi neral s Processi ng Permi t - No person shal l engage i n the
processi ng of mi neral s wi thout fi rst securi ng a mi neral s processi ng permi t from the Secretary.
Mi neral s processi ng permi t shal l be for a peri od of fi ve (5) years renewabl e for li ke periods
but not to exceed a total term of twenty-fi ve (25) years. In the case of mi neral ores or
mi neral s produced by the smal l-scal e mi ners, the processi ng thereof as well as the l i censi ng
of thei r custom mi l l s, or processi ng pl ants shal l conti nue to be governed by the provi si ons of
Republ i c Act No. 7076.

Secti on 56. El i gi bi l i ty of Forei gn-owned/ -control l ed Corporati on - A forei gn-
owned/-control l ed corporation may be granted a mi neral processi ng permi t.


CHAPTER X
DEVELOPMENT OF MINING COMMUNITIES,
SCIENCE AND MINING TECHNOLOGY

Secti on 57. Expendi ture for Communi ty Development and Sci ence and Mi ni ng
Technol ogy - A contractor shall assi st i n the devel opment of i ts mi ni ng communi ty, the
promoti on of the general wel fare of i ts inhabi tants, and the devel opment of sci ence and
mi ning technol ogy.

Secti on 58. Credi ted Acti vi ti es - Acti vi ti es that may be credi ted as expendi tures
for devel opment of mi ni ng communi ti es, and sci ence and mi ni ng technol ogy are the
fol l owi ng:

(a) Any acti vi ty or expendi ture i ntended to enhance the devel opment of the
mi ni ng and nei ghbori ng communi ti es of a mi ni ng operation other than
those requi red or provi ded for under exi sti ng l aws, or col l ecti ve bargai ni ng
agreements, and the l i ke; and
(b) Any acti vi ty or expendi ture di rected towards the devel opment of geosci ences
and mini ng technol ogy such as, but not l i mi ted to, i nsti tuti onal and
manpower devel opment, and basi c and appl i ed researches. Appropriate
supervi si on and control mechani sms shal l be prescri bed i n the i mpl ementi ng
rul esand regul ati ons of thi sAct.

Secti on 59. Traini ng and Development - A contractor shal l mai ntai n an effecti ve
program of manpower trai ni ng and devel opment throughout the term of the mi neral
agreement and shal l encourage and trai n Fi l i pi nos to parti ci pate i n al l aspects of the
mi ning operati ons, i ncl udi ng the management thereof. For hi ghl y-techni cal and
speci al i zed mi ni ng operati ons, the contractor may, subject to the necessary government
cl earances, empl oy qual i fi ed forei gners.

Secti on 60. Use of Indi genous Goods, Servi ces and Technol ogi es - A contractor
shall gi ve preference to the use of l ocal goods, services and sci enti fi c and techni cal
resources i n the mi ni ng operati ons, where the same are of equi val ent qual i ty, and are
avail abl e on equi val ent terms as thei r i mported counterparts.

Secti on 61. Donati ons/Turn Over of Faci l i ti es - Prior to cessati on of mini ng
operati ons occasi oned by abandonment or wi thdrawal of operati ons, on publ i c l ands by the
contractor, the l atter shal l have a peri od of one (1) year therefrom wi thin whi ch to remove
hi si mprovements; otherwi se, al l the soci al i nfrastructure and faci l i ti es shal l be turned over or
donated tax-free to the proper government authori ti es, nati onal or l ocal , to ensure that sai d
i nfrastructure and faci l i ti es are conti nuousl y mai ntai ned and uti l ized by the host and
nei ghbori ng communi ti es.

Secti on 62. Empl oyment of Fil i pi nos - A contractor shall gi ve preference to
Fi l i pi no ci tizens i n al l types of mi ni ng empl oyment wi thi n the country i nsofar as such
ci ti zens are qual i fied to perform the correspondi ng work wi th reasonable effi ci ency and
wi thout hazard to the safety of the operati ons. The contractor, however, shal l not be
hi ndered from hi ri ng empl oyees of his own sel ecti on, subj ect to the provi si ons of
Commonweal th Act No. 613, as amended, for techni cal and speci al ized work whi ch, i n hi s
j udgment and wi th the approval of the Director, requi res hi ghl y-speci al i zed trai ni ng or l ong
experi ence i n expl orati on, devel opment or uti l i zati on of mi neral resources: Provi ded, That
i n no case shal l each empl oyment exceed fi ve (5) years or the payback peri od as
represented i n ori gi nal proj ect study, whi chever i s l onger: Provi ded, further, That each
foreigner empl oyed as mine manager, vi ce-presi dent for operati ons or i n an equi valent
manageri al posi ti on i n charge of mi ni ng, mi l l i ng, quarryi ng or dril l i ng operati on shal l :

(a) Present evi dence of hi s qual i fi cati on and work experi ence; or
(b) Shal l pass the appropri ate government l i censure exami nati on; or
(c) In speci al cases, may be permi tted to work by the Director for a peri od not
exceedi ng one (1) year: Provi ded, however, That i f reci procal privi l eges are
extended to Fi l i pi no nati onal s i n the country of domi ci l e, the Di rector may
grant wai vers or exempti ons.


