Republic Act No.

7942
Philippine Mining Act of 1995

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
protect the rights of affected communities.

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.
This provision echoes the concept of jura regalia pursuant to which all lands of 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.1
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.”2 The right to possess or own the surface ground is separate
and distinct from the mineral rights over the same land. 3
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. This is geared
towards:
a. A more equitable distribution of opportunities, income and wealth
b. A sustained increase in the amount of goods and services produced by the
nation for the benefit of the people; and
c. An expanding productivity as the key to raising the quality life for all,
especially the underprivileged
Activities which may be undertaken by the State in connection with its “full control
and supervision”.

1
Republic v. Naguiat, GR No, 134209, Jan. 24, 2006, 479 SCRA 585
2
Republic v. CA and De la Rosa, GR No. L-43938, April 15, 1980
3
Comilang v. Buendia, GR No. L-24757, Oct. 25, 1967, 21 SCRA 486
 a. The State may directly undertake such activities
b. The State may enter into co-production, joint venture or production sharing
agreements with Filipino citizens or qualified corporations
c. Congress, may, by law, allow small-scale utilization of natural resources by
Filipino Citizens
d. 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.

RA 7942 provides for the State’s control and supervision over mining operations.
The following provisions thereof establish the mechanism of inspection and visitorial
rights over mining operations and institute reportorial requirements:
a. Section 8 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”
b. Section 9 authorizes the Mines and Geosciences Bureau under the DENR
 To exercise direct charge in the administration and disposition
of mineral resource
 To monitor the compliance by the contractor of the terms and
conditions of the mineral agreements
 To confiscate surety and performance bonds
 Deputize whenever necessary any member or unit of the
Philippine National Police, barangay, duly registered non-
governmental organization, or any qualified person to police
mining activities.
c. Section 66 vests in the Regional Director – exclusive jurisdiction over safety
inspections of all installations, whether surface or underground, utilized in
mining operations.

RIGHTS OF A LOCATOR to a PERFECTED MINING CLAIM

In McDaniel v. Apacible, it was held that a perfected valid appropriation of public
mineral lands operates as a withdrawal of the tract from the body of public domain, and
so long as such appropriation remains valid and subsisting, the land covered is deemed
private property. 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 the
government.
Mining rights acquired under the Philippine Bill of 1902 and before the effectivity of the
1935 Constitution could not be impaired even by the government. (Yinlu Bicol Mining
Corp v. Trans-Asia Oil and Energy Development), but mere recording of a mining claim,
without performing annual work obligation, does not convert land into mineral land.
(Atok Big-Wedge Mining Corporation v. IAC). “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 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.

Mineral Reservations
When the national interest so requires, such as when there is a need to preserve the
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 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.
This provision states that the establishment of mineral reservations resides in the President. 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.

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 reservation shall
be given priority. The mineral land so awarded shall be automatically excluded from the
reservation during the term of the agreement: Provided, further, that the right of the
lessee of a valid mining contract existing within the reservation at the time of its
establishment shall not be prejudiced or impaired.
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 DAO 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.
Section 18 of RA 7942 allows mining in public or private lands, including timber or forest lands
subject to existing rights and reservations.
Section 47 of PD No. 705 permits mining operations in forestlands which include the public
forest, the permanent forest or forest reserves and forest reservations.

ORGANIZATIONAL STRUCTURE
Authority of the Department
The Department of Environment and Natural Resources 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, promulgate such rules and
regulations as may be necessary to implement the intent and provisions of this Act.
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. Accordingly, the State, in
the exercise of its police power may not be precluded by the constitutional restriction on non-
impairment of contract from altering, modifying and amending the mining leases or agreements
granted under PD No. 463, as amended, pursuant to EO No. 211.
Authority of the Bureau
The Mines and Geosciences Bureau under the DENR, headed by a Director and assisted by
an Assistant Director, shall advise the Secretary on matter 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 Sec 15, 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
d. To recommend to the Secretary the granting of Mineral Agreements or to endorse to
the Secretary for action by the President the grants 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.
e. To cancel or 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
and barangay, duly registered and Department-accredited NGO or any qualified
person to police all mining activities
 g. To assist the Environmental Management Bureau under the Department and/or the
Department Regional Office in the processing or conduct of environmental impact
assessment in mining projects
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 and functions to the Regional
Director.

RECORDING SYSTEM
There shall be established a national and regional filing and recording system. The Bureau shall
publish at least annually, a mineral gazette of nationwide circulation containing:
a. Current list of mineral rights
b. Their location in the map
c. Mining rules and regulations
d. Other official acts affecting mining
e. Other information relevant to mineral resources development
A system and publication fund shall be included in the regular budget of the Bureau.

