licensing for the ph- system for eiti country mining, …the setup under ra 7942 and dao 96-40...

Licensing

System for

Mining, Coal,

Oil and Gas

Operations in

the Philippines

For the PH-

EITI Country

Report 2012 Written by

Ms. Regine Marie A. Tumlos

Ms. Maria Althea M. Teves

Under the direct supervision of

Atty. Jay L. Batongbacal

TABLE OF CONTENTS

LICENSING SYSTEM FOR MINING, COAL, OIL AND GAS OPERATIONS IN THE PHILIPPINES

Laws and Regulations Governing License Registers and License Allocations in the Mining, Coal, Oil and Gas and Sectors

1

Licensing System for Mining, Oil, Gas and Coal Operations 3

Procedures for obtaining permits for non-ancestral domain areas 3

Mining Permits 3

(1) Open and closed areas for mining under RA 7942 and EO 79 3

(2) Exploration Permit (EP) 5

(3) Mineral Agreements 11

(4) Special Mines Permit 17

(5) Financial or Technical Assistance Agreements (FTAA) 19

(6) Mineral Processing Permit (MPP) 25

(7) Quarry/Commercial or Industrial Sand and Gravel/Guano/Gemstone Gathering Permit 27

Coal Operating Contracts 32

Petroleum Contracts: Oil and Gas 37

List of all License Holders in the Extractive Industries in the Philippines 43

(1) Exploration Permits 43

(2) MPSAs 46

(3) Financial or Technical Assistance Agreements (FTAAs) 47

(4) Coal Operating Contracts 48

(5) Petroleum Service Contracts 53

Procedural and Substantive Reliefs that may be Granted for License Disputes and Rejected Applications

56

(1) Mineral Agreements and Financial or Technical Assistance Agreements (FTAAs) 56

(2) Coal Mining; Oil and Gas 63

A Summary of Outcome/Status of Applications for Licenses and Permits 64

License Transfer Systems 69

(1) Mining 69

(2) Coal Mining 70

(3) Petroleum: Oil and Gas 70

Description of Current State of Available Information on Licenses and Permits Relating to Extractive Industries in the Philippines and the Accessibility of the Foregoing Application

72

End Notes 73

ABBREVIATIONS

BC Before Christ

CADC Certificates of Ancestral Domains Claims

CALC Certificates of Ancestral Land Claims

CDO Cooperative Development Office

CD-ROM Compact Disk Read-Only Memory

CEMCRR Certificate of Environmental Management and Community Relations Record

CENRO City Environment and Natural Resource Officer

CMRB City Mining Regulatory Board

COC Coal Operating Contract

COMP Chamber of Mines of the Philippines

DA Department of Agriculture

DAO Department Administrative Order

DC Department Circular

DENR Department of the Environment and Natural Resources

DMO DENR Memorandum Order

DOE Department of Energy

ECC Environmental Compliance Certificate

EDU Exploration, Development and Utilization

EMB Environmental Management Bureau

EO Executive Order

EP Exploration Permit

EPEP Environmental Protection and Enhancement Program

ERDB Energy Resource Development Bureau

EWP Environmental Work Program

FPIC Free and Prior Informed Consent

FS Financial Statements

FTAA Financial or Technical Assistance Agreements

GIS General Information Sheet

ICC Indigenous Cultural Communities

IP Indigenous Peoples

IRR Implementing Rules and Regulations

JVA Joint Venture Agreement

KM Kilometer

LGU Local Government Unit

MA Mineral Agreements

MAB Mines Adjudication Board

MGB Mines and Geosciences Bureau

MO Memorandum Order

MOA Memorandum of Agreement

MPP Mineral Processing Permit

MPSA Mineral Production Sharing Agreement

MR Motion for Reconsideration

NAMRIA National Mapping and Resource Information Authority

NCIP National Commission on Indigenous Peoples

NIPAS National Integrated Protected Areas System

NOA Notice of Application

NP Negotiation Panel

NTDP National Tourism Development Plan

OSSC One-Stop Shop Committee

PD Presidential Decree

PECR Philippine Energy Contracting Round

PENRO Provincial Environment and Natural Resource Officer

PMRB Provincial Mining Regulatory Board

PNOC Philippine National Oil Company

RA Republic Act

RD Regional Director

REC Review and Evaluation Committee

RTS Return to Sender

SC Service Contracts

SEC Securities and Exchange Commission

SMP Special Mines Permit

TEP Temporary Exploration Permit

USB Universal Serial Bus

1

Licensing System for Mining, Coal, Oil and Gas Operations in the Philippines

1) Laws and Regulations Governing License Registers and License Allocations in the Mining, Coal, Oil

and Gas and Sectors

The Philippine Constitution of 1987 governs the exploration, development, processing and

utilization of mineral resources in the Philippines. Several laws have been passed to regulate the

exploration, development and utilization (EDU) of these mineral resources, such as the Republic Act

(RA) 7942 or the Mining Law, Presidential Decree (PD) 972 or the Coal Development Act of 1976,

and PD 87 or the Oil Exploration and Development Act. The Constitution and the relevant

legislations provide that all mineral sources within the territory of the Philippines are owned by the

State, and the state in turn has the responsibility to promote their rational exploration and

development.

Extraction for minerals in the country, however, started even before the enactment of these

laws, dating back to 400 B.C. to 250 B.C., when metals such as iron and bronze became tools of

trade and building in the Philippines1. As the archipelago was colonized by Spain, it was claimed by

the Spanish King under the Regalian Doctrine2. This would later on became the backbone of the

1987 Constitution to bolster the claim of the government’s ownership, as embodied in its section on

national economy and patrimony.

When Philippines was ceded to the Americans after the Spanish-American war, the Philippine

Bill of 1902 was enacted by the Americans, declaring all valuable mineral deposits found in public

lands free and open to exploration, occupation, and purchase for citizens of the United States and of

the Philippines3. It was also during this period that land laws were enacted to institutionalize land

registry and ownership: together, these laws gave way to the exploration, occupation and purchase

of mineral deposits by citizens and foreigners alike. The Land Registration Act No. 496 of 1902

implemented a Torrens titling system, and all lands unregistered fell under the administration of the

government via the Public Land Act of 1905. The first recorded Mining Law of the Philippines was

passed in 1905, giving the Americans access to mine public lands (Minerva Chaloping-March, 2011).

This was later on supplanted by the 1935 Constitution and the Commonwealth Act No. 137 or the

Mining Act of 19364 when it instead implemented a leasehold system for mining claimants5. The

leasehold system over lands with mineral deposits was carried on into the 1973 Constitution and PD

463 which held that “all valuable mineral deposits in public land…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.” More importantly, Article XII Section 1 of the 1935 Constitution

limited the exploitation, development, or utilization of all mineral lands of the public domain to

citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital

of which is owned by such citizens (Cagampang De-Castro, 2009). This provision was reiterated in

the 1973 Constitution up until the 1987, when a new Constitution was born. The 1987 Constitution

installed a different structure, one which established the policy of full control and supervision by the

state in the EDU of the country’s natural resources.

Subsequently, Executive Order 279 of 1987 gave the Secretary of the Department of

Environment and Natural Resources (DENR) the authority to negotiate and enter into, for and

behalf of the Government, joint ventures, co-productions, or production-sharing agreements for the

EDU of mineral resources with any interested parties, including foreign-owned corporations6. By

1992, foreign investors started pouring in as the new President, Fidel V. Ramos, moved to privatize

almost all government controlled corporations and to adopt neo-liberal economic policies so as to

gain more foreign investors, including those in the mining industry (Minerva Chaloping-March,

2011).

It was also during President Ramos’ time that the RA 7942 was approved. Embodied in it and its

Implementing Rules and Regulations (IRR) were the general principles governing mining

applications, the kinds of mining agreements allowed to be entered into, the mining rights granted

to permittees, and the necessary safety and environmental protection schemes that must

accompany every operation. The permit granted under the Mining Law could last for a maximum of

fifty (50) years, span over eighty-one thousand (81,000) hectares, with timber rights, water rights

and easement rights subsumed under a permit (Minerva Chaloping-March, 2011).

It wasn’t long before constitutionality of the Mining Law, particularly on the provision that

allowed foreign owned/-controlled corporations to excavate and process minerals, was questioned

for being in contravention with Article XII, Section 2 of the 1987 Constitution. Said provision reserves

the right to explore, develop and utilize mineral resources to Filipino citizens and corporations at

least sixty percent owned by such citizens. In the landmark case of La Bugal B’laan Tribal Association

Inc. vs. Ramos7, the Supreme Court ruled that the intent of the framers of the 1987 Constitution

was to permit service contracts with foreign corporations as Contractors, but with safety measures

in place to prevent abuses, as an exception to the general norm established in the first paragraph of

Section 2 of Article XII. The Court further ruled that:

“The setup under RA 7942 and DAO 96-40 hardly relegates the State to the role of a “passive

regulator” dependent on submitted plans and reports. On the contrary, the government

agencies concerned are empowered to approve or disapprove -- hence, to influence, direct and

change -- the various work programs and the corresponding minimum expenditure commitments

for each of the exploration, development and utilization phases of the mining enterprise.

xxx

FTAA Contractor is not free to do whatever it pleases and get away with it; on the contrary, it will

have to follow the government line if it wants to stay in the enterprise. Ineluctably then, RA

7942 and DAO 96-40 vest in the government more than a sufficient degree of control and

supervision over the conduct of mining operations.”

