CHAVI'ER IV - PHILIPPINE MINING ACT OF 1995 133
(Republic Act No. 7942)
Chapter IV
PHILIPPINE MINING ACT OF 1995
(Republic Act No. 7942)
A. Preliminary
01. Governing law.
On March 3, 1995, RA No. 7942, or the "Philippine Mining
Act of 1995," was enacted, instituting a new system of mineral
resources exploration, development, utilization and conservation in
the country.
02. Evolution of pertinent mining laws.
Before the cession of the Philippine Islands to the United
States under the Treaty of Paris, the prevailing mining law in the
colony was the Royal Decree of May, 1867, otherwise known as
The Spanish Mining Law.
In the advent of American occupation, the Philippines was
governed by means of organic acts which were in the nature of
charters serving as a Constitution of the occupied territory from
1900 to 1935. Among the principal organic acts of the Philippines
was the Act of Congress of July 1, 1902, or Philippine Bill
of 1902, through which the United States Congress assumed the
administration of the Philippine Islands.
The Philippine Bill of 1902 contained provisions for, among
many other things, the open arid free exploration, occupation and
purchase of mineral deposits and the land where they may be
found. It declared "all valuable mineral deposits in public lands in
the Philippine Islands, both surveyed and unsurveyed ... to be free
and open to exploration, occupation, and purchase, and the land in
which they are found to occupation and purchase, by citizens of the
United States, or of said Islands ..."
129.
Any qualified person desiring to locate a mineral claim may
en ter upon the same and locate a plot of ground measuring, where
possi ble, but not exceeding, one thousand feet in length by one
thousand feet in breadth, in as nearly as possible a rectangular
form. Under the Philippine Bill of 1902, the holder of the mineral
claims so located is entitled to all the minerals which may lie within
his claim, but he may not mine outside the boundary lines of his
claims. The mine claim locator must have his claim recorded in the
m ining recorder within thirty (30) days after the location thereof;
otherwise, he will be deemed to have abandoned the same.
One of the continuing requirements for the subsistence of the
mining claim is performance of not less than one hundred dollars'
worth of labor or undertaking of improvements of the same value
every year. This is a strict requisite, the locator's failure to comply
with which shall operate to open the claim or mine to relocation
in the same manner as if no location of the same had even been
made. Unequivocal is the mandatory nature of the work or labor
requirement on the mine that the Philippine Bill specifically
designates the time when the work or labor required to be done
annually on all unpatented mineral claims, shall commence.
Subsequently, among a few laws passed amending the
Philippine Bill of 1902 was Act No. 624 passed by the United
States Philippine Commission and approved on February
7, 1903. Said Act prescribed regulations to govern the location and
the manner of recording mining claims and the amount of work
necessary to hold possession thereof. Such regulations reinforced
the annual work or labor requirement of not less than one hundred
dollars' worth as provided for in the Philippine Bill of 1902, in
accordance with Section 36 thereof which limits the power of the
United States Philippine Commission to make regulations but "not
in conflict with the provision of this Act [i.e., the Philippine Bill of
1902], governing the location, manner of recording, and amount of
work necessary to hold possession of a mining claim ..."
On November 15, 1935, the Commonwealth Constitution
took effect. The 1935 Constitution declared all natural resources
or the Philippines, including mineral lands and minerals, to be
property belonging to the State. However, as it turned out, not
really all of the Philippines' natural resources were considered part
of the public domain. Those natural resources, and for that matter,
those mineral lands and minerals with respect to which there
a I ready was "any existing right, grant, lease, or concession at the
 I AW ()N NATURAL RES( HIR( ES ANI) MILES
()le PROCEDURE leOR ENVIRONMENTAL CASES
time of the inauguration of the government established under this
Constitution," were then considered outside the application of the
jura regalia doctrine or at least not unconditionally or totally within
the contemplation of said doctrine.
On November 7, 1936, the First National Assembly
enacted CA No. 137, otherwise known as the Mining Act.
In contradistinction with the Philippine Bill of 1902 which was
patterned after the United States Federal Mining Acts which
rejected the Regalian doctrine, the Mining Act expressly adopted the
Regalian doctrine following the provisions of the 1935 Constitution.
Since said Constitution necessarily prohibits the alienation mining
lands, the Mining Act granted only lease rights to mining claimants
who are proscribed from purchasing the mining claim itself. These
provisions of the Mining Act, however, were expressly inapplicable
to mining claimants who had located and recorded their claims
under the Philippine Bill of 1902.
The nationalism underlying the adoption of the Regalian
doctrine in the 1935 Constitution was further eroded by the
amendment thereto which was adopted by the First Congress on
September 18, 1946 and approved by a majority at the elections held
on March 11, 1947. This amendment which came in the form of an
"Ordinance Appended to the Constitution" is what is known as
the "Parity Rights" amendment. It provided that, notwithstanding
the adoption in the Constitution of the Regalian doctrine and the
proscription against aliens participating in the natural wealth of the
nation, excepted therefrom were the citizens of the United States
and its business enterprises which would have the equal right in
the disposition, exploitation, development and utilization of our
natural resources, among them, our mining lands and minerals for
the period from July 4, 1946 to July 3, 1974.
In the meantime, the provision of the Philippine Bill of 1902
regarding mining claims, insofar as the mining lands and mining
claims acquired before the effectivity of the 1935 Constitution
are concerned, continued to be in effect. Annual performance of
labor or undertaking of improvements on the mine remained an
annual requirement, non-compliance with which resulted in the
mine becoming again open to relocation but now subject to the
lease provisions of the Mining Act. The intention for this annual
work requirement to be a strict prerequisite to maintenance of a
claimant's rights under the Philippine Bill of 1902 apparently not
lost on subsequent legislators, they took the same as an absolute
CHAI"I'leit IV PHILIPPINE MININ( ACT Ole 1995
(Republic Act. No. 7942)
prerequisite with grave consequences and believed it necessary to
expressly enact a law waiving this requirement during the period
from January 1, 1952 to January 1, 1954 as the circumstances then
necessitated the same.
The Philippine Bill of 1902 clearly required the annual
performance of work on the mine or the undertaking of improvements
thereon in order for the mine claim locator to continue enjoying all
the rights accruing to him as such under the said Bill. This and
nothing short of this was the requirement. The filing of affidavits
of annual assessment work, which procedure is not even provided
for in the Philippine Bill of 1902, is required only for purposes of
proving that there had actually been work or improvements done.
Such filing could not have been intended to replace the actual
work requirement, and nary is there a basis in law to support any
conclusion to the contrary, notwithstanding what was appearing to
be the practice of mine claim locators of annually filing affidavits
of annual assessment but willfully not undertaking actual work or
tangible improvement on the mine site.
On August 1, 1968, then President Marcos issued EO No.
141. Whereas mining claim holders under the Philippine Bill of
1902 "... are of the impression that they may hold on to their claims
indefinitely by the mere filing of affidavits of annual assessment
work ..." EO No. 141 precisely declared that "such impression
is not correct, for what matters in maintaining and preserving
possessory title to the claim is the continuous performance of the
required assessment work, not the filing of an affidavit which may
be disproved by findings on the ground." Consequently, EO No. 141
established the status of such unpatented mining claims which have
not complied with the annual work requirement, as having been
abandoned and open for relocation, their declarations of location
being accordingly cancelled.
On January 17, 1973, the 1973 Constitution came into
force and effect. Unlike the former Charter, the 1973 Constitution
did not expressly qualify the application of the Regalian doctrine as
being subject to any right granted before the effectivity of the 1935
Constitution or the 1973 Constitution for that matter. It provided:
"SEC. 8. All lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all forces
of potential energy, fisheries, wildlife, and other natural
resources of the Philippines belong to the State. . . ."
136 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
But the conditional application of the Regalian doctrine under
the 1973 Constitution could be found in PD No. 463, enacted on
May 17, 1974, which revised the Mining Act (CA No. 137). While the
said decree declares that "... all mineral deposits in public or private
lands ... belong to the State, inalienably and imprescriptively ...,"
it also recognizes whatever rights or reservations had already been
existing with respect to certain mining lands, apparently alluding to
the rights of mining claim holders under the Philippine Bill of 1902.
Under the Philippine Bill of 1902, the procedure was that a
mining claim locator need not apply for a patent soon after locating
the mine. The patent may come later, and the said locator, for as long
as he complies with the annual actual work requirement, enjoyed
possessory rights with respect to such mining claim with or without
a patent therefor. Under EO No. 141, unpatented mining claims
shall be deemed abandoned upon a finding that the holders thereof
had not been actually performing any work or labor or undertaking
any improvement at the mine site notwithstanding their having
religiously filed annual affidavits of assessment.
Even under PD No. 463 which was enacted in 1974, the
possessory rights of mining claim holders under the Philippine Bill of
1902 remained effective for as long as said holders complied with the
annual actual work requirement. But on October 14, 1977, PD No.
1214 required all the holders of unpatented mining claims to secure
mining lease contracts under PD No. 463. Faced with the grave
consequence of forfeiture of all their rights to their claims, holders
of subsisting and valid patentable mining claims located under the
Philippine Bill of 1902 were to file mining lease applications therefor
within one (1) year from the effectivity of the said decree. The filing
of such mining lease applications was considered a waiver of the
holders' rights to the issuance of mining patents for their claims.
Corollarily, non-filing of applications for mining lease by the holders
thereof within the one-year period would cause the forfeiture of all
their rights to their claims.' •
The 1987 Constitution, adopted on February 2, 1987,
reiterates the dominant feature of the 1935 and 1973 Constitutions
— ownership by the State of all natural resources. Thus, all mineral
lands, as part of the country's natural resources, belong to the
Philippine State. Section 2, Article XII thereof states:
lAtok Big-Wedge Mining Co. v. Intermediate Appellate Court, GR No. 63528,
Sept. 9, 1996, 261 SCRA 528.
CHAVI'ER IV PHILIPPINE MINIM; ACT OF 1995 137
(Republic Act No. 7942)
"With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration,
development, and utilization of natural resources shall be
under the full control and supervision of the State. The
State may directly undertake such activities, or it may
enter into co-production, joint venture, or production-
sharing agreements with Filipino citizens, or corporations
or associations at least sixty per centum of whose capital
is owned by such citizens."
On March 3, 1995, RA No. 7942, or the Philippine
Mining Act of 1995, was enacted, instituting a new system for
the exploration, development, utilization and conservation of the
natural resources of the country. RA No. 7942 defines the modes of
mineral agreements for mining operations, outlines the procedure
for their filing and approval, assignment/transfer and withdrawal,
and fixes their terms. Similar provisions govern financial or technical
assistance agreements.
The law prescribes the qualifications of contractors and grants
them certain rights, including timber, water and easement rights,
and the right to possess explosives. Surface owners, occupants, or
concessionaires are forbidden from preventing holders of mining
rights from entering private lands and concession areas. A procedure
for the settlement of conflicts is likewise provided for.
The Act restricts the conditions for exploration, quarry and
other permits. It regulates the transport, sale and processing of'
minerals, and promotes the development of mining communities,
science and mining technology, and safety and environmental
protection.
The government's share in the agreements is spelled out and
allocated, taxes and fees are imposed, incentives granted. Aside
from penalizing certain acts, the law likewise specifies grounds for
the cancellation, revocation, and termination of agreements and
permits.
On April 9, 1995, thirty days following its publication on March
10, 1995 in two newspapers of general circulation, RA No. 7942 took
effect.
On August 15, 1995, the Department of Environment
and Natural Resources (DENR) issued DENR Administrative
Order (DAO) No. 95-23, series of 1995, otherwise known as the
138 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
Implementing Rules and Regulations of RA No. 7942. This
was later repealed by DAO No. 96-40, series of 1996, which was
adopted on December 20, 1996.2
03. Declaration of policy.
The State shall ensure, for the benefit of the Filipino people, the
full exploration and development as well as the judicious disposition,
utilization, management, renewal and conservation of the country's
forest, miner, land, waters, fisheries, wildlife, off-shore areas and
other natural resources, consistent with the necessity of maintaining
a sound ecological balance and protecting and enhancing the quality
of the environment and the objective of making the exploration,
development and utilization of such natural resources equitably
accessible to the different segments of the present as well as future
generations.'
All mineral resources in public and private lands within
the territory and exclusive economic zone of the Republic of the
Philippines are owned by the State. It shall be the responsibility of the
State to promote their rational exploration, development, utilization
and conservation through the combined efforts of government and
the private sector in order to enhance national growth in a way that
effectively safeguards the environment and protect the rights of
affected communities.4
Mineral production is a major support of the national economy,
and therefore the intensified discovery, exploration, development
and wise utilization of the country's mineral resources are urgently
needed for national development.5
04. Philippine mining laws are intended to promote national
growth through the grant of supervised exploration and
development of mineral resources to qualified persons.
In Liwat-Moya v. Ermita,6 the court, through Justice Martires,
underscored the policy of the country's mining laws to promote
national growth through the grant of supervised exploration and
'La Bugal-Maan Tribal Association, Inc. v. Ramos, GR No. 127882, Jan. 27,
2004, 445 SCRA 1, per J. Carpio-Morales.
3Sec. 1, Chapter 1, Title XIV, EO No. 292.
'Sec. 2, RA No. 7942.
613D No. 463.
6GR No. 191249, March 14, 2018.
CHAFFER IV • PHILIPPINE MINING ACT OF 1995 139
(Republic Act No. 7942)
development of mineral resources to qualified persons, necessitating
the complete and prompt compliance with requirements. The
instant case does not merely involve the delayed filing of the
requirements under DMO No. 97-07, but the complete absence
thereof. Consequently, petitioner's application for MPSA is deemed
to have been automatically denied when the deadline lapsed without
her submission of the pertinent requirements. The background facts
of the case are as follows:
PD No. 463, or the Mineral Resources Development Decree of
1974, stressed the importance of mineral production to the growth
of national economy and the need to encourage qualified persons to
undertake the exploration and development of mineral resources,
viz.:
"WHEREAS, mineral production is a major
support of the national economy, and therefore the
intensified discovery, exploration, development and
wise utilization of the country's mineral resources
are urgently needed for national development;
WHEREAS, the existence of large undeveloped
mineral areas and the proliferation of small mining
claims deter modern development of the country's
mineral resource' s and urgently require well-
planned exploration, development and systematic
exploitation of mineral lands to accelerate
production and to bolster the national economy;
WHEREAS, effective and continuous mining
operations require considerable outlays of capital and
resources, and make it imperative that persons
possessing the financial resources and technical
skills for modern exploratory and development
techniques be encouraged to undertake the
exploration, development and exploitation of our
mineral resources;
WHEREAS, the foregoing objectives cannot be
achieved within the shortest possible time without
removing the deficiencies and limitations of existing
laws and improving the same in order to provide for a
modernized administration and disposition of mineral
 140 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
lands and to promote and encourage the development
and exploitation thereof." (Emphasis supplied)
RA No. 7942, or the Philippine Mining Act of 1995, the present
law on mining, adopts a similar policy, to wit:
"Section 2. Declaration of Policy. — All mineral
resources in public and private lands within the
territory and exclusive economic zone of the Republic
of the Philippines are owned by the State. It shall be
the responsibility of the State to promote their
rational exploration, development, utilization
and conservation through the combined efforts
of government and the private sector in order to
enhance national growth in a way that effectively
safeguards the environment and protects the rights
of affected communities." (Emphasis supplied)
RA No. 7942 defines the persons qualified to undertake mining
operations as "any citizen of the Philippines with capacity to contract,
or a corporation, partnership, association, or cooperative organized
or authorized for the purpose of engaging in mining, with technical
and financial capability to undertake mineral resources
development and duly registered in accordance with law at least
sixty per centum (60%) of the capital of which is owned by citizens
of the Philippines x x x." Relative to mineral production sharing
agreements under PD No. 463, EO No. 279 also instructs that said
agreements should incorporate the minimum terms and conditions
enumerated therein. Towards this end, DENR Administrative
Order (DAO) No. 57, providing the guidelines on mineral production
sharing agreements under EO No. 279, sets forth the minimum
requirements that must be submitted by prospective proponents.
These provisions bring to the fore the intent of the law to boost
national economy by granting mineral exploration and development
only to qualified persons who can competently and promptly
undertake mining operations. They underscore the need not only for
complete but also prompt compliance with the specific requirements
of the rules. Complete compliance is necessary to ensure that the
MPSA applicant is a qualified person as defined under the law and
has the requisite skills, financial resources, and technical ability to
conduct mineral exploration and development consistent with state
policies. Prompt compliance, on the other hand, ensures that non-
ClIAI"I'ER IV l'1111,11)1 ) INE MINING ACT OF 1995 141
(Itcpublic Act No. 7942)
moving applications are weeded out in order to give other qualified
persons an opportunity to develop mining areas whose potential for
mineral production might never be realized, to the detriment of our
national economy.
Consistent with this intent, Section 113 of RA No. 7942 limits
the period for entering into mineral agreements by a holder of
mining claims and applications filed under PD No. 463 and still
pending when the new law took effect. DAO No. 96-40, or the Revised
Implementing Rules and Regulations (IRR) of RA No. 7942, sets
a specific date for compliance and further provides that failure to
exercise the preferential rights granted by the law within the stated
period results in automatic abandonment of the pending application.
Thus, the preferential right given to applications still pending upon
the effectivity of RA No. 7942 is subject to the following conditions:
(1) that the applicant submits the status report, letter of intent, and
all the lacking requirements as provided by DMO No. 97-07; and (2)
that said compliance is performed within the deadlines set.
It is under the foregoing backdrop that the Court, in Liwat-Moya,
denied petitioner's MPSA with the Mines and Geosciences Bureau
(MOB) not only because of the delayed filing of the requirements
under DMO No. 97-07, but also the complete absence thereof. DAO
No. 96-40 authorizes the MGB to deny or cancel mining applications
that fail to comply with pertinent laws, rules, and regulations.
05. Ownership of mineral resources.
Section 2, Article XII of the Constitution, provides:
"SEC. 2. All lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural
lands, all other natural resources shall not be alienated.
The exploration, development, and utilization of natural
resources shall be under the full control and supervision
of the State. The State may directly undertake such
activities, or it may enter into co-production, joint venture,
or production-sharing agreements with Filipino citizens,
or corporations or associations at least sixty per centum of
whose capital is owned by such citizens."
142 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
The foregoing provision echoes the concept of jura regalia
pursuant to which all lands of the public domain belong to the State,
and that the State is the source of any asserted right to ownership
in land and charged with the conservation of such patrimony. All
lands not appearing to be clearly of private dominion presumptively
belong to the State.7
The Regalian doctrine which, as its name implies, is intended
for the benefit of the State, not of private persons. The rule simply
reserves to the State all minerals that may be found in public and
even private land devoted to "agricultural, industrial, commercial,
residential or (for) any purpose other than mining." Thus, if a person
is the owner of agricultural land in which minerals are discovered,
his ownership of such land does not give him the right to extract
or utilize the said minerals without the permission of the State to
which such minerals belong. Once minerals are discovered in the
land, whatever the use to which it is being devoted at the time, such
use may be discontinued by the State to enable it to extract the
minerals therein in the exercise of its sovereign prerogative. The
land is thus converted to mineral land and may not be used by any
private party, including the registered owner thereof, for any other
purpose that will impede the mining operations to be undertaken
therein. The Regalian doctrine then extends not only to land but
also to "all natural wealth that may be found in the bowels of the
earth."8
The right to possess or own the surface ground is separate and
distinct from the mineral rights over the same 1and.8 And the fact
that the location of a mining claim has been perfected does not bar
the government's exercise of its power of eminent domain. The right
of eminent domain covers all forms of private property, tangible or
intangible, and includes rights which are attached to land.°
Ownership of mineral deposits by the State is also a dominant
principle expressed in PD No. 463, otherwise known as the "Mineral
Resources Decree of 1974," to wit:
'Republic v. Naguiat, OR No. 134209, Jan. 24, 2006, 479 SCRA 585.
'Republic v. Court of Appeals and De la Rosa, GR No. L-43938, April 15, 1980,
160 SCRA 228.
9Comilang v. Buendia, GR No. L-24757, Oct. 25, 1967, 21 SCRA 486.
1°Benguet Consolidated, Inc. v. Republic, GR No. 71412, Aug. 15, 1986, 143
SCRA 466.
ClIAIIIER IV 1)1111,114 ) INE MINING ACT Ole 1995 143
(Republic Act No, 7942)
"SEC. 4. Minerals Excluded from other Rights
to Lands. — The ownership or the right to use public
OV private lands whether exposed or submerged, for
agricultural, logging, industrial, commercial, residential,
petroleum exploration and/or exploitation or purposes
or any purpose other than mining, does not include the
ownership of, nor the right to develop, exploit or utilize,
the mineral deposits found in, on or under the surface of
such lands, except with respect to quarry resources as
provided for this Decree.
SEC. 5. Mineral Deposits Open to Location and
Lease. — Subject to any existing rights or reservations,
nil valuable mineral deposits in public land including
timber or forest land as defined in Presidential Decree
No. 389, otherwise known as the Forestry Reform Code
or in private land not closed to mining location, and the
land which they are found, shall be free and open to
prospecting, occupation, location and lease."
Section 5 of RA No. 7942 on mineral reservations provides that
"I in I ining operations in existing mineral reservations and such other
reservations as may thereafter be established, shall be undertaken
by the Department or through a contractor[.]" Section 5 is a special
provision, as it specifiCally treats of the establishment of mineral
reservations only. Said provision grants the President the power
to proclaim a mineral land as a mineral reservation, regardless of
whether such land is also an existing forest reservation."
In Southeast Mindanao Gold Mining Corporation v. Balite
Portal Mining Cooperative'2 involving the Diwalwal gold rush
Vl'a, the Court declared that "the State may not be precluded from
considering a direct takeover of the mines, if it is the only plausible
remedy in sight to the gnawing complexities generated by the gold
rush."
Like the 1935 and 1973 Constitutions before it, the 1987
Constitution, in its Section 2, Article XII, prohibits the alienation
of natural resources, except agricultural lands. The same section
"Apex Mining Co., Inc. v. Southeast Mindanao Gold Mining Corporation, OR
No, 152613, Nov. 20, 2009.