SCOPE OF APPLICATION
Sec 16. No ancestral land shall be opened for mining operations without prior consent of the
indigenous cultural community concerned.

Sec. 17 Payments for Indigenous Cultural Community pursuant to the preceding section, the
royalty payment, upon utilization of the minerals shall be agreed upon by the parties. The said
royalty shall form part of a trust fund for the socioeconomic well-being of the indigenous
cultural community.
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.

Sec. 19 Areas Closed to Mining Applications

In military and other government reservations, except upon prior written clearance by the
government agency concerned
a. Near or under public or private buildings, cemeteries, archaeological 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
b. In areas covered by valid and existing mining rights
c. In areas expressly prohibited by law
d. 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
utilization of minerals shall be agreed upon by the parties, said royalty
forming a trust fund for socioeconomic development of the community
concerned
e. Old growth and 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 Intergrated Protected Area System (NIPAS)
EXPLORATION PERMIT
What is an exploration permit?
An exploration permit is an initial mode of entry in mineral exploration allowing a qualified
person to undertake exploration activities for mineral resources in certain areas open to mining
in the country.
Term of the Exploration Permit
The term shall be for a period of two years from the date of issuance thereof, renewable for
like periods but not to exceed a total term of four (4) years for non-metallic mineral exploration
or six (6) years for metallic mineral exploration.
No renewal or permit shall be allowed unless the permittee has complied with all ther terms
and condition and has not been found guilty of violation of any provision of the Act and the IRR.
Transfer of Exploration Permit
An exploration permit may be transferred or assigned to a qualified person subject to the
approval of the Secretary upon the recommendation of the Director. In the absence of the
approval of the Secretary of the DENR, the transfer or assignment of an exploration permit is
without legal force and effect.
Maximum Area for Exploration Permit
The maximum area that a qualified person may hold at any one time shall be:
a. Onshore, in any one province
1. For individuals – 20 blocks
2. For partnerships, corporations, cooperatives, or associations – 200 blocks
b. Onshore, in the entire Philippines
1. For individuals – 40 blocks
2. For partnerships, corporations, cooperatives, or associations- 400

c. Offshore, beyond 500 meters from the mean low tide level-
1. For individuals – 100 blocks
2. For partnerships, corporations, cooperatives or association -1000 blocks
Registration of Exploration Permit
After the Director approves and issues the exploration permit, 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.
MINERAL AGREEMENT
An agreement between a Contractor and the Government wherein the
Government grants to the Contractor the exclusive right to conduct mining
operations within, but not title over, the contract area. Mining operations that
are allowed under Mineral Agreements include development/construction and
utilization of mineral resources including the continuance of exploration works
during the conduct of development/construction/utilization activities.
Mineral Agreements are classified into:

(1) Mineral production sharing agreement (MPSA) -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 agreement.

(2) Co-production agreement (CA) -an agreement between the government and
the contractor wherein the government shall provide inputs to the mining
operations other than the mineral resource.

(3) Joint-venture agreement (JVA) -an agreement wherein the Government and
the Contractor organize a joint-venture company with both parties having equity
shares. Aside from earnings in the equity, the government shall be entitled to a
share in the gross output of the mining project.

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. the risks involved,
C. contribution to the project to the economy
D. other factors that will provide for a fair and equitable sharing between the
government and the contractor.

Who is qualified to apply for a Mineral Agreement?

The following Qualified Person may apply for a Mineral Agreement:

(1) Individual - Filipino citizen of legal age and with capacity to contract; or
(2) Corporation, Partnership, Association or Cooperative - organized or
authorized for the purpose of engaging in mining, duly registered in accordance
with law, at least sixty percent (60%) of the capital of which is owned by Filipino
citizens.
How much area is granted for a Mineral Agreement?
Each Qualified Person is limited to the following maximum size of area to apply
for or hold at any one time under a Mineral Agreement:

A. Onshore (any one province)

-Individual - Ten (10) blocks
-Partnership/ Cooperatives/ Associations/ Corporation- One hundred (100)
blocks

B. Onshore (entire Philippines)

-Individual - Twenty (20) blocks

-Partnership/ Cooperatives/ Associations/ Corporation- Two hundred (200)
blocks

C. Offshore (entire Philippines)

-Individual - Fifty (50) blocks

-Partnership/ Cooperatives/ Associations/ Corporation- Five hundred (500)
blocks
-For the exclusive economic zone, a larger area to be determined by the
Secretary

*Note: shall not include mining/quarry areas under operating agreements

Filing and approval of Mineral agreements

The Mineral Agreements should be filed in the region where the areas of interest
are located.