Mining applications were, however, suspended pursuant to Executive Order (EO) No. 79. This

was done in recognition of the need to create a new legislation to rationalize existing revenue

sharing schemes and mechanisms that will be more equitable to all stakeholders. An exception to

this is the allowable expansion of existing contract areas if there is an imminent and/ or critical

threatened economic disruption which could have an adverse effect on the national economy or

priority government projects8. The moratorium was lifted on 18 March 2013 insofar as applications

for EPs and FTAAs are concerned, but MPSA applications are still on hold (Santos, 2013).

2) Licensing System for Mining, Oil, Gas and Coal Operations

a) Procedures for Obtaining permits for Non-Ancestral Domain Areas

i) Mining Permits

(1) Open and Closed Areas for Mining Under RA 7942 and EO 79

The Mining Law enumerates the areas which may and may not be applied for in the exploration,

utilization, and development of mineral resources. In its IRR, the list of areas open to mining includes

public or private lands not covered by any existing mineral rights or mining applications, lands that have

expired, abandoned or cancelled mining or quarrying rights, mineral reservations, and timber or forest

lands.9 Whereas areas closed to mining applications are enumerated as follows:

a) Areas covered by valid and existing mining rights and mining applications subject to Subsection

b(3) herein;

b) Old growth or virgin forests, proclaimed watershed forest reserves, wilderness areas, mangrove

forests, mossy forests, national parks, provincial/municipal forests, tree parks, greenbelts,

game refuge, bird sanctuaries and areas proclaimed as marine reserves/marine parks and

tourist zones as defined by law and identified initial components of the National Integrated

Protected Areas System (NIPAS) pursuant to R.A. No. 7586 and such areas expressly prohibited

thereunder, as well as under Department Administrative Order No. 25, Series of 1992, and

other laws;

c) Areas which the Secretary may exclude based, inter alia, on proper assessment of their

environmental impacts and implications on sustainable land uses, such as built-up areas and

critical watersheds with appropriate barangay/municipal/city/ provincial Sanggunian ordinance

specifying therein the location and specific boundary of the concerned area;

d) Offshore areas within five hundred (500) meters from the mean low tide level and onshore

areas within two hundred (200) meters from the mean low tide level along the coast;

e) In case of seabed/marine aggregate quarrying, offshore areas less than 1,500 meters from the

mean low tide level of land or island(s) and where the seabed depth is less than 30 meters

measured at mean sea level; and

f) Areas expressly prohibited by law.10

The list of areas closed to mining was expanded under EO No. 79 of 2012, where President

Benigno Aquino Jr. disallowed any and all applications for mineral contracts, concessions, and

agreements for areas that were enumerated in Section 19 of RA 7942; areas established under National

Integrated Protected Areas System (NIPAS) or RA No. 7586; prime agricultural lands, in addition to lands

covered by RA No. 6657 or the Comprehensive Agrarian Reform Law of 1988, including plantations and

areas devoted to valuable crops, and strategic agriculture and fisheries development zones and fish

refuge and sanctuaries declared as such by the Secretary of the Department of Agriculture (DA); tourism

development areas, as identified in the National Tourism Development Plan (NTDP); and other critical

areas, island ecosystems, and impact areas of mining as determined by current and existing mapping

technologies, that the DENR may hereafter identify pursuant to existing laws, rules, and regulations,

such as, but not limited to, the NIPAS Act.

Furthermore, there is an express prohibition against the granting of Mineral Agreements (MAs),

Financial or Technical Assistance Agreements (FTAAs) or mining permits over areas subject of

Certificates of Ancestral Domains/Ancestral Land Claims (CADC/CALC) or in areas verified by the DENR’s

Regional Office and/or other office or agency of the Government as actually occupied by Indigenous

Cultural Communities (ICCs) and Indigenous Peoples (IPs) under claim of time immemorial possession

except with their prior consent.11

Mining in Mineral Reservations may be done by submitting an application for permits to the

Regional Office concerned for its initial evaluation and endorsement to the MGB for final evaluation.12 A

Mineral Reservation is an area established and proclaimed as such by the President upon the

recommendation of the Director of the MGB through the Secretary of DENR. All submerged lands within

the contiguous zone and Exclusive Economic Zone are included in a Mineral Reservation.13 EO 79

expanded the coverage of mineral reservations when it included areas with known strategic mineral

resources or reserves. These areas will be declared as Mineral Reservations after proper consultation

with the stakeholders.14

One of the Secretary’s duties is to perform a periodic review of existing Mineral Reservations to

determine if its coverage is still consistent with national interests.15 The President, however, upon the

recommendation of the Director through the Secretary, can de-establish, alter, or modify a Mineral

Reservation when such national interest so requires.16

On the other hand, mining in Government Reservations may be undertaken by the DENR itself.

If, however, it cannot, a Qualified Person may take over the right to explore, develop and utilize the

minerals.17 When such situation arises, a Memorandum of Agreement must be entered into by and

between DENR and a qualified government corporation/ entity authorizing the latter to explore, develop

and/or utilize the mineral resources found therein. Operations in Government Reservations must first be

done through an Exploration Permit before the same is opened for Mineral Agreement/FTAA application

or other mining applications.18

(2) Exploration Permit (EP)

According to the Primer for Exploration Permit produced by the Mines and Geosciences Bureau

(MGB), an exploration permit is the initial mode of entry in the mineral exploration allowing a Qualified

Person to undertake exploration activities for mineral resources in certain areas open to mining. A

Qualified Person is one that fulfills the following requirements:

a) Any Filipino citizen of legal age and with capacity to contract;

b) A Filipino-owned 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 with the Securities and Exchange Commission (SEC)/ Cooperative

Development Office (CDO); and

c) A legally organized foreign-owned corporation duly registered with SEC.19

If the applicant falls under the above named persons, he/she/it must submit the additional

requirements:

a) Exploration Permit Application with complete mandatory requirements to be filed at the MGB Central

Office using Form No. 05-01;

b) Proof of payment of corresponding filing fee and processing fee of Php 300.00/ hectare but not less than

Php 200,000.00/ application; and

c) Five (5) sets of the following mandatory requirements:

a. Location map/ sketch plan of the proposed permit area showing its geographic coordinates/

meridional block20 (s) and boundaries in relation to major environmental features and other

projects using a National Mapping and Resource Information Authority (NAMRIA) topographic

map in a scale of 1:50,00 duly prepared, signed and sealed by a deputized Geodetic Engineer;

b. Two-year Exploration Work Program21 using MGB Form No. 5-4 duly prepared, signed, and

sealed by a licensed Engineer or Geologist;

c. Proof of Technical Competence, including, among others, curricula vitae and track records in

exploration and environmental management of the technical personnel who shall undertake

the activities in accordance with the submitted Exploration Work Program;

d. Proof of Financial Capability to undertake the Exploration Work Program, such as the following:

i. For an individual- copy of income tax return for the preceding year and proof of bank

deposit or credit line; and

ii. For a corporation, partnership, association or cooperative- latest audited financial

statement and, when applicable, Annual Report for the preceding year, credit line (s),

bank guarantee (s) and/or similar negotiable instruments.

d) Photocopies of Articles of Incorporation/ Partnership/ Association, By-Laws, and Certificate of

Registration, duly certified by the Securities and Exchange Commission or authorized Government

agency(ies) concerned, for a corporation, partnership, association or cooperative, or Certification from

the Bureau/ regional Office concerned that said documents are duly registered in that Office. The said

Article of Incorporation shall specific a minimum authorized and paid-up capital of Php 100,000,000.00

and Php 6,500,000.00, respectively. Non-compliance to the preceding authorized and paid-up

capitalization shall cause denial of the mining application as deemed appropriate by the MGB.

e) Affidavit of Undertaking for corporation, partnership, association or cooperatives declaring:

a. The list of application filed and the Mining Permit (s)/ Contract (s) granted to the Applicant,

including the corresponding hectarage and location of the areas, disaggregated on a per

province basis; and

b. The list of other Applicant (s)/ Contractor (s)/ Permittee(s) in which more than seventy (70)

percent of the authorized capital stock is held by stockholders of the applicant, including the

corresponding hectarage, disaggregated on a per province basis.22

The maximum area that a Qualified Person may hold at any one time shall be:

a) For onshore, in any one province:

1. for individuals, twenty (20) blocks: and

2. for partnerships, corporations, cooperatives, or associations, two hundred

(200) blocks.

b) For onshore, in the entire Philippines:

1. For individuals, forty (40) blocks; and

2. For partnerships, corporations, cooperatives, or associations, four hundred

(400) blocks.

c) Offshore, beyond five hundred meters (500m) from the mean low tide level:

1. For individuals, one hundred (100) blocks; and

2. For partnerships, corporations, cooperatives, or associations, one thousand

(1,000) blocks.23

It is the MGB that has the authority to grant an exploration Permit to a Qualified Person. Once

granted, the term of an Exploration Permit is only for a period of two (2) years from date of issuance

(Mines and Geosciences Bureau).