CHAPTER XI
SAFETY AND ENVIRONMENTAL PROTECTION

Secti on 63. Mi nes Safety and Envi ronmental Protecti on - Al l contractors and
permi ttees shal l stri ctl y compl y with al l the mi nes safety rul es and regul ati ons as may be
promul gated by the Secretary concerni ng the safe and sani tary upkeep of the mi ni ng
operati ons and achi eve waste-free and effi ci ent mi ne devel opment. Personnel of the
Department i nvol ved i n the i mpl ementati on of mi nes safety, heal th and envi ronmental rul es
and regul ations shal l be covered under Republ ic Act No. 7305.

Secti on 64. Mi ne Labor - No person under si xteen (16) years of age shal l be
empl oyed in any phase of mi ni ng operati ons and no person under ei ghteen (18) years of
age shal l be empl oyed underground i n a mi ne.

Secti on 65. Mi ne Supervi si on - Al l mi ni ng and quarryi ng operati ons that empl oy
more than fi fty (50) workers shal l have at l east one (1) l i censed mini ng engi neer wi th at l east
fi ve (5) years of experi ence i n mi ni ng operati ons, and one (1) registered foreman.

Secti on 66. Mine Inspection - The regional director shal l have excl usi ve
j uri sdi cti on over the safety i nspection of al l i nstall ati ons, surface or underground, i n mi ni ng
operati ons at reasonabl e hours of the day or ni ght and as much aspossi ble i n a manner that
wi l l not i mpede or obstruct work i n progressof a contractor or permi ttee.

Secti on 67. Power to Issue Orders - The mi nes regi onal di rector shal l , i n
consul tati on wi th the Envi ronmental Management Bureau, forthwi th or wi thi n such ti me as
speci fi ed i n hi s order, requi re the contractor to remedy any practi ce connected with mi ni ng
or quarryi ng operati ons, whi ch i s not i n accordance wi th safety and anti-pol l uti on l aws and
regul ati ons. In case of i mmi nent danger to l i fe or property, the mi nes regi onal di rector may
summari l y suspend the mi ni ng or quarryi ng operati ons unti l the danger i s removed, or
appropri ate measures are taken by the contractor or permi ttee.

Secti on 68. Report of Acci dents - In case of any i ncident or acci dent, causing or
creati ng the danger of l oss of l i fe or seri ous physi cal i nj uri es, the person i n charge of
operati ons shal l i mmedi atel y report the same to the regi onal offi ce where the operati ons are
si tuated. Fai l ure to report the same wi thout j usti fi abl e reason shal l be a cause for the
i mposi ti on of admi ni strati ve sancti ons prescribed i n the rul esand regul ati ons i mpl ementi ng
thi s Act.

Secti on 69. Environmental Protecti on - Every contractor shal l undertake an
environmental protecti on and enhancement program coveri ng the period of the mi neral
agreement or permi t. Such envi ronmental program shal l be i ncorporated i n the work
program whi ch the contractor or permi ttee shal l submi t as an accompanyi ng document to
the appl i cati on for a mi neral agreement or permi t. The work program shal l i ncl ude not onl y
pl ans rel ati ve to mi ni ng operati ons but al so to rehabi l i tati on, regenerati on, revegetati on
and reforestati on of mi neral i zed areas, sl ope stabil i zati on of mi ned-out and tai l ings covered
areas, aquacul ture, watershed devel opment and water conservati on; and soci oeconomi c
devel opment.

Secti on 70. Environmental Impact Assessment (EIA) - Except duri ng the
explorati on peri od of a mi neral agreement or fi nanci al or techni cal assi stance agreement or
an expl oration permi t, and envi ronmental cl earance certi fi cate shal l be requi red based on
an envi ronmental impact assessment and procedures under the Phi l i ppi ne Envi ronmental
Impact Assessment System i ncl uding Secti ons 26 and 27 of the Local Government Code of
1991 whi ch require national agenci es to mai ntai n ecol ogi cal bal ance, and pri or
consul tati on wi th the l ocal government uni ts, nongovernmental and peopl e's organi zations
and other concerned sectors of the communi ty: Provi ded, That a compl eted ecol ogi cal
profil e of the proposed mi ni ng area shal l al so consti tute part of the environmental i mpact
assessment. People's organi zati ons and nongovernmental organi zati ons shal l be al l owed
and encouraged to parti ci pate i n ensuri ng that contractors/permittees shal l observe al l the
requi rements of envi ronmental protecti on.

Secti on 71. Rehabi l i tation - Contractors and permi ttees shall technical l y and
bi ol ogi cal l y rehabi li tate the excavated, mi ned-out, tai l i ngs covered and di sturbed areas to
the condi ti on of envi ronmental safety, as may be provi ded i n the i mpl ementi ng rul es and
regul ati ons of thi s Act. A mi ne rehabi li tati on fund shal l be created, based on the
contractor's approved work program, and shal l be deposi ted as a trust fund i n a government
deposi tory bank and used for physi cal and soci al rehabil i tati on of areas and communi ti es
affected by mi ni ng acti vi ti es and for research on the soci al, technical and preventi ve aspects
of rehabi l i tati on. Fai l ure to ful fi l l the above obl i gati on shal l mean i mmedi ate suspensi on or
cl osure of the mi ni ng acti viti es of the contractor/permi ttee concerned.