Exception: mineral reservation which shall be filed with the Bureau

Who approves the mineral agreement?

The Secretary of the DENR
Note: Copies of the mineral agreement shall be submitted to the President.
Thereafter, the President shall provide a list to Congress of every approved
agreement within thirty (30) days from its approval by the Secretary.
Assignment or transfer
Any transfer or assignment of a mineral agreement shall be subject to the
approval of the Secretary upon the recommendation of the Director.
Any transfer or assignment shall not be approved unless the transferor/assignor
or contractor has complied with all the terms and conditions of the agreement
and the provisions of the Act and these implementing rules and regulations at
the time of transfer.
Any transfer or assignment shall be deemed automatically approved if not acted
upon by the Secretary within thirty (30) calendar days from official receipt
thereof, unless patently unconstitutional or illegal.
What is the term of a Mineral Agreement?
A Mineral Agreement shall have a term not exceeding twenty-five (25) years from
the date of its execution, and renewable for another term not exceeding twenty-
five (25) years under the same terms and conditions, without prejudice to
changes mutually agreed upon by the Government and the Contractor.

After the 50 year term of the Mineral Agreement, the operation of the mine may
be undertaken by the Government or through a Contractor. The contract for the
operation of a mine will be awarded to the highest bidder in a public bidding
after due publication of the notice thereof. However, the original Contractor
shall have the right to equal the highest bid upon reimbursement of all
reasonable expenses of the highest bidder.
Publication, posting, radio announcement
The Bureau or Regional Office concerned shall issue to the applicant a Notice of
Application for Mineral Agreement for publication, posting, and radio
announcement within fifteen (15) working days from receipt of the necessary
area clearances.

The notice must contain the following:

-name and complete address of the applicant
-duration of the agreement
-extent of operation
-area location
-geographical coordinates/meridional block(s) of the proposed contract area
-location map/sketch plan with index map relative to major environmental
features and other projects and to the nearest municipalities.
Registration of Mineral Agreement
Upon approval of the 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 and the
concerned Regional Office for areas outside mineral reservations within fifteen
(15) working days from receipt of written notice. Registration is effected only
upon payment of required fees and failure of the contractor to cause the
registration within the prescribed period shall be a sufficient ground for
cancellation of the agreement.

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 special mines permit (SMP) may be issued by the Director upon clearance by
the Secretary and shall be for a period of one (1) year renewable once, however,
it may further be renewed depending upon the nature of the deposit, the
propriety of the mining operation, the environmental and community relations
track record of the applicant, faithful compliance with the terms and conditions
of the SMP and diligence of the applicant in pursuing the mineral agreement
application, subject to the approval of the Secretary.
Financial or Technical Assistance Agreement
A Financial or Technical Assistance Agreement may be entered into between a
Contractor and the Government for the large-scale exploration, development
and utilization of natural resources except cement raw materials, marble,
granite, sand and gravel and construction aggregates.
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.
Who is qualified to apply for an FTAA?
The following Qualified Person may apply for an FTAA:
(a) any Filipino citizen of legal age and with capacity to contract;
(b) Filipino-owned Corporation, Partnership, Association or Cooperative, at least
sixty percent (60%) of the capital is owned by Filipino citizens, 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 the law; or
(c) Foreign-owned Corporation - any partnership, association or cooperative duly
registered in accordance with law and in which less than fifty percent (50%) of
the capital is owned by Filipino citizens.
How much area is granted for an FTAA?
The maximum FTAA contract area that may be applied for or granted per
Qualified Person in the entire Philippines are the following:
A. One thousand (1,000) meridional blocks or approximately eighty-one thousand
(81,000) hectares onshore,
B. Four thousand (4,000) meridional blocks or approximately three hundred
twenty-four thousand (324,000) hectares offshore or
C. Combination of one thousand (1,000) meridional blocks onshore and four
thousand (4,000) meridional blocks offshore.
What is the term of an FTAA?
A FTAA has a term of twenty-five (25) years from the date of its issuance, and
renewable for another term not exceeding twenty-five (25) years. The following
are the phase of mining operations of an FTAA:
A. Exploration - up to two (2) years from date of FTAA execution, extendible for
another two (2) 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/prefeasibility 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 (10) years, to
ensure the collection of the government share, given maximum five (5) year cost
recovery period.
Negotiations
A FTAA shall be negotiated by the Department and executed and approved by
the President and the latter shall notify the Congress of all financial or technical
assistance agreements within thirty (30) days from execution and approval
thereof.
Filing and Evaluation of FTAA
All financial or technical assistance agreement proposals 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, financial or technical assistance agreements and other mining rights
are not impaired or prejudiced thereby. The Secretary shall recommend its
approval to the President.
Any application that transcends into two (2) or more regions shall be filed with
the Regional Office which has the largest area covered by the application.
Publication, posting, radio announcement
The Bureau or Regional Office concerned shall issue to the applicant a Notice of
Application for FTAA for publication, posting, and radio announcement within
fifteen (15) working days from receipt of the necessary area clearances.