The Regional Office which receives the mineral agreement application has fifteen (15) working

days from receipt of the said to application to check the control maps if the area applied for is free or

open. The Regional Office will then transmit a copy of the location map/sketch plan of the applied area

to the pertinent department sectors, offices, agencies and the concerned local government units for

Area Status.24 Upon being informed of such transmittance, the applicant must now secure the necessary

area status/consent/clearance from said department sectors, agencies and local government units,

which in turn, must submit the area status/consent/clearance on the proposed permit area within thirty

(30) working days from receipt of the notice. However, if the applied area falls within the administration

of two (2) or more Regional Offices, the Regional Office which has jurisdiction over the lesser area of the

shall follow the same procedure.25

Within five (5) working days from receipt of the necessary area clearances, the concerned

Regional Office must issue the Notice of Application for the EP to the applicant for publication and radio

announcement, and to the Offices concerned for posting. Afterwhich, within five (5) working days from

receipt of the Notice, the applicant shall cause the publication thereof once, in two (2) newspapers: one

of general circulation published in Metro Manila and another published in the municipality or province

where the proposed contract area is located, if there be such newspapers; otherwise, in the newspaper

published in the nearest municipality or province. The affidavits of publication should be submitted by

the applicant to the Regional Office concerned within five (5) days from the date of publication of the

Notice.26

The Regional Office concerned will post the Notice on its bulletin board, and those of the

concerned LGUs for one (1) week, copy furnished the MGB and the barangay(s) where the proposed

contract area is located.27 There should also be radio announcements made daily for one (1) week in a

local radio program. All expenses for the publication and announcement are to be shouldered by the

applicant.28.

Within five (5) working days from the last date of posting and radio announcement, the

authorized officers of the offices concerned shall issue a certification that the posting/radio

announcement requirement was complied with. Should there any opposition to the application, such

must be made to the Regional Office concerned or through any PENRO or CENRO concerned within ten

(10) days from the date of publication or from the last date of posting/radio announcement. The

opposition is to be heard by a Panel of Arbitrators, and upon final resolution of such, the Panel must

issue a Certification to that effect within five (5) working days from the date of finality of resolution. A

Certification from the Panel may also be availed of upon request of an interested party even if there is

no protest or opposition.29

Within fifteen (15) working days from receipt of the Certification issued by the Panel of

Arbitrators, the RD concerned shall initially evaluate the Mineral Agreement. The RD shall then endorse

his/her findings to the MGB for further evaluation by the Director within fifteen (15) working days from

receipt of forwarded documents.30

Upon evaluation and a finding that all requirements are in order, the Regional Director shall

then issue the EP to the permittee. The same must be registered s in the Regional Office concerned

within fifteen (15) working days from receipt of the written notice and upon payment of the required

fees. A consultation between the permittee and the Sanggunian must also be held prior to the

implementation of the Exploration Work Program.31

The permittee is required to submit the following documents following the approval of the EP:

a) For a corporation, partnership, association or cooperative, Secretary’s Certificate attesting to a

Board resolution regarding the authorization of the company’s authorized signatory;

b) Area Status and Clearance issued by concerned regional One-Stop Shop Committee (s) (OSSC) and

proof of payment of Area Clearance Fee;

c) Certificate of Environmental management and Community Relations Record or Certificate of

Exemption as the case may be, as determined by the Bureau in consultation with the Environmental

Management Bureau and/or the DENR-regional office. This requirement is submitted prior to the

issuance if the pertinent Notice of Application.

d) Environmental Work Program32 (EWP) using MGB Form No. 16-1 or MGB No. 16-1A. if the applicant

is a member of the Chamber of Mines of the Philippines, Inc. (COMP), she/she/it must submit

Certificate of Good membership Standing, which is a necessary requirement before the

Environmental Work Program can be evaluated. This requirement is submitted prior the issuance of

the Notice of application

e) Affidavits of Publication of the Notice of Application (NOA) for EP in two (2) newspapers, i.e. one of

general circulation published in Metro Manila and another in the municipality or the province where

the proposed permit area is located or in the newspaper published in the nearest municipality or

province. The said affidavits of publication shall be submitted to the MGB-Regional Office concerned

within five (5) days from the date of publication of the said Notice.

f) Certificates from the concerned Offices that the mining applicant has complied with the posting of

the NOA on the bulletin boards of the MGB Regional Office (s) concerned, province (ss) and

municipality (ies) concerned, or city (ies) concerned for one (1) week and its radio announcement

for one (1) week in a local radio program.

g) Certification of final resolution of any adverse claim, protest of application filed against the

application for EP or that no adverse claim, protest or opposition has been filed against the said

application by the panel of Arbitrators of the concerned MGB Regional Office.33

Should the application be for offshore exploration, the permittee must submit:

a) Name, port of registry, tonnage, type and class of survey vessel(s)/platform(s). If a foreign vessel

should be used, the expected date Provided, That if a foreign vessel is to be used, the expected date

of first entry or appearance and final departure of the survey vessel shall be provided and all the

necessary clearances obtained;

b) A certification from the Coast and Geodetic Survey Department of the NAMRIA that the proposed

Exploration Work Program was duly registered to provide update in the publication of "Notice to

Mariners" together with a list of safety measures to be regularly undertaken to ensure the safety of

navigation at sea and prevent accident;

c) An agreement to:

a. Properly identify all installations, vessels and other crafts involved in exploration

recognizable to all vessels within reasonable distance;

b. Notify the Bureau thirty (30) calendar days prior to the intention to remove all scientific

installations or equipment and apparatus; and

c. Allow the Bureau's authorized personnel, Philippine Coast Guard and other authorized

persons during reasonable hours to board the vessel(s) while within the Exclusive Economic

Zone34.

Furthermore, the permittee must, within ninety (90) days from issuance of the EP, submit a

Certificate of Non-Overlap for areas without ICCs/IPs or Certification Precondition35 from the NCIP for

areas with ICCs/IPs. If the Certificate of Non-Overlap for areas without ICCs/IPs or Certification

Precondition could not be issued, it is enough for the permittee to submit NCIP’s Report on the Field-

Based Investigation (FBI)36 showing that the applied for area that does not overlap ancestral domain, or

the MoA executed by and among the EP permittee, ICC/IP concerned and the NCIP for the applied area

(Mines and Geosciences Bureau).

Under EO 79, an EP application should be approved or disapproved within six (6) months of its

application. Furthermore, it set internal deadlines for the different agencies involved. Section 7 of its IRR

provides:

“xxx

a) DENR Sector concerned, for issuance of Area Status and Clearance- within one (1) month from

date of filing the application.

b) National Commission on Indigenous People (NCIP), for the issuance of a Certificate of Non-

Overlap- within three (3) months or Compliance Certificate (Certification Precondition)- within

six (6) months from the date of filing the application

c) LGU concerned, for the issuance of certification of posting of the Notice of Application- within

one (1) week from the last day of completing of posting.

d) Panel of Arbitrators, for the issuance of certification as to any adverse claim or opposition- within

one (1) week from the date of filing of the requests.”

Failure of the agencies to issue the items abovestated on time means that the requirements shall be

deemed waived.37

An EP may be renewed by filing an application for renewal field verification report by the Regional

Office confirming the resource discovery and upon payment of the required conversion fee, the

application for conversion shall be evaluated and approved prior to the expiration of EP. The application

shall be accompanied by five(5) sets of the following mandatory requirements:

a. Audited financial statements covering the term of the Exploration Permit; and

b. Two (2)-year Exploration Work Program (MGB Form No. 5-4) duly prepared, signed and sealed by a

licensed Mining Engineer or Geologist.

The renewal may be granted by the Secretary, through the Director, after a field verification is

conducted by the Bureau. The permittee must likewise comply with all the requirements, pay all the

necessary fees, submit an Environmental Work Program and secure a Certification by the Regional Office

concerned as to the compliance with the terms and conditions of the EP.