14411, No. 135190, April 3, 2002.
144 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
provides that "(t)he exploration, development and utilization of
natural resources shall be under the full control and supervision of
the State." The constitutional policy of the State's "full control and
supervision" over natural resources proceeds from the concept of jura
regalia, as well as the recognition of the importance of the country's
natural resources, not only for national economic development, but
also for its security and national defense. Under this provision, the
State assumes "a more dynamic role" in the exploration, development
and utilization of natural resources.'3
The nationalization of the natural resources which character-
izes the 1935, 1973, and the present Constitution, is intended: (1)
to insure their conservation for Filipino posterity; (2) to serve as an
instrument of national defense, helping prevent the extension to the
country of foreign control through peaceful economic penetration;
and (3) to avoid making the Philippines a source of international
conflicts with the consequent danger to its internal security and in-
dependence."
a. "Full control and supervision by the State" in the
exploration, development and utilization of the
country's natural resources
The adoption of the concept of jura regalia that all natural
resources are owned by the State embodied in the 1935, 1973, and
1987 Constitutions, as well as the recognition of the importance
of the country's natural resources, not only for national economic
development, but also for its security and national defense, ushered
in the adoption of the constitutional policy of "full control and
supervision by the State" in the exploration, development
and utilization of the country's natural resources. The options
open to the State are through direct undertaking or by entering
into co-production, joint venture, or production-sharing
agreements, or by entering into agreement with foreign-owned
corporations for large-scale exploration, development, and
utilization.
Upon the effectivity of the 1987 Constitution on February 2,
1987, the State assumed a more dynamic role in the exploration,
"La Bugal-iflaan Tribal Association, Inc. v. Ramos, GR No. 127882, Jan. 27,
2004, 445 SCRA 1.
"Ibid.
(.11All'ER IV P1111,1{TINE MINING ACT OF 1995 145
(Republic Act No. 7942)
development, and utilization of the natural resources of the country.
Article XII, Section 2 of the said Charter explicitly ordains that the
exploration, development and utilization of natural resources shall
1)1. tinder the full control and supervision of the State. Consonant
therewith, the exploration, development and utilization of natural
resources may be undertaken by means of direct act of the State, or
it may opt to enter into co-production, joint venture, or production-
sharing agreements, or it may enter into agreements with foreign-
owned corporations involving either technical or financial assistance
for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms
mid conditions provided by law, based on real contributions to the
economic growth and general welfare of the country.
The economic policy on the exploration, development and
utilization of the country's natural resources under Article XII,
Section 2 of the 1987 Constitution could not be any clearer. As
enunciated in Article XII, Section 1 of the 1987 Constitution, the
exploration, development and utilization of natural resources
tinder the new system mandated in Section 2, is geared towards a
more equitable distribution of opportunities, income, and wealth;
it sustained increase in the amount of goods and services produced
by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all, especially
the underprivileged. The exploration, development and utilization
of the country's natural resources are matters vital to the public
interest and the general welfare of the people.
The recognition of the importance of the country's natural
resources was expressed as early as the 1984 Constitutional
Convention. In connection therewith, the 1986 UP Constitution
Project observed: "The 1984 Constitutional Convention recognized
the importance of our natural resources not only for its security
iti id national defense. Our natural resources which constitute the
exclusive heritage of the Filipino nation, should be preserved for
hose under the sovereign authority of that nation and for their
prosperity. This will ensure the country's survival as a viable and
III vereign republic."15
"Miners Association of the Philippines v. Factoran, GR No. 98332, Jan. 16,
1119b, 240 SCRA 100.
146 LAW ON NATURAL RESOURCES AND RULES
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b. The old system of exploration, development and
utilization of natural resources through licenses,
concessions or leases has been omitted under the
1987 Constitution
PD No. 463, as amended, pertained to the old system of
exploration, development and utilization of natural resources
through licenses, concessions or leases. While these arrangements
were provided under the 1935 and the 1973 Constitutions, they have
been omitted by Section 2 of Article XII of the 1987 Constitution.
With the shift of constitutional policy toward "full control and
supervision of the State" over natural resources, the Court in Miners
Association of the Philippines v. Factorani6 declared the provisions
of PD No. 463 as contrary to or violative of the express mandate of
the 1987 Constitution. The said provisions dealt with the lease of
mining claims; quarry permits or licenses covering privately-owned
or public lands; and other related provisions on lease, licenses, and
permits.
RA No. 7942, or the Philippine Mining Act of 1995, embodies
the new constitutional mandate. It has repealed or amended all laws,
executive orders, presidential decrees, rules and regulations — or
parts thereof — that are inconsistent with any of its provisions. It is
relevant to state, however, that Section 2 of Article XII of the 1987
Constitution does not apply retroactively to a "license, concession or
lease" granted by the government under the 1973 Constitution or
before the effectivity of the 1987 Constitution on February 2, 1987.
As noted in Miners Association of the Philippines,17 the deliberations
of the Constitutional Commission emphasized the intent to apply the
said constitutional provision prospectively. While RA No. 7942 has
expressly repealed provisions of mining laws that are inconsistent
with its own, it nonetheless respects previously issued valid and
existing licenses, as follows:
"SEC. 5. Mineral Reservations. — When the national
interest so requires, such as when there is a need to
preserve strategic raw materials for industries critical to
national development, or certain minerals for scientific,
March 30, 2004, 426 SCRA 517.
CHAFFER IV 1911LIPPINE MINING ACT OF 1995 147
(Republic Act No. 7942)
cultural or ecological value, the President may establish
mineral reservations upon the recommendation of the
Director through the Secretary. Mining operations in
existing mineral reservations and such other reservations
as may thereafter be established, shall be undertaken by
the Department or through a contractor: Provided, That
a small scale-mining cooperative covered by Republic Act
No. 7076 shall be given preferential right to apply for a
small-scale mining agreement for a maximum aggregate
area of twenty-five percent (25%) of such mineral
reservation, subject to valid existing mining/quarrying
rights as provided under Section 112 Chapter XX hereof.
All submerged lands within the contiguous zone and in
the exclusive economic zone of the Philippines are hereby
declared to be mineral reservations.
XXX XXX XXX
SEC. 7. Periodic Review of Existing Mineral Reser-
vations. —The Secretary shall periodically review existing,
mineral reservations for the purpose of determining
whether their continued existence is consistent with
the national interest, and upon his recommendation,
the President may, by proclamation, alter or modify
the boundaries thereof or revert the same to the public
domain without prejudice to prior existing rights.
XXX XXX XXX
SEC. 18. Areas Open to Mining Operations. —
Subject to any existing rights or reservations and prior
agreements of all parties, all mineral resources in public
or private lands, including timber or forestlands as defined
in existing laws, shall be open to mineral agreements or
financial or technical assistance agreement applications.
Any conflict that may arise under this provision shall be
heard and resolved by the panel of arbitrators."8
18Republic v. Rosemoor Mining and Development Corporation, GR No. 149927,
148 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
c. RA No. 7942 reiterates ownership of natural
resources by the State
RA No. 7942, the Philippine Mining Act of 1995, reiterates that
mineral resources are owned by the State.
"SEC. 4. Ownership of Mineral Resources. — Mineral
resources are owned by the State and the exploration,
development, utilization and processing thereof shall be
under its full control and supervision. The State may
directly undertake such activities or it may enter into
mineral agreements with contractors.
The State shall recognize and protect the rights of
the indigenous cultural communities to their ancestral
lands as provided for by the Constitution."
Thus, the State may pursue the constitutional policy of
full control and supervision of the exploration, development and
utilization of the country's natural mineral resources, by either
directly undertaking the same or by entering into agreements with
qualified entities. Obviously, the State may not be precluded from
considering a direct takeover of the mines, if it is the only plausible
remedy in sight to the gnawing complexities generated by the gold
rush. The State need be guided only by the demands of public
interest in settling for this option, as well as its material and logistic
feasibility.19
Section 4 of RA No. 7942 substantively reiterated Section 2 of
DA0 No. 96-40 as follows:
"Sec. 2. Declaration of Policy. — All mineral resources
in public and private lands within the territory and
exclusive economic zone of the Republic of the Philippines
are owned by the State. It shall be the responsibility of the
State to promote their rational exploration, development,
utilization and conservation through the combined efforts
of the Government and private sector in order to enhance
national growth in a way that effectively safeguards
'Southeast Mindanao Gold Mining Corporation v. Balite Portal Mining
Cooperative, GR No. 135190, April 3, 2002, 380 SCRA 145.
CHAPTER IV — PHILIPPINE MINING ACT OF 1996 149
(Republic Act No. 7942)
the environment and protects the rights of affected
communities."
d. Activities which may be undertaken by the State in
connection with its "full control and supervision"
The State, being the owner of the natural resources, is
accorded the primary power and responsibility in the exploration,
development and utilization thereof. As such, it may undertake
these activities through four modes:
(1) The State may directly undertake such activities.
(2) The State may enter into co-production, joint venture
or production-sharing agreements with Filipino citizens or
qualified corporations.
(3) Congress may, by law, allow small-scale utilization
of natural resources by Filipino citizens.
(4) For the large-scale exploration, development and
utilization of minerals, petroleum and other mineral 'oils,
the President may enter into agreements with foreign-owned
corporations involving technical or financial assistance.2°
RA No. 7942 provides for the State's control and super-
vision over mining operations. The following provisions thereof
establish the mechanism of inspection and visitorial rights over
mining operations and institute reportorial requirements in this
manner:
(1) Section 8 which provides for the DENR's power of
over-all supervision and periodic review for "the conservation,
management, development and proper use of the State's
mineral resources";
(2) Section 9 which authorizes the Mines and Geo-
sciences Bureau (MGB) under the DENR to exercise "direct
charge in the administration and disposition of mineral
resources," and empowers the MGB to "monitor the compliance
by the contractor of the terms and conditions of the mineral
•agreements," "confiscate surety and performance bonds,"
'Cruz v. Secretary of Environment and Natural Resources, GR No. 135385,
Dec. 6, 2000, 347 SCRA 128, per Justice Puno.
150 LAW ON NATURAL RESOURCES ANI) RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
and deputize whenever necessary any member or unit of the
Philippine National Police, barangay, duly registered non-
governmental organization (NGO) or any qualified person to
police mining activities;
(3) Section 66 which vests in the Regional Director
"exclusive jurisdiction over safety inspections of all installa-
tions, whether surface or underground," utilized in mining
operations.
(4) Section 35, which incorporates into all FTAAs the
following terms, conditions and warranties:
"(g) Mining operations shall be conducted in
accordance with the provisions of the Act and its IRR.
(h) Work programs and minimum expenditures
commitments.
XXX XXX XXX
(k) Requiring proponent to effectively use
appropriate anti-pollution technology and facilities to
protect the environment and restore or rehabilitate
mined-out areas.
(1) The contractors shall furnish the government
records of geologic, accounting and other relevant data
for its mining operation, and that books of accounts and
records shall be open for inspection by the government ...
(m) Requiring the proponent to dispose of the
minerals at the highest price and more advantageous
terms and conditions.
XXX XXX XXX
(o) Such other terms and conditions consistent
with the Constitution and with this Act as the Secretary
may deem to be for the best interest of the State and the
welfare of the Filipino people."
The foregoing provisions of Section 35 of RA No. 7942 are also
reflected and implemented in Section 56(g), (h), (1), (m) and (n) of
the implementing rules, DA0 No. 96-40. Moreover, RA No. 7942
CHAFFER IV 19111,114'INE MINING ACT OF 1995 151
(Republic Act, No. 7942)
and DAO No. 96-40 also provide various stipulations confirming the
government's control over mining enterprises.2'
06. Rights of a locator to a perfected mining claim.
While ownership of the natural resources is vested in the
State, there was a time when the mining laws prevailing in this
jurisdiction were compromising of the Filipino people's inherent
rights to their natural wealth.
Thus, in Mc-Daniel v. Apacible,22 a 1922 decision, it was held
that a perfected valid appropriation of public mineral lands operates
as a withdrawal of the tract from the body of the public domain,
and so long as such appropriation remains valid and subsisting, the
land covered thereby is deemed private property. A mining claim
perfected under the law is property in the highest sense, which may
be sold and conveyed and will pass by descent. It has the effect of a
grant of the right to present and exclusive possession of the lands
located. A valid and subsisting location of mineral land, made and
kept up in accordance with the provisions of the statutes, has the
effect of a grant of the present and exclusive possession of the lands
located. The discovery of minerals in the ground by one who has a
valid mineral location, perfects his claim and his location, not only
against third persons but also against the government.
Mc-Daniel was r6iterated in a catena of subsequent cases, to
wit: Gold Creek Mining Corporation v. Rodriguez (1938),23 Salacot
Mining Company v. Rodriguez (1939),24 Bambao v. Lednicky
(1961),25 Comilang v. Buendia (1967),2" Benguet Consolidated, Inc.
v. Republic (1986),27 Republic v. Court of Appeals and De la Rosa
(1988),28 and Atok-Big Wedge Mining Co., Inc. v. Court of Appeals
(1991).29
21La Bugal-Blaan Tribal Association, Inc. v. Ramos, GR No. 127882, Dec. 1,
2004, 445 SCRA 1.
22McDanie1 v. Apacible, GR No. 17597, Feb. 7, 1922, 42 Phil. 749.
23GR No. 45859, Sept. 28, 1938, 66 Phil. 259.
24GR No. 45860, March 20, 1939, 67 Phil. 97.
'GR. No. L-15459, Jan. 28, 1961, 1 SCRA 330.
'GI/ No. L-24757, Oct. 25, 1967, 21 SCRA 486.
27GR No. 71412, Aug. 5, 1986, 143 SCRA 466.
28GR No. L-43938, April 15, 1988, 160 SCRA 228.
29GR No. 88883, Jan. 18, 1991, 193 SCRA 71.
152 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
a. Mining rights acquired under the Philippine Bill
of 1902 and prior to the effectivity of the 1935
Constitution were vested rights that could not be
impaired even by the government
This principle was reiterated by the Court in Yinlu Bicol
Mining Corporation v. Trans-Asia Oil and Energy Development
Corporation3° where Justice Bersamin concluded:
"Indeed, the mining patents of Yinlu were issued
pursuant to the Philippine Bill of 1902 and were
subsisting prior to the effectivity of the 1935 Constitution.
Consequently, Yinlu and its predecessors-in-interest had
acquired vested rights in the disputed mineral lands
that could not and should not be impaired even in light
of their past failure to comply with the requirement of
registration and annual work obligations. Relevantly,
we advert to the DENR's finding that PIMI's failure to
register the patents in 1974 pursuant to PD No. 463
was excusable because of its suffering financial losses
at that time, which eventually led to the foreclosure of
the mortgages on its assets by the MBC and PCIB as its
creditors. The failure of Yinlu's predecessors-in-interest
to register and perform annual work obligations did not
automatically mean that they had already abandoned
their mining rights, and that such rights had already
lapsed. For one, the DENR itself declared that it had not
issued any specific order cancelling the mining patents.
Also, the tenets of due process required that Yinlu and
its predecessors-in-interest be given written notice of
their non-compliance with PD No. 463 and the ample
opportunity to comply."
b. But mere recording of a mining claim, without
performing annual work obligation, does not
convert land into mineral land
However, in Atok Big-Wedge Mining Co. v. Intermediate
Appellate Court,31 which involved the issue as to who is preferred
— the mining claimant who merely recorded or located a mining
a°GR No. 207942, Jan. 12, 2015.
31GR No. 63528, Sept. 9, 1996, 261 SCRA 529.
CI AM'ER IV -- PHILIPPINE MINING ACT OF 1995 153
(Republic Act No. 7942)
claim without performing the annual work obligation required by
the Philippine Bill of 1902, or the applicant for registration who has
possessed the land under a bona fide claim of ownership for at least
30 years prior to the filing of his land registration application — the
Court clarified that the mere recording or location of a mining claim
does not ipso facto and irreversibly convert the land into mineral
land. "Mere location does not mean absolute ownership over the
affected land or mining claim. It merely segregates the located
land or area from the public domain by barring other would-be
locators from locating the same and appropriating for themselves
the minerals found therein." The process of recording mining
claims is not the operative act of classifying lands into mineral
lands. The recording of a mining claim only operates to reserve to
the registrant exclusive rights to undertake mining activities upon
the land subject of the claim. The rights of a mining claimant are
confined to possessing the land for purposes of extracting therefrom
minerals in exclusion of any or all other persons whose claims are
subsequent to the original mining locator. Thus, if no minerals are
extracted therefrom, notwithstanding the recording of the claim, the
land is not mineral land and registration thereof is not precluded by
such recorded claim.
On October 14, 1977, PD No. 1214 was issued requiring all
locators under the Act. of Congress of July 1, 1902 (Philippine Bill
of 1902) to secure mining lease contracts under the provisions of PD
No. 463 (Mineral Resources Development Decree of 1974), thus —
"SEC. 1. Holders of subsisting and valid patentable
mining claims, lode or placer, located under the provisions
of the Act of Congress of July 1, 1902, as amended, shall
file a mining lease application therefor with the Mines
Regional office concerned within a period of one (1) year
from the approval of this Decree, and upon the filling
thereof, holders of the said claims shall be considered to
have waived their rights to the issuance of mining patents
therefor: Provided, however, That the non-filing of the
application for mining lease by the holders thereof within
the period herein prescribed shall cause the forfeiture of
all his rights to the claim.
SEC. 2. No mines temporary permit shall be required
of a holder of a patentable mining claim, lode or placer, in
the extraction and disposal of minerals taken therefrom
154 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
prior to the filling of the mining lease application
therefor; Provided, That upon the filling of the said
application, the provisions of Presidential Decree No. 463
shall apply: Provided, further, That patent applications
already published shall be exempted from the publication
requirements of Presidential Decree No. 463."
In the case of Zambales Chromite Mining Co., Inc. v. Leido,"
the Court ruled that PD No. 1214 is in accord with Section 8, Article
XIV of the 1973 Constitution and Section 2, Article XII of the 1987
Constitution. The Court cited its earlier ruling in Santa Rosa Mining
Co., Inc. v. Leido" where it upheld the constitutionality of PD No.
1214, thus:
"We now come to the question of whether or not
Presidential Decree No. 1214 is constitutional. x x x
(W)e hold that Presidential Decree No. 1214 is not
unconstitutional. It is a valid exercise of the sovereign
power of the State, as owner, over lands of the public
domain, of which petitioner's mining claims still form a
part, and over the patrimony of the nation, of which mineral
deposits are a valuable asset. It may be underscored, in
this connection, that the Decree does not cover all mining
claims located under the Phil. Bill of 1902, but only those
claims over which their locators had failed to obtain a
patent. And even then, such locators may still avail of
the renewable twenty-five-year (25) lease prescribed by
Presidential Decree No. 463, the Mineral Development
Resources Decree of 1974.
Mere location does not mean absolute ownership
over the affected land or the mining claim. It merely
segregates the located land or area from the public domain
by barring other would-be locators from locating the same
and appropriating for themselves the minerals found
therein. To rule otherwise would imply that location is
all that is needed to acquire and maintain rights over a
located mining claim. This, we cannot approve or sanction
because it is contrary to the intention of the lawmaker
32GR No. 49143, Aug. 21, 1989, 176 SCRA 602.
33GR No. L-49109, Dec. 1, 1987, 156 SCRA 1.
CHAPTER IV PHILIPPINE MINING ACT OF 1995 155
(Republic Act No. 7942)
that the locator should faithfully and consistently comply
with the requirements for annual work and improvements
in the located mining claim."
c. Abandonment
The word "abandon," in its ordinary sense, means to forsake
entirely; to forsake or renounce utterly. The dictionaries trace this
word to the root idea of "putting under a ban." The emphasis is on
the finality and the publicity with which some thing or body is thus
put in the control of another, and hence the meaning of giving up
absolutely, with intent never again to resume or claim one's rights or
interests. In other words the act of abandonment constitutes actual,
absolute, and irrevocable desertion of one's right or property.34
Thus, abandonment may be said to result where there is
concurrence of two elements: the first being the intent to abandon
a right or claim and the second being the external act by which
that intention is expressed and carried into effect. There must,
moreover, be an actual, as distinguished from a merely projected,
relinquishment of a claim or right; otherwise, the right or claith is
not vacated or waived so as to be susceptible of being appropriated
by the next owner. In a case, the Director of Mines and public
respondent Office of the President had found that, in point of fact,
private respondent Supreme Aggregates had performed its annual
work obligations. Supreme Aggregates could not therefore be said to
have intended to abandon its mining claim or lease, notwithstanding
the fact that it had failed to submit the normal documentary proof
of performance of annual work obligations — that is, the affidavit of
annual work obligations:35
In Greenhills Mining Co. v. Office of the President,36 the Court
ruled:
"The cases of McDaniel v. Apacible, Gold Creek
Mining Corporation v. Rodriguez, and Salacot Mining
Company v. Abadilla relied upon by the petitioner, and
where we held that the appropriation of a mineral land
pursuant to a valid claim segregates it from the public
34Medrana v. Office of the President, GR No. 85904, Aug. 21, 1990, 188 SCRA
818.
35/bid.
36GR No. L-75962, June 30, 1988, 163 SCRA 350.
156 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
domain, are not in point. The petitioner assumes that the
claims of other claimants recorded in 1933 and 1934 were
still valid when the Southern Zambales Forest Reservation
was established in 1956. According to the Office of the
President, however, the original claimowners had failed
to perform annual development work on the claims in
violation of the provisions of Section 36 of the Philippine
Bill of 1902. As a consequence, the area became 'open to
relocation ... as if no location of the same had ever been
made.' Conversely, assuming that the government lost the
property when the petitioner, or the original claimowners
staked their claims in 1933 and 1934, it reverted to the
public dominion upon abandonment thereof. Accordingly,
when President Magsaysay established the Southern
Zambales Forest Reserve in 1956, the areas covered by
the said abandoned claims already formed part of the
public domain. The petitioner cannot, moreover, claim
privity of title with the owners of the prior locations. Such
prior locations had been abandoned, or at most, forfeited,
and the petitioner's own location cannot be considered a
continuation thereof."