The notice must contain the following:

-name and complete address of the applicant
-duration of the agreement
-extent of operation
-area location
-geographical coordinates/meridional block(s) of the proposed contract area
-location map/sketch plan with index map relative to major environmental
features and other projects and to the nearest municipalities.
Terms and conditions of the FTAA
The following terms, conditions, and warranties stated under Section 35 of
Republic Act 7942 shall be incorporated in the financial or technical assistance
agreement.
The Department shall formulate and promulgate such other rules, regulations
and guidelines necessary to ensure compliance with the terms and conditions
stated and to establish a fixed and stable fiscal regime with respect to FTAAs.
Assignment or transfer
A financial or technical assistance agreement 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.

Small Scale Mining Act (Republic Act No. 7076)

Small-scale mining is defined as minimum activities which rely heavily on manual
labor using simple implements and methods, and which do not use explosives or
heavy mining equipment.
The main purpose of the law is:
1. To effect an orderly and systematic disposition of small-scale mining areas in
the country;
2. To regulate the small-scale mining industry with the view to encourage their
growth and productivity;
3. To provide technical, financial and marketing assistance and efficient
collection of government revenues.
Through this law, the harmful effects of the classic trade-off between
development and environment could be minimized if not totally avoided.
With Republic Act 7076 it allows small miners under this law to use only simple
equipment in extracting gold and other precious metals in their mining areas. In
this age of modern technology, this law is making sure that the small mining law
should benefit the small miners and not only the big-time operators who are
using the skills and sweat of small-scale miners.
Under RA 7076, no ancestral land may be declared as a people’s small scale
mining area without the prior consent of the cultural communities
 concerned. This respects the rights of the indigenous peoples to their ancestral
lands which are fully guaranteed under existing laws.
The law defines small miners as Filipino citizens who, individually or in group,
voluntarily form a cooperative, duly licensed by the Department of Environment
and Natural Resources, to engage in the extraction or removal of minerals or ore-
bearing materials from the ground.
It’s implementing rules lay down the powers and functions of the Department of
Environment and Natural Resources, the Provincial/City Mining Regulatory Board
and in coordination with other concerned government agencies. The DENR
together with the other concerned government agencies is designed to achieve
an orderly, systematic and rational scheme for the small-scale development and
utilization of mineral resources in certain mineral areas in order to address the
social, economic, technical, and environmental connected with small-scale
mining activities.
While the Provincial/City Mining Regulatory Board (PCMRB) created under the
direct supervision and control of the Secretary which is the board of PCMRB, is
the implementing agency of the Department of Environment and Natural
Resources which has the powers and function subject to review by the Secretary.
Extent of the contract area:
The area shall not exceed twenty hectares (20 has.) per contractor and the depth
or length of the tunnel not exceeding that recommended by the director taking
into account the following circumstances:
a) Size of membership and capitalization of the cooperative;
b) Size of mineralized area;
c) Quantity of mineral deposits;
d) Safety of miners;
e) Environmental impact and other considerations; and
f) Other related circumstances.
Terms and Conditions of the contract
A contract shall have a term of two (2) years, renewable subject to verification
by the Board for like periods as long as the contractor complies with the
provisions set forth in this Act, and confers upon the contractor the right to mine
within the contract area: Provided, That the holder of a small-scale mining
contract shall have the following duties and obligations:
 a) Undertake mining activities only in accordance with a mining plan duly
approved by the Board;
b) Abide by the Mines and Geosciences Bureau and the Small-scale Mining Safety
Rules and Regulations;
c) Comply with his obligations to the holder of an existing mining right;
d) Pay all taxes, royalties or government production share as are now or may
hereafter be provided by law;
e) Comply 'with pertinent rules and regulations on environmental protection and
conservation, particularly those on tree-cutting; mineral-processing and
pollution control;
f) File under oath at the end of each month a detailed production and financial
report to the Board; and
g) Assume responsibility for the safety of persons working in the mines.
PROHIBITED ACTS
Awarded contracts may be cancelled on the following grounds:
1. Non-Compliance with the terms and conditions of the contract and that of
existing mining laws, rules and regulations including those pertaining to mine
safety, environmental protection and conservation, tree cutting, mineral
processing and pollution control;
2. Non.-compliance with the contractor's obligations to existing mining claim
holders/private landowners as stipulated in Section 13, 17 and 18 of this Act;
3. Non-payment of fees, taxes, royalties or government share in accordance
with this Order and existing mining laws;
4. Abandonment of mining site by the contractor; and
5. Ejectment from the People's Small-scale Mining Area of the Contractor by
the government for reasons of national interest and security.
Penalty/Fine
When contracts are cancelled, the Secretary may impose fines of an amount not
less than Twenty Thousand Pesos (P20, 000.00) but not more than One Hundred
Thousand Pesos (P100, 000.00). Non-payment of the fine imposed shall render
the small-scale mining contractor ineligible for other small-scale mining
contracts.
 CHAPTER VIII
QUARRY RESOURCES
l. 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
Vl of the implementing rules and regulations.