Should the application, however, still be pending one (1) month after date of filing and even after

compliance with the abovementioned requirements, the applicant shall submit an affidavit attesting to

such compliance. The application shall then be deemed approved and the Director shall issue the

renewed Exploration Permit within five (5) working days from receipt of said affidavit, for registration

and release.38

If results of the exploration reveal the presence of mineral deposits feasible for mining

operations, the holder of the EP may, within the term of the EP, file a declaration of mining project

feasibility. An EP may be converted totally or partially into an MA or FTAA if exploration if the permit

area gives way to a resource discovery. The permittee shall file a Letter of Intent, indicating the areas to

be converted and those which are not, in the Regional Office concerned prior to the expiration of the

Exploration Permit, copy furnished the Bureau. A field verification report shall be conducted by the

Regional Office confirming the resource discovery and the permittee the required conversion fee. A

separate MA or FTAA application shall be filed in the Regional Office concerned within thirty (30) days

from filing of the Letter of Intent. Failure to submit a separate application within the period provided

will mean that the permittee intends to continue with the EP until its expiration.39

The moratorium on mining applications under EO 79 does not apply to EPs, so long as

exploration is done outside National Government-owned Mining Assets. EO 79 also grants the EP Holder

the right of first option to develop and utilize the minerals in their respective permit areas upon the

declaration of the mining project feasibility. EP Holders who fail to operationalize within the period

allowable under their permits will lose their priority right over their area and risk having their permit

areas be declared opened for public bidding.40

The steps for filing an EP application have been modified by DAO 2013-11, pursuant to the

objective of EO 79 for the creation of the Mining One-Stop Shop. EP Applications, along with its

complete mandatory requirements are to be filed with the MGB Central Office. It is imperative that the

area applied for is open for mining and that such mandatory requirements are complete upon filing, or

else the application will be automatically denied. The applicant will be issued an Order of Payment by

the Central Office for the filing and processing fees, afterwhich the same will forward the application

and all pertinent documents to the Regional Office concerned for evaluation through the Mining One-

Stop Shop.41

(3) Mineral Agreements (MA)

In Mineral Agreements, the Government gives the Contractor exclusive right to conduct mining

operations within a contract area, but withholds title over it. Aside from this, auxiliary rights such as

timber, water and easement rights are also granted. Mineral Agreements are classified into:

a) Mineral Production Sharing Agreement (MPSA);

b) Co-Production Agreement; and

c) Joint Venture Agreement (JVA).

Under an MPSA, the Contractor acquires the exclusive right to mine a particular area, shouldering

the financing, technology, management and personnel needed for such endeavor. The gross output is

then shared with the Government. As held in Dizon Copper Silver Mines, Inc. vs. Dr. Luis Dizon, the

government was no longer just a mere licensor, concessor, or lessor of mining resources; it actually

started to assume full control and supervision in the exploration, development, and utilization of mining

claims.42 The MPSA is an example of an innovation introduced by the 1987 Constitution insofar as it gave

the Government an active role in the EDU mineral resources. In a co-production agreement, it is the

government who provides the inputs and tools to the mining operation. Lastly, a JVA is one where the

Government and a Contractor come together to form a joint-venture company. They each hold equity

shares, and the Government is entitled to a share in the gross output.43 The moratorium on mining

applications under EO 79 unfortunately still applies to MPSAs.

To qualify as an applicant for a Mineral Agreement, the following requirements must be satisfied:

a) Individual- He or she must be a Filipino citizen of legal age and with capacity to contract; or

b) Corporation, partnership, association or cooperative – it must be 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.44

The maximum areas allowed to be held by an applicant at one time are as follows (Mines and Geosciences

Bureau):

Metallic: Non metallic:

Onshore in any

province

Individual- ten (10) blocks or

approximately eight hundred ten

(810) hectares;

Corporations, partnerships,

associations or cooperatives – five

thousand (5,000) hectares for metallic

minerals and two thousand (2,000)

hectares for non-metallic minerals per

final mining area

Individual- eight hundred ten (10)

hectares;


associations or cooperatives- two

thousand (2,000) hectares

Onshore in entire

Philippines

Individuals - twenty (20)blocks or

approximately one thousand six

hundred twenty (1,620) hectares and

For corporations, partnerships,

associations or cooperatives – five

thousand (5,000) hectares per final

mining area s

Individuals- eight hundred ten (10)

hectares;


associations or cooperatives- two

thousand (2,000) hectares

a) Sand Gravel Individuals – twenty (20) hectares;


associations or cooperatives – fifty

(50) hectares

b) Marble,

granite and

construction

aggregates

Individuals – fifty (50) hectares;


associations or cooperatives- One

hundred (100) hectares

II. Cement raw

materials

such as

limestone,

shale and

limestone

Individuals – five hundred (500)

hectares;


associations or cooperatives- One

thousand (1000) hectares

Offshore in the entire

Philippines, beyond

five hundred meters

(500 m) from the

mean low tide level

Individuals- fifty (50)blocks or

approximately four thousand fifty

(4,050) hectares,


associations or cooperatives - five

hundred (500) blocks or

approximately forty thousand five

hundred (40,500) hectares, and

Exclusive Economic Zone - a larger

area to be determined by the

Secretary upon the recommendation

of the Director.

Two thousand (2000) hectares

The applicant shall submit at least five (5) sets of the following mandatory requirements for the

development/construction/utilization of mineral resources, including the continuance of exploration

work during the conduct of development/construction/utilization activities:

a) For an individual –

a. Location map/sketch plan of the proposed contract area showing its geographic

coordinates/meridional block(s) and boundaries in relation to major environmental features

and other projects using a NAMRIA topographic map in a scale of 1:50,000 duly prepared,

signed and sealed by a deputized Geodetic Engineer;

b. Three-year Development/Utilization Work Program (MGB Form No. 6-2) duly prepared, signed

and sealed by a licensed Mining Engineer or Geologist;

c. Proof of technical competence, including, among others, curricula vitae and track records in

mining operations and environmental management of the technical personnel who shall

undertake the activities in accordance with the submitted Development/Utilization Work

Program;

d. Proof of financial capability to undertake the activities pursuant to the Development/Utilization

Work Program, such as a copy of the income tax return for the preceding year and proof of

bank deposit or credit line in the amount of at least Two Million Five Hundred Thousand Pesos

(PhP2,500,000.00);

e. Mining Project Feasibility Study (MGB Form No. 5-3); and

f. Complete and final exploration report pertaining to the area.

b) For a corporation, partnership, association or cooperative –

a. Duly certified Certificate of Registration, Articles of Incorporation/Partnership/Association and

By-Laws issued by the SEC or authorized Government agency concerned, or Certification from

the Bureau/Regional Office concerned that the said documents are duly registered in that

Office;

b. Location map/sketch plan of the proposed contract area showing its geographic




c. Three-year Development/Utilization Work Program (MGB Form No. 6-2) duly prepared, signed

and sealed by a licensed Mining Engineer or Geologist;

Table 1: Maximum areas allowable under the Mining Law and its IRR.

d. Proof of technical competence, including, among others, curricula vitae and track records in


undertake the activities in accordance with the submitted Development/Utilization Work

Program;

e. Proof of financial capability to undertake the activities pursuant to the Development/Utilization

Work Program, such as latest audited financial statement and, where applicable, Annual Report

for the preceding year, credit line(s), bank guarantee(s) and/or similar negotiable instruments;

f. Affidavit of Undertaking pursuant to DMO No. 99-10, as amended;

g. Mining Project Feasibility Study (MGB Form No. 5-3); and

h. Complete and final exploration report pertaining to the area.

c) For holders of valid and existing mining lease contracts, operating agreements, Quarry Permits/licenses

or unperfected mining/quarry claims, the following shall be submitted in addition to the aforesaid

requirements, whenever applicable:

a. Certification from the Regional Office concerned that the mining/quarry claims are valid and

subsisting;

b. Appropriate environmental report on the rehabilitation of mined-out and/or mine

waste/tailings-covered areas and anti-pollution measures undertaken during the mining

operations;

c. ECC for any new phase outside of the originally approved operation under the mining project;

d. Mining Project Feasibility Study (MGB Form No. 5-3): Provided, That a Mineral Agreement

applicant with existing mining operation may submit, in lieu of the Mining Project Feasibility

Study, a Project Description and a detailed financial statement of its operations incorporating

therein the social and environmental expenditures, taxes and fees paid (MGB Form No. 5-3A);

and

e. Approved survey plan of the mining area.45

The MA application (MGB Form No. 6-1), along with the abovestated requirements are to be

filed with the Regional Office concerned. If the application covers two (2) or more regions, then the

documents should be filed with the Regional Office which has the largest area covered by the

application, copy furnished the other Regional Offices concerned. The applicant must pay the required

fees and an application with lacking any of the above requirements will not be accepted.46

Upon acceptance of the application but before its issuance, the following additional

requirement must also be submitted:

a) Environmental Compliance Certificate (ECC);47

b) Environmental Protection and Enhancement Program (EPEP);48

c) Certificate of Environmental Management and Community Relations Record (CEMCRR)49/ Certificate

of Exemption;

d) Approved Survey Plan;

e) Certification Precondition from the National Commission on Indigenous Peoples attesting that:

a. The proposed permit area does not overlap any ancestral land/ domain claim in case of

non-indigenous people area; or

b. The Free and Prior Informed Consent (FPIC) has been issued by the ICC/IP concerned.

