Mining

By: Mark Pasco

Objectives
Learn about the following:
a. Mining industry in the Philippines
b. Legal policy and frameworks
c. RA 7942 Philippine Mining Act of 1995
d. Environmental laws and policies applicable to
mining
e. Mining in Tampakan
f. La Bugal Blaan Tribal Association Inc., et.al vs
Ramos Case G.R. No 127882

Mining Definition
The process or business of extracting from the earth the
precious or valuable metals, either in their native state or
in their ores

Pros:
High paying jobs
Urbanization of the area
More taxes to the government

Cons:
Environmental degradation
Loss of wildlife habitat
Groundwater depletion

Mining in the Philippines
The Philippines has rich natural resources. It has
one of the leading global reserves in minerals
such as gold (Baguio, Masbate, Surigao), copper
(Surigao), chromite (Zambales, Northern
Luzon), nickel (Nonoc, Rio Tuba) among many
others. The Philippine continue to be a major
producer of gold and copper. In 1991 the nation
was 13
th
in the world in copper production and
11
th
in gold production. To put in monetary value
it would translate to Php 47 trillion

Legal Policy and Framework
I. Spanish Royal Decree of 1837
II. Philippine Bill of 1902
III. Commonwealth Act of 137 (1936)
IV. Presidential Decree No. 463 or the Mineral
Resource Development Decree of 1974
- PD 463 introduced the concept of 25-year
mining leases and service contracts and was
hailed as a transition from passive to active,
from historic to relatively modernized system of
administration and disposition of mineral lands.
(Lopez, SP (1992) page 280)

Executive Order No. 279 (1989)
Article XII, Section 2 of the 1987 Constitution states that
all lands of the public domain, minerals, coal and other
natural resources are owned by the State.

Article II, Section 16 of the 1987 Constitution states the
right of the people to a balanced and healthful ecology
in accord with the rhythm and harmony of nature.

EO 279 ushered the shift from leasehold system under
PD 463 to production sharing agreement, co-production,
joint venture and financial or technical assistance
agreements with foreign owned corporations.
Republic Act 7942 or the Philippine
Mining Act of 1995 (1995)
Initially called the Mineral Resources Development Act
of 1988, the proposed mining policy was meant to
achieve two primary tasks:
1. To revitalize the ailing Philippine mining industry by
providing fiscal reforms and incentives and
2. To maintain a viable inventory of mineral reserves to
sustain the industry through the fresh infusion of capital
through direct foreign investments to finance mineral
exploration and/or development activities.

Revised Implementing Rules and Regulations of RA
7942 (DENR Administrative Order No.96-40) -
approved on December 19, 1996
International Environmental Laws
International agreements to which the
Philippines is a party are part of the law of the
land. They are thus subject to implementation
with the same force and effect as domestic laws,
and the Philippines is bound to perform the
obligations imposed by these treaties.
a. Stockholm Declaration
b. Rio Declaration
c. UN Framework Convention on Climate Change
d. Kyoto Protocol

Highlights of RA 7942
Considered as one of the most socially and
environmentally sensitive legislation in its class wherein
the provisions of this act take into consideration the
following:

Local government empowerment
Respect and concern for the indigenous cultural
communities
Equitable sharing of benefits of natural wealth
Economic demands of present generation while providing
the necessary foundation for the next generation
Worldwide trends towards globalization
Protection for and wise government of the environment
(Section 4 of RA 7942)
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.

Declaration of Policy
(Section 2 of DAO 96-40)
All mineral resources are owned by the State.

The State shall promote the rational exploration,
development, utilization and conservation.

The promotion shall be the combined efforts of the
Government and private sector for the
enhancement of national growth in a way that
effectively safeguards the environment and protect
the rights of affected communities.

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.

Areas closed to Mining Applications
Mineral agreement or financial 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 building, 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;

Areas closed to Mining Applications
(d) In areas expressedly 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 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 the R.A.
No. 7586, Department Administrative Order No. 25, series
of 1992 and other laws.