I. QUARRY PERMIT

 WHO can apply for a quarry permit?

- Any qualified person may apply.
 Where?
- Provincial/City Mining Regulatory Board
 Coverage
-either for privately-owned lands and/or public lands
 For purposes of?
- building and construction materials such as marble,
basalt, andesite, conglomerate, tuff, adobe, granite,
gabbro, serpentine, inset filling materials, clay for ceramic
tiles and building bricks, pumice, perlite and other similar
materials that are extracted by quarrying from the
ground.

 Who can grant such application?

-The provincial governor shall grant the permit after
the applicant has complied with all the requirements as
prescribed by the rules and regulations.

 What is the Size of area covered by quarry permit?

ANS: The maximum area which a qualified person

may hold at any one time shall be five hectares (5 has):
 Provided, That in large scale quarry operations involving
cement raw materials, marble, granite, sand and gravel
and construction aggregates, a qualified person and the
government may enter into a mineral agreement as
defined herein.

 In Republic V. Rosemoor Mining and Development

Corporation (RMDC)

-The quarry license permit issued in the name of

RMDC allowing 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
463, the governing law at the time it was granted. By
the same token, Proclamation No. 2204- which
awarded to RMDC 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 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 100 hectares in any one province and not more
than one 1,000 hectares in the entire Philippines.”

-But court stated that the law, in categorical and

mandatory terms, requires that a quarry license, like the RDMC,
should cover 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.
 What is the duty of Provincial / City Mining Regulatory
Board?

-The Provincial / City 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.
 What is the Composition of the P/CMR?

-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 representative 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.

 What is the duration of the quarry permit?

-A quarry permit shall have a term of five (5) years, renewable

for like periods but not to exceed a total term of twenty five (25)
years. No quarry permit shall be issued or granted on any area
covered by a mineral agreement, or financial or technical
assistance agreement (FTAA).

 What is the obligation of the A permittee if issued one?

-The permittee shall, during the term of his permit, pay a quarry
fee as provided for under the implementing rules and regulations.
The permittee shall also pay the excise tax as provided by pertinent
laws.

 May a quarry permit be cancelled? By who?

-yes, by the provincial governor. (Section 45)
o For what grounds?
- for violations of the provisions of this Act or its
implementing rules and regulations or the terms and
conditions of said permit: Provided, That before the
cancellation of such permit, the holder thereof shall be
given the opportunity to be heard in an investigation
conducted for the purpose.

ll. Commercial Sand and Gravel Permit.

 Who can Apply?

- Any qualified person may be granted a permit
 b. Who can approve such application?
- it is the provincial governor.
 c. Purpose?
-so that the permittee can extract and remove sand
and gravel or other loose or unconsolidated materials
which are used in their natural state, without undergoing
processing from an area of not more than five hectares (5
has) and in such quantities as may be specified in the
permit.

lll. Industrial Sand and Gravel Permit

 Who can apply?
– Any qualified person may be granted an industrial sand
and gravel permit.
 Why who?
-by the Bureau for the extraction of sand and gravel and
other loose or unconsolidated materials that necessitate the
use of mechanical processing covering an area of more than
five hectares (5 has.) at any one time.
  What is the term of the permit ?
-The permit shall have a term of five (5) years,
renewable for a like period but not to exceed a total term
of twenty-five (25) years.

lV. Sand and Gravel Permit.

o Who can apply?