CHAPTER XII
AUXILIARY MINING RIGHTS

Secti on 72. Ti mber Ri ghts - Any provi sion of l aw to the contrary notwi thstanding,
a contractor may be granted a ri ght to cut trees or ti mber wi thi n hi s mi ning area as may be
necessary for hi s mi ni ng operati ons subj ect to forestry l aws, rul esand regul ati ons: Provided,
That i f the l and covered by the mi ni ng area i s al ready covered by exi sti ng ti mber
concessi ons, the vol ume of ti mber needed and the manner of cutti ng and removal thereof
shall be determi ned by the mi nes regi onal di rector, upon consul tati on wi th the contractor,
the ti mber concessi onai re/permi ttee and the Forest Management Bureau of the Department:
Provi ded, further, That i n case of di sagreement between the contractor and the ti mber
concessi onai re, the matter shal l be submi tted to the Secretary whose deci si on shal l be fi nal .
The contractor shal l perform reforestati on work wi thi n his mi ni ng area in accordance wi th
forestry l aws, rul es and regul ati ons.

Secti on 73. Water Ri ghts - A contractor shal l have water rights for mi ni ng
operati ons upon approval of appl i cati on wi th the appropri ate government agency i n
accordance wi th exi sti ng water l aws, rul es and regul ati ons promulgated thereunder:
Provi ded, That water ri ghts al ready granted or vested through l ong use, recogni zed and
acknowl edged by l ocal customs, l aws, and deci si ons of courts shal l not thereby be i mpai red:
Provi ded, further, That the Government reserves the ri ght to regul ate water ri ghts and the
reasonabl e and equi tabl e di stri buti on of water suppl y so as to prevent the monopoly of the
use thereof.

Secti on 74. Ri ght to Possess Expl osi ves- A contractor/expl orati on permi ttee have
the ri ght to possess and use expl osi ves withi n hi s contract/permi t area asmay be necessary
for hi s mi ni ng operations upon approval of an appl icati on wi th the appropri ate government
agency i n accordance wi th exi sti ng l aws, rul es and regul ati ons promul gated thereunder:
Provi ded, That the Government reserves the ri ght to regul ate and control the expl osi ve
accessories to ensure safe mini ng operati ons.

Secti on 75. Easement Ri ght - When mi ni ng areas are so si tuated that for
purposes of more conveni ent mi ning operati ons it i s necessary to bui l d, construct or i nstal l
on the mi ning area or l ands owned, occupi ed or leased by other persons, such i nfrastructure
as roads, rai l roads, mi l l s, waste dump si tes, tai l i ngs ponds, warehouses, stagi ng or storage
areas and port faci l i ti es, tramways, runways, ai rports, el ectri c transmi ssi on, tel ephone or
tel egraph l ines, dams and thei r normal fl ood and catchment areas, sites for water wel l s,
di tches, canal s, new ri ver beds, pi pel i nes, fl umes, cuts, shafts, tunnel s, or mi l l s, the
contractor, upon payment of j ust compensati on shal l be enti tl ed to enter and occupy sai d
mi ning areas or lands.

Secti on 76. Entry i nto Pri vate Lands and Concessi on Areas - Subj ect to pri or
noti fi cati on, hol dersof mi ning ri ghts shal l not be prevented from entry i nto pri vate l ands and
concessi on areas by surface owners, occupants, or concessi onai res when conducti ng mi ni ng
operati ons therei n: Provi ded, That any damage done to the property of the surface owner,
occupant, or concessi onai re as a consequence of such operati ons shal l be properl y
compensated as may be provi ded for i n the i mpl ementi ng rul es and regul ati ons: Provi ded,
further, That to guarantee such compensati on, the person authori zed to conduct mi ni ng
operati ons shal l , pri or thereto, post a bond wi th the regi onal di rector based on the type of
properti es, the prevai l i ng pri ces i n and around the area where the mi ni ng operati onsare to
be conducted, wi th surety or sureti es sati sfactory to the regi onal director


CHAPTER XIII
SETTLEMENT OF CONFLICTS

Secti on 77. Panel of Arbi trators - There shall be a panel of arbi trators i n the
regi onal offi ce of the Department composed of three (3) members, two (2) of whom must be
members of the Phi l i ppi ne Bar i n good standi ng and one a l i censed mini ng engi neer or a
professi onal i n a rel ated fiel d, and dul y desi gnated by the Secretary as recommended by
the Mi nes and Geosci ences Bureau Director. Those desi gnated as members of the panel
shall serve as such i n addi ti on to thei r work i n the Department wi thout recei vi ng any
additi onal compensati on. As much as practi cabl e, sai d members shal l come from the
di fferent bureaus of the Department in the regi on. The presi di ng offi cer thereof shal l be
sel ected by the drawi ng of l ots. Hi s tenure as presi di ng offi cer shal l be on a yearl y basi s.
The members of the panel shall perform thei r duti es and obl i gati ons i n heari ng and
decidi ng cases unti l thei r desi gnati on i s wi thdrawn or revoked by the Secretary. Wi thi n thi rty
(30) worki ng days, after the submi ssi on of the case by the parti es for deci sion, the panel shal l
have excl usi ve and ori gi nal j uri sdi cti on to hear and deci de on the fol l owi ng:

(a) Di sputes i nvol vi ng ri ghts to mi ni ng areas;
(b) Di sputes i nvol vi ng mi neral agreements or permi t;
(c) Di sputes invol vi ng surface owners, occupants and cl ai mhol ders/
concessi onai res; and
(d) Di sputes pendi ng before the Bureau and the Department at the date of the
effecti vi ty of thi s Act.