For offshore applications, the additional requirements stated under EP should be submitted as well.

The same area status/ clearance/consent posting, publication, announcement and consultation

with the Sanggunian requirements discussed under an EP should be followed. A converted EP

application or a previously published valid and existing mining claim or MA application that has fulfilled

such requirements are exempted from such.50

An MA application may be transferred or assigned upon the approval of the Regional Director

concerned and the same shall be subject to eligibility requirements and shall not be allowed in cases

involving speculation. The RD, in approving such act, must take into consideration national interest and

public welfare.51 An MA application may also be converted, totally or partially, into an EP application.

The Contractor shall file a Letter of Intent, indicating the areas to be converted and those which are not,

in the Regional Director concerned.52

Thereafter, the Director shall endorse the application to the Secretary for

consideration/approval within fifteen (15) working days from receipt. If the application is not acted

upon by the Secretary within thirty (30) calendar days, the application will be deemed approved, and

the Secretary shall, within five (5) days thereafter, sign all the pertinent documents for the approval of

the said application.53

For MPSAs, the MGB Director may, upon the request of the MPSA applicant, issue a Temporary

Exploration Permit (TEP), pending the approval of the Secretary. The TEP is valid for a period of one

year. However, the one-year period of the TEP will be deducted from the exploration period of the

MPSA (Quisimbing Torres Law Offices, 2005).

The next step to be taken is the numbering of the application. The Secretary will forward the

approved Mineral Agreement to the MGB for numbering and the RD shall notify the Contractor to cause

the registration of its Mineral Agreement with the MGB for areas inside Mineral Reservations or with

the Regional Office concerned for areas outside Mineral Reservations within fifteen (15) working days

from receipt of the written notice and upon payment of the required fees.54

The Bureau/Regional Office concerned shall then officially release the Mineral Agreement to the

Contractor after registration of the same. 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.55

Section 34 of the IRR of the Mining Act gives an MA a life span of twenty-five (25) years from

date of execution, including a two (2) year exploration period. The term of the MA is renewable only for

another twenty-five (25) years under the same terms and conditions thereof, without prejudice to

changes mutually agreed upon by the Government and the Contractor. Beyond this term, the operation

of the mine may be handled by the Government or through a Contractor through a public bidding. An

MA has an exploration period of up to two (2) years from date of issuance thereof, renewable for like

periods but not to exceed a total term of six (6) years for nonmetallic minerals exploration or eight (8)

years for metallic minerals exploration. Renewal is subject to the annual review and approval by the

Director. If, however, the Contractor feels that exploration is warranted beyond the six (6)- or eight (8)-

year period, the Director may grant such extension if the Contractor has substantially implemented the

Exploration and Environmental Work Programs.

Renewal of the exploration period may be had by submitting a renewal application in the Bureau,

copy furnished the Regional Office concerned, accompanied by the following mandatory requirements:

a) Justification of renewal;

c) Comprehensive technical reports on the outcome of the two (2)-year Exploration and Environmental

Work Programs, signed by a licensed Mining Engineer or Geologist and an Environmental Officer,

respectively;

c) Audited financial statements covering the term of the Exploration Period;

d) Two (2)-year Exploration Work Program (MGB Form No. 5-4) duly prepared, signed and sealed by a

licensed Mining Engineer or Geologist;

e) Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16-1A);

f) Certification by the Regional Office concerned as to the compliance of the Contractor with the terms and

conditions of the Mineral Agreement during the Exploration Period; and

g) Other supporting papers as the Bureau may require.

The application and the mandatory requirements must be submitted prior to the expiration of the

exploration period.56

An MA may be converted, totally or partially, into another mode of Mineral Agreement or FTAA

by filing a Letter of Intent with the Bureau, copy furnished the Regional Office concerned. Apart from

filing of the Letter of Intent, the Contractor must also comply with all the requirements and pay the

conversion fee. Any revisions to the MA should be submitted to the Director within sixty (60) calendar

days from the date of filing the Letter of Intent.57

The MA may only be transferred or assigned Qualified Person(s) and upon payment of an

application fee. An application for transfer or assignment must be filed with the Regional Office

concerned for evaluation, along with the pertinent Deed of Assignment that shall contain, among

others, a stipulation that the transferee/assignee assumes all obligations of the transferor/assignor

under the Agreement. The Secretary may impose additional conditions for the approval of

transfer/assignment of the MA. Approval of such transfer or assignment shall be given by the Secretary,

upon the recommendation of the Director, and upon a finding that the transferor/assignor or Contractor

has complied with all the terms and conditions of the MA as well as RA 7942 and its IRR. If the

application is still pending even after (30) calendar days from official receipt thereof, the same will be

deemed automatically approved unless it is patently unconstitutional, illegal or where such transfer or

assignment is violative of pertinent rules and regulations.58

(4) Special Mines Permit

A (SMP)59 is granted to an applicant who already has a valid and existing MA that is free

from any conflict or adverse claim. This is issued by the Director upon clearance by the Secretary. The

SMP is valid for one (1) year and renewable only once.

An SMP may be granted if:

a) That the applicant is already operating or has completed the development/ construction stage and is

ready to begin operations or has a readily available ore for mining subject to verification by the Bureau;

b) That the applicant has already submitted a proposed Mineral Agreement;

c) That the applicant has submitted a one-year Work Program duly prepared, signed and sealed by a

licensed Mining Engineer, Geologist or Metallurgical Engineer;

d) Submission of ECC, including proof of compliance therewith, if applicable;

e) Submission of EPEP;

f) Submission of proof of satisfactory Environmental Management Record and Community Relations

Record, if applicable;

g) Posting of Surety Bond prior to registration of the SMP; and

h) Such other conditions and requirements not inconsistent with the Act and these implementing rules and

regulations, as well as those which the Secretary may deem to be for the national interest and public

welfare.

Based on the Procedure for the Acceptance of a Special Mines Permit of MGB, the following items

are mandatory requirements for an SMP:

a) Application letter;

b) Filing fee (Php 20.00/ Ha but not less than Php 50,000.00);

c) MPSA Application;

d) For corporations/ partnerships/ associations or cooperatives- SEC/ CDA- certified Certificate of

Registration, Articles of Incorporation/ Partnership/ Association and By-laws (Note: with minimum

authorized capital of Php 1000,000,000.00 and paid-up capital of Php 6, 250,000.00);

e) Location map/ Sketch Plan (1:50,000 NAMRIA topographic map) prepared, sealed and signed by a

Geodetic Engineer;

f) Proof of technical competence in the form of:

1. Bio-data and track records in mining/ environmental management;

a) Sworn statement of the technical person (s) who will undertake the implementation of the Work

Programs or employment contract

g) Proof of financial capability

1. For an individual:

a. Statement of assets and liabilities duly sworn in accordance with existing laws;

b. Latest ITR

c. Credit lines/ bank guarantees/ deposits of at least Php 2.5 M

2. For corporation/ partnership/ association/ cooperative:

a. Latest audited Financial Statements;

b. Annual Report for the preceding year;

c. Credit lines/ bank guarantees/ deposits

h) Certification by the MGB Regional Office concerned as to the applicant’s compliance with the provision

of Section 48.a of DENR AO 2010-21;

i) One (1) Year Work Program;

j) EPEP;

k) SDMP;

l) ECC;

m) Certificate of Satisfactory Environmental Management and Community Relations Record;

n) Area Status and Clearance;

o) Certification from the Panel of Arbitrators concerned/MAB;

p) NCIP Certification Precondition;

q) Endorsement of the Sanggunian Concerned;

r) MGB- registered Secretary’s Certificate attesting to a Board Resolution authorizing the President to sign

and execute documents in connection with the MPSA/ SMP application.

To qualify for renewal, following considerations shall be taken into account: 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 MA application, subject to the approval of the Secretary.60

(5) Financial or Technical Assistance Agreements (FTAAs)

A Financial or Technical Assistance Agreement may be entered into between a Contractor and

the Government for large-scale exploration, development and utilization of gold, copper, nickel,

chromite, lead, zinc and other minerals except for cement raw materials, marble, granite, sand and

gravel and construction aggregates.61

The State is granted the right to enter into FTAAs by virtue of Article XII, Section 2 of the 1987

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 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 President shall notify the Congress of every contract entered into in accordance with this

provision, within thirty days from its execution.”