The present Constitution in express terms states that with
the exception of agricultural lands, all other natural resources shall
not be alienated. Mineral resources are thus clearly beyond the
commerce of man. They cannot be the subject of patent. As held
in Republic v. Court of Appeals and De la Rosa,"7 the Regalian
doctrine reserves to the State all natural wealth that may be found
in the bowels of the earth even if the land where. the discovery is
made be private. Accordingly, a registered owner of land does not
have the right to extract or utilize minerals discovered underneath
his property without the permission of the State which owns the
minerals.
It should be noted, however, that not any and all forms of
utilization of natural resources are prohibited. The Constitution
itself states that Congress may, by law, allow small-scale utilization
of natural resources by its citizens. Further, Section 6, Article
XIII, directs the State, in the disposition and utilization of natural
resources, to apply the principles of agrarian reform or stewardship.
Similarly, Section 7, Article XIII mandates the State to protect the
"GR No. L-43938, April 15, 1988, 160 SCRA 228.
CHAPTER IV — PHILIPPINE MINING ACT OF 1995 157
(Republic Act No. 7942)
rights of subsistence fishermen to the preferential use of marine and
fishing resources. Clearly, Section 2, Article XII, when interpreted
in view of the pro-Filipino, pro-poor philosophy of our fundamental
law, and in harmony with the other provisions of the Constitution
rather as a sequestered pronouncement, cannot be construed as
a prohibition against any and all forms of utilization of natural
resources without the State's direct participation.38
07. Mineral reservations.
Section 5 of RA No. 7942 provides:
"SEC. 5. Mineral Reservations. — When the national
interest so requires, such as when there is a need to
preserve strategic raw materials for industries critical to
national development, or certain minerals for scientific,
cultural or ecological value, the President may establish
mineral reservations upon the recommendation of the
Director through the Secretary. Mining operations in
existing mineral reservations and such other reservations
as may thereafter be established, shall be undertaken by
the Department or through a contractor: Provided, That
a small scale-mining cooperative covered by Republic Act
No. 7076 shall be given preferential right to apply for a
small-scale mining agreement for a maximum aggregate
area of twenty-five percent (25%) of such mineral
reservation, subject to valid existing mining/quarrying
rights as provided under Section 112 Chapter XX hereof.
All submerged lands within the contiguous zone and in
the exclusive economic zone of the Philippines are hereby
declared to be mineral reservations."
The above provision states that the establishment of mineral
reservations resides in the President. Hence, it is beyond the power
of the DENR Secretary to withdraw lands from forest reserves
and to declare the same as an area open for mining operations.
Inescapably, DA0 No. 66, declaring 729 hectares of the areas
covered by the Agusan-Davao-Surigao Forest Reserve as non-forest
land open to small-scale mining operations, was held null and void
'Cruz v. Secretary of Environment and Natural Resources, supra, per Justice
Kapunan.
158 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
as the DENR Secretary has no power to convert forest reserves into
non-forest reserves.39
It may be stated in this connection that areas within a forest
reserve are not open to mining location. Pursuant to PD No. 463,
which governed the old system of exploration, development, and
utilization of mineral resources through "license, concession or
lease," one can acquire mining rights within forest reserves by
initially applying for a permit to prospect with the Bureau of Forest
Development (BFD) and subsequently for a permit to explore with
the then Bureau of Mines and Geosciences (BMGS).4°
Note, however, that Section 6 of RA No. 7942 provides that
mining operations in reserved lands other than mineral reservations
may be undertaken by the Department of Environment and Natural
Resources (DENR) subject to certain limitations. It provides:
"SEC. 6. Other Reservations. — Mining operations
in reserved lands other than mineral reservations may be
undertaken by the Department, subject to limitations as
herein provided. In the event that the Department cannot
undertake such activities, they may be undertaken
by a qualified person in accordance with the rules and
regulations promulgated by the Secretary. The right to
develop and utilize the minerals found therein shall be
awarded by the President under such terms and conditions
as recommended by the Director and approved by the
Secretary: Provided, That the party who undertook the
exploration of said reservations shall be given priority.
The mineral land so awarded shall be automatically
excluded from the reservation during the term of the
agreement: Provided, further, That the right of the lessee
of a valid mining contract existing within the reservation
at the time of its establishment shall not be prejudiced or
impaired."
Clearly, RA No. 7942 does not disallow mining applications
in all forest reserves but only those specifically declared closed to
mining applications under Section 19 of the law, such as: (a) in
39Apex Mining Co., Inc. v. Southeast Mindanao Gold Mining Corporation, GR
No. 152613, June 23, 2006, 492 SCRA 355.
40Apex Mining Co. v. Garcia, GR No. 92605, July 16, 1991, 199 SCRA 278.
CHAPTER IV 19111411TINK MINING ACT Ole 1995 159
(Republic Act, No. 7942)
in ilitary and other government reservations, except upon prior
written clearance by the government agency concerned; (b) in areas
expressly prohibited by law; and (c) in old growth or virgin forests,
Proclaimed watershed forest reserves, wilderness areas, mangrove
Forests, mossy forests, national parks, provincial/municipal forests,
parks, greenbelts, game refuge and bird sanctuaries as defined by
law and in areas expressly prohibited under the National Integrated
Protected Areas System (NIPAS) under RA No. 7586, and DAO No.
25, series of 1992, and other laws.
Even if the area is a government reservation, defined as
Proclaimed reserved lands for specific purposes other than mineral
reservations," such does not necessarily preclude mining activities
in the area. Section 15(b) of DA0 No. 96-40 provides that government
reservations may be opened for mining applications upon prior
written clearance by the government agency having jurisdiction
over such reservation. Moreover, Section 18 of RA No. 7942 allows
mining in public or private lands, including timber or forest lands
subject to existing rights and reservations. Similarly, Section 47 of
I'D No. 705 permits mining operations in forestlands which include
the public forest, the permanent forest or forest reserves, and foiest
reservations.42
DENR Memorandum Order No. 03-98, which lays down the
guidelines in the issuance of area status and clearance or consent for
mining applications pursuant to RA No. 7942, provides that timber
or forest lands, military and other government reservations, forest
reservations, forest reserves other than critical watershed forest
reserves, and existing DENR Project Areas within timber or forest
lands, reservations and reserves, among others, are open to mining
applications subject to area status and clearance.
The case of PNOC-Energy Development Corporation v.
Veneracion43 involves the conflicting claims of petitioner and
respondent over the mining rights over Block 159 of the Malangas
Coal Reservation, Alicia, Zamboanga del Sur. On October 18, 1991,
Petitioner submitted to the DENR an application/proposal for a
Mineral Production Sharing Agreement (MPSA) over Block 159 of
the Malangas Coal Reservation. However, it was only on April 13,
'Sec. 5, Chapter I, DA0 No. 96-40.
. 'PICOP Resources, Inc. v. Base Metals Mineral Resources Corporation, GR
No. 163509, Dec. 6, 2006.
"GR No. 129820, Nov. 30, 2006.
160 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
1992 when Proclamation No. 890 was issued excluding Block 159
from the Malangas Coal Reservation and declaring it as government
mineral reservation open for disposition to qualified mining
applicants, pursuant to EO No. 279.
Ruling against petitioner's claim of preferential rights over
Block 159, the Court held that petitioner's MPSA, which was filed
prior to Proclamation No. 159, was improper and could not have
been legally accepted since the area was still within an existing
government reservation. And since only the respondent filed an
MPSA after the issuance of Proclamation 890, the preferential right
over Block 159 was acquired by the respondent.
The Court explained that prospecting and exploration of
minerals in a government reservation is prohibited under Section 13
of PD No. 463 unless authorized by the government itself. The law
enumerates the requirements for the prospecting and exploration of
government reserved land, to wit: (1) a prospecting permit from the
agency that has jurisdiction over the area; (2) an exploration permit
from the Mines and Geosciences Bureau (MGB); (3) if the exploration
reveals the presence of commercial deposit, the permittee applies
with the MGB for the exclusion of the area from the reservation;
(4) issuance of a Presidential proclamation excluding the area from
the reservation; and (5) a mining agreement approved by the DENR
Secretary.
08. Classification of minerals.
Land leased for mining purposes are classified under CA No.
137, or the Mining Act, as follows:
First group — Metals or metalliferous ores.
Second group — Precious stones.
Third group — Fuels.
Fourth group — Salines and mineral waters.
Fifth group — Building stone in place, clays, fertilizers,
and other non-metals."
Lands of the first group shall be those which contain any of the
metallic elements or minerals, or their combinations, such as gold,
"Sec. 15, CA No. 137, enacted Nov. 7, 1936.
CHAI"I'ER IV - - UI IILI NINE MINING ACT OF 1995 161
(Republic; Act No. 7942)
silver, platinum, tin, chromium, iron, manganese, copper, nickel,
lead, zinc, cinnabar, tungsten, and the like.15
Lands of the second group shall be those which contain
minerals mainly used for ornamental purposes such as diamond,
ruby, emerald, sapphire, topaz, amethyst, zircon, aquamarine, opal,
jade, agate, tourmaline, beryl, garnet, turquoise and the like.48
Lands of the third group shall be those which contain
combustible substances in solid, liquid, gaseous form, such as peat,
coal, mineral oils, natural gas, oil shales, asphalt, and the like, but
not the recent products of organic life.47
Lands of the fourth group shall be those which contain surface
or subterranean soluble substances or waters which by their mineral
contents are classified as mineral waters, such as salt, nitrates,
sulphurated, carbonated, sodic, calcic, and other waters.48
Lands of the fifth group shall be those which contain nonmetallic
substances, such as:
(a) Those used for building or construction purposes,
such as marble, granite, clay, and the like.
(b) Asbestos, feldspar, lime, mica, guano, phosphate,
potash, saltpeter, niter, and the like.
(c) Other substances used in the manufacture of paints,
ceramics and fertilizers and for other industrial purposes.4°
Mineral lands may be classified under more than one group,
depending upon the nature and uses of the minerals contained
therein.5°
09. Definition of terms.
As used in the Act, the following terms, whether in singular or
plural, shall mean:
(a) "Ancestral lands" refers to all lands exclusively
and actually possessed, occupied, or utilized by indigenous
'Sec. 16, ibid.
46Sec. 17, ibid.
'Sec. 18, ibid.
48Sec. 19, ibid.
48Sec. 20, ibid.
60Sec. 22, ibid.
162 LAW ON NATURAL RESOUIN ;ES AND RULES
OF PROCEDURE FOR ENVIRONMENTAI, CASES
cultural communities by themselves or through their ancestors
in accordance with their customs and traditions since time
immemorial, and as may be defined and delineated by law.
(b) "Block"or "meridional block"means an area bounded
by one-half (1/2) minute of latitude and one-half (1/2) minute
of longitude, containing approximately eighty-one hectares (81
has.).
(c) "Bureau" means the Mines and Geosciences Bureau
under the Department of Environment and Natural Resources.
(d) "Carrying capacity" refers to the capacity of natural
and human environments to accommodate and absorb change
without experiencing conditions of instability and attendant
degradation.
(e) "Contiguous zone" refers to water, sea bottom and
substratum measured twenty-four nautical miles (24 n.m.)
seaward from the base line of the Philippine archipelago.
(f) "Contract area" means land or body of water
delineated for purposes of exploration, development, or
utilization of the minerals found therein.
(g) "Contractor" means a qualified person acting alone
or in consortium who is a party to a mineral agreement or to a
financial or technical assistance agreement.
(h) "Co-production agreement (CA)" means an
agreement entered into between the Government and one or
more contractors in accordance with Section 26(b) hereof.
(i) "Department" means the Department of Environ-
ment and Natural Resources.
(j) "Development" means the work undertaken to
explore and prepare an ore body or a mineral deposit for
mining, including the construction of necessary infrastructure
and related facilitio,$.
(k) "Director" means the Director of the Mines and
Geosciences Bureau.
(1) "Ecological profile or eco-profile "refers to geographic-
based instruments for planners and decision-makers which
presents an evaluation of the environmental quality and
carrying capacity of an area.
CHAPTER IV PHILIPPINE MINING ACT OF 1995 163
(Republic Act No. 79,12)
(m) "Environmental Compliance Certificate (ECC)"
refers to the document issued by the government agency
concerned certifying that the project under consideration will
not bring about an unacceptable environmental impact and
that the proponent has complied with the requirements of the
environmental impact statement system.
(n) "Environmental Impact Statement (EIS)" is the
document which aims to identify, predict, interpret, and
communicate information regarding changes in environmental
quality associated with a proposed project and which examines
the range of alternatives for the objectives of the proposal and
their impact on the environment.
(o) "Exclusive economic zone" means the water, sea
bottom and subsurface measured from the baseline of the
Philippine archipelago up to two hundred nautical miles (200
n.m.) offshore.
(p) "Existing mining/quarrying right" means a valid
and subsisting mining claim or permit or quarry permit or any
mining lease contract or agreement covering a mineralized
area granted/issued under pertinent mining laws.
(q) "Exploration" means the searching or prospecting
for mineral resources by geological, geochemical or geophysical
surveys, remote sensing, test pitting, trenching, drilling, shaft
sinking, tunneling or any other means for the purpose of
determining the existence, extent, quantity and quality thereof
and the feasibility of mining them for profit.
(r) "Financial or technical assistance agreement" means
a contract involving financial or technical assistance for large-
scale exploration, development, and utilization of mineral
resources.
(s) "Force majeure" means acts or circumstances
beyond the reasonable control of contractor including, but not
limited to, war, rebellion, insurrection, riots, civil disturbance,
blockade, sabotage, embargo, strike, lockout, any dispute with
surface owners and other labor disputes, epidemic, earthquake,
storm, flood or other adverse weather conditions, explosion,
fire, adverse action by government or by any instrumentality
or subdivision thereof, act of God or any public enemy and any
cause that herein describe over which the affected party has no
reasonable control.
164 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
(t) "Foreign-owned corporation"means any corporation,
partnerships, association, or cooperative duly registered in
accordance with law in which less than fifty per centum (50%)
of the capital is owned by Filipino citizens.
(u) "Government" means the government of the Republic
of the Philippines.
(v) "Gross output" means the actual market value of
minerals or mineral products from its mining area as defined
in the National Internal Revenue Code.
(w) "Indigenous cultural community" means a group
or tribe or indigenous Filipinos who have continuously lived
as communities on communally-bounded and defined land
since time immemorial and have succeeded in preserving,
maintaining, and sharing common bonds of languages,
customs, traditions, and other distinctive cultural traits, and
as may be defined and delineated by law.
(x) "Joint venture agreement (JV)" means an agreement
entered into between the government and one or more
contractors in accordance with Section 26(c) hereof.
(y) 'Mineral processing" means the milling, beneficia-
tion or upgrading of ores or minerals and rocks or by similar
means to convert the same into marketable products.
(z) 'Mine wastes and tailings" shall mean soil and rock
materials from surface or underground mining and milling
operations with no economic value to the generator of the same.
(aa) "Minerals"refers to all naturally occurring inorganic
substance in solid, gas, liquid, or any intermediate state
excluding energy materials such as coal, petroleum, natural
gas, radioactive materials, and geothermal energy.
(ab) 'Mineral agreement" means a contract between the
government and, a contractor, involving mineral production-
sharing agreement, co-production agreement, or joint-venture
agreement.
(ac) 'Mineral land" means any area where mineral
resources are found.
(ad) "Mineral resource" means any concentration of
minerals/rocks with potential economic value.
CHAI"VER IV PHILIPPINE MINING ACT 01,' 1995 165
(Republic! Act No. 7942)
(ae) "Mining area" means a portion of the contract area
identified by the contractor for purposes of development,
mining, utilization, and sites for support facilities or in the
immediate vicinity of the mining operations.
(at) "Mining operation" means mining activities
involving exploration, feasibility, development, utilization, and
processing.
(ag) "Non-governmental organization (NGO)" includes
non-stock, non-profit organizations involved in activities
dealing with resource and environmental conservation,
management and protection.
(ah) "Net assets" refers to the property, plant and
equipment as reflected in the audited financial statement of the
contractor net of depreciation, as computed for tax purposes,
excluding appraisal increase and construction in progress.
(ai) "Offshore" means the water, sea bottom, and
subsurface from the shore or coastline reckoned from the mean
low tide level up to the two hundred nautical miles (200 n.m.)
exclusive economic zone including the archipelagic sea and
contiguous zone.
(aj) "Onshore" means the landward side from the mean
tide elevation, including submerged lands in lakes, rivers and
creeks.
(ak) "Ore" means a naturally occurring substance or
material from which a mineral or element can be mined and/or
processed for profit.
(al) "Permittee" means the holder of an exploration
permit.
(am) "Pollution control and infrastructure devices" refers
to infrastructure, machinery, equipment and/or improvements
used for impounding, treating or neutralizing, precipitating,
filtering, conveying and cleansing mine industrial waste and
tailings as well as eliminating or reducing hazardous effects
of solid particles, chemicals, liquids or other harmful by-
products and gases emitted from any facility utilized in mining
operations for their disposal.
(an) "President" means the President of the Republic of
the Philippines.
166 I,AW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
(ao) "Private land" refers to any land belonging to any
private person which includes alienable and disposable land
being claimed by a holder, claimant, or occupant who has
already acquired a vested right thereto under the law, although
the corresponding certificate or evidence of title or patent has
not been actually issued.
(ap) "Public land" refers to lands of the public domain
which have been classified as agricultural lands and subject
to management and disposition or concession under existing
laws.
(aq) "Qualified person" means any citizen of the
Philippines with capacity to contract, or a corporation, partner-
ship, association, or cooperative organized or authorized for
the purpose of engaging in mining, with technical and financial
capability to undertake mineral resources development and
duly registered in accordance with law at least sixty per
centum (60%) of the capital of which is owned by citizens of the
Philippines: Provided, That a legally organized foreign-owned
corporation shall be deemed a qualified person for purposes
of granting an exploration permit, financial or technical
assistance agreement or mineral processing permit.
(ar) "Quarrying" means the process of extracting,
removing and disposing quarry resources found on or
underneath the surface of private or public land.
(as) "Quarry permit" means a document granted to a
qualified person for the extraction and utilization of quarry
resources on public or private lands.
(at) "Quarry resources" refers to any common rock
or other mineral substances as the Director of Mines and
Geosciences Bureau may declare to be quarry resources such as,
but not limited to, andesite, basalt, conglomerate, coral sand,
diatomaceous earth, diorite, decorative stones, gabbro, granite,
limestone, marble, marl, red burning clays for potteries and
bricks, rhyolite, rock phosphate, sandstone, serpentine, shale,
tuff, volcanic cinders, and volcanic glass: Provided, That such
quarry resources do not contain metals or metallic constituents
and/or other valuable minerals in economically workable
quantities: Provided, further, That non-metallic minerals such
as kaolin, feldspar, bull quartz, quartz or silica, sand and
pebbles, bentonite, talc, asbestos, barite, gypsum, bauxite,
magnesite, dolomite, mica, precious and semi-precious stones,
CHAI"PER IV PHILIPPINE MINING ACT OF 1995 167
(Republic Act No. 7942)
and other non-metallic minerals that may later be discovered
and which the Director declares the same to be of economically
workable quantities, shall not be classified under the category
of quarry resources.
(au) "Regional director"means the regional director of any
mines regional office under the Department of Environment
and Natural Resources.
(av) "Regional office" means any of the mines regional
offices of the Department of Environment and Natural
Resources.
(aw) "Secretary" means the Secretary of the Department
of Environment and Natural Resources.
(ax) "Special allowance" refers to payment to the
claim-owners or surface right-owners particularly during
the transition period from Presidential Decree No. 463 and
Executive Order No. 279, series of 1987.
(ay) "State" means the Republic of the Philippines.
(az) "Utilization" means the extraction or disposition of
minerals.
B. Organizational Structure
10. Authority of the Department.
Pursuant to Section 8 of PD No. 7942, the Department of
Environment and Natural Resources (DENR) shall be the primary
agency responsible for the conservation, management, development,
and proper use of the State's mineral resources including those in
reservations, watershed areas, and lands of the public domain. The
Secretary shall have the authority to enter into mineral agreements
on behalf of the government upon the recommendation of the
Director, and promulgate such rules and regulations as may be
necessary to implement the intent and provisions of the Act.
a. Validity of administrative orders issued by the
Department Secretary; PD No. 463 repealed
The rule-making authority of the DENR Secretary was
sustained in Miners Association of the Philippines v. Factoran.5' In
51GR No. 98332, Jan. 16, 1995, 240 SCRA 100.
168 LAW ON NATURAL 111.;SOI HUTS AND RULES
OF PROCEDURE FOR ENVIRONMKNTAL CASES
this case, petitioner maintained that DENR Administrative Order
(DAO) No. 57, in relation to DENR Administrative Order (DAO)
No. 82, violates the non-impairment clause in Section 10, Article
III of the Constitution because Article 9 of DAO No. 57 unduly pre-
terminates and automatically converts mining leases and other
mining agreements into production-sharing agreements within
one year from effectivity of said guideline, while Section 3 of DAO
No. 82, declares that failure to submit Letters of Intent (LOIs) and
MPSAs within two years from the effectivity of DAO No. 57 or until
July 17, 1991 shall cause the abandonment of mining, quarry, and
sand gravel permits.
The Court disagreed with petitioner, holding that DAO No. 57
applies only to all existing mining leases or agreements which were
granted after the effectivity of the 1987 Constitution pursuant to
EO No. 211. EO No. 279 which has the force and effect of a statute
or law validly modified or altered the privileges granted, as well as
the terms and conditions of mining leases and agreements under EO
No. 211 after the effectivity of the 1987 Constitution by authorizing
the DENR Secretary to negotiate and conclude joint venture, co-
production, or production-sharing agreements for the exploration,
development and utilization of mineral resources and prescribing
the guidelines for such agreements and those agreements involving
technical or financial assistance by foreign-owned corporations for
large-scale exploration, development, and utilization of minerals.
The Court further stressed that mining leases or agreements
granted by the State, such as those granted pursuant to E0 No. 211,
are subject to alterations through a reasonable exercise of the police
power of the State.