– Any qualified person may be granted an exclusive sand
and gravel permit.
o Why who?
-by the provincial governor.
o Purpose?
-to quarry and utilize sand and gravel or other loose or
unconsolidated materials from public lands for his use,
provided that there will be no commercial disposition
thereof.

BUT NOTE that A mineral agreement or a financial technical

assistance agreement contractor shall, however, have the right to
extract and remove sand and gravel and other loose
unconsolidated materials without need of a permit within the area
covered by the mining agreement for the exclusive use in the mining
operations: Provided, That monthly reports of the quantity of
materials extracted therefrom shall be submitted to the mines
regional office concerned: Provided, further, That said right shall be
coterminous with the expiration of the agreement.
Holders of existing mining leases shall likewise have the same rights as
that of a contractor: Provided, That said right shall be coterminous
with the expiry dates of the lease.
V. Government Gratuitous Permit (GGP)

 To whom such permit be granted?

– Any government entity or instrumentality may be granted a
gratuitous permit.

 by who?
-by the provincial governor.

 Purpose?
- to extract sand and gravel, quarry or loose unconsolidated
materials needed in the construction of building and/or
infrastructure for public use or other purposes over an area of
not more than two hectares (2 has.) for a period coterminous
with said construction.

Vl. Private Gratuitous Permit.

a. Who may avail of such permit?

- Any owner of land may be granted a private gratuitous
permit.
b. Who will grant?
- the provincial governor.

Vll. Guano Permit.

a. Who may apply?

-Any qualified person may be granted a guano permit.
b. Who will grant?
-The provincial governor.
c. Purpose?

-To extract and utilize loose unconsolidated guano and other

organic fertilizer materials in any portion of a municipality where he
has established domicile. The permit shall be for specific caves
and/or for confined sites with locations verified by the Department's
field officer in accordance with existing rules and regulations.
Vlll. Gemstone Gathering Permit

- Any qualified person may be granted a non-exclusive

gemstone gathering permit by the provincial governor to gather
loose stones useful as gemstones in rivers and other locations.

CHAPTER IX
TRANSPORT, SALE AND PROCESSING OF MINERALS

l. Ore Transport Permit. - A permit specifying the origin and quantity

of non-processed mineral ores or minerals shall be required for their
transport.

a. Who will issue?

-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.
NOTE: 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 (2 m.t.) to be
used exclusively for assay or pilot test purposes shall be exempted
from such requirement.

ll. 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(DTI) and accredited by the Department, with a
copy of said registration submitted to the Bureau.

Lll. 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
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 Republic Act No. 7076.

lll. Eligibility of Foreign-owned/-controlled Corporation

- A foreign-owned/-controlled corporation may be granted a

mineral processing permit.

CHAPTER X
DEVELOPMENT OF MINING COMMUNITIES, SCIENCE AND MINING
TECHNOLOGY

l. Expenditure for Community Development and

Science and Mining Technology

- A contractor shall assist in the development of its mining

community, the promotion of the general welfare of its inhabitants,
and the development of science and mining technology.

ll. Credited Activities. - Activities that may be credited as

expenditures for development of mining communities, and science
and mining technology are the following:

(a) Any activity or expenditure intended to enhance the

development of the mining and neighboring communities of a
mining operation other than those required or provided for
 under existing laws, or collective bargaining agreements, and
the like; and
b) Any activity or expenditure directed towards the
development of geosciences and mining technology such as,
but not limited to, institutional and manpower development,
and basic and applied researches.

Appropriate supervision and control mechanisms shall be prescribed

in the implementing rules and regulations of this Act.

lll. Training and Development.

-A contractor shall maintain an effective program of

manpower training and development throughout the term of the
mineral agreement and shall encourage and train Filipinos to
participate in all aspects of the mining operations, including the
management thereof. For highly-technical and specialized mining
operations, the contractor may, subject to the necessary
government clearances, employ qualified foreigners.

lV. Use of Indigenous Goods, Services and

Technologies

- A contractor shall give preference to the use of local goods,

services and scientific and technical resources in the mining
operations, where the same are of equivalent quality, and are
available on equivalent terms as their imported counterparts.

V. Donations/Turn Over of Facilities.

- Prior to cessation of mining operations occasioned by

abandonment or withdrawal of operations, on public lands by the
contractor, the latter shall have a period of one (1) year therefrom
within which to remove his improvements; otherwise, all the social
infrastructure and facilities shall be turned over or donated tax-free
to the proper government authorities, national or local, to ensure
that said infrastructure and facilities are continuously maintained
and utilized by the host and neighboring communities.