Under the Mining Law, those qualified to apply for an FTAA are:

a) Individual- He or she must be a Filipino citizen of legal age and with capacity to contract; or

b) A Filipino-owned corporation legally organized for the purpose of engaging in mining; with technical and

financial capability to undertake mineral resources development and duly registered with the SEC/ CDO;

and,

c) A foreign-owned corporation legally organized for the purpose of engaging in mining; with technical and

financial capability to undertake mineral resources development and duly registered with the SEC.62

A Qualified Person should be able to submit the following when applying for an FTAA (Mines and

Geosciences Bureau, 2013):

a) The FTAA application (MGB Form No. 7-1) to be filed at the MGB Central office;

b) Proof of payment of corresponding filing and processing fee of Php 300.00/ hectare but not less than Php

500,000.00/ application; and

c) Eight (8) sets of the following mandatory requirements:

a. Duly certified Certificate of Registration, Articles of Incorporation and By-Laws issued by the SEC

or authorized Government agency(ies) concerned, or Certification from the Bureau/Regional

Office concerned that the said documents are duly registered in that Office;

b. Location map/sketch plan of the proposed contract area showing its geographic




c. Two-year Exploration Work Program (MGB Form No. 5-4) duly prepared, signed and sealed by a


d. Proof of technical competence, including, among others, curricula vitae and track records in


undertake the activities in accordance with the submitted Exploration Work Program;

e. Proof of financial capability to undertake the activities pursuant to the Exploration Work

Program, such as latest audited financial statement and,where applicable, Annual Report for

the preceding year, credit line(s), bank guarantee(s) and/or similar negotiable instruments; and

f. Affidavit of Undertaking pursuant to DMO No. 99-10, as amended, for a corporation,

partnership, association or cooperative:

i. The list of applications that the applicant has filed and the mining permit(s)/ contract(s)

granted to him./her/it including the corresponding hectarage and location of the areas,

disaggregated on a per province basis; and

ii. The list of other Applicant (s)/ Contractor (s)/ Permittee (s) in which more than seventy

(70) percent of the authorized capital stock is held by stockholders of the applicant,

including the corresponding hectarage, disaggregated on a per province basis.

The maximum FTAA contract area that may be applied is as follows:

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.63

Any application with incomplete mandatory requirements shall not be accepted. After the

acceptance of the application but prior the approval of the FTAA, the following requirements should also

be submitted (Mines and Geosciences Bureau, 2013):

a) Posting of financial guarantee/performance bond and letter of credit or other forms of negotiable

instruments from any Government-accredited bonding company or financial institution, in favor of

the Government upon notification by the Secretary, which shall be in any foreign currency

negotiable with the Bangko Sentral ng Pilipinas or in Philippine Peso in such amount equivalent to

the expenditure obligations of the applicant for any year;

b) Certificate of Environmental management and Community Relations Record or Certificate of

Exemption as the case may be

c) Environmental Work Program (EWP) using MGB Form No. 16-1 or MGB No. 16-1A;

d) Certification Precondition from the NCIP for areas with ICCs/IPs attesting that:

a. The proposed contract area does not overlap any ancestral; land/domain claim in case of

non-IP area; or

b. The FPIC has been issued by the ICC/IP concerned

e) Mining Project Feasibility Study;

f) Three (3)-Year Development/Utilization Work Program;

g) Proof of technical competence, including, among others, curricula vitae and track records in mining

operations and environmental management of the technical personnel who

h) shall undertake the activities in accordance with the submitted Development/Utilization Work

Program;

i) Proof of financial capability to undertake the activities pursuant to the Development/Utilization

Work Program, such as latest audited financial statement and where applicable, Annual Report for

the preceding year, credit line(s), bank guarantee(s) and/or similar negotiable instruments;

j) approved survey plan, ECC, EPEP and SDMP; and

k) Other supporting documents that may be required by the MGB.

For offshore applications, aside from those above, the same following additional requirements

in EPs and MAs should also be submitted.

The applicant must also show that he/she/it has an authorized capital of at least Four Million

U.S. Dollars (US$4,000,000.00) or its Philippine Peso equivalent after the approval of the FTAA but prior

to registration of the same.64

The same area status/ clearance/consent posting, publication, announcement and consultation

with the Sanggunian requirements discussed under EPs and MAs must be abided by for FTAA

applications.

The applicant is given the option to convert his/her/it’s FTAA application into an EP application.

A Letter of Intent detailing which areas will be covered by the conversion must be filed with the RD

concerned without losing its priority rights over the applied area. After filing and payment of the

required conversion fee, the application will be evaluated and approved. However, the date of filing of

the Exploration Permit application shall be reckoned from the date when the original FTAA application

was filed.65

Fifteen (15) after the Certification from the Panel is received by the Regional Director, he will

evaluate the same and then endorse it to the Director. The MGB Director is given fifteen (15) working

days to review the application, afterwhich he is to endorse the same to the Negotiation Panel as a final

step for its evaluation.

The Negotiation Panel (NP) is given thirty (30) calendar days from receipt of the documents to

evaluate the same. The NP must take into consideration the contributions the FTAA will make to the

economy of the country, its contribution to the community, the support it can provide to Local

Government programs, and its positive effect on the development of local scientific and technical

resources. The NP can either recommend the approval of the FTAA to the President or it can schedule a

negotiation with the applicant. If the negotiated terms and conditions are acceptable to the NP, the

same should be incorporated in the proposal, and a resolution shall be made by the NP. The Secretary

shall then recommend the application to the President.66 Like an MPSA, a TEP may also be issued for an

FTAA project while awaiting the President’s approval.67

An FTAA application may be transferred or assigned upon approval of the Regional Director

concerned and the same shall be subject to eligibility requirements and shall not be allowed in cases

involving speculation. The RD, in approving such act, must take into consideration national interest and

public welfare.68 An FTAA application may also be converted, totally or partially, into an EP application.

The Contractor shall file a Letter of Intent, indicating the areas to be converted and those which are not,

in the Regional Director concerned.69

An approved FTAA will be numbered by the MGB and the Contractor must register it within

fifteen (15) days after the Regional Director concerned notifies him.70 Furthermore, the Contractor must

submit within ninety (90) days of the issuance of an FTAA a Certificate of Non-Overlap for areas without

ICC/IPs or a Certification Precondition from the NCIP. An FTAA has a term of twenty-five (25) years from

the date of its issuance, including a two (2) year exploration period. It is renewable for another term not

exceeding twenty-five (25) years, but its application for renewal of the term must be filed with the

Central Office no later than six (6) months prior the expiration of the FTAA.71 The renewal shall be under

such terms and conditions as may be provided for by law and mutually agreed upon by the parties. The

exploration period may be continued for up to two (2) years from date of FTAA execution, extendible for

another two (2) years. To renew the exploration period, the Contractor must file before the expiration

of the same a renewal application in the Bureau, copy furnished the Regional Office concerned, to be

accompanied by the following requirements:


b) Comprehensive technical reports on the outcome of the two (2)-year Exploration and Environmental

Work Programs, signed by a licensed Mining Engineer or Geologist and an Environmental Officer,

respectively;

c) Audited financial statements covering the term of the Exploration Period;

d) Two (2)-year Exploration Work Program (MGB Form No. 5-4) duly prepared, signed and sealed by a


e) Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16-1A);

f) Relinquishment report; and

g) Certification by the Regional Office concerned as to the compliance with the terms and conditions of the

FTAA, particularly the level of implementation of the Work Programs and compliance with the fiscal and

reporting obligations.

If the economic viability of the ores in the contract area is found to be inadequate to justify large-

scale mining operations, a Contractor may convert totally or partially its FTAA into an MA by filing a

Letter of Intent with the Department, copy furnished the Bureau/Regional Office concerned. Apart from

filing of the Letter of Intent, the Contractor must also comply with all the requirements and pay the

conversion fee. The application shall be subject to verification and validation by the Bureau and to the

final approval of the Secretary. Any revisions to the FTAA should be submitted to the Director within

sixty (60) calendar days from the date of filing the Letter of Intent. Foreign Contractors are given a

period of one (1) year from the date of filing the Letter of Intent to satisfy the sixty percent (60%)

Filipino equity requirement, subject to an extension of another one (1) year as may be approved by the

Secretary.72

The FTAA may only be transferred or assigned Qualified Person(s) and upon payment of an

application fee. An application for transfer or assignment must be filed with the Regional Office

concerned for evaluation, along with the pertinent Deed of Assignment that shall contain, among

others, a stipulation that the transferee/assignee assumes all obligations of the transferor/assignor

under the Agreement. Upon endorsement by the Director, the Secretary may recommend to the

President the transfer or assignment of rights and obligations under any FTAA for approval. The

approval may only be granted The Secretary may impose additional conditions for the approval of

transfer/assignment of the FTAA. Approval of such transfer or assignment shall be given by the

Secretary, upon the recommendation of the Director, and upon a finding that the transferor/assignor or

Contractor has complied with all the terms and conditions of the FTAA as well as RA 7942 and its IRR. If

the application is still pending even after (30) calendar days from official receipt thereof, the same will

be deemed automatically approved unless it is patently unconstitutional, illegal or where such transfer

or assignment is violative of pertinent rules and regulations.73

Under the IRR of EO 79, a National Government-owned Mining Asset may be subject to an FTAA

through public bidding, provided that in an expiring agreement, the original or previous holder may bid

if it still is qualified. Moreover, mineral rights over areas that have been verified to contain mineral

resources and reserves and those owned by the Government and expired permit shall now be subject to

public bidding as well. It is the duty of MGB to prepare the necessary competitive bidding packages and

formulate the proper guidelines and procedures for such.74

(6) Mineral Processing Permit (MPP)

A Mineral Processing Permit (MPP) allows for the milling, beneficiation, leaching, smelting,

cyanidation, calcination or upgrading of ores, minerals, rocks, mill tailings, mine waste and/or other

metallurgical by-products or by similar means of minerals so as to make them commercially viable.75

This is granted to Qualified Persons who are either Filipino citizens of legal age and with capacity to

contract or a corporation, partnership, association or cooperative, duly organized or authorized for the

purpose of engaging in mining, duly registered in accordance with law, either Filipino or foreign-owned

(Mines and Geoscience Bureau).