As regards petitioner's insistence that PD No. 463, as amended,
continues to govern the acceptance and approval of declarations
of location and all other kinds of applications for the exploration,
development, and utilization of mineral resources pursuant to EO
No. 211, the Court was unswayed, holding:
"PD No. 463, as amended, pertains to the old system
of exploration, development and utilization of natural
resources through 'license, concession or lease' which,
however, has been disallowed by Article XII, Section 2 of
the 1987 Constitution. By virtue of the said constitutional
mandate and its implementing law, EO No. 279 which
superseded EO No. 211, the provisions dealing on 'license,
CHAPTER IV 1 1111,11)1'INE MININ(; ACT Ole 1995 169
(Republic Acl N. 7).12)
concession or lease' of mineral resources under PD No.
463, as amended, and other existing mining laws are
deemed repealed and, therefore, ceased to operate as the
governing law. x x x Specifically, the provisions of PD
No. 463, as amended, on lease of mining claims under
Chapter VIII, quarry permits on privately-owned lands
or quarry license on public lands under Chapter XIII and
other related provisions on lease, license and permits are
not only inconsistent with the raison d'etre for which EO
No. 279 was passed, but contravene the express mandate
of Article XII, Section 2 of the 1987 Constitution. Its force
and effectivity is thus foreclosed."
b. Role of local governments
Subject to Section 8 of the Act and pursuant to the Local
Government Code and other pertinent laws, the Local Government
Units (LGUs) shall have the following roles in mining projects
within their respective jurisdictions:
a. To ensure that relevant laws on public notice, public
consultation and public participation are complied with; s
b. In coordination with the Bureau/Regional Office(s)
and subject to valid and existing mining rights, to approve
applications for small-scale mining, sand and gravel, quarry,
guano, gemstone gathering and gratuitous permits and for
industrial sand and gravel permits not exceeding five hectares;
c. To receive their share as provided for by law in the
wealth generated from the utilization of mineral resources and
thus enhance economic progress and national development;
d. To facilitate the process by which the community
shall reach an informed decision on the social acceptability of a
mining project as a requirement for securing an Environmental
Compliance Certificate (ECC);
e. To participate in the monitoring of any mining
activity as a member of the Multipartite Monitoring Team
referred to in Section 185 hereof;
f. To participate as a member of the Mine Rehabilitation
Fund Committee as provided for in Sections 182 to 187 hereof;
g. To be the recipient of social infrastructure and
community development projects for the utilization of the host
170 LAW ON NATURAL RESOURCES AND RI /I ,ES
OF PROCEDURE FOR ENVIRONMENTAL CASES
and neighboring communities in accordance with Chapter XIV
hereof;
h. To act as mediator between the indigenous cultural
communities and the contractors as may be requested;
i. To coordinate with the Department and Bureau in
the implementation of the Act and the implementing rules and
regulations in their respective jurisdictions. In areas covered by
the Southern Philippines Council for Peace and Development
(SPCPD), Autonomous Region of Muslim Mindanao (ARMM)
and future similar units, the appropriate offices of said units
shall coordinate with the Department and Bureau in the
implementation of the Act and these implementing rules and
regulations; and
j. To perform such other powers and functions as may
be provided for by applicable laws, rules and regulations.52
11. Authority of the Bureau.
The Mines and Geosciences Bureau (Bureau), headed by
a Director and assisted by an Assistant Director, absorbed the
functions of the Bureau of Mines and Geosciences, Mineral
Reservations Development Board, and the Gold Mining Industry
Development Board which were abolished by EO No. 131, except
line functions and powers thereof which were transferred to the
regional field offices. The Bureau shall advise the Secretary on
matters pertaining to geology and mineral resources exploration,
development, utilization, and conservation.'"
The Bureau shall have the following authority, among others:
a. To have direct charge in the administration and
disposition of mineral lands and mineral resources;
b. To undertake geological, mining, metallurgical,
chemical and other researches, as well as mineral exploration
surveys: Provided, That for areas closed to mining applications
as provided for in Section 15 hereof, the Bureau can undertake
studies for purposes of research and development;
c. To confiscate, after due process, surety, performance
and guaranty bonds after notice of violation;
• "Sec. 7, Consolidated Implementing Rules and Regulations of RA No. 7942
"Sec. 8, DAO No. 96-40.
"Sec. 16, Chapter 3, Title XIV, EO No. 292.
CIIAITER IV l'1111,11'1'INE MINIM; ACT OF 1
- 995 171
(Republic Act. No. 79,1 2)
d. To recommend to the Secretary the granting of
Mineral Agreements or to endorse to the Secretary for action
by the President the grant of FTAAs, in favor of qualified
persons and to monitor compliance by the contractor with the
terms and conditions of the Mineral Agreements and FTAAs.
For this purpose, an efficient and effective monitoring system
shall be established to ascertain periodically whether or not
these objectives are realized;
e. To cancel or to recommend cancellation, after due
process, mining rights, mining applications and mining claims
for non-compliance with pertinent laws, rules, and regulations;
f. To deputize, when necessary, any member or unit
of the Philippine National Police (PNP) and barangay, duly
registered and Department-accredited Non-governmental
Organization (NGO) or any qualified person to police all mining
activities;
g. To assist the Environmental Management Bureau
(EMB) under the Department and/or the Department Regional
Office in the processing or conduct of environmental impact
assessment in mining projects; and
h. To exercise such other authority vested by the
Act and as provided for in these implementing rules and
regulations.
The Director may delegate such authority and other powers
a lid functions to the Regional Director."
There shall be as many regional offices in the country as may
he established by the Secretary, upon the recommendation of the
Director.
a. Trend to make adjudication of mining cases a
purely administrative matter
Under PD No. 1281, the Bureau of Mines, now Mines and Geo-
ticiences Bureau (Bureau), was vested with jurisdictional supervi-
ti ion and control over all holders of mining claims or applicants for
!I RR).
'Sec. 9, RA No. 7942.
172 LAW ON NATURAL RESOURCES AND MILES
OF PRO( TD LIRE VOR ENVIRONMENTAL CASES
and/or grantees of mining licenses, permits, leases and/or operators
thereof, including mining service contracts and service contractors
insofar as their mining activities are concerned. To effectively dis-
charge its task as the government's arm in the administration and
disposition of mineral resources, Section 7 of PD No. 1281 conferred
upon the Bureau original and exclusive jurisdiction to hear and de-
cide cases involving, among others, the "(c) cancellation and/or en-
forcement of mining contracts due to the refusal of the claimowner/
operator to abide by the terms and conditions thereof." Analyzing
the objectives of PD No. 1281, particularly said Section 7 thereof,
the trend is to make the adjudication of mining cases a purely ad-
ministrative matter.56
In Benguet Corporation v. Leviste,57 the subject agreement
is a mining contract and private respondent, in seeking a judicial
declaration of its nullity, did not wish to abide by its terms and
conditions. It was held that these elements alone bring the action
within the ambit of Section 7 of PD No. 1281. Whatever the basis for
the refusal to abide by the contract's terms and conditions, the basic
issue remains one of its cancellation, which is precisely what PD No.
1281 places within the exclusive original jurisdiction of the Bureau.
b. Doctrine of primary jurisdiction
In recent years, it has been the jurisprudential trend to apply
the doctrine of primary jurisdiction in many cases involving matters
that demand the special competence of administrative agencies.
Thus, the doctrine of primary jurisdiction finds application in
a case where the question is what coal areas should be exploited
and developed and which entity should be granted coal operating
contracts over said areas since the question involves a technical
determination by the Bureau as the administrative ,agency in
possession of the specialized expertise to act on the matter. These
issues preclude an initial judicial determination.58
In this connection, it should be stated that the findings of
government agencies with respect to the construction of statutes the
'Atlas Consolidated Mining & Development Corporation v. Court of Appeals,
GR No. 54305, Feb. 14, 1990, 182 SCRA 166.
57GR No. 65021, Nov. 21, 1991, 193 SCRA 250.
""Industrial Enterprises, Inc. v. Court of Appeals, GR No. 88550, April 18,
1990, 184 SCRA 426.
ClIAI"fER IV 1)1111,11'1'I 4E MINIM: ACT 1995 173
(Itepublic Act No. 7)/12)
implementation of which has been reposed in them, are controlling
on the courts.5"
c. Non-interference by the courts on purely adminis-
trative matters
In reviewing administrative decisions of the executive branch
of the government, the findings of fact made therein must be
respected, as long as they are supported by substantial evidence,
even if not overwhelming or preponderant. It is not for reviewing
court to weigh the conflicting evidence, determine the credibility of
the witnesses, or otherwise substitute its own judgment for that of
the administrative agency on the sufficiency of the evidence. The
administrative decision in matters within the executive jurisdiction
can only be set aside on proof of gross abuse of discretion, fraud or
error of law.""
12. Recording system.
There shall be established a national and regional filing and
recording system. A mineral resource database system shall be set
up in the Bureau which shall include, among others, a mineral rights
management system. The Bureau shall publish at least annually, a
mineral gazette of nationwide circulation containing among others,
a current list of mineral rights, their locations in the map, mining
rules and regulations, other official acts affecting mining, and other
information relevant to mineral resources development. A system
and publication fund shall be included in the regular budget of the
Bureau.61
C. Scope of Application
13. Areas open to mining operations.
Subject to any existing rights or reservations and prior
agreements of all parties, all mineral resources in public or private
lands, including timber or forestlands as defined in existing laws,
shall be open to mineral agreements or financial or technical
• 'Apex Mining Co. v. Garcia, GR No. 92605, July 16, 1991, 199 SCRA 278;
Greenhills Mining Co. v. Office of the President, GR No. L-75962, 163 SCRA 350.
6°/bid.
61Sec. 14, RA No. 7942.
174 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
assistance agreement applications. Any conflict that may arise
under this provision shall be heard and resolved by the panel of
arbitrators.62
14. Areas closed to mining operations.
Mineral agreement or fi nancial or technical assistance
agreement applications shall not be allowed:
(a) In military and other government reservations,
except upon prior written clearance by the government agency
concerned;
(b) Near or under public or private buildings, cemeteries,
archeological and historic sites, bridges, highways, waterways,
railroads, reservoirs, dams or other infrastructure projects,
public or private works including plantations or valuable
crops, except upon written consent of the government agency
or private entity concerned;
(c) In areas covered by valid and existing mining rights;
(d) In areas expressly prohibited by law;
(e) In areas covered by small-scale miners as defined
by law unless with prior consent of the small-scale miners, in
which case a royalty payment upon the utilization of minerals
shall be agreed upon by the parties, said royalty forming a
trust fund for the socioeconomic development of the community
concerned; and
(f) Old growth or virgin forests, proclaimed watershed
forest reserves, wilderness area, mangrove forests, mossy
forests, national parks, provincial/municipal forests, parks,
greenbelts, game refuge and bird sanctuaries as defined by
law and in areas expressly prohibited under the National
Integrated Protected Area System (NIPAS) under RA No.
7586, Department Administrative Order (DAO) No. 25, series
of 1992 and other laws."'
62Sec. 18, RA No. 7942.
"Sec. 19, RA No. 7942.
175
CHAI"I'Elt IV PHILIPPINE MINING ACT OF 1995
(Republic Act. No. 7942)
However, the following areas may be opened for mining
applications the approval of which is subject to the following
conditions:
(a) Military and other government reservations, upon
prior written clearance by the government agency having
jurisdiction over such reservations;
(b) Areas near or under public or private buildings,
cemeteries, archaeological and historic sites, bridges,
highways, water-ways, railroads, reservoirs, dams or other
infrastructure projects, public or private works, including
plantations or valuable crops, upon written consent of the
concerned government agency or private entity subject to
technical evaluation and validation by the Bureau;
(c) Areas covered by Financial or Technical Assistance
Agreement (FTAA) applications which shall be opened for
quarry resources mining applications pursuant to Section
53 hereof upon the written consent of the FTAA applicants:
Provided, That sand and gravel permit applications, shall
not require consent from the FTAA, Exploration Permit or
Mineral Agreement applicant, except for Mineral Agreement
or Exploration Permit applications covering sand, gravel and/
or alluvial gold: Provided, further, That the Director shall
formulate the necessary guidelines to govern this provision;
(d) Areas covered by small-scale mining under RA
No. 7076/PD No. 1899 upon prior consent of the small-scale
miners, in which case a royalty payment, upon the utilization
of minerals, shall be agreed upon by the concerned parties and
shall form a Trust Fund for the socio-economic development of
the concerned community; and
(e) DENR Project Areas upon prior consent from the
concerned agency."
No ancestral land shall be opened for mining operations with-
out the prior consent of the indigenous cultural community con-
cerned.65
"Sec. 15, CIRR.
65Sec. 16, ibid.
 176 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
D. Exploration Permit
15. Exploration permit.
Section 20 of RA No. 7942 provides:
"SEC. 20. Exploration Permit. — An exploration
permit grants the right to conduct exploration for all
minerals in specified areas. The Bureau shall have the
authority to grant an exploration permit to a qualified
person."
An exploration permit grants the right to conduct exploration
for all minerals in specified areas. The Bureau shall have the
authority to grant an exploration permit to a qualified person.66
Exploration activities may be directly undertaken by the
Department or, in the event that the Department cannot undertake
such exploration activities, by a qualified person in specified areas as
determined by the Secretary: Provided, That the conduct of mineral
exploration by a qualified person in all areas open to mining shall be
initially undertaken through an exploration permit, subject to the
provisions of Chapter VII on the FTAA.
In case an immediate technical study of an area is necessary,
the Department or any of its authorized agencies/instrumentalities
and the exploration permit applicant may enter into a memorandum
of agreement to jointly undertake such study.°
a. Section 3(aq) of RA No. 7942 is not unconstitutional
An observation has been made that Sections 3(aq) of RA No.
7942 — which allows a foreign contractor to apply for and hold an
exploration permit — is unconstitutional. The reasoning is that
Section 2 of Article XII of the Constitution does not allow foreign-
owned corporations to undertake mining operations directly.
The observation, however, is not well-founded. In La Bugal-
B'laan Tribal Association v. Ramos,68 the Court ruled that while
66Sec. 20, RA No. 7942.
'Sec. 17, CIIR, as amended by Sec. 2, DAO No. 2003-46 and further amended
by Sec. 1, DAO No. 2005-15.
68C4R No. 127882, Dec. 1, 2004, 445 SCRA 1.
CHAPTER IV - 14111,114)1NE MINING MT OF 1995 177
(Republic Act No. 7942)
the Constitution mandates the State to exercise full control and
supervision over the exploitation of mineral resources, nowhere does
it require the government to hold all exploration permits and similar
authorizations. In fact, there is no prohibition at all against foreign
or local corporations or contractors holding exploration permits.
Pursuant to Section 20 of RA No. 7942, an exploration permit
merely grants to a qualified person the right to conduct exploration
for all minerals in specified areas. Such a permit does not amount
to an authorization to extract and carry off the mineral resources
that may be discovered. As no extraction is involved, there are no
revenues or incomes to speak of. In short, the exploration permit is an
authorization for the grantee to spend its own funds on exploration
programs that are pre-approved by the government, without
any right to recover anything should no minerals in commercial
quantities be discovered.
Pursuant to Section 24 of RA No. 7942, an exploration permit
grantee who determines the commercial viability of a mining area
may, within the term of the permit, file with the MGB a declaration
of mining project feasibility accompanied by a work program
for development. The approval of the mining project feasibility
and compliance with other requirements of RA No. 7942 vests in
the grantee the exclusive right to an MPSA or another mineral
agreement, or to an FTAA.
In brief, the exploration permit serves a practical and legitimate
purpose in that it protects the interests and preserves the rights of
the exploration permit grantee (the would-be contractor) — foreign
or local — during the period of time that it is spending heavily on
exploration works, without yet being able to earn revenues to recoup
any of its investments and expenditures. Minus this permit and the
protection it affords, the exploration works and expenditures may
end up benefiting only claim-jumpers. Such a possibility tends to
discourage investors and contractors. Thus, Section 3(aq) of RA No.
7942 may not be deemed unconstitutional.
b. Submission of work program
Under Section 24, an exploration permit holder who determines
the commercial viability of a project covering a mining area may,
within the term of the permit, file with the Mines and Geosciences
Bureau a declaration of mining project feasibility. This declaration
is to be accompanied by a work program for development for the
178 LAW ON NATURAL RESOURCES AN I) RULES CHAPTER IV PHILIPPINE MINING ACT OF 1995 179
OF PROCEDURE FOR ENVIRONMENTAL CASES (Republic Act No. 7942)

Bureau's approval, the necessary prelude for entering into an d. Transfer of exploration permit
FTAA, a mineral production sharing agreement (MPSA), or some
Section 25 of RA No. 7942 provides:
other mineral agreement. With the submission of approved work
programs and budgets for the exploration and the development/ "SEC. 25. Transfer or Assignment. — An exploration
construction phases, the government will be able to scrutinize and permit may be transferred or assigned to a qualified
approve or reject such expenditures. It will be well-informed as to person subject to the approval of the Secretary upon the
the amounts of pre-operating and other expenses that the contractor recommendation of the Director."7'
may legitimately recover and the approximate period of time needed
to effect such a recovery. The required prior approval is necessary because exploration
The aforecited provisions on approved work programs and permits are strictly granted to entities or individuals possessing the
budgets have counterparts in Section 35, which deals with the terms resources and capability to undertake mining operations.
and conditions exclusively applicable to FTAAs. The said provision In Apex Mining Co., Inc. v. Southeast Mindanao Gold Mining
requires certain terms and conditions to be incorporated into FTAAs; Corporation,72 it was held that the respondent (SEM) has not
among them, "a firm commitment ... of an amount corresponding acquired any right to the Diwalwal gold rush area because the
to the expenditure obligation that will be invested in the contract transfer of Exploration Permit 133 was not with the prior approval
area" and "representations and warranties ... to timely deploy these of the DENR Secretary."
[financing, managerial and technical expertise and technological]
resources under its supervision pursuant to the periodic work e. Maximum area for exploration permit
programs and related budgets ...," as well as "work programs and
minimum expenditures cornmitments.""9 The maximum area that a qualified person may hold at any
one time shall be:
c. Term of exploration permit (a) Onshore, in any one province —
The term of an exploration permit shall be for a period of two (1) For individuals, 20 blocks; and
years from date of issuance thereof, renewable for like periods but
not to exceed a total term of four years for non-metallic mineral (2) For partnerships, corporations, cooperatives,
exploration or six years for metallic mineral exploration: Provided, or associations, 200 blocks.
That no renewal of permit shall be allowed unless the permittee (b) Onshore, in the entire Philippines —
has complied with all the terms and conditions thereof, and has
(1) For individuals, 40 blocks; and
not been found guilty of violation of any provision of the Act and
these implementing rules and regulations: Provided, further, That (2) For partnerships, corporations, cooperatives,
the conduct of a feasibility study and filing of the declaration of or associations, 400 blocks.
mining project feasibility shall be undertaken during the term of the
exploration permit, subject to the provisions of Section 30 hereof.7°

"Sec. 19-A, CIRR, provides: "Transfer or assignment of exploration permit

"La Bugal-B'laan Tribal Association, Inc. v. Ramos, GR No. 127882, Jan. 27,
2004, 445 SCRA 1.
70Sec. 18, CIRR, as amended by Sec. 2, DA0 No. 99-57 and further amended by
Sec. 2, DA0 No. 2005-15.
applications shall be allowed subject to the approval of the Director/Regional Director
taking into account the national interest and public welfare: Provided, That such
transfer or assignment shall be subject to eligibility requirements and shall not be
allowed in cases involving speculation."
72GR No. 152613, June 23, 2006, 492 SCRA 355.
"See also Moncayo Integrated Small-Scale Miners v. Southeast Mindanao
Gold Mining Corporation, GR No. 149638, Dec. 10, 2014.
180 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
(c) Offshore, beyond 500 meters from the mean low tide
level —
(1) For individuals, 100 blocks; and
(2) For partnerships, corporations, cooperatives,
or associations, 1,000 blocks.
f. Rights and obligations of the permittee
An exploration permit shall grant to the permittee, his heirs
or successors-in-interest, the right to enter, occupy and explore the
area. The permittee shall undertake an exploration work on the area
as specified by its permit based on an approved work program. The
permittee may apply for a mineral production sharing agreement,
joint venture agreement, co-production agreement or financial
or technical assistance agreement over the permit area, which
application shall be granted if the permittee meets the necessary
qualifications and the terms and conditions of any such agreement.71
g. Terms and conditions of exploration permit
An exploration permit shall contain the following terms and
conditions:
a) The right to explore shall be subject to valid, prior
and existing rights of any party(ies) within the subject area;
b) The permit shall be for the exclusive use and benefit
of the permittee or its duly authorized representative and, shall
under no circumstances, be used by the permittee for purposes
other than exploration;
c) The term of the permit shall be for a period of two
years from date of issuance thereof, renewable for like periods
but not to exceed a total term of four years for nonmetallic
mineral exploration or six years for metallic mineral
exploration.
d) The permittee shall submit to the Bureau/Regional
Office concerned within 30 calendar days after the end of each
semester a report under oath of the exploration work program
implementation and expenditures showing discrepancies/
deviations including the results of the survey, laboratory
"Sec. 23, RA No. 7942.