Governing Principles
(Section 3 of DAO 96-40)
Mineral resource exploration, development, utilization and
conservation shall be governed by the principle of sustainable
mining, which provides that the use of mineral wealth shall be
pro-environment and pro-people in sustaining wealth
creation and improved quality of life under the following
terms:

Mining is a temporary land use for the creation of wealth,
leading to an optimum land use in post-mining stage as
consequence of progressive and engineered mine
rehabilitation works done in cycle with mining operations;
Mining activities must always be guided by current Best
Practices in environmental management committed to
reducing the impacts of mining while efficiently and
effectively protecting the environment;
Governing Principles
(Section 3 of DAO 96-40)
The wealth created as a result of mining accruing to the
Government and the community should lead to other wealth-
generating opportunities for people in the communities and for
other environment-responsible endeavors.
Mining activities shall be undertaken with due and equal
regard for economic and environmental considerations, as
well as for health, safety, social and cultural concerns.
Conservation of minerals is effected not only through
technological efficiencies of mining operations but also
through the recycling of mineral-based products, to
effectively lengthen the usable life of mineral commodities.
The granting of mining rights shall harmonize existing
activities, policies and programs of the Government that
directly or indirectly promote self-reliance, development
and resource management.

Different Types of Large Scale Mining
Permits / Agreements under RA 7942

Role of LGUs
The IRR highlights the role of LGU in mining projects, both as
active beneficiaries and as active participants in mineral resources
management, in consonance with the Constitution and government
policies on local autonomy and empowerment. As such, the Mining
Act provides the following:

LGUs have a share of 40% of the gross collection derived from the
National Government from mining taxes
In consonance with the Local Government Code and the People Small
Scale Mining Act (RA 7076), the LGUs shall be responsible for the
issuance of permits for small scale mining and quarrying operations,
through the Provincial/City Mining Regulatory Board
To actively participate in the process by which the communities shall
reach an informed decision of the social acceptability of a mining project
as a requisite for acquiring the Environmental Compliance Certificate
To participate in the monitoring of mining activities as a member of the
Multipartite Monitoring team

Ancestral Land and ICC Areas
The Mining Act fully recognizes the rights of Indigenous
People/Indigenous Cultural Communities and respect their
ancestral lands. Thus in Accordance with the DENR
Administrative Order No 2, and consistent with the
Indigenous Peoples Rights Act (IPRA), the following shall be
observed:

No mineral agreement, FTAA and mining permits shall be
granted in ancestral lands/domains except with prior
informed consent
Where written consent is granted by the ICCs , a royalty
payment shall be negotiated which shall not be less than 1%
of the total of the Gross output of the mining operations in
the area
Representation in the Multipartite Monitoring team

On Social and Community
Development and Reasearch
Mining contractors/operators shall allocate a
minimum of 1% of their direct mining and
milling costs for the development of the
following:

Construction and maintenance of structures
such as roads, bridges, and other
infrastructures
Mining technologies and geosciences

Ideal Mining Framework under the
existing Mining Laws (Banaag 2000)