An MPP application shall be filed in the Regional Office concerned for mineral or non-mineral

reservation areas with five (5) sets of the following mandatory requirements:76

a) Application Form (MGB Form No. 11-02);

b) SEC-certified Certificate of Registration, Articles of Incorporation;

c) Location Map/Sketch Plan (1:50,000 NAMRIA topographic map) of the area of the proposed

processing plant;

d) Feasibility Study including work programs, plant site, mill and plant layout/design, details of

technology tobe employed in the proposed operation, anti-pollution devices/measures as well as

the plant capacity

e) CEMCRR or COE;

f) ECC;

g) EPEP;

h) SDMP;

i) Proof of technical competence in the form of:

a. Bio-data and track records in mining operations/ environmental management;

b. Sworn statement or employment contract/proof of availed service of the technical

person/s who will undertake the implementation of the Work Programs

j) Interim Importation Permit/certification fromEMB on the use of chemicals (e.g. cyanide, mercury) in

compliance with R.A. No. 6969;

k) Brief history of applicant’s activities for the last five (5) years, if any;

l) Supply Contract/Agreement with mining rights holders, if applicable

m) Proof of financial capability:

a. Latest audited Financial Statements;

b. Annual Report for the preceding year;

c. Credit Lines/Bank Guarantees/Deposits

n) Proof/s of payment of application fee:

a. Project cost of > PhP500M = PhP50,000.00

b. Project cost of PhP250-500M = PhP20,000.00

c. Project cost of < PhP250M = PhP10,000.00

After submission of the mandatory requirements and payment of the filing MPP:77

a) MGB reg. Secretary’s Certificate attesting to a Board Resolution authorizing the President to sign and

execute documents in connection with the MPP application;

b) Certification Precondition;

c) Proof/s of payment of FS Evaluation Fee = PhP20,000;

d) Prior approval or endorsement in the form of Resolution or Certification by at least the majority of the

Sanggunian concerned.

Approval of the application may be given by the Secretary himself if the project cost is more than

Five Hundred Million Pesos. Projects which range between than Two Hundred Million Pesos to Five

Hundred Million Pesos may also be approved by the Secretary, through the Director. For applications

whose project costs is Two Hundred Million Pesos or less, the Secretary through the Regional Director

concerned, may approve said application. Applications of this range need not be submitted to the

Central Office, it is enough that copies of the issued MP and all its requirements are forwarded to the

Central Office. The registration procedure must be followed by the Permittee to cause the release of the

MPP78.

An MPP is given a life span of five (5) years, renewable or like periods but not to exceed a total term

of twenty-five (25) years. A renewal is only allowed if the Permittee has complied with all the terms and

conditions of his permit and has not been found violating the Mining Law and its IRR.79

(7) Quarry/Commercial or Industrial Sand and Gravel/ Guano/Gemstone Gathering

Permit

Quarry/Commercial or Industrial Sand and Gravel/ Guano/Gemstone Gathering Permit are

obtained through an application filed with the Provincial Governor/City Mayor through the

Provincial/City Mining Regulatory Board (P/CMRB). The IRR of RA 7942 provides the guidelines for the

application of permits for these resources.

The applicant must submit the following mandatory requirements:

a) Application form, provided, that any application that transcends into two (2) or more

regions/provinces/cities shall be filed with the Regional Office/Provincial/City Mining Regulatory Board

(C/PMRB) which has the largest area covered by the application, copy furnished the other Regional

Office(s)/Provincial/City Mining Regulatory Board concerned;

b) Payment of the required fees to the Regional Office/ C/PMRB;

c) At least two (2) sets of the following mandatory requirements applicable to the type of permit applied

for:

a. Location map/sketch plan of the proposed permit area showing its geographic coordinates/

meridional block(s) and boundaries in relation to major environmental features and other

projects using NAMRIA topographic map in a scale of 1:50,000 duly prepared, signed and sealed

by a deputized Geodetic Engineer;

b. Area clearance from the Government agencies/LGUs concerned that may be affected by the

permit application or written permission from the landowner(s) and surface owner(s) of the

area applied for;

c. Work Program duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;

d. An application for or a CEMCRR;

e. ECC prior to extraction, removal and/or disposition and EPEP (MGB Form No. 16-2)

f. Proof of technical competence including, among others, curricula vitae and track records in


undertake the activities in accordance with the submitted Work Program and EPEP;

g. Proof of financial capability to undertake the activities pursuant to Work Program and EPEP,

such as the following:

i. For individuals - Statement of assets and liabilities duly sworn in accordance with

existing laws, credit lines and income tax return for the preceding three (3) years and

ii. For corporations, partnerships, associations or cooperatives - Latest Audited Financial

Statement and where applicable, Annual Report for the preceding year, credit lines,

bank guarantees and/or similar negotiable instruments.

h. Photocopy of Articles of Incorporation/ Partnership/Association, By Laws and Certificate of

Registration, duly certified by the SEC or authorized Government agency(ies) concerned, for

corporations, partnerships, associations or cooperatives; and

i. Other supporting papers as the Regional Office/Provincial/City Mining Regulatory Board

concerned may require or the applicant may submit.80

The applicants for such permit can only apply for the following area, production rate, or cost:

a) Quarry Permit- an area of not more than five (5) hectares, and a production rate of not more than fifty

thousand (50,000) tons annually and/or whose project cost is not more than Ten Million Pesos

(PhP10,000,000.00)81

Existing Quarry Permits at the effectivity of Department AO No. 99-57 under which the production rate is

more than fifty thousand (50,0000) tons annually and/or whose project cost is more than Ten Million

Pesos(PhP10,000,000.00) shall not be renewed but shall be given preferential right to a Mineral

Agreement application.82

b) Commercial Sand and Gravel Permit83- covering an area of not more than five (5) hectares: Provided,

That only one (1) Permit shall be granted to a Qualified Person in a municipality at any one time;

c) Industrial Sand and Gravel Permit-an area of not more than five (5) hectares at any one time; : 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.

d) Exclusive Sand and Gravel Permit- an area of not more than one (1) hectare and a maximum volume of

fifty (50) cubic meters: Provided, That there will be no commercial disposition thereof.

e) Government Gratuitous Permit84- not to exceed one (1) year in public/private land(s) covering an area of

not more than two (2) hectares. The applicant shall submit a project proposal stating where the

materials to be taken shall be used and the estimated volume needed.

f) Private Gratuitous Permit- from his/her land; provided, that there is adequate proof of ownership and

that the materials shall be for personal use.

g) Gratuitous Guano Permit85- may be granted to an individual for his/her personal use or to any

Government agency in need of the material, in such quantity not more than two thousand kilograms

(2,000 kg).

h) A Commercial Guano Permit- for sale or commercial disposition thereof in such quantity as may be

specified

i) Gemstone Gathering Permit86- Board for the extraction, removal and utilization of loose stones useful as

gemstones

The permits are effective under for a life span of and renewable for:

a) Quarry Permit- of five (5) years from the date of issuance thereof, renewable for like period but not to

exceed a total term of twenty-five (25) years;

b) Commercial Sand and Gravel Permit- for a term of one (1) year from date of issuance thereof, renewable

for like period and in such quantities as may be specified in the Permit

c) Industrial Sand and Gravel Permit- or 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, That any Qualified

Person may apply for an Industrial Sand and Gravel Permit with the Regional Director through the

Regional Office 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 (1) Permit shall be

granted to a Qualified Person in a municipality at any one time.

d) Exclusive Sand and Gravel Permit- a nonrenewable period not exceeding sixty (60) calendar days

e) Government Gratuitous Permit- 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 (2) hectares

f) Private Gratuitous Permit- for a renewable period of sixty (60) calendar days

g) Gratuitous Guano Permit- within a specified period

h) A Commercial Guano Permit- within a specified period

i) Gemstone Gathering Permit- for a term not exceeding one (1) year from the date of issuance thereof,

renewable for like periods

For Guano permits, the applicant must submit the following requirements:87

a) permit application (MGB Form No. 8-5), provided, That any application that transcends into two (2) or

more regions shall be filed with the Provincial/City Mining Regulatory Board which has the largest area

covered by the application, copy furnished the other Provincial/City Mining Regulatory Board concerned

by the applicant: Provided, further,

b) payment of the required fees to the Provincial/City Mining Regulatory Board

c) at least two (2) sets of the following mandatory requirements applicable to the type of permit applied

for:





b. Certification from the Barangay Captain that the applicant has established domicile in the area

applied for;

c. Area clearance from the Government agencies/LGUs concerned that may be affected by the


area applied for;

d. ECC prior to extraction, removal, disposition and/or utilization and EPEP (MGB Form No. 16-2)

as provided for in Section 169 hereof;

e. Declaration of the approximate quantity of guano resources available in the permit area applied

for; and

f. Other supporting papers as the Provincial/City Mining Regulatory Board concerned may require

or the applicant may submit.