CHAPTER IV — PHILIPPINE MINING ACT OF 1995 181
(Republic Act No. 7942)
reports, geological reports/maps subject to semiannual
inspection and verification by the Bureau/Regional Office
concerned at the expense of the permittee.
e) The permittee shall submit to the Bureau/Regional
Office concerned within 30 calendar days from the end of six
months after the approval of the environmental work program
(EWP) and every six months thereafter a status report on its
compliance with the said EWP;
f) The permittee shall annually relinquish at least
20% of the permit area during the first two years of exploration
and at least 10% of the remaining permit area annually during
the extended exploration period. However, if the permit area
is less than 5,000 hectares, the permittee need not relinquish
any part thereof. A separate report of relinquishment shall
be submitted to the Bureau/Regional Office concerned with a
detailed geologic report of the relinquished area accompanied
by maps at a scale of 1:50,000 and results of analyses and
corresponding expenditures, among others. The minimum
exploration expenditures for the remaining area after
relinquishment shall be based on the approved EWP;
g) The Secretary or his duly authorized representative
shall annually review the performance of the permittee;
h) The permittee shall submit to the Bureau/
Regional Office concerned a final report upon the expiration
or relinquishment of the permit or its conversion into mineral
agreement or FTAA in a form and substance comparable to
published reports of respected international organizations and
shall incorporate all the findings in the permit area, including
locations of samples, assays, chemical analyses and assessment
of the mineral potential. Such report shall include complete
detailed expenditures incurred during the exploration;
i) In case of diamond drilling, the permittee shall, upon
request of the Director/Regional Director concerned, submit
to the Bureau/Regional Office concerned a quarter of the core
samples which shall be deposited in the Bureau/Regional Office
core library concerned for reference and safekeeping;
j) Offshore exploration activities shall be carried out
in accordance with the United Nations Convention on the
Law of the Sea (UNCLOS) and in a manner that will not
182 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
adversely affect the safety of navigation at sea and will ensure
accommodation with other marine activities such as fishing,
aquaculture, transportation, etc.;
k) Onshore exploration activities shall be carried out in
a manner that will, at all times, safeguard the environment;
1) If the permittee applies for a mineral agreement or
FTAA over the permit area, the exploration period covered by
the exploration permit shall be considered as the exploration
period of the mineral agreement or FTAA;
m) The permittee shall comply with pertinent provisions
of the Act and these implementing rules and regulations; and
n) The permittee in the case of a juridical entity
shall annually submit a copy of its Securities and Exchange
Commission-received general information sheet; and
o) Other terms and conditions which the Bureau/
Regional Office concerned may deem appropriate.75
h. Registration of exploration permit
Upon evaluation that all the terms and conditions and all
pertinent requirements are in order and that the subject area
has been cleared from any conflict, the Director shall approve and
issue the exploration permit, and the permittee shall cause the
registration of the same with the Bureau/Regional Office concerned
within 15 working days from receipt of the written notice and upon
payment of the required fees.76
i. Exploration permit revocable when demanded by
the police power
The exploration, development and utilization of the country's
natural mineral resources are matters impressed with great public
interest. Like timber permits, mining exploration permits do not
vest in the grantee any permanent or irrevocable right within the
purview of the non-impairment of contract and due process clauses
of the Constitution, since the State, under its all-encompassing
'Sec. 22, CIRR, as amended by Sec. 4, DA0 No. 99-57, Sec. 3, DA0 No. 2003-
46 and further amended by Secs. 5 and 6, DAO No. 2005-15.
76Sec. 23. ibid.. as amended by Sec. 7, DA0 No. 2005-15.
CHAIITER IV 111111,11)PINE MINING ACT OF 1995 183
(Republic Act No. 7942)
Police power, may alter, modify or amend the same, in accordance
with the demands of the general welfare.77
Indeed, a mining license, being a mere privilege, does not
vest absolute rights in the holder. Thus, without offending the due
process and the non-impairment clauses of the Constitution, it can
be revoked by the State in the public interest.78
E. Mineral Agreements
16. Forms of mineral agreement.
For purposes of mining operations, a mineral agreement may
take the following forms as herein defined:
(a) Mineral production sharing agreement (MPSA)— is
an agreement where the government grants to the contractor
the exclusive right to conduct mining operations within a
contract area and shares in the gross output. The contractor
shall provide the financing, technology, management and
personnel necessary for the implementation of this agreemeht.
(b) Co-production agreement (CA) — is an agreement
between the government and the contractor wherein the
government shall provide inputs to the mining operations
other than the mineral resource.
(c) Joint-venture agreement (JVA) — is an agreement
where a joint-venture company is organized by the government
and the contractor with both parties having equity shares.
Aside from earnings in equity, the government shall be entitled
to a share in the gross output.79
A mineral agreement shall grant to the contractor the exclusive
right to conduct mining operations and to extract all mineral
resources found in the contract area. In addition, the contractor
may be allowed to convert his agreement into any of the modes of
mineral agreements or financial or technical assistance agreement
'Southeast Mindanao Gold Mining Corporation v. Balite Portal Mining
Cooperative, GR No. 104047, April 3, 2002, 380 SCRA 145.
'Republic v. Rosemoor Mining and Development Corporation, GR No. 149927,
March 30, 2004, 426 SCRA 517.
79Sec. 26, RA No. 7942.
184 LAW ON NATURAL RESOIIRCES AND RULES CIIAPTER IV - 1)111111TINK MINING ACT 01.' 1995 185
OF PROCEDURE FOR ENVIRONMENTAL CASES (Republic Act No. 7942)

covering the remaining period of the original agreement subject, to consultation with the Environmental Management Bureau of the
the approval of the Secretary.8° I )optirtment.82 A qualified person means —
a. In case of an individual — must be a Filipino citizen
a. Scope of mineral agreements of legal age and with capacity to contract; or
Mineral production sharing, co-production and joint venture b. In case of a corporation, partnership, association or
agreements are collectively classified by RA No. 7942 as "mineral cooperative — must be organized or authorized for the purpose
agreements." The government participates the least in a mineral of engaging in mining, duly registered in accordance with
production sharing agreement (MPSA). In an MPSA, the government law, at least 60% of the capital of which is owned by Filipino
grants the contractor the exclusive right to conduct mining operations citizens.83
within a contract area and shares in the gross output. The MPSA
contractor provides the financing, technology, management and c. Maximum area for mineral agreement
personnel necessary for the agreement's implementation. The total
The maximum area that a qualified person may hold at any
government share in an MPSA is the excise tax on mineral products
lime under a mineral agreement shall be:
under RA No. 7729, amending Section 151(a) of the National Internal
Revenue Code, as amended. (a) Onshore, in any one province —
In a co-production agreement (CA), the government provides (1) For individuals, ten blocks; and
inputs to the mining operations other than the mineral resource, while (2) For partnerships, cooperatives, associations, or
in a joint venture agreement (JVA), where the government enjoys corporations, 100 blocks.
the greatest participation, the government and the JVA contractor
organize a company with both parties having equity shares. Aside (b) Onshore, in the entire Philippines —
from earnings in equity, the government in a JVA is also entitled to (1) For individuals, 20 blocks; and
a share in the gross output. The government may enter into a CA or
JVA with one or more contractors. The government's share in a CA (2) For partnerships, cooperatives, associations, or
or JVA is set out in Section 81 of the law. corporations, 200 blocks.

All mineral agreements grant the respective contractors the (c) Offshore, in the entire Philippines —
exclusive right to conduct mining operations and to extract all (1) For individuals, 50 blocks;
mineral resources found in the contract area. A "qualified person"
may enter into any of the mineral agreements with the government.8' (2) For partnerships, cooperatives, associations, or
corporations, 500 blocks; and
b. Eligibility (3) For the exclusive economic zone, a larger area
to be determined by the Secretary.
A qualified person may enter into any of the three modes
of mineral agreement with the government for the exploration, The maximum areas mentioned above that a contractor may
development and utilization of mineral resources: Provided, That hold under a mineral agreement shall not include mining/quarry
in case the applicant has been in the mining industry for any IIIMS under operating agreements between the contractor and a
length of time, he should possess a satisfactory environmental track claimowner/lessee/permittee/licensee entered into under PD No.
record as determined by the Mines and Geosciences Bureau and in 463.84

'Supra. "Sec. 27, supra.

'La Bugal-B'laan Tribal Association, Inc. v. Ramos, GR No. 127882, Jan. 27, "Sec. 32, CIRR, as amended by Sec. 12, DA0 No. 2005-15.
2004, 445 SCRA 1. "Sec. 28, RA No. 7942.
186 LAW ON NATURAL RESOURCES AND RULES
Ole PROCEDURE FOR ENVIRONMENTAL CASES
d. Filing and approval of mineral agreements
All proposed mineral agreements shall be filed in the region
where the areas of interest are located, except in mineral reservations
which shall be filed with the Bureau. The filing of a proposal for
a mineral agreement shall give the proponent the prior right to
areas covered by the same. The proposed mineral agreement will
be approved by the Secretary and copies thereof shall be submitted
to the President. Thereafter, the President shall provide a list to
Congress of every approved mineral agreement within thirty (30)
days from its approval by the Secretary.85
e. Assignment or transfer
Any assignment or transfer of rights and obligations under
any mineral agreement except a financial or technical assistance
agreement shall be subject to the prior approval of the Secretary.
Such assignment or transfer shall be deemed automatically approved
if not acted upon by the Secretary within thirty (30) working days
from official receipt thereof, unless patently unconstitutional or
illegal."
f. Term of a mineral agreement
Mineral agreements shall have a term not exceeding twenty-five
(25) years to start from the date of execution thereof, and renewable
for another term not exceeding twenty-five (25) years under the
same terms and conditions thereof, without prejudice to changes
mutually agreed upon by the parties. After the renewal period,
the operation of the mine may be undertaken by the government
or through a contractor. The contract for the operation of a mine
shall be awarded to the highest bidder in a public bidding after due
publication of the notice thereof: Provided, That the contractor shall
have the right to equal the highest bid upon reimbursement of all
reasonable expenses of the highest bidder.87
g. Publication, posting, radio announcement
Within fifteen (15) working days from receipt of the necessary
area clearances, the Bureau or Regional Office concerned shall issue
'Sec. 29, RA No. 7942.
"Sec. 30, ibid.
'Sec. 32, ibid.
CHAPTER IV PHILIPPINE MINING ACT OF 1995 187
(Republic Act No. 7942)
to the applicant the Notice of Application for Mineral Agreement for
publication, posting and radio announcement which shall be done
within fifteen (15) working days from receipt of the notice.88
h. Registration of mineral agreement
Upon approval of the mineral agreement by the Secretary, the
same shall be forwarded to the Bureau for numbering. The Director
shall notify the contractor to cause the registration of its mineral
agreement with the Bureau for areas inside mineral reservations
or with the concerned Regional Office for areas outside mineral
reservations within fifteen (15) working days from receipt of the
written notice. Registration is effected only upon payment of the
required fees (Annex 5-A). Failure of the contractor to cause the
registration of its mineral agreement within the prescribed period
shall be a sufficient ground for cancellation of the same.89
i. Issuance of special mines permit
An applicant for mineral agreement whose application is valid
and existing, has been granted an area status and clearance, NCIP
precondition certification and endorsement from the concerned
Sanggunian, and has no pending mining dispute/conflict as certified
by the concerned Panel of Arbitrators/Mines Adjudication Board,
may file an application for special mines permit (SMP) with the
Bureau/Regional Office concerned. A SMP may be issued by the
Director upon clearance by the Secretary. The SMP shall be for a
period of one (1) year, subject to renewal.
In cases where public welfare so requires, the Secretary may,
after verification and evaluation of the Bureau, grant other forms of
special mines permit so as to address the specific conditions in the
area concerned.'
j. DENR Secretary has the authority to cancel mineral
agreements
The DENR Secretary, and not the Panel of Arbitrators (POA),
has the jurisdiction to cancel existing mineral lease contracts or
mineral agreements. This power emanates from his administrative
88Sec. 38, CIRR.
"Sec. 43, ibid.
"Sec. 48, ibid.
188 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
authority, supervision, management, and control over mineral
resources under Section 2, Chapter I, Title XIV of Book IV of the
Revised Administrative Code of 1987. A petition for the cancellation
of an existing mineral agreement based on the alleged violation
of any of the terms thereof, is not a "dispute" involving a mineral
agreement under Section 77(b) of RA No. 7942, which lists down
the cases under the jurisdiction of the POA. Appeal from a decision
of the DENR Secretary shall be taken to the Office of the President
under AO No. 18, series of 1987.9'
F. Financial or Technical Assistance Agreement
17. Financial or Technical Assistance Agreement (FTAA).
A financial or technical assistance agreement (FTAA) is defined
as "a contract involving financial or technical assistance for large-
scale exploration, development, and utilization of natural resources."
Like a CA or a JVA, an FTAA is subject to negotiation. The
government's contributions, in the form of taxes, in an FTAA is
identical to its contributions in the two mineral agreements, save
that in an FTAA:
"The collection of government share in financial or
technical assistance agreement shall commence after the
financial or technical assistance agreement contractor has
fully recovered its pre-operating expenses, exploration,
and development expenditures, inclusive."92
a. A financial technical assistance agreement (FTAA)
is a contract or property right which merits
protection by the due process clause
Unlike a timber license agreement which may be validly
revoked, rescinded or withdrawn by executive action whenever
dictated by public interest or public welfare," a financial technical
91Basiana Mining Exploration Corporation v. DENR Secretary, GR No.
191705, March 7, 2016; Narra Nickel Mining and Development Corporation v.
Redmont Consolidated Mines Corporation, GR No. 202877, Dec. 9, 2015; Celestial
Nickel Mining Exploration Corporation v. Macroasia Corporation, GR No. 169080,
Dec. 19, 2007.
"La Bugal-B'laan Tribal Association, Inc. v. Ramos, GR No. 127882, Jan. 27,
2004, 445 SCRA 1.
"Oposa v. Factoran, GR No. 101803, July 30, 1993.
CHAPTER IV — PHILIPPINE MINING ACT OF 1995 189
(Republic Act No. 7942)
assistance agreement (FTAA) for large-scale exploration,
development and utilization (EDU) of minerals, petroleum and other
mineral oils is a contract or property right which merits protection
of the Constitution. Given the inadequacy of Filipino capital and
technology in large-scale EDU activities, the State may secure
the help of foreign companies in all relevant matters — especially
financial and technical assistance — provided that, at all times,
the State maintains its right of full control. The foreign assistor
or contractor assumes all financial, technical and entrepreneurial
risks in the EDU activities; hence, it may be given reasonable
management, operational, marketing, audit and other prerogatives
to protect its investments and to enable the business to succeed."
In Narra Nickel Mining and Development Corporation v.
Redmont Consolidated Mines Corporation,95 the Court, through
Justice Perlas-Bernabe, stressed that an FTAA entered into by the
President on behalf of the State involves a matter of public concern
in that it covers the large-scale exploration, development, and
utilization of mineral resources. Hence, it is properly classified as
a government or public contract which is "generally subject to the
same laws and regulations which govern the validity and sufficiency
of contracts between private individuals."
b. Eligibility
Any qualified person with technical and financial capability to
undertake large-scale exploration, development, and utilization of
natural resources in the Philippines may enter into such agreement
directly with the government through the DENR. For the purpose
of granting an FTAA, a legally organized foreign-owned corporation
(any corporation, partnership, association, or cooperative duly
registered in accordance with law in which less than 50% of the
capital is owned by Filipino citizens) is deemed a "qualified person."
Other than the difference in contractors' qualifications, the
principal distinction between mineral agreements and FTAAs is
the maximum contract area to which a qualified person may hold
or be granted. "Large-scale" under RA No. 7942 is determined by
the size of the contract area, as opposed to the amount invested
(US$50,000,000), which was the standard under EO No. 279.9"
"La Bugal-Blaan Tribal Association v. Ramos, supra.
"GR No. 195580, April 21, 2014.
96/bid.; Sec. 33, RA No. 7942.
190 LAW ON NATURAL RESOURCES AND R111 ,ES
OF' PROCEDURE RIR ENVIRONMENTAL CASES
c. Minerals subject of FTAA
An FTAA may be entered into for the exploration, development
and utilization of gold, copper, nickel, chromite, lead, zinc and other
minerals; however, no FTAAs may be granted with respect to cement
raw materials, marble, granite, sand and gravel and construction
aggregates.'°
d. Maximum contract area
The maximum contract area that may be granted per qualified
person, subject to relinquishment shall be:
(a) 1,000 meridional blocks onshore;
(b) 4,000 meridional blocks offshore; or
(c) Combination of (a) and (b) provided that it shall not
exceed the maximum limits for onshore and offshore areas.
e. Term of an FTAA
An FTAA shall have a term not exceeding twenty-five (25)
years from the date of execution thereof, and renewable for another
term not exceeding twenty-five (25) years under such terms and
conditions as may be provided for by law and mutually agreed upon
by the parties. The activities of each phase of mining operations
must be completed within the following periods:
(a) Exploration — up to two (2) years from date of FTAA
execution, extendible for another two years;
(b) Pre-feasibility study, if warranted — up to two (2)
years from expiration of the exploration period;
(c) Feasibility study — up to two (2) years from the
expiration of the exploration/pre-feasibility study period or
from declaration of mining project feasibility; and
(d) Development, construction and utilization
remaining years of FTAA.
The mine should have a profitable operating life of more than
ten years, to ensure the collection of the government share, given a
maximum five-year cost recovery period.98
97Sec. 50, CIRR.
"Sec. 52, ibid., as amended by Sec. 1, DA0 No. 2004-54.
ClIAI"I'Elt IV PHILIPPINE MININ(1 ACT Olo 1995 191
(Republic Art No. 7942)
f. Negotiations
Like a CA or a JVA, an FTAA is subject to negotiation. The
government's contributions, in the form of taxes, in an FTAA is
identical to its contributions in the two mineral agreements, save
that in an FTAA:
"The collection of government share in financial or
technical assistance agreement shall commence after the
financial or technical assistance agreement contractor has
fully recovered its pre-operating expenses, exploration,
and development expenditures, inclusive."
An FTAA involves terms, conditions, and warranties which
must be agreed upon by the contracting parties pursuant to Section
36 of RA No. 7942 which provides:
"Section 36. Negotiations. — A financial or technical
assistance agreement shall be negotiated by the
Department and executed and approved by the President.
The President shall notify Congress of all financial or
technical assistance agreements within thirty (30) days
from execution and approval thereof."
g. Filing and evaluation of FTAA
All FTAAs shall be filed with the Bureau after payment of the
required processing fees. If the proposal is found to be sufficient
and meritorious in form and substance after evaluation, it shall
be recorded with the appropriate government agency to give the
proponent the prior right to the area covered by such proposal:
Provided, That existing mineral agreements, FTAAs and other
mining rights are not impaired or prejudiced thereby. The Secretary
shall recommend its approval to the President."
The proposed contract area shall be closed to other mining
applications for minerals mentioned in Section 50 hereof, but shall
be open for quarry resources mining applications upon the written
consent of the FTAA applicant and verification by the Bureau/
concerned Regional Office, except for sand and gravel applications
which shall require no consent thereof: Provided, That if consent is
99Sec. 37, RA No. 7942.
192 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
unreasonably withheld, the case shall be resolved by the Panel of
Arbitrators.'m
h. Publication, posting and radio announcement
Within fifteen (15) working days from receipt of the necessary
area clearances, the Bureau/Regional Office concerned shall issue
to the applicant the Notice of Application for FTAA for publication,
posting and radio announcement which shall be done within 15
working days from receipt of the notice. The notice must contain,
among others, the name and complete address of the applicant,
duration of the FTAA applied for, extent of operation to be
undertaken, area location, geographical coordinates/meridional
block(s) of the proposed contract area and location map/sketch
plan with index map relative to major environmental features and
projects and to the nearest municipalities.im
i. Terms and conditions of the FTAA
The following terms, conditions and warranties, among others,
shall be incorporated in the FTAA, namely:
a. A firm commitment, in the form of a sworn statement
during the existence of the agreement, that the contractor
shall comply with minimum ground expenditures during the
exploration and pre-feasibility periods;
b. A stipulation that the contractor shall not, by virtue
of the FTAA, acquire any title over the contract/mining area
without prejudice to the acquisition by the contractor of the
land/surface rights through any mode of acquisition provided
for by law;
c. Representations and warranties that the contractor
has, or has access to, all. the financing, managerial and
technical capability and technology required to promptly
and effectively carry out the objectives of the agreement with
the understanding to timely utilize these resources under
its supervision pursuant to the periodic work programs and
related budgets, and when proper, providing an exploration
'°°Sec. 53, CIRR.
' Sec. 55, ibid.
CHAPTER IV • PHILIPPINE MINING ACT OF 1995 193
(Republic Act No. 7942)
period up to two years, extendible for another two years,
subject to annual review by the Secretary in accordance with
these implementing rules and regulations;
XXX XXX XXX
i. A stipulation that the contractor shall give preference
to goods and services produced and offered in the Philippines
of comparative quality and cost. In particular, the contractor
shall give preference to qualified Filipino construction
enterprises, construction materials and skills available in the
Philippines, Filipino sub-contractors for road construction and
transportation and Philippine household equipment, furniture
and food;
j. A stipulation that the contractor is obliged to give
preference to Filipinos in all types of mining employment
for which they are qualified and that the technology shall be
transferred to the same;
XXX XXX XXX
q. A stipulation that alien employment shall be limited
to technologies requiring highly specialized training and
experience subject to the required approval under existing
laws, rules and regulations.
The Department shall formulate and promulgate such
other rules, regulations and guidelines necessary to ensure
compliance with the terms and conditions herein stated and
to establish a fixed and stable fiscal regime with respect to
FTAAs.'"
j. Assignment or transfer
A FTAA may be assigned or transferred, in whole or in part,
to a qualified person subject to the prior approval of the President:
Provided, That the President shall notify Congress of every
financial or technical assistance agreement assigned or converted in
accordance with this provision within thirty (30) days from the date
of the approval thereof. m3
1°2Sec. 56, supra, as amended by Sec. 9, DA0 No. 2003-46 and further amended
by Sec. 19, DAO No. 2005-15.
'Sec. 40, RA No. 7942.
194 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
The Philippine Mining Act of 1995, particularly Section 40
thereof requiring the approval of the President with respect to
assignment or transfer of FTAAs, is prospective in operation.'"
18. FTAA provisions of RA No. 7942 and DAO No. 96-40, s. 1996,
earlier held valid.
a. La Bugal-Blaan Tribal Association, Inc. v. Ramos
1) Initial decision: Utilization of inalienable
lands of the public domain through license,
concession or lease is no longer allowed under
the 1987 Constitution
In La Bugal-Inaan Tribal Association, Inc. v. Ramos,'°5
petitioners assailed the constitutionality of RA No. 7942, or the
Philippine Mining Act of 1995, along with the implementing rules
and regulations, (DENR) Administrative Order (DAO) No. 96-40,
and the Financial and Technical Assistance Agreement (FTAA)
entered into on March 30, 1995 by the Republic of the Philippines
and the Western Mining Corporation (Philippines), Inc. (WMCP), a
corporation organized under Philippine laws.