Secti on 78. Appel l ate Juri sdi cti on - The deci si on or order of the panel of
arbi trators may be appeal ed by the party not sati sfi ed thereto to the Mi nes Adj udi cati on
Board wi thi n fi fteen (15) days from receipt thereof whi ch must decide the case wi thi n thi rty
(30) days from submi ssi on thereof for deci sion.

Secti on 79. Mi nes Adj udi cati on Board - The Mi nes Adj udi cati on Board shal l be
composed of three (3) members. The Secretary shal l be the chai rman wi th the Di rector of
the Mi nes and Geosci ences Bureau and the Undersecretary for Operati ons of the
Department as members thereof. The Board shal l have the fol l owi ng powers and functi ons:

(a) To promul gate rul es and regul ati ons governi ng the hearing and di sposi ti on
of cases before i t, as wel l as those pertaini ng to i ts i nternal functi ons, and
such rul es and regul ati ons as may be necessary to carry out i ts functi ons;
(b) To admi ni ster oaths, summon the parti es to a controversy, i ssue subpoena
requi ri ng the attendance and testi mony of wi tnesses or the producti on of
such books, papers, contracts, records, statement of accounts, agreements,
and other documents as may be material to a j ust determi nati on of the
matter under i nvesti gati on, and to testi fy i n any i nvesti gati on or heari ng
conducted in pursuance of thi s Act.
(c) To conduct heari ngs on al l matters wi thin i ts j uri sdi cti on, proceed to hear
and determi ne the di sputes i n the absence of any party thereto who has
been summoned or served wi th noti ce to appear, conduct i tsproceedi ngs or
any part thereof i n publ i c or i n private, adj ourn i ts heari ngs at any ti me and
pl ace, refer technical matters or accounts to an expert and to accept hi s
report as evi dence after heari ng of the parti es upon due noti ce, direct parti es
to be j oi ned i n or excl uded from the proceedi ngs, correct, amend, or wai ve
any error, defect or i rregul ari ty, whether i n substance or i n form, gi ve al l such
di recti ons as i t may deem necessary or expedi ent in the determi nati on of the
di spute before i t, and di smi ss the mi ni ng di spute as part thereof, where i t i s
tri vi al or where further proceedi ngs by the Board are not necessary or
desirabl e;
(1) To hol d any person i n contempt, di rectl y or i ndirectl y, and i mpose
appropri ate penal ti es therefor; and
(2) To enj oi n any or al l acts i nvolvi ng or ari si ng from any case pendi ng
before i t whi ch, i f not restrai ned forthwi th, may cause grave or
i rreparabl e damage to any of the parti es to the case or seri ousl y
affect soci al and economi c stabi l i ty.

In any proceedi ng before the Board, the rul es of evi dence prevai li ng i n courts of l aw
or equi ty shal l not be control l i ng and i t i s the spi ri t and i ntenti on of thi s Act that shal l
govern. The Board shal l use every and al l reasonabl e means to ascertai n the factsi n each
case speedil y and obj ecti vel y and wi thout regard to techni cal i ti esof l aw or procedure, all i n
the i nterest of due process. In any proceedi ng before the Board, the parties may be
represented by l egal counsel . The fi ndings of fact of the Board shal l be concl usive and
bi ndi ng on the parties and i ts deci si ons or order shal l be final and executory.

A peti ti on for revi ew by certi orari and questi on of l aw may be fi l ed by the aggri eved
party wi th the Supreme Court wi thi n thi rty (30) days from recei pt of the order or deci si on of
the Board.

CHAPTER XIV
GOVERNMENT SHARE

Secti on 80. Government Share i n Mi neral Producti on Shari ng Agreement - The
total government share i n a mi neral producti on shari ng agreement shall be the exci se tax
on mi neral products as provi ded i n Republ i c Act No. 7729, amending Secti on 151(a) of the
National Internal Revenue Code, as amended.

Secti on 81. Government Share i n Other Mi neral Agreements - The share of the
Government i n co-producti on and j oint-venture agreements shal l be negotiated by the
Government and the contractor taki ng i nto consi derati on the: (a) capi tal i nvestment of the
proj ect, (b) ri sks i nvol ved, (c) contri buti on of the proj ect to the economy, (d) other factors
that wi l l provi de for a fai r and equi tabl e shari ng between the Government and the
contractor. The Government shal l al so be enti tl ed to compensati ons for i ts other
contri buti ons whi ch shal l be agreed upon by the parti es, and shal l consi st, among other
thi ngs, the contractor's forei gn stockhol ders ari sing from di vi dend or i nterest payments to the
sai d forei gn stockhol ders, i n case of a forei gn nati onal , and al l such other taxes, duti es and
feesas provi ded for under exi sti ng l aws.

The Government share i n fi nanci al or techni cal assi stance agreement shal l consi st
of, among other things, the contractor's corporate i ncome tax, exci se tax, speci al al l owance,
wi thhol di ng tax due from the contractor's forei gn stockhol ders ari si ng from di vi dend or
i nterest payments to the sai d foreign stockhol der i n case of a forei gn nati onal and al l such
other taxes, duti es and feesas provi ded for under exi sti ng l aws.