Vll. Employment of Filipinos

-A contractor shall give preference to Filipino citizens in all

types of mining employment within the country insofar as such
citizens are qualified to perform the corresponding work with
reasonable efficiency and without hazard to the safety of the
operations.
- The contractor, however, shall not be hindered from hiring
employees of his own selection, subject to the provisions of
Commonwealth Act No. 613, as amended, for technical and
specialized work which, in his judgment and with the approval of the
Director, requires highly-specialized training or long experience in
exploration, development or utilization of mineral resources:
- Provided, That in no case shall each employment exceed five
(5) years or the payback period as represented in original project
study, whichever is longer: Provided, further, That each foreigner
employed as mine manager, vice-president for operations or in an
equivalent managerial position in charge of mining, milling,
quarrying or drilling operation shall:

(a) Present evidence of his qualification and work experience;

or
(b) Shall pass the appropriate government licensure
examination; or
(c) In special cases, may be permitted to work by the Director
for a period not exceeding one (1) year: Provided, however,
That if reciprocal privileges are extended to Filipino nationals in
the country of domicile, the Director may grant waivers or
exemptions.
GROUNDS FOR CANCELLATION, REVOCATION, AND TERMINATION
The following are the grounds for cancellation, revocation and termination of a Mining
Permit/Mineral Agreement/FTAA:
1.) Late or Non-filing of Requirements.
2.) Violation of the Terms and Conditions of Permits or Agreements.
3.) Non-payment of Taxes and Fees.
4.) Falsehood or Omission of Facts in the Statement.

FLORO CEMENT CORPORATION vs. HON. BENJAMIN K. GOROSPE, et al.

G.R. No. L-46787, August 12, 1991

FACTS:
The municipality of Lugait, province of Misamis Oriental, filed a verified complaint for
collection of manufacturer’s and exporter’s taxes against Floro Cement Corporation who is
engaged in the manufacture and selling, including exporting, of cement. The municipality
alleged that the imposition and collection of these taxes is based on its Municipal Ordinance
No. 5 which was passed pursuant to PD No.231 and also Municipal Ordinance No. 10 pursuant to
PD No. 426, amending PD No. 231.
Floro Cement Corporation set up the defense that it is not liable to pay manufacturer's
and exporter's taxes alleging among others that the municipality’s power to levy and collect
taxes, fees, rentals, royalties or charges of any kind whatsoever has been limited or withdrawn
by Section 52 of PD No. 463. CFI: Ordered Floro Cement Corporation to pay the manufacturer’s
and exporter’s taxes
ISSUE:
WON Ordinances Nos. 5 and 10 of Lugait, Misamis Oriental apply to petitioner Floro
Corporation notwithstanding the limitation on the taxing power of local government as
provided for in Sec. 5 of P.D. 231 and Sec. 52 of P.D. 463.
RULING:
Cement is not a mineral product but rather a manufactured product. As the power of
taxation is a high prerogative of sovereignty, the general rule is that any claim for exemption
from the tax statute should be strictly construed against the taxpayer. He who claims an
exemption must be able to point out some provision of law creating the right. It must be shown
indubitably to exist and a well-founded doubt is fatal to the claim. Floro Cement Corporation
failed to meet this requirement.
The exemption mentioned in Sec. 52 of P.D. No. 463 refers only to machineries,
equipment, tools for production, etc., as provided in Sec. 53 of the same decree. The
manufacture and the export of cement does not fall under the said provision for it is not a
mineral product. It is not cement that is mined only the mineral products composing the
finished product.Ordinances Nos. 5 and 10, which were enacted pursuant to P.D. No. 231 and
P.D. No. 426, respectively, properly apply to Floro Cement Corporation.
DENR Administrative Order No. 96- 40 (•)
• Grounds for suspension or Cancellation of tax incentives and credits: (Section 31, paragraph
a)
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;
3.) Whenever the project ceases to be viable and its continued operation would require
additional costs to the economy.
• What happens when a contractor decides to withdraw from business or suspend its operations
covered by the Agreement? (Section 31, paragraph b)
- The mineral agreement or FTAA will automatically be cancelled and the contractor shall
cease to be entitled to the incentives.
- 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.
• Effect of expiration and cancellation of a permit and mineral agreement of FTAA:
-the mining operations may be undertaken by the Government through one of its
agencies or through a qualified independent Contractor.
- 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.