Petitioners claimed that the WMCP FTAA, which was entered
into pursuant to EO No. 279, violates Section 2, Article XII of the
Constitution because, among other reasons:
(a) It allows foreign-owned companies to extend more
than mere financial or technical assistance to the State in
the exploitation, development, and utilization of minerals,
petroleum, and other mineral oils, and even permits foreign
owned companies to "operate and manage mining activities."
(b) It allows foreign-owned companies to extend both
technical and financial assistance, instead of "either technical
or financial assistance."
Petitioners argued that, in accordance with the text of Sec-
tion 2, Article XII of the Constitution, FTAAs should be limited to
"technical or financial assistance" only. They observed, however,
that, contrary to the language of the Constitution, the WMCP FTAA
allows WMCP, a fully foreign-owned mining corporation, to extend
104
Lepanto Consolidated Mining Co. v. WMC Resources, GR No. 162331, Nov.
20, 2006, J. Chico-Nazario.
1°5GR No. 127882, Jan. 27, 2004, 421 SCRA 148.
CHAPTER IV -- 1'1 111,119'1Ni.: MINING ACT OF 1995 195
(lipptildic Act No. 7942)
1114111 kan mere financial or technical assistance to the State, for it
permits WMCP to manage and operate every aspect of the mining
ivily.
On January 27, 2004, the Court en bane, through Justice
'. 11.1)io-Morales, promulgated its decision granting the petition
11, 1 declaring the unconstitutionality of certain provisions of RA
No, 7942, DAO No. 96-40, as well as of the entire FTAA executed
1,e1ween the government and WMCP, mainly on the finding that
l'"I'AAs are service contracts prohibited by the 1987 Constitution. The
decision struck down the subject FTAA for being similar to service
contracts, which, though permitted under the 1973 Constitution,
were subsequently denounced for being antithetical to the principle
oI' sovereignty over our natural resources, because they allowed
Ibreign control over the exploitation of our natural resources, to the
prejudice of the Filipino nation.
The Court held that unlike the 1935 and 1973 Constitutions
authorizing the State to grant licenses, concessions, or leases for
the exploration, exploitation, development, or utilization of ritural
resources, "the utilization of inalienable lands of public donlain
through 'license, concession or lease' is no longer allowed under the
1987 Constitution."
2) Resolution on motion for reconsideration:
Initial decision reconsidered; the State may
secure the help of foreign companies, especially
financial and technical assistance, provided
that the State maintains its right of full control
However, by a resolution dated December 1, 2004, the Court,
through Justice Panganiban,'" reconsidered its earlier decision and
declared RA No. 7942 and its implementing rules and regulations
contained in DAO No. 9640 valid insofar as they relate to the FTAAs
referred to in paragraph 4, Section 2, Article XII of the Constitution
which reads:
"The President may enter into agreements with
foreign-owned corporations involving either technical
or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and
'La Bugal-Blaan Tribal Association, Inc. v. Ramos, GR No. 127882, Dec. 1,
2004, 445 SCRA 1.
196 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
other mineral oils, according to the general terms and
conditions provided by law based on real contributions
to the economic growth and general welfare of the
country. In such agreements, the State shall promote
the development and use of local scientific and technical
resources."
The Court reiterated that all mineral resources are owned by
the State and their exploration, development and utilization (EDU)
must always be subject to the full control and supervision of
the State. However, given the inadequacy of Filipino capital and
technology in large-scale EDU activities, the State may secure
the help of foreign companies in all relevant matters — especially
financial and technical assistance — provided that, at all times,
the State maintains its right of full control. The foreign assistor
or contractor assumes all financial, technical and entrepreneurial
risks in the EDU activities; hence, it may be given reasonable
management, operational, marketing, audit and other prerogatives
to protect its investments and to enable the business to succeed. The
Court ratiocinated:
"On the first ground, petitioners assert that paragraph
4 of Section 2 of Article XII permits the government to
enter into FTAAs only with foreign-owned corporations.
However, a textual analysis of the first paragraph of
Section 2 of Article XII does not support petitioners'
argument. The pertinent part of the said provision states:
'Sec. 2. ... The exploration, development and utilization
of natural resources shall be under the full control and
supervision of the State. The State may directly undertake
such activities, or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino
citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. ...'
Nowhere in the provision is there any express limitation
or restriction insofar as arrangements other than the
three aforementioned contractual schemes are concerned.
XXX XXX XXX
From the foregoing, we are impelled to conclude
that the phrase agreements involving either technical
or financial assistance, referred to in paragraph 4, are
in fact service contracts. But unlike those of the 1973
variety, the new ones are between foreign corporations
CHAPTER IV I 1111
II Pl'INE MINIM.: ACT OF 1995 197
(Republic Act No. 7942)
acting as contractors on the one hand; and on the other,
the government as principal or "owner" of the works.
In the new service contracts, the foreign contractors
provide capital, technology and technical know-how,
and managerial expertise in the creation and operation
of large-scale mining/extractive enterprises; and the
government, through its agencies (DENR, MGB),
actively exercises control and supervision over the entire
operation.
Such service contracts may be entered into only with
respect to minerals, petroleum and other mineral oils. The
grant thereof is subject to several safeguards, among
which are these requirements:
XXX XXX XXX
To repeat, the primacy of the principle of the State's
sovereign ownership of all mineral resources, and its full
control and supervision over all aspects of exploration,
development and utilization of natural resources must be
upheld. But 'full control and supervision' cannot be taken'
literally to mean that the State controls and supervises
everything down to the minutest details and makes all
required actions, as this would render impossible the
legitimate exerci§e by the contractor of a reasonable degree
of management prerogative and authority, indispensable
to the proper functioning of the mining enterprise. Also,
government need not micro-manage mining operations
and day-to-day affairs of the enterprise in order to be
considered as exercising full control and supervision.
Control, as utilized in Section 2 of Article XII, must
be taken to mean a degree of control sufficient to enable
the State to direct, restrain, regulate and govern the
affairs of the extractive enterprises."
b. Didipio Earth-Saver's Multi-Purpose Association v.
Gozun
The petitioners for prohibition and mandamus in Didipio
Earth-Saver's Multi-Purpose Association v. Gozunw7 alleged that RA
I'GR No. 157882, March 30, 2006, 485 SCRA 586.
198 LAW ON NATURAL RESOURCES AND RI ILES
OF PROCEDURE FOR ENVIRONM ENTA I CASES
No. 7942, as well as its implementing rules and regulations, makes
it possible for FTAA contracts to cede over to a fully foreign-owned
corporation full control and management of mining enterprises, with
the result that the State is allegedly reduced to a passive regulator
dependent on submitted plans and reports, with weak review and
audit powers. They contended that the law, the implementing
regulations, and the CAMC FTAA cede beneficial ownership of
the mineral resources to the foreign contractor. However, the
Court, through Justice Chico-Nazario, noted that this argument
was already raised in La Bugal-BEaan Tribal Association, Inc. v.
Ramos,m8 where the Court, in its resolution dated December 1, 2004,
held that RA No. 7942 has in fact established the mechanism of
inspection and visitorial rights over mining operations and institute
reportorial requirements enumerated in the decision which ensure
the State's control and supervision over mining operations. Moreover,
both RA No. 7942 and DAO 96-40 also provide various stipulations
confirming the government's control over mining enterprises, as
enumerated in said resolution.
G. Quarry Resources
19. Quarry operations; general provisions.
Quarry sand and gravel, guano and gemstone resources in
private and/or public lands may be extracted, removed, disposed
and/or utilized: Provided, That in large-scale quarry operations
involving cement raw materials, marble, granite and sand and
gravel and construction aggregates, any qualified person may apply
for a mineral agreement subject to the provisions of Chapter VI of
the implementing rules and regulations.
Size of area covered by quarry permit
a.
In Republic v. Rosemoor Mining and Development Corpora-
tion,w9 the quarry license permit issued in the name of Rosemoor
Mining Development Corporation allowed the corporation to extract
and dispose of marbleized limestone from a 330.3062-hectare land
in San Miguel, Bulacan. The license is, however, subject to the
terms and conditions of PD No. 463, the governing law at the time
it was granted. By the same token, Proclamation No. 2204 — which
l'GR No. 127882, Dec. 1, 2004, 445 SCRA 1.
ImGR No. 149927, March 30, 2004, 426 SCRA 517.
CHAI"I'ER IV 1 1111.111) INE MINING ACT 01" 1995 199
(Republic Act No. 7942)
awarded to Rosemoor the right of development, exploitation, and
utilization of the mineral site — expressly cautioned that the grant
was subject to "existing policies, laws, rules and regulations." The
license was thus subject to Section 69 of PD No. 463, which reads:
"SEC. 69. Maximum Area of Quarry License —
Notwithstanding the provisions of Section 14 hereof,
a quarry license shall cover an area of not more than
one hundred (100) hectares in any one province and not
more than one thousand (1,000) hectares in the entire
Philippines."
The Court stated that the law, in categorical and mandatory
terms, requires that a quarry license, like that of Rosemoor, should
cover a maximum of 100 hectares in any given province. The law
neither provides any exception nor makes any reference to the
number of applications for a license. The intent of the law would be
brazenly circumvented by ruling that a license may cover an area
exceeding the maximum by the mere expediency of filing several
applications. Such ruling would indirectly permit an act that is
directly prohibited by the law.
b. Provincial/City Mining Regulatory Board
The Provincialtity Mining Regulatory Board shall, among
others, accept, process and evaluate applications and determine
administrative charges and fees for quarry, sand and gravel, guano,
gemstone gathering and small-scale mining permits duly filed with
the same. It shall be chaired by the concerned Regional Director or
his/her duly authorized representative with the following members:
1) Provincial Governor/City Mayor or his/her represen-
tative as Vice-Chair,
2) Small-scale mining representative,
3) Large-scale mining representative, and
4) Department-duly accredited environmental non-
governmental organization representative.
The concerned regional office shall provide the technical
secretariat to the Provincial/City Mining Regulatory Board."°
"Sec. 70, CIRR.
200 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
20. Quarry permit.
Any qualified person may apply for a quarry permit with the
Provincial Governor/City Mayor through the Provincial/City Mining
Regulatory Board for the extraction, removal and disposition of
quarry resources covering an area of not more than five hectares,
and a production rate of not more than 50,000 tons annually and/or
whose project cost is not more than P10,000,000.00, for a term of five
years from the date of issuance thereof, renewable for like period
but not to exceed a total term of twenty-five (25) years. However,
existing quarry permits under which the production rate is more
than 50,000 tons annually and/or whose project cost is more than
P10,000,000.00 shall not be renewed but shall be given preferential
right to a mineral agreement application which shall be evaluated
and approved in accordance with Chapter VI of DA0 No. 96-40 and
the pertinent provisions of said order.'"
21. Sand and gravel permits.
a. Commercial sand and gravel permit
Any qualified person may apply for a commercial sand and
gravel permit with the Provincial Governor/City Mayor through the
Provincial/City Mining Regulatory Board for the extraction, removal
and disposition of sand and gravel and other loose or unconsolidated
materials which are used in their natural state without undergoing
processing covering an area of not more than five hectares for a term
of one year from date of issuance thereof, renewable for like period
and in such quantities as may be specified in the permit: Provided,
That only one permit shall be granted to a qualified person in a
municipality at any one time under such terms and conditions as
provided herein.
b. Industrial sand and gravel permit
Any qualified person may apply for an industrial sand and
gravel permit (MGB Form Nos. 8-1 or 8-1A and 8-2 or 8-2A) with the
Provincial Governor/City Mayor through the Provincial/City Mining
Regulatory Board for the extraction, removal and disposition of
sand and gravel and other loose or unconsolidated materials that
necessitate the use of mechanical processing covering an area of not
more than five (5) hectares at any one time for a term of five (5)
"Sec. 71, ibid., as amended by Sec. 13, DAO No. 99-57.
CHAPTER IV — 1)1111,11)1)INE MINIM: ACT OF 1995 201
(Republic Act No. 7942)
years from date of issuance thereof, renewable for like periods but
not to exceed a total term of twenty-five (25) years: Provided, That
any qualified person may apply for an industrial sand and gravel
permit with the Regional Director through the Regional Office for
areas covering more than five (5) hectares but not to exceed twenty
(20) hectares at any one time for a term of five (5) years from date
of issuance thereof, renewable for like periods but not to exceed a
total term of twenty-five (25) years: Provided, further, That only one
permit shall be granted to a qualified person in a municipality at
any one time under such terms and conditions as provided herein.
c. Exclusive sand and gravel permit
Any qualified person may apply for an exclusive sand and
gravel permit (MGB Form No. 8-4B) with the Provincial Governor/
City Mayor through the Provincial/City Mining Regulatory Board
for extraction, removal and utilization of sand and gravel and other
loose or unconsolidated materials from public land for its own use
covering an area of not more than one hectare for a non-renewable
period not exceeding sixty (60) calendar days and a maximum volume
of 50 cubic meters: Provided, That there will be no commercial
disposition thereof."2
d. Rights and obligations of the quarry or commercial/
industrial sand and gravel permit holder
The quarry or sand and gravel permit holder, its heirs or
successors-in-interest shall have the right to exclusively extract,
remove, dispose and/or utilize quarry or sand and gravel resources
within the permit area with full rights of ingress and egress, the
right to occupy the same, all other rights provided for in the Act
and these implementing rules and regulations; and the obligation to
fully comply with the terms and conditions of the permit."3
22. Gratuitous permits.
a. Government gratuitous permit
Any government entity/instrumentality in need of quarry, sand
and gravel or loose/unconsolidated materials in the construction of
building(s) and/or infrastructure for public use or other purposes
may apply for a government gratuitous permit (MGB Form No.
8-3B) with the Provincial Governor/City Mayor through the
It25ec. 72, CIRR.
H3Sec. 78, ibid.
202 LAW ON NATURAL RESOURCES ANI) RULES
OF PROCEDURE FOR ENVIRONMENTAI, CASES
Provincial/City Mining Regulatory Board for a period coterminous
with the construction stage of the project but not to exceed one (1)
year in public/private land(s) covering an area of not more than
two hectares. The applicant shall submit a project proposal stating
where the materials to be taken shall be used and the estimated
volume needed.
Private gratuitous permit
b.
Any landowner may apply for a private gratuitous permit with
the Provincial Governor/City Mayor through the Provincial/City
Mining Regulatory Board for the extraction, removal and utilization
of quarry, sand and gravel or loose/unconsolidated materials from
his/her land for a non-renewable period of sixty (60) calendar days:
Provided, That there is adequate proof of ownership and that the
materials shall be for personal use.
23. Guano permit.
Any qualified person, whose domicile is within the municipality
where the area applied for is located, may apply for a guano permit
with the Provincial Governor/City Mayor through the Provincial/City
Mining Regulatory Board for the extraction, removal, disposition,
and/or utilization of loose unconsolidated guano and other organic
fertilizer deposits in specific caves and/or confined sites for a term of
one (1) year or upon the extraction of the quantity as specified in the
permit: Provided, That only one guano permit shall be issued for the
same cave or area: Provided, further, That the maximum area for
the guano permit that a qualified person may hold at any one time
shall not be more than five hectares.
a. Gratuitous guano permit
A gratuitous guano permit (MGB Form No. 8-6) may be granted
to an individual for his/her personal use or to any government
agency in need of the material within a specified period and in such
quantity not more than 2,000 kilograms.
b. Commercial guano permit
A commercial permit may be granted to a qualified person for
sale or commercial disposition thereof within a specified period and
in such quantity as may be specified thereof."4
"Sec. 81, CIRR.
ClIAI"I'ER IV l'1111,11)1'INE MINING ACT 014" 1991) 203
(Republic Act No. 7942)
c. Rights and obligations of the guano permit holder
The guano permit holder, its heirs or successors-in-interest
shall have the right to exclusively conduct extract, remove, dispose
and/or utilize guano resources within the permit area with full
rights of ingress and egress, the right to occupy the same, all other
rights provided for in the Act and these implementing rules and
regulations; and the obligation to fully comply with the terms and
conditions of the permit.' 5
24. Gemstone gathering permit.
Any qualified person may apply for a gemstone gathering
permit with the Provincial Governor/City Mayor through the
Provincial/City Mining Regulatory Board for the extraction, removal
and utilization of loose stones useful as gemstones for a term not
exceeding one (1) year from the date of issuance thereof, renewable
for like periods: Provided, That the application for renewal shall be
filed before the expiry date of the permit: Provided, further, That the
permit holder has complied with all the terms and conditions of the
original Permit as provided herein and has not been found guilty of
violation of any provision of the Act and these implementing rules
and regulations. " '
25. Cancellation, revocation, termination of a quarry, sand and
gravel, gratuitous, guano, and gemstone gathering permit.
The quarry/sand and gravel/gratuitous/guano/gemstone
gathering permit may be canceled/revoked/terminated, after due
process, by the concerned Regional Director/Provincial Governor/
City Mayor based on the following grounds:
(a) Failure to comply with the terms and conditions of
the permit and ECC, if applicable;
(b) Violation of any provision of the Act and these
implementing rules and regulations;
(c) Failure to pay the excise tax for two (2) consecutive
years;
(d) Any misrepresentation in any statement made in
the application or those made later in support thereof;
115Sec. 86, ibid.
116Sec. 88, CIRR.
204 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
(e) If the commodity stipulated in the permit has been
exhausted before the expiry date thereof; and
(f) When national interest and public welfare so require
or for environmental protection or ecological reasons.
Upon cancellation of the permit, the said areas shall
automatically be reverted back to its original status.117
H. Transport, Sale and Processing of Minerals
26. Ore transport permit.
A permit specifying the origin and quantity of non-processed
mineral ores or minerals shall be required for their transport.
Transport permits shall be issued by the mines regional director
who has jurisdiction over the area where the ores were extracted.
In the case of mineral ores or minerals being transported from
the small-scale mining areas to the custom mills or processing
plants, the Provincial Mining Regulatory Board (PMRB) concerned
shall formulate their own policies to govern such transport of ores
produced by small-scale miners. The absence of a permit shall be
considered as prima facie evidence of illegal mining and shall be
sufficient cause for the government to confiscate the ores or minerals
being transported, the tools and equipment utilized, and the vehicle
containing the same. Ore samples not exceeding two metric tons to
be used exclusively for assay or pilot test purposes shall be exempted
from such requirement.118
a. Mineral trading registration
No person shall engage in the trading of mineral products, either
locally or internationally, unless registered with the Department of
Trade and Industry and accredited by the Department, with a copy
of said registration submitted to the Bureau.""
b. Minerals processing permit
No person shall engage in the processing of minerals without
first securing a minerals processing permit from the Secretary.
Minerals processing permit shall be for a period of five (5) years
"'Sec. 100, CIRR.
'Sec. 53, RA No. 7942.
119Sec. 54, ibid.
CHAPTER IV PHILIPPINE MINING ACT OF 1995 205
(Repuhlic Act No. 7942)
renewable for like periods but not to exceed a total term of twenty-
five (25) years. In the case of mineral ores or minerals produced
by the small-scale miners, the processing thereof as well as the
licensing of their custom mills, or processing plants shall continue
to be governed by the provisions of RA No. 7076.120 A foreign-owned/
controlled corporation may be granted a mineral processing permit.'21
I. Safety and Environmental Protection
27. Mines safety and environmental protection.
All contractors and permittees shall strictly comply with all
the mines safety rules and regulations as may be promulgated by
the Secretary concerning the safe and sanitary upkeep of the mining
operations and achieve waste-free and efficient mine development.
Personnel of the DENR involved in the implementation of mines
safety, health and environmental rules and regulations shall be
covered under RA No. 7305.122
a. Mine labor
No person under sixteen (16) years of age shall be employed in
any phase of mining operations and no person under eighteen (18)
years of age shall be employed underground in a mine.'23 All mining
and quarrying operations that employ more than fifty (50) workers
shall have at least one (1) licensed mining engineer with at least five
(5) years of experience in mining operations, and one (1) registered
foreman.''''
b. Power to issue orders
The mines regional director shall, in consultation with the
Environmental Management Bureau, forthwith or within such
time as specified in his order, require the contractor to remedy any
practice connected with mining or quarrying operations, which is not
in accordance with safety and anti-pollution laws and regulations.
In case of imminent danger to life or property, the mines regional
12()Sec. 55, RA No. 7942.
121Sec. 56, ibid.
'Sec. 63, ibid.
123Sec. 64, ibid.
'Sec. 65, ibid.
 206 LAW ON NATURAL RESOURCES ANI) RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
director may summarily suspend the mining or quarrying operations
until the danger is removed, or appropriate measures are taken by
the contractor or permittee.125
c. Pollution cases under the jurisdiction of the
Pollution and Adjudication Board
The Pollution and Adjudication Board (PAB) under RA No.
3931, as amended by PD No. 984 (National Pollution Control
Decree of 1976) has not been divested of its authority to try and
hear pollution cases connected with mining operations by virtue of
the subsequent enactment of RA No. 7942 (Philippine Mining Act
of 1995). The Mines and Geosciences Bureau was created under EO
No. 292 (Administrative Code of 1987) to absorb the functions of the
abolished Bureau of Mines and Geosciences, Mineral Reservations
Development Board and the Gold Mining Industry Development
Board to, among others, recommend policies, regulations and
programs pertaining to mineral resources development; assist in the
monitoring and evaluation of the Bureau's programs and projects;
and to develop and promulgate standards and operating procedures
on mineral resources development. On the other hand, the PAB was
created and granted under EO No. 192 broad powers to adjudicate
pollution cases in genera1.126
Section 19 of EO No. 192 vested the PAB with the specific power
to adjudicate pollution cases in general. Section 2, par. (a) of PD No.
984 defines the term "pollution" as referring to any alteration of the
physical, chemical and biological properties of any water, air and/
or land resources of the Philippines, or any discharge thereto of any
liquid, gaseous or solid wastes as will or is likely to create or to
render such water, air and land resources harmful, detrimental or
injurious to public health, safety or welfare or which will adversely
affect their utilization for domestic, commercial, industrial,
agricultural, recreational or other legitimate purposes. The
authority of the mines regional director is complementary to that of
the PAB. Section 66 of RA No. 7942 gives the mines regional director
exclusive jurisdiction over the safety inspection of all installations,
surface or underground in mining operations. Section 67 thereof
vests upon him the power to issue orders requiring a contractor to
"Sec. 67, supra.