Relief for Environmental Violations
Philippine Mining Act of 1995
Section Violation Relief/ Penalty
95 Failure of permittee or contractor to comply
with any of the requirements on the Act or
IRR without a valid reason
Suspension of any permit or agreement provided
under the act
96 Violation of terms and conditions of permits
or agreements
Cancellation of permit or agreement
97 Failure to pay taxes and fees due to the
Government for two (2) consecutive years
Cancellation of EP, MA, FTAA, and other agreements
and Reopening of area to new applicants
98 Failure to abide by terms and conditions of
tax incentive and credits
Suspension or cancellation of tax incentive and credit
99 False statements in EP, MA, and FTAA which
may alter, change or affect substantially the
facts set forth therein
Revocation and termination of permit or agreement
108 Violations of terms and conditions of ECC,
which causes environmental damage through
pollution
Imprisonment of six (6) months to six (6) years, or
Fine of Fifty thousand d pesos (Php 50,000) to two
hundred thousand pesos (Php 200,000), or
Both, at discretion of the court
110 Any other violation of the Act and IRR Fine not exceeding Five thousand pesos (Php 5,000)
Environmental Laws related to the
mining sector
1. Presidential Decree No. 3931 (June 18, 1964) National Water and Pollution Control Commission
2. Presidential Decree No. 984 (August 18, 1976) The Pollution Control Law of 1976 declaring as a
national policy the prevention, abatement and control
pollution of water, air and land for the more effective
utilization of the countrys resources
3. Presidential Decree No. 1151 (June 6, 1977) The Philippine Environmental Policy recognizes the
submission of Environmental Impact Assessment
studies
4. Presidential Decree No. 1152 (June 6, 1977) The Philippine Environmental Code
5. DENR Administrative Order No 52 series of 1989 Rules and regulations on the participation of non-
governmental organizations in the DENR programs,
particularly in natural resources development,
conservation, management and protection and the
enforcement of laws, rules and regulations for the
sustainable development of the countrys remaining
natural resources for the benefit and enjoyment of
present and future generation of Filipinos
Mining in Tampakan

La Bugal Blaan Tribal Association Inc.,
et.al vs Ramos Gr. No 127882
January 2004
Background of the case:

RA 7942 took effect on April 9, 1995. Before the effectivity of RA
7942, on March 30, 1995 the President signed a FTAA with WMCP,
a corporation organized in the Philippine laws, covering close to
100,000 hectares of land in several areas in Mindanao. Petitioners
prayed that RA 7942, its implementing rules and the FTAA between
the government and WMCP be declared unconstitutional on ground
that they allow fully foreign owned corporations like WMCP to
exploit, explore and develop Philippine mineral resources in
contravention of Article XII Section 2.

In January 2001, WMC sold its wholes stake to Sagittarius Mines,
60% of which is owned by Filipinos while 40% of which is owned by
IndoPhil.

La Bugal Blaan Tribal Association Inc.,
et.al vs Ramos Gr. No 127882
January 2004
Issues:
Whether or not the Philippine Mining Act is unconstitutional for
allowing a fully foreign-owned corporation to exploit Philippine
Mineral Resources
Whether or not the FTAA between the government and WMCP is
a service contract that permits fully foreign owned companies
to exploit Philippine resources
Held:
a. RA 7942 is unconstitutional for permitting fully foreign owned
corporations to exploit Philippine natural resources
Article XII Section 2 of the 1987 Constitution retained the Regalian
doctrine which set forth the unconstitutionality of RA 7942.

La Bugal Blaan Tribal Association Inc.,
et.al vs Ramos Gr. No 127882
January 2004

La Bugal Blaan Tribal Association Inc.,
et.al vs Ramos Gr. No 127882
December 2004
Background of the case:
La Bugal Blaan Tribal Association Inc.,
et.al vs Ramos Gr. No 127882
December 2004
References
Philippine Mining Act RA 7942
Legal Responses to the Environmental Impacts of Mining (Antonio G.M. La
Vina, Alaya M. de Leon, Gregorio Rafael P. Bueta)
Mining and Geosciences Bureau (www.mgb.gov.ph)
Department of Environment and Natural Resources (www.denr.gov.ph)
Sustainable Development in the Philippine Minerals Industry: A baseline
study (M.V. Cabalda, M.B. Banaag, P.N. T. Tidalgo, R. B. Garces, MGB
Philippines, February 2002)
All that glitters: Foreign Investment in Mining Trumps the Environment in
the Philippines (Alan Khee-Jin Tan, January 2006)
Sagittarius Mines Inc (http://www.smi.com.ph/EN/Pages/Home.aspx)
IndoPhil Resources (http://www.indophil.com/)
http://ustlawreview.com/pdf/vol.XLIX/Cases/La_Bugal_Blaan_v._Ramos
.pdf
http://ustlawreview.com/pdf/vol.XLIX/Cases/La_Bugal_Blaan_%20v._R
amos_II.pdf
Philippines: Mining or Food? (Robert Goodland and Clive Wicks, 2001)