The col l ecti on of Government share i n financi al or techni cal assi stance agreement
shall commence after the fi nanci al or techni cal assi stance agreement contractor has ful l y
recovered i ts pre-operati ng expenses, expl orati on, and devel opment expendi tures, i ncl usi ve.

Secti on 82. Al l ocati on of Government Share - The Government share as referred
to i n the precedi ng secti ons shal l be shared and al l ocated i n accordance wi th Secti ons 290
and 292 of Republ ic Act No. 7160 otherwise known as the Local Government Code of 1991.
In case the devel opment and uti l i zation of mi neral resources i s undertaken by a
government-owned or -control l ed corporati on, the shari ng and al l ocati on shal l be i n
accordance wi th Secti ons 291 and 292 of the sai d Code.


CHAPTER XV
TAXES AND FEES

Secti on 83. Income Taxes - After the l apse of the i ncome tax hol i day as provi ded
for in the Omni bus Investments Code, the contractor shal l be l i abl e to pay i ncome tax as
provi ded i n the National Internal Revenue Code, as amended.

Secti on 84. Excise Tax on Mi neral Products - The contractor shal l be l i abl e to
pay the exci se tax on mi neral products as provi ded for under Secti on 151 of the Nati onal
Internal Revenue Code: Provi ded, however, That wi th respect to a mi neral producti on
shari ng agreement, the exci se tax on mi neral products shal l be the government share under
sai d agreement.

Secti on 85. Mi ne Wastes and Tai l i ngs Fees - A semi -annual fee to be known as
mi ne wastes and tai l i ngs fee i s hereby i mposed on all operati ng mi ni ng compani es i n
accordance wi th the i mpl ementi ng rul es and regul ati ons. The mi ne wastes and tai l i ngs fee
shall accrue to a reserve fund to be used excl usi vel y for payment for damagesto:

(a) Li ves and personal safety;
(b) Lands, agricul tural crops and forest products, mari ne l i fe and aquati c
resources, cul tural resources; and
(c) Infrastructure and the revegetati on and rehabi l i tati on of si l ted farm l ands
and other areas devoted to agri cul ture and fishi ng caused by mi ni ng
pol l uti on.

Thi s i s i n addi ti on to the suspensi on or closure of the acti vi ti es of the contractor at
any ti me and the penal sancti ons i mposed upon the same.

The Secretary i s authori zed to i ncrease mi ne wastes and tai l i ngs fees, when publ i c
i nterest so requi res, upon the recommendati on of the Di rector.

Secti on 86. Occupati on Fees - There shall be col l ected from any hol der of a
mi neral agreement, fi nanci al or techni cal assi stance agreement or expl orati on permi t on
publi c or pri vate l ands, an annual occupati on fee i n accordance wi th the fol l owi ng
schedul e:

(a) For expl orati on permi t - Fi ve pesos (P5.00) per hectare or fracti on thereof per
annum.
(b) For mi neral agreements and fi nanci al or techni cal assi stance agreements -
Fi fty pesos (P50.00) per hectare or fracti on thereof per annum; and
(c) For mi neral reservati on - One hundred pesos (P100.00) per hectare or
fracti on thereof per annum.

The Secretary i s authori zed to i ncrease the occupati on fees provi ded herei n when
the publ i c i nterest so requi res, upon recommendati on of the Bureau Di rector.

Secti on 87. Manner of Payment of Fees - The fees shal l be pai d on the date the
mi ning agreement i s regi stered wi th the appropri ate offi ce and on the same date every year
thereafter. It shal l be paid to the treasurer of the munici pal i ty or ci ty where the onshore
mi ning areas are l ocated, or to the Di rector i n case of offshore mi ni ng areas. For this
purpose, the appropri ate offi cer shal l submi t to the treasurer of the muni cipal i ty or ci ty where
the onshore mi ni ng area i s l ocated, a compl ete li st of all onshore mi ni ng ri ghts regi stered
wi th hi s office, i ndicati ng therei n the names of the hol ders, area i n hectares, l ocati on, and
date regi stered. If the fee i s not pai d on the date speci fi ed, i t shal l be i ncreased by twenty-
fi ve per centum (25%).

Secti on 88. Al l ocati on of Occupati on Fees - Thi rty per centum (30%) of al l
occupati onal fees col l ected from the hol ders of mi ni ng ri ghts i n onshore mi ni ng areasshal l
accrue to the provi nce and seventy per centum (70%) to the muni ci pal i ty i n whi ch the
onshore mi ni ng areas are located. In a chartered ci ty, the ful l amount shal l accrue to the
ci ty concerned.

Secti on 89. Fi l i ng Fees and Other Charges - The Secretary i s authorized to
charge reasonabl e fi l i ng fees and other charges as he may prescri be i n accordance wi th the
i mplementi ng rul esand regul ati ons.


CHAPTER XVI
INCENTIVES

Secti on 90. Incenti ves - The contractors i n mi neral agreements, and fi nanci al or
techni cal assi stance agreements shal l be enti tl ed to the appl i cabl e fi scal and non-fi scal
i ncenti ves as provi ded for under Executi ve Order No. 226, otherwi se known as the Omnibus
Investments Code of 1987: Provi ded, That hol ders of expl orati on permits may regi ster wi th
the Board of Investments and be enti tl ed to the fi scal i ncenti ves granted under the sai d
Code for the duration of the permi ts or extensi ons thereof: Provi ded, further, That mi ni ng
acti vi ti es shal l al ways be i ncl uded in the i nvestment pri ori ti es pl an.