'Republic v. Marcopper Mining Corporation, GR No. 137174, July 10, 2000,
335 SCRA 386.
CHAPTER IV PHILIPPINE MINING ACT Ole 1995 207
(Republic Act No. 7942)
remedy any practice connected with mining or quarrying operations
which is not in accordance with safety and anti-pollution laws and
regulations. The power granted to the mines regional director is for
purposes of effectively regulating and monitoring activities within
mining operations and installations pursuant to the environmental
protection and enhancement program undertaken by contractors
and permittees in procuring their mining permit. While the mines
regional director has express administrative and regulatory powers
over mining operations and installations, he has no adjudicative
powers over complaints for violation of pollution control statutes
and regulations.127
d. Environmental Impact Assessment (EIA)
Except during the exploration period of a mineral agreement
or financial or technical assistance agreement or an exploration
permit, an environmental clearance certificate shall be required
based on an environmental impact assessment and procedures
under the Philippine Environmental Impact Assessment System
including Sections 26 and 27 of the Local Government Code of
1991 which require national agencies to maintain ecological
balance, and prior consultation with the local government units,
non-governmental and people's organizations and other concerned
sectors of the community: Provided, That a completed ecological
profile of the proposed mining area shall also constitute part of the
environmental impact assessment. People's organizations and non-
governmental organizations shall be allowed and encouraged to
participate in ensuring that contractors/permittees shall observe all
the requirements of environmental protection.128
J. Surface Rights
28. Easement rights.
Section 75 of RA No. 7942 provides that when mining areas are
so situated that for purposes of more convenient mining operations it
is necessary to build, construct or install on the mining area or lands
owned, occupied or leased by other persons, such infrastructure as
roads, railroads, mills, waste dump sites, tailings ponds, warehouses,
staging or storage areas and port facilities, tramways, runways,
127Repub1ic v. Marcopper Mining Corporation, supra.
"Sec. 70, RA No. 7942.
208 LAW ON NATURAL RESOURCES ANI) RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
airports, electric transmission, telephone or telegraph lines, dams
and their normal flood and catchment areas, sites for water wells,
ditches, canals, new river beds, pipelines, flumes, cuts, shafts,
tunnels, or mills, the contractor, upon payment of just compensation
shall be entitled to enter and occupy said mining areas or lands.
29. Entry into lands.
Section 76 of RA No. 7942 reads:
"SEC. 76. Entry into Private Lands and Concession
Areas. — Subject to prior notification, holders of mining
rights shall not be prevented from entry into private
lands and concession areas by surface owners, occupants,
or concessionaires when conducting mining operations
therein: Provided, That any damage done to the property
of the surface owner, occupant, or concessionaire as
a consequence of such operations shall be properly
compensated as may be provided for in the implementing
rules and regulations: Provided, further, That to
guarantee such compensation, the person authorized
to conduct mining operations shall, prior thereto, post
a bond with the regional director based on the type of
properties, the prevailing prices in and around the area
where the mining operations are to be conducted, with
surety or sureties satisfactory to the regional director."
On the other hand, Section 107 of DA0 No. 96-40 states:
"Any damage done to the property of the surface
owner, occupant, or concessionaire thereof as a
consequence of the mining operations or as a result of
the construction or installation of the infrastructure
mentioned in Section 104 above shall be properly and
justly compensated.
Such compensation shall be based on the agreement
entered into between the holder of the mining rights and
the surface owner, occupant or concessionaire thereof or,
where appropriate, in accordance with PD No. 512.
In case of disagreement or in the absence of an
agreement, the matter shall be brought before the Panel
of Arbitrators for proper disposition."
CHAll'ER IV PHILIPPINE MINING ACT OF 1995 209
(Republic Act No. 7942)
a. Policy of multiple land use
The policy of multiple land use is enshrined in our laws towards
the end that the country's natural resources may be rationally
explored, developed, utilized, and conserved. Thus, Section 2, PD No.
705, the Revised Forestry Code of the Philippines, states that "the
multiple uses of forest lands shall be oriented to the development
and progress requirements of the country, the advancement of
science and technology, and the public welfare." On the other hand,
RA No. 7942, the Philippine Mining Act of 1995, recognizing the
equiponderance between mining and timber rights, gives a mining
contractor the right to enter a timber concession and cut timber
therein provided that the surface owner or concessionaire shall be
properly compensated for any damage done to the property as a
consequence of mining operations. Section 2 of RA No. 7942 provides
that a contractor may be granted a right to cut trees or timber within
his mining areas as may be necessary for his mining operations
subject to forestry laws, rules and regulations. And Section 76
thereof provides that, subject to prior notification, holders of mining
rights shall not be prevented from entry into private lands and
concession areas by surface owners, occupants, or concessionaires
when conducting mining operations therein.12"
b. Historical background of Section 76
Section 76 was first found in Section 27 of CA No. 137 which
took effect on November 7, 1936, viz.:
"Before entering private lands the prospector shall
first apply in writing for written permission of the private
owner, claimant, or holder thereof, and in case of refusal
by such private owner, claimant, or holder to grant such
permission, or in case of disagreement as to the amount of
compensation to be paid for such privilege of prospecting
therein, the amount of such compensation shall be fixed
by agreement among the prospector, the Director of the
Bureau of Mines and the surface owner, and in case of
their failure to unanimously agree as to the amount of
compensation, all questions at issue shall be determined
by the Court of First Instance."
129PIC0P Resources, Inc. v. Base Metals Resources Corporation, GR No.
163509, Dec. 6, 2006, J. Tinga.
210 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
Similarly, the pertinent provision of PD No. 463, otherwise
known as "The Mineral Resources Development Decree of 1974,"
reads:
"SEC. 12. Entry to Public and Private Lands. — A
person who desires to conduct prospecting or other mining
operations within public lands covered by concessions or
rights other than mining shall first obtain the written
permission of the government official concerned before
entering such lands. In the case of private lands, the
written permission of the owner or possessor of the land
must be obtained before entering such lands. In either
case, if said permission is denied, the Director, at the
request of the interested person may intercede with the
owner or possessor of the land. If the intercession fails,
the interested person may bring suit in the Court of
First Instance of the province where the land is situated.
If the court finds the request justified, it shall issue an
order granting the permission after fixing the amount of
compensation and/or rental due the owner or possessor:
Provided, That pending final adjudication of such amount,
the court shall upon recommendation of the Director
permit the interested person to enter, prospect and/or
undertake other mining operations on the disputed land
upon posting by such interested person of a bond with
the court which the latter shall consider adequate to
answer for any damage to the owner or possessor of the
land resulting from such entry, prospecting or any other
mining operations."
Hampered by the difficulties and delays in securing surface
rights for the entry into private lands for purposes of mining
operations, PD No. 512 dated July 19, 1974 was passed into law in
order to achieve full and accelerated mineral resources development.
Thus, PD No. 512 provides for a new system of surface rights
acquisition by mining prospectors and claimants. Whereas in CA
No. 137 and PD No. 463, eminent domain may only be exercised
in order that the mining claimants can build, construct or install
roads, railroads, mills, warehouses and other facilities, this time, the
power of eminent domain may now be invoked by mining operators
for the entry, acquisition and use of private lands, viz.:
"SEC. 1. Mineral prospecting, location, exploration,
development and exploitation is hereby declared of public
CHAPTER IV -- PHILIPPINE MINING ACT OF 1995 211
(Republic Act, No. 7942)
use and benefit, and for which the power of eminent
domain may be invoked and exercised for the entry,
acquisition and use of private lands. ... "
The evolution of mining laws gives positive indication that
mining operators who are qualified to own lands were granted the
authority to exercise eminent domain for the entry, acquisition,
and use of private lands in areas open for mining operations. This
grant of authority extant in Section 1 of PD No. 512 is not expressly
repealed by Section 76 of RA No. 7942; and neither are the former
statutes impliedly repealed by the former. These two provisions can
stand together even if Section 76 of RA No. 7942 does not spell out
the grant of the privilege to exercise eminent domain which was
present in the old law.'"
c. Section 76 constitutes compensable "taking" for
public use
In Didipio Earth-Savers' Multi-Purpose Association, Inc. v.
Gozun,m petitioners sought to nullify Section 76 of RA No. 7942
and Section 107 of DAO No. 96-40 which they claim allow the
unlawful and unjust "taking" of private property for private purpose
in contradiction with Section 9, Article III of the 1987 Constitution
mandating that private property shall not be taken except for public
use and the corresponding payment of just compensation. They
assert that public respondent DENR, through the Mining Act and
its implementing rules and regulations, cannot, on its own, permit
entry into a private property and allow taking of land without
payment of just compensation. Holding that Section 76 of RA No.
7942 and Section 107 of DAO No. 9640 are not unconstitutional, the
Court ruled:
"Considering that Section 1 of PD No. 512 granted
the qualified mining operators the authority to exercise
eminent domain and since this grant of authority is
deemed incorporated in Section 76 of RA No. 7942, the
inescapable conclusion is that the latter provision is a
taking provision.
130Didipio Earth-Savers' Multi-Purpose Association, Inc. v. Gozun, GR No.
157882, March 30, 2006, 485 SCRA 586.
13I/bid.
212 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
While this Court declares that the assailed provision
is a taking provision, this does not mean that it is
unconstitutional on the ground that it allows taking of
private property without the determination of public use
and the payment of just compensation. x x x
Mining industry plays a pivotal role in the
economic development of the country and is a vital tool
in the government's thrust of accelerated recovery.
The importance of the mining industry for national
development is expressed in PD No. 463 (which
states that mineral production is a major support of
the national economy, and therefore the intensified
discovery, exploration, development and wise utilization
of the country's mineral resources are urgently needed for
national development).
Irrefragably, mining is an industry which is of public
benefit."
d. Determination of compensation by the Panel of
Arbitrators is only preliminary
As to the contention that RA No. 7942 and Section 107 of DAO
No. 96-40 encroach on the power of the trial courts to determine
just compensation in eminent domain cases inasmuch as the same
determination of proper compensation are cognizable only by the
Panel of Arbitrators, the Court held:
"Although Section 105 confers upon the Panel of
Arbitrators the authority to decide cases where surface
owners, occupants, concessionaires refuse permit holders
entry, thus, necessitating involuntary taking, this does
not mean that the determination of the just compensation
by the Panel of Arbitrators or the Mines Adjudication
Board is final and conclusive. The determination is only
preliminary unless accepted by all parties concerned.
There is nothing wrong with the grant of primary
jurisdiction by the Panel of Arbitrators or the Mines
Adjudication Board to determine in a preliminary matter
the reasonable compensation due the affected landowners
or occupants. The original and exclusive jurisdiction of
the courts to decide determination of just compensation
remains intact despite the preliminary determination
made by the administrative agency."
CHAPTER IV — PHILIPPINE MINING ACT OF 1995 213
(Republic Act No. 7942)
e. Surface rights must be based on compliance with
legal requirements
Under the Regalian doctrine, minerals found in one's land
belong to the State and not to a private landowner.'3' Nonetheless,
a condition sine qua non is that the prospecting, exploration,
discovery, and location must be done in accordance with the law.
Where applicant's rights to use and exploit the mineral resources
discovered and located never matured because of its omission to
comply with a condition precedent, its claim for surface rights and
right of way is not only unwarranted, it would be to countenance
illegal trespass into private property.'33
30. Voluntary agreement.
A voluntary agreement between a surface owner, occupant or
concessionaire thereof permitting holders of mining rights to enter
into and use its land for mining purposes shall be registered with
the concerned Regional Office. The said agreement shall be binding
upon the parties, their heirs, successors-in-interest and assigns.
134
K. Transport of Mineral/Mineral Products and
Confiscation, Seizure, and Disposition of Illegally-
sourced Minerals/Mineral Products
31. Ore transport permit.
The transport of all minerals/mineral products and by-products,
including gold bullions, by permit holders, contractors, accredited
traders, retailers, processors and other mining rights holders must
be accompanied by an ore transport permit (MOB Form No. 12-1)
issued by the Regional Director concerned or his/her duly authorized
representative: Provided, That the transport of sand and gravel
shall be covered by a delivery receipt.
For MPSA and FTAA Contractors, Ore Transport Permits
(OTP) shall be issued under the Agreements: Provided, That a written
notice prior to shipment or transport of ores shall be furnished to
the Regional Office concerned for the purpose of monitoring mining
' 32Sec. 2, Art. XII, Constitution.
' 33Standard Mineral Products, Inc. v. Court of Appeals, GR No. L-43277, April
26, 1990, 184 SCRA 571.
'Sec. 106, DA0 No. 96-40.
214 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
activities in the contract area: Provided, further, That such activity
is in accordance with the terms and conditions of the Agreement.
An OTP is not necessary for ore samples not exceeding two
metric tons to be used exclusively for assay and pilot test purposes.
Instead, a certification regarding the same shall be issued by the
Regional Director concerned. For ore samples exceeding two metric
tons to be transported exclusively for assay and pilot tests purposes,
an OTP shall be issued by the Regional Director concerned for a
limited amount based on the type of ore, metallurgical tests to be
undertaken and other justifiable reasons as determined by the
Regional Office concerned.'"5
32. Arrests, confiscations, and seizures.
The absence of any of the required documents shall be
considered prima facie evidence of illegal mining and shall cause
the confiscation/seizure of the minerals/mineral products and the
tools and equipment including conveyance used in the commission
of the offense in favor of the government pursuant to PD No. 1281,
subject to further investigation. If it is found that the minerals/
mineral products seized have been mined, extracted, or removed
without any permit or authority under existing mining laws, rules
and regulations, final confiscation can be effected to be followed by
the filing of the complaint for theft of minerals. The Bureau officers
which include the Regional Director and other Bureau personnel,
duly authorized by the Director, DENR personnel duly authorized
by the Secretary, permittee, contractor, permit holder and other duly
deputized personnel shall have authority to arrest offenders, and
confiscate/seize illegally-sourced minerals/mineral products and the
tools, equipment and conveyance used in the commission of offense.
It shall be the primary responsibility of the permittee,
contractor, or permit holder to police the permit/contract area from
any illegal mining operations.""
33. Custody of the confiscated/seized minerals/mineral products,
tools, equipment and conveyance.
a. In case of apprehension by the Bureau field officer, the
mineral products, tools, equipment and conveyance used shall be
"Sec. 117, CIRR, as amended by Sec. 15, DA0 No. 2003-46.
"Sec. 118, CIRR, as amended by Sec. 14, DAO No. 99-57.
CHAll'ER IV PHILIPPINE MINING ACT OF 199( 215
(Republic Act No. 7942)
deposited with the concerned Regional Office or wherever it is most
convenient, for safekeeping. If the transfer of the seized products
to the aforecited offices is not immediately feasible, the same shall
be placed under the custody of any licensed mine operator or the
nearest local public official such as the Barangay Captain, Municipal/
City Mayor, Provincial Governor or the Philippine National Police
( PNP), at the discretion of the confiscating officer taking into
account the safety of the confiscated items. The apprehending officer
is authorized to seek assistance from licensed mine operators to
provide transportation facilities for the transfer of the confiscated
items from the place of apprehension to the place of custody. In any
event, the custody shall be duly acknowledged and received by the
official taking custody thereof: Provided, That in the case of seizure/
confiscation by the Bureau the case shall be referred to the concerned
Regional Office for further investigation and disposition;
b. In case of apprehension by the PNP, Economic Intelligence
and Investigation Bureau (EIIB), Coast Guard and other government
law enforcement agencies, the apprehending agency shall notify the
concerned Regional Office and turn over the seized items thereto, for
proper investigation and disposition; and
c. For confiscated gold and/or other precious metal(s), the
concerned Regional Office shall first determine if they conform with
the Bangko Sentral ng Filipinas (BSP) specifications or requirements
for acceptance. If the confiscated gold and/or other precious metals
satisfy the minimum weight requirements but it does not conform
with the physical requirements, the said metal(s) shall be delivered
by the accountable officer escorted by security officers to the Bureau/
concerned Regional Office Metallurgy Laboratory for processing.
In cases where the weight requirement is not satisfied, the chief
cashier/accountant of the concerned Regional Office shall store the
confiscated metal(s) in a safety deposit box of the nearest reputable
banking institution duly accredited by the Department Regional
Office. Once the inventory of metal(s) reaches the minimum BSP
weight specifications, the chief cashier/accountant shall turn over the
confiscated metal(s) to the Metallurgy Office. The latter shall turn
over immediately after processing into saleable form the metal(s) to
the Chief Cashier/Accountant. In each turnover, accountability is
transferred through a memorandum receipt.'"
' 37Sec. 121, CIRR.
216 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
L. Settlement of Conflicts
34. Panel of Arbitrators.
Chapter XIII (Settlement of Conflicts) of RA No. 7942 provides
for the powers of the panel of arbitrators and the Mines Adjudication
Board (MAB).
There shall be a panel of arbitrators in the regional office of
the Department composed of three (3) members, two (2) of whom
must be members of the Philippine Bar in good standing and one
a licensed mining engineer or a professional in a related field, and
duly designated by the Secretary as recommended by the Mines and
Geosciences Bureau Director. Those designated as members of the
panel shall serve as such in addition to their work in the Department
without receiving any additional compensation. As much as
practicable, said members shall come from the different bureaus of
the Department in the region. The presiding officer thereof shall
be selected by the drawing of lots. His tenure as presiding officer
shall be on a yearly basis. The members of the panel shall perform
their duties and obligations in hearing and deciding cases until their
designation is withdrawn or revoked by the Secretary. Within thirty
(30) working days, after the submission of the case by the parties for
decision, the panel shall have exclusive and original jurisdiction to
hear and decide on the following:
(a) Disputes involving rights to mining areas;
(b) Disputes involving mineral agreements or permit;
(c) Disputes involving surface owners, occupants and
claimholders/concessionaires; and
(d) Disputes pending before the Bureau and the
Department at the date of the effectivity of the Act.138
a. Settlement of mining disputes by the Panel of
Arbitrators
The provisions creating the Panel of Arbitrators (POA) for the
settlement of conflicts refers to disputes involving rights to mining
areas, mineral agreements or permits and those involving surface
138Sec. 77, RA No. 7942.
CHAM'ER IV 19111,11TINE MINING ACT OF 1995 217
(Republic Act No. 7942)
owners, occupants and claimholders/concessionaires. A mining
dispute is a dispute involving (a) rights to mining areas, (b) mineral
agreements, FTAAs, or permits, and (c) surface owners, occupants
and claimholders/concessionaires.
Under RA No. 7942, the POA has exclusive and original
jurisdiction to hear and decide these mining disputes. But the
panel's jurisdiction is limited only to those mining disputes which
raise questions of fact or matters requiring the application of
technological knowledge and experience."° The question of whether
issues involving the rescission of a contract are arbitrable was
answered by the Court in the affirmative."°
In Pearson v. Intermediate Appellate Court," the Court
observed that the trend has been to make the adjudication of mining
cases a purely administrative matter. Administrative agencies are
considered specialists which "can deal with the problems [in their
respective fields] with more expertise and dispatch than can be
expected from the legislature or the courts of justice."142
The POA is a quasi-judicial body which forms part of the DENR,
an administrative agency. Hence, the provision on mandatory resort
to arbitration, freely entered into by the parties, must be held
binding against them."3
Decisions of the Supreme Court on mining disputes have
recognized a distinction between (1) the primary powers granted
by pertinent provisions of law to the then Secretary of Agriculture
and Natural Resources (and the bureau directors) of an executive
or administrative nature, such as granting of license, permits,
lease and contracts, or approving, rejecting, reinstating or
canceling applications, or deciding conflicting applications, and
(2) controversies or disagreements of civil or contractual nature
between litigants which are questions of a judicial nature that
may be adjudicated only by the courts of justice. This distinction is
'Gonzales v. Climax Mining, Ltd., GR No. 161957, Feb. 28, 2005, 452 SCRA
607.
"Cargill Philippines, Inc. v. San Fernando Regal Trading, GR No. 175404,
Jan. 31, 2011.
' 41Cited in Gonzales v. Climax Mining, Ltd., supra.
"Zoleta v. Land Bank of the Philippines, GR No. 205108, Aug. 9, 2017.
"Benguet Corp. v. Department of Environment and Natural Resources, GR
No. 163101, Feb. 13, 2008.
 218 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
carried on even in RA No. 7942. The Court in Gonzales v. Climax
Mining Ltd." explained:
"Arbitration before the Panel of Arbitrators is
proper only when there is a disagreement between the
parties as to some provisions of the contract between
them, which needs the interpretation and the application
of that particular knowledge and expertise possessed
by members of that Panel. It is not proper when one
of the parties repudiates the existence or validity of
such contract or agreement on the ground of fraud or
oppression as in this case. The validity of the contract
cannot be subject of arbitration proceedings. Allegations
of fraud and duress in the execution of a contract are
matters within the jurisdiction of the ordinary courts of
law. These questions are legal in nature and require the
application and interpretation of laws and jurisprudence
which is necessarily a judicial function."
Consequently, where what was being protested are the alleged
negative environmental impact of the small-scale mining operation
being conducted by mining entities, or the authority of the governor
to issue mining permits in favor of these entities, or the perceived
indifference of the DENR and local government officials over the
issue, resolution of these matters does not entail the technical
knowledge and expertise of the members of the Panel but requires
an exercise of judicial function.'45
In Narra Nickel Mining Corporation v. Redmont Consolidated
Mines Corporation,116 the Court, through Justice Velasco, reiterated
that the POA has jurisdiction to settle disputes over rights to
mining areas which involved the petitions filed by Redmont against
petitioners Narra, McArthur and Tesoro. Redmont, by filing its
petition against petitioners, is asserting the right of Filipinos over
mining areas in the Philippines against alleged foreign-owned
mining corporations. Such claim constitutes a "dispute" under
114
Supra; See also Koppel, Inc. v. Makati Rotary Club Foundation, GR No.
198075, Sept. 4, 2013; Dolot v. Paje, GR No. 199199, Aug. 27, 2013; Olympic Mines
and Development Corp. v. Platinum Group Metals Corporation, GR No. 178188, Aug.
14, 2009.
I'Dolot v. Paje, ibid.