ORGANIZATIONAL AND INSTITUTIONAL ARRANGEMENTS

DENR Adiministrative Order N0. 97-11
Consistent with its transformation from a staff to line agency, the Bureau's
organizational structure shall consist of the central and regional offices, as well as district and
other pertinent offices that may be hereinafter created.
It shall exercise supervision and control over its regional, district and other field offices,
which shall, in turn, constitute the operating arms of the Bureau for the direct implementation
of plans and programs in accordance with approved policies and standards.
The Chief Executive of the Bureau is the Director who has the prime authority and
responsibility to carry out the mandate of the Bureau, and discharge its powers and functions.
The Regional Director, with a rank equivalent to that of a Regional Technical Director, shall
discharge the mandate of the Bureau at the regional level and be directly responsible to the
Bureau Director.
The different organizational subdivisions are as follows:
A.) Central Office
1. Office of the Director
2. Planning and Policy Division
3. Administrative Division
4. Finance Division
5. Mineral Economics Division
6. Mining Environment and Safety Division
7. Mining Tenements Management Division
8. Public Information and Publication Division
9. Marine Geological Survey Division
10. Lands Geological Survey Division
11. Mining Technology Division
12. Metallurgical Technology Division

B.) Regional Office

1. Office of the Regional Director
2. Administrative and Finance Division
3. Mine Management Division
4. Mining Environment and Safety Division
5. Geosciences Division
6. District and other Pertinent Offices

PENAL PROVISIONS
1.) False statement (sec. 101) - Fine of not exceeding Php 10,00.00

2.) Illegal exploration (sec 102)
3.) Theft of minerals (sec. 103)
Elements:
a. The accused extracted, removed
and/or disposed minerals;
b. These minerals belong to the
government or have been taken from
a mining claim;
c. The Accused did not possess a mining
lease or a temporary permit or any
other permit to mine.
4.) Destruction of mining structure (sec.
104)
5.) Mines Arson (sec. 105)
- Fine not exceeding Php 50,000.00
- Imprisonment of 6 months to 6 years;
or
- Fine from Php 10,00.00 to Php
20,000.00;
- Imprisonment of for a period not
exceeding 5 years; and
- Pay compensation for the damages
- Revised penal code; and
- Pay compensation for the damages
 6.) Willful damage to a mine (sec. 106)
7.) Illegal obstruction to permittees or
contractors (sec. 107)
8.) Violation of terms and conditions of
the environmental compliance
certificate(sec. 108)
9.) Obstruction of government officials
(sec. 109)
10.) Other violations (sec. 110)
- Imprisonment not exceeding 5 years;
and
- Pay compensation for the damages.
- - Fine not exceeding Php 5,000.00; or
- Imprisonment not exceeding 1 year
- - Imprisonment of 6 months to 6
years; or
- Fine of Php 50,000.00 to Php
200,000.00
- Fine not exceeding Php 5,000.00; or
- Imprisonment not exceeding 1 year
- Fine not exceeding Php 5,000.00

People of the Philippines vs Hon. Francisco Men Abad, et al.

GR No. L-55132, August 30, 1988

FACTS:
Director of Mines issued a commercial lease permit to Felix to quarry, extract, and carry
away sand and gravel at Banaue, Ifugao. Felix filed a criminal case against respondents (Robles,
Bandao, Oyagon, Uyang, Lattod, Buccahan Mundiguing, Junior Mundiguing, Tundagui, Chonga-
Ap, Tid-Ong, Ballogan, Fernan Gaggo, Carmen Gaggo and Pocya) for "Theft of Minerals."
Respondent contended that there is no crime committed for they had paid sand and gravel
tax and therefore the government consented their extraction of the sand and gravel.
ISSUE: Whether or not the acts of respondents constitute "Theft of Mineral" considering that
they paid sand and gravel tax.
RULING:
Yes.The elements of Section 78 of P.D. No. 463 are all present, to wit: the respondents,
conspiring and mutually helping on another, willfully and feloniously extracted, removed
and/or disposed of minerals or materials aggregates like sand and gravel; materials were taken
from Banaue, Ifugao, which is covered by commercial permit issued by Bureau of Mines in favor
of Felix de Castro; the extracting was done without any mining lease or permit of their own
pursuant to law. Further, the sand and gravel tax merely shows payments of taxes, the receipts
are insufficient to prove that proper Government Office gave its consent to extract, remove or
dispose the said sand and gravel.
Who charges fines?
- The Secretary is authorized to charge fines for late or non-submission of reports in
accordance with the implementing rules and regulations of this Act. (Section 111)