Secti on 91. Incenti ves for Pol l uti on Control Devi ces - Poll uti on control devi ces
acqui red, constructed or instal l ed by contractors shal l not be consi dered as improvements on
the l and or bui l di ng where they are pl aced, and shal l not be subj ect to real property and
other taxes or assessments: Provi ded, however, That payment of mi ne wastes and tai l ings
feesi s not exempted.

Secti on 92. Income Tax-Carry Forward of Losses - A net operati ng l oss wi thout
the benefi t of i ncenti ves incurred i n any of the fi rst ten (10) years of operati ons may be
carried over as a deducti on from taxabl e i ncome for the next fi ve (5) years i mmedi atel y
fol l owi ng the year of such l oss. The enti re amount of the l oss shal l be carri ed over to the
fi rst of the fi ve (5) taxable years fol l owi ng the l oss, and any porti on of such l oss whi ch
exceeds the taxable i ncome of such fi rst year shal l be deducted i n l ike manner from the
taxabl e i ncome of the next remai ning four (4) years.

Secti on 93. Income Tax-Accel erated Depreci ati on - Fi xed assets may be
depreci ated as fol l ows:

(a) To the extent of not more than twi ce as fast as the normal rate of
depreci ati on or depreci ated at normal rate of depreci ati on if the expected
l i fe is ten (10) yearsor l ess; or
(b) Depreci ated over any number of years between fi ve (5) years and the
expected l i fe i f the l atter is more than ten (10) years, and the depreci ati on
thereon al l owed as deducti on from taxabl e i ncome: Provi ded, That the
contractor noti fi es the Bureau of Internal Revenue at the begi nni ng of the
depreci ati on rate all owed by thi s secti on wi l l be used.

In computing for taxabl e i ncome, unl ess otherwi se provi ded i n thi s Act, the
contractor may, at hi s opti on, deduct expl orati on and devel opment expendi tures
accumul ated at cost as of the date of the prospecti ng or explorati on and devel opment
expendi tures pai d or i ncurred duri ng the taxabl e year: Provi ded, That the total amount
deducti bl e for explorati on and devel opment expendi tures shal l not exceed twenty-fi ve per
centum (25%) of the net i ncome from mi ni ng operati ons. The actual expl orati on and
devel opment expendi tures mi nus the twenty-fi ve per centum (25) net i ncome from mi ni ng
shall be carri ed forward to the succeedi ng years unti l ful l y deducted.

Net i ncome from mi ni ng operati on i s defined as gross i ncome from operati ons l ess
al l owabl e deducti ons whi ch are necessary or rel ated to mi ni ng operati ons. Al l owabl e
deducti ons shal l i ncl ude mi ni ng, mi l l i ng and marketi ng expenses, depreci ati on of properti es
di rectl y used i n the mi ni ng operati ons. Thi s paragraph shal l not appl y to expendi turesfor
the acqui si ti on or i mprovement of property of a character whi ch is subj ect to the al l owances
for depreci ati on.

Secti on 94. Investment Guarantees - The contractor shal l be enti tl ed to the basi c
ri ghts and guarantees provi ded i n the Consti tuti on and such other ri ghts recogni zed by the
government as enumerated hereunder:

(a) Repatri ati on of i nvestments - The ri ght to repatri ate the enti re proceeds of
the l i qui dati on of the forei gn i nvestment i n the currency i n whi ch the
i nvestment was ori gi nal l y made and at the exchange rate prevai l i ng at the
ti me of repatri ati on.
(b) Remi ttance of earni ngs - The ri ght to remi t earni ngs from the i nvestment in
the currency i n which the forei gn investment was ori gi nall y made and at the
exchange rate prevai l i ng at the ti me of remi ttance.
(c) Forei gn l oans and contracts - The ri ght to remi t at the exchange rate
prevai l i ng at the ti me of remi ttance such sums asmay be necessary to meet
the payments of i nterest and pri nci pal on forei gn loans and forei gn
obl i gati ons ari si ng from fi nanci al or techni cal assi stance contracts.
(d) Freedom from expropri ati on - The ri ght to be free from expropriati on by the
Government of the property represented by i nvestments or l oans, or of the
property of the enterpri se except for publ ic use or i n the i nterest of nati onal
wel fare or defense and upon payment of j ust compensati on. In such cases,
foreign i nvestors or enterpri ses shal l have the ri ght to remi t sums recei ved as
compensati on for the expropri ated property i n the currency i n whi ch the
i nvestment was ori gi nal l y made and at the exchange rate prevai l i ng at the
ti me of remittance.
(e) Requi si ti on of i nvestment - The ri ght to be free from requi si ti on of the
property represented by the i nvestment or of the property of the enterpri ses
except i n case of war or nati onal emergency and only for the durati on
thereof. Just compensati on shal l be determi ned and pai d ei ther at the time
or i mmedi atel y after cessati on of the state of war or nati onal emergency.
Payments recei ved as compensation for the requi si ti oned property may be
remitted i n the currency i n whi ch the i nvestments were ori ginal l y made and
at the exchange rate prevail i ng at the ti me of remittance.
(f) Confi denti al i ty - Any confi denti al i nformati on suppl i ed by the contractor
pursuant to thi s Act and i ts i mplementi ng rul es and regul ati ons shal l be
treated as such by the Department and the Government, and duri ng the term
of the proj ect to which i t relates.