" GGR No. 195580, April 21, 2014.
CHAPTER IV PHILIPPINE MINING ACT OF 1995 219
(Republic Act No. 7942)
Section 77 of RA No. 7942. Incidentally, the Court ruled that the
control test" is still the prevailing mode of determining whether
or not a corporation is a Filipino corporation, within the ambit of
Section 2, Article II of the 1987 Constitution, entitled to undertake
the exploration, development, and utilization of the natural
resources of the Philippines.
b. Appeal
The decision or order of the Panel of Arbitrators (POA) may
be appealed by the party to the Mines Adjudication Board (MAB)
within fifteen (15) days from receipt thereof which must decide the
case within thirty (30) days from submission thereof for decision.'47
35. Mines Adjudication Board.
The Mines Adjudication Board (MAB) is composed of three
(3) members, with the Secretary as chairman, and the Director
of the Mines and Geosciences Bureau and the Undersecretary for
Operations of the Department as members. The Board has the
following powers and functions:
(a) Promulgate rules and regulations governing the
hearing and disposition of cases before it, as well as those
pertaining to its ,internal functions, and such rules and
regulations as may be necessary to carry out its functions;
(b) Administer oaths, summon the parties to a
controversy, issue subpoena requiring the attendance and
testimony of witnesses or the production of such books, papers,
contracts, records, statement of accounts, agreements, and
other documents as may be material to a just determination
of the matter under investigation, and to testify in any
investigation or hearing conducted in pursuance of this Act;
(c) Conduct hearings on all matters within its
jurisdiction, proceed to hear and determine the disputes in
the absence of any party thereto who has been summoned or
served with notice to appear, conduct its proceedings or any
part thereof in public or in private, adjourn its hearings at any
time and place, refer technical matters or accounts to an expert
and to accept his report as evidence after hearing of the parties
1'17Sec. 78, RA No. 7942.
 220 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
upon due notice, direct parties to be joined in or excluded
from the proceedings, correct, amend, or waive any error,
defect or irregularity, whether in substance or in form, give all
such directions as it may deem necessary or expedient in the
determination of the dispute before it, and dismiss the mining
dispute as part thereof, where it is trivial or where further
proceedings by the Board are not necessary or desirable:
(1) Hold any person in contempt, directly or
indirectly, and impose appropriate penalties therefor;
and
(2) Enjoin any or all acts involving or arising
from any case pending before it which, if not restrained
forthwith, may cause grave or irreparable damage to any
of the parties to the case or seriously affect social and
economic stability.
In any proceeding before the Board, the rules of evidence
prevailing in courts of law or equity shall not be controlling and it is
the spirit and intention of this Act that shall govern. The Board shall
use every and all reasonable means to ascertain the facts in each
case speedily and objectively and without regard to technicalities of
law or procedure, all in the interest of due process. In any proceeding
before the Board, the parties may be represented by legal counsel.
The findings of fact of the Board shall be conclusive and binding on
the parties and its decisions or order shall be final and executory.
While the MAB's jurisdiction covers the settlement of conflicts
over mining claims, the Provincial Mining Regulatory Board
(PMRB) — created under RA No. 7076 known as the People's Small-
Scale Mining Act of 1991 — granted powers that include functions
more executive in nature such as declaring and segregating areas
for small-scale mining.
a. Adjudication of mining cases an administrative
matter
The trend at present is to make the adjudication of mining
cases a purely administrative matter. This does not mean that
administrative bodies have complete rein over mining disputes.
Questions and controversies that are judicial, not administrative,
in nature can be resolved only by the regular courts in whom
is vested the judicial power to resolve and adjudicate such civil
disputes and controversies between litigants in accordance with
CHAPTER IV — PHILIPPINE MINING ACT OF 1995 221
(Republic Act No. 7942)
the established norms of law and justice. The Supreme Court has
recognized a distinction between (1) the primary powers granted
by pertinent provisions of law to the then Secretary of Agriculture
and Natural Resources (and the bureau directors) of an executive
or administrative nature, such as "granting of license, permits,
lease and contracts, or approving, rejecting, reinstating or
cancelling applications, or deciding conflicting applications," and
(2) controversies or disagreements of civil or contractual nature
between litigants which are questions of a judicial nature that may
be adjudicated only by the courts of justice.
This distinction is carried on even under the present law.
Findings of fact by the MAB, which exercises appellate jurisdiction
over decisions or orders of the panel of arbitrators, shall be conclusive
and binding on the parties, and its decision or order shall be final and
executory. But resort to the appropriate court, through a petition for
review by certiorari, involving questions of law, may be made within
30 days from the receipt of the order or decision of the MAB."8
b. PAO has no authority over pollution cases
The scope of authority of the Panel of Arbitrators (PAO) and
the Mines Adjudication Board (MAB) conferred by RA No. 7942
clearly excludes adjudicative responsibility over pollution cases.
They have no authority to adjudicate cases involving violations of
pollution laws and regulations in general.'"
c. MAB decisions are appealable to the Court of
Appeals
Decisions of the MAB are appealable to the Court of Appeals
under Rule 43 of the Rules of Court. In Carpio v. Sulu Resources
Development Corporation,'"" the Court clarified that while Section
79 of the Philippine Mining Act of 1995 provides that petitions for
review of MAB decisions are to be brought directly to the Supreme
Court, the MAB is a quasi-judicial agency whose decisions should
148Gonza1es v. Climax Mining Ltd., GR No. 161957, Feb. 28, 2005, 452 SCRA
607; Pearson v. Intermediate Appellate Court, GR No. 74454, Sept. 3, 1998, 452
SCRA 607; Twin Peaks Mining Association v. Navarro, GR No. L-49835, Dec. 18,
1979, 94 SCRA 768; PNOC-Energy Development Corporation v. Veneracion, GR No.
129820, Nov. 30, 2006.
"'Republic v. Marcopper Mining Corporation, GR No. 137174, July 10, 2000,
355 SCRA 386.
'""GR No. 148267, Aug. 8, 2002, 387 SCRA 128.
222 LAW ON NATURAL RESOURCES AND RULES
OP PROCEDURE FOR ENVIRONMENTAL CASES
be brought to the Court of Appeals.' ' The Court held in a line of
cases that appeals from judgments and final orders of quasi-judicial
bodies are required to be brought to the Court of Appeals, under
the requirements and conditions set forth in Rule 43 of the Rules of
Court.152
d. DENR devoid of jurisdiction to determine validity
of mining contracts or disputes
A mining dispute is within the jurisdiction of the Department of
Environment and Natural Resources (DENR), and has the authority
to exercise its technical knowledge or expertise over any mining
operations or dispute. However, it is devoid of jurisdiction where the
issue involves the validity of mining contracts as this is a judicial
question. A judicial question is raised when the determination of
the question involves the exercise of a judicial function; that is, the
question involves the determination of what the law is and what
the legal rights of the parties are with respect to the matter in
controversy. '5
This principle is illustrated in Asaphil Construction and
Development Corporation v. Tuasoni" where respondent (Tuason)
filed with the then Bureau of Mines, DENR, a complaint against
Asaphil and Induplex for declaration of nullity of two contracts,
namely, the Contract for Sale and Purchase of Perlite Ore between
Tuason and Induplex, and the Agreement to Operate Mining Claims
between Tuason and Asaphil. The Court held that the allegations
in Tuason's complaint do not make out a case for a mining dispute
or controversy within the jurisdiction of the DENR. While the
Agreement to Operate Mining Claims is a mining contract, the
ground upon which the contract is sought to be annulled is not
due to Asaphil's refusal to abide by the terms and conditions of the
agreement, but due to Induplex's alleged violation of the condition
imposed by the BOI in its Joint Venture Agreement with Grefco, Inc.
Also, Tuason sought the nullity of the Contract for Sale and Purchase
of Perlite Ore, based on the same alleged violation. Obviously, this
151Asaphi1 Construction and Development Corporation v. Tuason, GR No.
134030, April 25, 2006, 488 SCRA 126.
"PNOC-Energy Development Corporation v. Veneracion, GR No. 129820,
Nov. 30, 2006.
"Gonzales v. Climax Mining Ltd., supra.
154Supra.
CHAPTER IV - PHILIPPINE MINING ACT OF 1995 223
(Republic Act No. 7942)
raises a judicial question which is proper for determination by the
regular courts.
The scope of authority of the PAO and the MAB conferred by
RA No. 7942 excludes adjudicative responsibility over pollution
cases. The internal structure, organization and description of the
functions of the DENR, particularly the Mines and Geo-Sciences
Bureau, reveals no provision pertaining to the resolution of cases
involving violations of the pollution laws.155
M. Government Share
36. Government share in mineral production sharing agreement.
The total government share in a mineral production sharing
agreement shall be the excise tax on mineral products as provided
in RA No. 7729, amending Section 151(a) of the National Internal
Revenue Code, as amended.'56
37. Government share in other mineral agreements.
The share of the government in co-production and joint-venture
agreements shall be negotiated by the government and the contractor
taking into consideration the: (a) capital investment of the project,
(b) risks involved, (c) contribution of the project to the economy,
(d) other factors that Will provide for a fair and equitable sharing
between the government and the contractor. The government shall
also be entitled to compensations for its other contributions which
shall be agreed upon by the parties, and shall consist, among other
things, the contractor's foreign stockholders arising from dividend
or interest payments to the said foreign stockholders, in case of a
foreign national, and all such other taxes, duties and fees as provided
for under existing laws.
The government share in financial or technical assistance
agreement shall consist of, among other things, the contractor's
corporate income tax, excise tax, special allowance, withholding tax
due from the contractor's foreign stockholders arising from dividend
or interest payments to the said foreign stockholder in case of a
foreign national and all such other taxes, duties and fees as provided
for under existing laws.
155Republic v. Marcopper Mining Corporation, GR No. 137174, July 10, 2000,
355 SCRA 386.
'Sec. 80, RA No. 7942.
224 LAW ON NATURAL RESOURCES AND RULES
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The collection of government share in financial or technical
assistance agreement shall commence after the financial or technical
assistance agreement contractor has fully recovered its pre-operating
expenses, exploration, and development expenditures, inclusive.157
N. Incentives
38. Fiscal and non-fiscal incentives.
The contractors in mineral agreements, and financial or
technical assistance agreements shall be entitled to the applicable
fiscal and non-fiscal incentives as provided for under EO No. 226,
otherwise known as the Omnibus Investments Code of 1987:
Provided, That holders of exploration permits may register with the
Board of Investments and be entitled to the fiscal incentives granted
under the said Code for the duration of the permits or extensions
thereof: Provided, further, That mining activities shall always be
included in the investment priorities plan.'58
39. Incentives for pollution control devices.
Pollution control devices acquired, constructed or installed by
contractors shall not be considered as improvements on the land
or building where they are placed, and shall not be subject to real
property and other taxes or assessments: Provided, however, That
payment of mine wastes and tailings fees is not exempted.'59
40. Investment guarantees.
The contractor shall be entitled to the basic rights and
guarantees provided in the Constitution and such other rights
recognized by the government as enumerated hereunder:
(a) Repatriation of investments — The right to repatriate
the entire proceeds of the liquidation of the foreign investment
in the currency in which the investment was originally made
and at the exchange rate prevailing at the time of repatriation.
(19) Remittance of earnings — The right to remit
earnings from the investment in the currency in which the
41. Late or non-filing of requirements.
157Sec. 81, RA No. 7942.
'Sec. 90, ibid.
159Sec. 91, RA No. 7942.
requirements provided in the Act or in its implementing rules and
CHAPTER IV - - PHILIPPINE MINING ACT OF 1995 225
(Republic Act No. 7942)
foreign investment was originally made and at the exchange
rate prevailing at the time of remittance.
(c) Foreign loans and contracts — The right to remit
at the exchange rate prevailing at the time of remittance such
sums as may be necessary to meet the payments of interest
and principal on foreign loans and foreign obligations arising
from financial or technical assistance contracts.
(d) Freedom from expropriation — The right to be
free from expropriation by the government of the property
represented by investments or loans, or of the property of the
enterprise except for public use or in the interest of national
welfare or defense and upon payment of just compensation.
In such cases, foreign investors or enterprises shall have
the right to remit sums received as compensation for the
expropriated property in the currency in which the investment
was originally made and at the exchange rate prevailing at the
time of remittance.
(e) Requisition of investment — The right to be,. free
from requisition of the property represented by the investment
or of the property of the enterprises except in case of war or
national emergency and only for the duration thereof. Just
compensation shall be determined and paid either at the
time or immediately after cessation of the state of war or
national emergency. Payments received as compensation for
the requisitioned property may be remitted in the currency
in which the investments were originally made and at the
exchange rate prevailing at the time of remittance.
(f) Confidentiality — Any confidential information
supplied by the contractor pursuant to this Act and its
implementing rules and regulations shall be treated as such by
the Department and the Government, and during the term of
the project to which it relates.
0. Grounds for Cancellation, Revocation,
and Termination
Failure of the permittee or contractor to comply with any of the
226 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
regulations, without a valid reason, shall be sufficient ground for the
suspension of any permit or agreement provided under the Act."")
42. Violation of the terms and conditions of permits or
agreements.
Violation of the terms and conditions of the permits or
agreements shall be sufficient ground for cancellation of the same.'6'
43. Non-payment of taxes and fees.
Failure to pay the taxes and fees due the government for two
consecutive years shall cause the cancellation of the exploration
permit, mineral agreement, financial or technical assistance
agreement and other agreements and the re-opening of the area
subject thereof to new applicants.162
It has been held the business of manufacturing and exporting
cement does not partake of the exploration, development nor
exploitation of mineral resources as defined in Section 2 of PD No.
463, hence, it is outside the scope of application of Section 52 of said
Decree.163
44. Suspension or cancellation of tax incentives and credits.
a. Grounds for suspension or cancellation
The Bureau may suspend or cancel wholly or partially any
incentive granted under the rules and regulations for any cause
including the following:
1) Any violation of the Act, rules and regulations
implementing the same or of the terms and conditions in the
Mineral Agreement or FTAA;
2) Any material misrepresentation or false statements
made to the Bureau at any time before or after the approval/
conclusion of its Mineral Agreement or FTAA;
'Sec. 95, RA No. 7942.
'Sec. 96, ibid.
162Sec. 97, ibid.
163F1oro Cement Corporation v. Gorospe, GR No. 46787, Aug. 12, 1991, 200
SCRA 480.
CHAPTER IV PHILIPPINE MINING ACT OF 1995 227
(Republic Act, No. 7942)
3) Whenever the project ceases to be viable and its
continued operation would require additional costs to the
economy. In this case, the Bureau shall evaluate the status of
the project and shall decide if suspension/cancellation shall be
imposed.
b. Withdrawal from the mineral agreement or FTAA
Whenever a contractor decides to withdraw from business or
suspend its operations covered by the agreement, written notice
thereof shall be sent to the Director before decision is implemented.
Withdrawal from business operations shall automatically cancel the
mineral agreement or FTAA. Upon such withdrawal, the contractor
shall cease to be entitled to the incentives.
c. Refund and penalties
In case of cancellation of the mineral agreement or FTAA, the
Bureau may in appropriate cases, recommend to other incentive-
dispensing agencies the cancellation, of registration without
prejudice to the imposition of the corresponding penalties and refund
of incentives availed of, pursuant to the Act and these implementing
rules and regulations and under EO No. 226, laws creating export
processing zones and other laws."4
45. Effect of expiration and cancellation of a permit and mineral
agreement or FTAA.
Upon the expiration of a mining permit/mineral agreement/
FTAA, the mining operations may be undertaken by the government
through one of its agencies or through a qualified independent
contractor. In the latter case, the contract shall be awarded to
the highest bidder in a public bidding held after due publication
of the notice thereof. The contractor/permit holder shall have the
right to equal the highest bid upon reimbursement of all reasonable
expenses of the highest bidder.
Upon cancellation of a mining permit/mineral agreement/
FTAA, the Director shall cause the same to be entered in the
registration book and a notice thereof shall be posted on the bulletin
board of the Bureau and Regional Office and the mining area covered
thereby shall thereupon be open to new applicants.
164Sec. 231, DA0 No. 96-40.
228 LAW ON NATURAL RESOURCES AND RULES
OF PROCEDURE FOR ENVIRONMENTAL CASES
Non-payment of taxes and fees causing the cancellation of a
mining permit/mineral agreement/FTAA shall have also the effect
of re-opening the mining area to new applicants.'66
46. Falsehood or omission of facts in the statement.
All statements made in the exploration permit, mining
agreement and financial or technical assistance agreement shall
be considered as conditions and essential parts thereof and any
falsehood in said statements or omission of facts therein which
may alter, change or affect substantially the facts set forth in
said statements may cause the revocation and termination of the
exploration permit, mining agreement and financial or technical
assistance agreement.'66
P. Organizational and Institutional Arrangements
47. From staff to line bureau.
The Mines and Geo-Sciences Bureau has been transformed into
a line bureau consistent with Section 9 of the Act. Under the Bureau
are the necessary mines regional, district and other pertinent offices
— the number and specific functions of which shall be provided in
the implementing rules and regulations.'67
Q. Penal Provisions
48. False statements.
Any person who knowingly presents any false application,
declaration, or evidence to the government or publishes or causes
to be published any prospectus or other information containing any
false statement relating to mines, mining operations or mineral
agreements, financial or technical assistance agreements and
permits shall, upon conviction, be 'penalized by a fine of not exceeding
P10,000.00.168
165Sec. 232, CIRR.
166Sec. 99, RA No. 7942.
'See. 100, ibid.
'Sec. 101, ibid.
CHAVITR IV P1111 A NINE MINING ACT OF 1995 229
(Republic Act No. 7942)
49. Illegal exploration.
Any person undertaking exploration work without the
necessary exploration permit shall, upon conviction, be penalized by
a fine of not exceeding P50,000.00.166
50. Theft of minerals.
Any person extracting minerals and disposing the same without
a mining agreement, lease, permit, license, or steals minerals or
ores or the products thereof from mines or mills or processing plants
shall, upon conviction, be imprisoned from six months to six years or
pay a fine from P10,000.00 to P20,000.00, or both, at the discretion
of the appropriate court. In addition, he shall be liable to pay
damages and compensation for the minerals removed, extracted,
and disposed of. In the case of associations, partnerships, or
corporations, the president and each of the directors thereof shall be
responsible for the acts committed by such association, corporation,
or partnership.'76
a. Elements of the offense
The elements of the offense are: (1) the accused extracted,
removed and/or disposed of minerals; (2) these minerals belong to
the government or have been taken from a mining claim or claims
leased, held, or owned by other persons; and (3) the accused did not
possess a mining lease or a temporary permit or any other permit to
mine granted by the Secretary or the Director under existing mining
decrees, laws and regulations.'71
It has been held that receipts merely showing payment of taxes
do not constitute the authority to extract, remove, and/or dispose
of minerals. Such receipts are insufficient evidence to prove that
the proper government office had, in effect, granted the required
permit to extract minerals from said quarry. In crimes punished by
special laws, the act alone, irrespective of its motives, constitutes
the offense.172
169Sec. 102, ibid.
'Sec. 103, ibid.
171Peop1e v. Abad, GR No. L-55132, Aug. 30, 1988, 165 SCRA 57.
172Ibid.
230 LAW ON NATURAL RESOURCES AND ItIlLES
OF PROCEDURE FOR ENVIRONMENTAL CASES
51. Destruction of mining structures.
Any person who willfully destroys or damages structures in
or on the mining area or on the mill sites shall, upon conviction,
be imprisoned for a period not to exceed five years and shall, in
addition, pay compensation for the damages which may have been
caused thereby.' 7"
52. Mines arson.
Any person who willfully sets fire to any mineral stockpile,
mine or workings, fittings or a mine, shall be guilty of arson and
shall be punished, upon conviction, by the appropriate court in
accordance with the provisions of the Revised Penal Code and shall,
in addition, pay compensation for the damages caused thereby.174
53. Willful damage to a mine.
Any person who willfully damages a mine, unlawfully causes
water to run into a mine, or obstructs any shaft or passage to a mine,
or renders useless, damages or destroys any machine, appliance,
apparatus, rope, chain, tackle, or any other things used in a mine,
shall be punished, upon conviction, by the appropriate court, by
imprisonment not exceeding a period of five years and shall, in
addition, pay compensation for the damages caused thereby.'"
54. Illegal obstruction to permittees or contractors.
Any person who, without justifiable cause, prevents or obstructs
the holder of any permit, agreement or lease from undertaking
his mining operations shall be punished, upon conviction by the
appropriate court, by a fine not exceeding P5,000.00 or imprisonment
not exceeding one year, or both, at the discretion of the court.176
55. Violation of the terms and conditions of the environmental
compliance certificate.
Any person who willfully violates or grossly neglects to abide
by the terms and conditions of the environmental compliance
I 73Sec. 104, RA No. 7942.
'"Sec. 105, ibid.
175Sec. 106, ibid.
176Sec. 107, ibid.
CLIAI"l'ER IV Milli l'I'INE MINING ACT OF 1995 231
(Republic Act No. 7942)
certificate issued to said person and which causes environmental
damage through pollution shall suffer the penalty of imprisonment
of six months to six years or a fine of P50,000.00 to P200,000.00, or
both, at the discretion of the court.'77
For a violation of Section 108 of RA No. 7942, it must be
established that there is willful violation and gross neglect on the
part of the accused to abide by the terms and conditions of the
environmental compliance certificate (EC C).
56. Obstruction of government officials.
Any person who illegally prevents or obstructs the Secretary,
the Director or any of their representatives in the performance of
their duties under the provisions of the Act and of the regulations
promulgated thereunder shall be punished, upon conviction, by
the appropriate court, by a fine not exceeding P5,000.00 or by
imprisonment not exceeding one year, or both, at the discretion of
the court.178
57. Other violations.
Any other violation of the Act and its implementing rules and
regulations shall constitute an offense punishable with a fine not
exceeding P5,000.00.'79
58. Fines.
The Secretary is authorized to charge fines for late or non-
submission of reports in accordance with the implementing rules
and regulations of the Act.'8°
I77Sec. 108, ibid.
178Sec. 109, ibid.
179Sec. 110, ibid.
'Sec. 111, RA No. 7942.