CHAPTER XVII
GROUND FOR CANCELLATION, REVOCATION, AND TERMINATION

Secti on 95. Late or Non-fi l i ng of Requi rements - Fail ure of the permi ttee or
contractor to compl y wi th any of the requi rements provi ded in thi s Act or i n i ts i mpl ementi ng
rul es and regul ati ons, wi thout a val i d reason, shal l be suffi ci ent ground for the suspensi on of
any permi t or agreement provi ded under thi s Act.

Secti on 96. Vi olati on of the Terms and Condi ti ons of Permits or Agreements -
Vi olati on of the terms and condi ti ons of the permi ts or agreements shal l be suffi cient ground
for cancel l ati on of the same.

Secti on 97. Non-payment of Taxes and Fees - Fail ure to pay the taxesand fees
due the Government for Two (2) consecuti ve years shal l cause the cancel l ati on of the
explorati on permi t, mi neral agreement, fi nanci al or techni cal assi stance agreement and
other agreements and the re-openi ng of the area subj ect thereof to new appl i cants.

Secti on 98. Suspensi on or Cancel l ati on of Tax Incentives and Credi ts - Fai lure to
abi de by the terms and condi ti ons of tax i ncenti ves and credi ts shal l cause the suspensi on or
cancel l ati on of sai d i ncentives and credi ts.

Secti on 99. Fal sehood or Omi ssi on of Facts i n the Statement - Al l statements
made i n the expl orati on permi t, mi ni ng agreement and fi nanci al or techni cal assi stance
agreement shal l be consi dered as condi ti ons and essential parts thereof and any fal sehood
i n sai d statements or omi ssi on of facts therei n whi ch may al ter, change or affect substanti al l y
the facts set forth i n sai d statements may cause the revocati on and termi nati on of the
explorati on permi t, mi ni ng agreement and fi nancial or techni cal assi stance agreement.

CHAPTER XVIII
ORGANIZATIONAL AND INSTITUTIONAL ARRANGEMENTS

Secti on 100. From Staff Bureau to Line Bureau - The Mi nes and Geosci ences
Bureau i s hereby transformed i nto a l i ne bureau consi stent wi th Secti on 9 of thi s Act:
Provi ded, That under the Mi nes and Geosci ences Bureau shal l be the necessary mi nes
regi onal , distri ct and other perti nent offi ces - the number and speci fi c functi ons of whi ch
shall be provi ded i n the i mpl ementi ng rul es and regul ati ons of this Act.


CHAPTER XIX
PENAL PROVISIONS

Secti on 101. Fal se Statements - Any person who knowi ngl y presents any fal se
appli cati on, decl arati on, or evi dence to the Government or publ i shes or causes to be
publi shed any prospectus or other i nformati on contai ni ng any fal se statement rel ati ng to
mi nes, mi ni ng operati ons or mi neral agreements, fi nanci al or techni cal assi stance
agreements and permi ts shal l , upon convi cti on, be penal i zed by a fi ne of not exceedi ng
Ten thousand pesos(P10,000.00).

Secti on 102. Il l egal Expl orati on - Any person undertaki ng expl orati on work wi thout
the necessary explorati on permi t shal l , upon convi cti on, be penal i zed by a fi ne of not
exceedi ng Fi fty thousand pesos (P50,000.00).

Secti on 103. Theft of Mi neral s - Any person extracti ng mi neral s and di sposi ng the
same wi thout a mi ni ng agreement, l ease, permi t, l i cense, or steal s mi neral s or ores or the
products thereof from mi nes or mi l l s or processi ng pl ants shal l , upon convi cti on, be
i mpri soned from six (6) months to si x (6) years or pay a fi ne from Ten thousand pesos
(P10,000.00) to Twenty thousand pesos (P20,000.00), or both, at the di screti on of the
appropri ate court. In addi ti on, he shal l be l i abl e to pay damagesand compensati on for the
mi neral s removed, extracted, and di sposed of. In the case of associ ati ons, partnershi ps, or
corporati ons, the presi dent and each of the di rectors thereof shal l be responsi bl e for the acts
commi tted by such associ ati on, corporati on, or partnershi p.

Secti on 104. Destructi on of Mi ni ng Structures - Any person who wi ll ful l y destroys or
damages structures i n or on the mi ni ng area or on the mi l l si tes shal l , upon convi cti on, be
i mpri soned for a peri od not to exceed fi ve (5) years and shal l , i n addi ti on, pay
compensati on for the damages which may have been caused thereby.

Secti on 105. Mi nes Arson - Any person who wi ll ful l y sets fi re to any mi neral
stockpi l e, mi ne or worki ngs, fi tti ngs or a mi ne, shall be guil ty of arson and shal l be puni shed,
upon convi cti on, by the appropri ate court i n accordance wi th the provi sions of the Revised
Penal Code and shal l , i n addi ti on, pay compensati on for the damages caused thereby.

Secti on 106. Wi l l ful Damage to a Mi ne - Any person who wi ll ful l y damages ami ne,
unl awful l y causes water to run i nto a mi ne, or obstructs any shaft or passage to a mi ne, or
renders usel ess, damages or destroys any machi ne, appl i ance, apparatus, rope, chai n,
tackle, or any other thi ngs used i n a mine, shal l be puni shed, upon convi ction, by the
appropri ate court, by i mpri sonment not exceedi ng a peri od of fi ve (5) years and shal l, i n
additi on, pay compensati on for the damages caused thereby.

Secti on 107. Il l egal Obstructi on to Permi ttees or Contractors - Any person who,
wi thout j ustifi abl e cause, prevents or obstructs the hol der of any permi t, agreement or l ease
from undertaki ng hi s mini ng operati ons shal l be puni shed, upon convi cti on by the
appropri ate court, by a fi ne not exceedi ng Fi ve thousand pesos (P5,000.00) or i mpri sonment
not exceeding one (1) year, or both, at the di screti on of the court.

Secti on 108. Viol ati on of the Terms and Condi ti ons of the Environmental
Compl i ance Certi fi cate - Any person who wi ll ful l y viol ates or grossl y negl ects to abide by the
terms and condi ti ons of the envi ronmental compli ance certi fi cate i ssued to sai d person and
whi ch causes envi ronmental damage through pol l uti on shal l suffer the penal ty of
i mpri sonment of si x (6) months to si x (6) years or a fi ne of Fi fty thousand pesos (P50,000.00)
to Two hundred thousand pesos (P200,000.00), or both, at the di screti on of the court.

Secti on 109. Il l egal Obstructi on to Government Offi ci al s - Any person who i l l egal l y
prevents or obstructs the Secretary, the Di rector or any of thei r representatives i n the
performance of thei r duti es under the provi si ons of thi s Act and of the regul ations
promul gated hereunder shal l be puni shed, upon convi cti on, by the appropri ate court, by a
fi ne not exceedi ng Fi ve thousand pesos (P5,000.00) or by i mpri sonment not exceedi ng one
(1) year, or both, at the di screti on of the court.

Secti on 110. Other Vi ol ati ons - Any other vi ol ati on of thi sAct and i ts i mpl ementing
rul es and regul ati ons shal l consti tute an offense puni shabl e wi th a fi ne not exceedi ng Fi ve
thousand pesos (P5,000.00).

Secti on 111. Fi nes - The Secretary i s authori zed to charge fines for l ate or non-
submi ssi on of reports i n accordance wi th the i mpl ementing rul esand regul ati ons of thi sAct.


CHAPTER XX
TRANSITORY AND MISCELLANEOUS PROVISIONS

Secti on 112. Non-i mpai rment of Exi sti ng Mi ni ng/Quarryi ng Ri ghts - Al l val i d and
exi sti ng mi ni ng lease contracts, permi ts/l i censes, leases pendi ng renewal , mineral
producti on-shari ng agreements granted under Executi ve Order No. 279, at the date of
effecti vi ty of thi s Act, shal l remai n val i d, shal l not be i mpai red, and shall be recogni zed by
the Government: Provi ded, That the provi si ons of Chapter XIV on government share i n
mi neral producti on-shari ng agreement and Chapter XVI on i ncentives of thi s Act shal l
i mmedi atel y govern and appl y to a mi ni ng l essee or contractor i ndi cates hi s i ntenti on to the
secretary, i n wri ti ng, not to avai l of sai d provi si ons: Provi ded, further, That no renewal of
mi ning l ease contracts shall be made after the expi rati on of i ts term: Provi ded, final l y, That
such l eases, producti on-shari ng agreements, fi nanci al or techni cal assi stance agreements
shal l compl y wi th the appl i cabl e provi si ons of thi s Act and i ts i mpl ementi ng rul es and
regul ati ons.

Secti on 113. Recogni ti on of Vali d and Exi sti ng Mi ni ng Cl ai ms and Lease/Quarry
Appl i cati ons- Holders of val i d and exi sti ng mi ni ng cl ai ms, l ease/quarry appl i cati ons shall be
gi ven preferenti al ri ghts to enter i nto any mode of mi neral agreement wi th the government
wi thi n two (2) years from the promul gati on of the rul es and regul ati ons i mpl ementi ng thi s
Act.

Secti on 114. Separabi l i ty Cl ause - If any of the provi sion of thi s Act i s hel d or
declared to be unconsti tutional or i nval i d by a competent court, the other provi si ons hereof
shall conti nue to be i n force as i f the provi si on so annul l ed or voi ded had never been
i ncorporated i n thi s Act.

Secti on 115. Repeal i ng and Amendi ng Clause. Al l l aws, executi ve orders,
presi denti al decrees, rul es and regul ati onsor partsthereof whi ch are i nconsi stent wi th any of
the provi si ons of this Act are hereby repealed or amended accordingl y.

Secti on 116. Effecti vi ty Clause - This Act shal l take effect thi rty (30) days fol l owi ng
i ts compl ete publ i cati on i n two (2) newspapers of general ci rcul ation i n the Phi l i ppi nes.

Approved,



EDGARDO J. ANGARA JOSE DE VENECIA, JR.
Senate Presi dent Speaker of the House
of Representati ves


Thi s Act whi ch i s a consol idati on of House Bi l l No. 10816 and Senate Bil l No. 1639
was fi nal l y passed by the House of Representati vesand the Senate on February 10, 1995.




EDGARDO E. TUMANGAN CAMILO L. SABIO
Secretary of the Senate Secretary General
House of Representati ves


Approved: Mar 03 1995



FIDEL V. RAMOS
Presi dent of the Phil i ppi nes