Applicants for Gemstones must submit the following mandatory requirements:88

a) The permit application, provided, That any application that transcends into two (2) or more regions shall

be filed with the Provincial/City Mining Regulatory Board which has the largest area covered by the

application, copy furnished the other Provincial/City Mining Regulatory Board concerned by the

applicant

b) payment of the required fees

c) at least five (5) sets of the following mandatory requirements:





b. Area clearance from the Government agencies/LGUs concerned that may be affected by the


area applied for;

c. Declaration of the approximate quantity of gemstone available in the permit area applied for;

and

d. Other supporting papers as the Provincial/City Mining Regulatory Board concerned may require

or the applicant may submit.

Within fifteen (15) working days from receipt of the permit application for a Quarry or Sand and

Gravel / Guano / Gemstone Gathering Permit, the Regional Office/P/CMRB concerned shall transmit a

copy of the location map/sketch plan of the applied area to the Regional Office concerned/pertinent

Department sector(s) affected by the application for area status, copy furnished the

municipality(ies)/city(ies) concerned and other relevant offices or agencies of the Government for their

information. The agencies and departments concerned must submit the area status/consent/clearance

within thirty (30) working days from receipt of the notice. Should the applied area fall under a

reservations/ reserves/project of the Department/ Bureau/ Regional Office(s) and consent/clearance is

denied, such denial may be appealed to the Office of the Secretary.

The Regional Office(s) concerned shall check in the control maps if the area is free/ open for

mining applications within fifteen (15) days from the receipt of the application, and if the area applied

for is open, the Regional Office (s) shall then notify the applicant in writing to pay the clearance fee. If

the area applied for is not open for applications, the same shall be excluded from the coverage of

application. Furthermore, if the same area will be subject to cases of overlapping of claims/conflicts/

complaints from landowners, NGOs, LGUs and other concerned stakeholders, the Regional Director/

Provincial Governor/City Mayor concerned shall exert all efforts to resolve the same.89

Within fifteen (15) working days from receipt of the necessary area clearances, the Regional

Office(s)/P/CMRB concerned shall issue to the Quarry or Sand and Gravel/ Guano/ Gemstone Gathering

Permit applicant the Notice of Application. The applicant must post the same within fifteen (15) working

days from receipt of the Notice. The Regional Office/P/CMRB, on the hand, shall post the Notice on the

bulletin boards of the Regional Office(s), PENRO(s), CENRO(s) concerned boards and in the province(s)

and municipality(ies) concerned for two (2) consecutive weeks, copy furnished the barangay(s) where

the proposed permit area is located. The posted Notice shall be translated to the local dialect if

necessary.

A certification that the posting requirements have been complied with shall from the authorized

officer (s) shall be issued within thirty (30) calendar days from the last date of posting. Any adverse

claim, protest or opposition shall be filed directly, within thirty (30) calendar days from the last date of

posting, with the Regional Office concerned or through any PENRO or CENRO concerned for filing in the

Regional Office where the Panel of Arbitrators shall resolve such claim, protest or opposition. Upon final

resolution of such, the Panel shall issue a Certification to that effect within five (5) working days from

the date of finality of resolution thereof. If there shall be claim, protest or opposition, the Panel shall

likewise issue a Certification to that effect within five (5) working days from the last day of filing protest,

adverse claim, or opposition.90

Only when the area applied for is finally clear of any conflict and all the abovementioned steps

have been taken can the Regional Director/Provincial Governor/City Mayor concerned approve and

issue the Permit. The Regional Director/Provincial Governor/City Mayor must, within thirty (30) calendar

days from his evaluation, notify the Permit Holder to register the permit. The Permit Holder has fifteen

(15) working days from date of receipt of the written notice to register the permit, and only then shall

the Regional Office/P/CMRB release the Permit. . Failure to cause the registration of its Permit within

the prescribed period shall be a sufficient ground for cancellation of the same. Registration is effected

only upon payment of the required fees.91

Quarry/Commercial or Industrial Sand and Gravel/ Guano/Gemstone Gathering Permit may be

renewed within sixty (60) calendar days before the expiration of the Permit by submitting to the

Regional Office/P/CMRB concerned an application for renewal to be accompanied by two (2) sets of the

following applicable mandatory requirements:92


b) Comprehensive and validated technical report on the outcome of the operations, including their

environmental effects duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;

c) Audited report of expenditures incurred during the operations period;

d) Work Program duly prepared,signed and sealed by a licensed Mining Engineer or Geologist;

e) EPEP (MGB Form No. 16-2) as provided for in Section 169 hereof; and

f) Other supporting papers as the Regional Office/Provincial/City Mining Regulatory Board concerned may

require or the applicant may submit.

The Regional Office/P/CMRB will conduct a field investigation at the expense of the Permit Holder,

and only upon finding that the permit holder has complied with the requirements above shall the

renewal be granted.

ii) Coal Operating Contracts

The constitutional framework of State ownership and its responsibility to the EDU of all natural

resources apply to coal. Coal mining operations are governed by PD No. 972 otherwise known as the

“Coal Development Act of 1976” and later on amended by PD 1174. PD 72 divided the country into coal

regions where exploration and exploitation programs can be implemented. The Department of Energy93

is was given the duty to establish these regions and to undertake the active EDU of coal resources, as

well as enter into Coal Operating Contracts (COC) with private parties.

A COC gives a Contractor the right to explore a contract area for two (2) years, extendible for

another two (2) years. The Contractor or the Operator is responsible for all the necessary services,

technology and financing of the operation. If coal of commercial quantity is found during the exploration

phase, the Operator must then delineate the deposit which will constitute a development and

production area and move on to the development and production phase of the contract (Department of

Energy).

In August 2003, the DOE held the first Philippine Energy Contracting Round (PECR) to serve as the

arena for the awarding of Service Contracts (SCs) for petroleum and COCs for the EDU coal. A PECR is a

mechanism whereby the government bids out areas with potential indigenous energy resources for

exploration and possible development and production. This provides a more transparent and

competitive system of awarding petroleum service and coal operating contracts (Oca, 2014). In the last

PECR held on 2012, there were sixty-nine (69) applications, but only eleven (11) COCs were awarded

(Oca, 2014). The fifth PECR, however, only garnered nine (9) COC applications, and only eight (8) passed

the preliminary examination of documents (Lectura, 2014).

Department Circular (DC) 2011-12-00010 established the Review and Evaluation Committee (REC) of

DOE and laid down the steps for applying for a SC or a COC. This was further amended by DC 2014-02-

0005, putting REC in charge of the preparation of specific guidelines for the requisite documentation to

be submitted by the proponents for each PECR; the examination and evaluation of the capabilities of

each proponent as embodied in their submitted documents; recommending to the Secretary of DOE

which of the proponents to award the COC to and answering questions the Secretary may raise in

connection with the contracts endorsed; and the resolution of issues in relation to the legal, technical

and financial capabilities of applicants, including motions for reconsideration.

Moreover, the REC was given the duty to determine prospective petroleum and coal areas found in

the Philippine territory including its maritime zones and continental shelf for inclusion in the PECR,

subject to nominations by proponents of areas that were not included in REC’s map, as approved by the

Secretary.

Before the official open of a PECR, the REC must have already prepared the pertinent PECR

documents which contain a description of available data and the prospect of petroleum and coal

resources in each area including, among others:

a) Location Map and Technical Description of the areas being offered during the PECR;

b) Schedule of activities for the PECR; and

c) Such other information as the REC may deem appropriate.

The REC must then schedule a pre-submission conference to discuss relevant circulars and rules and

entertain questions or clarifications from prospective applicants. It will also issue additional guidelines

on the venue, set-up and procedures in the opening of the PECR applications.

Round 5 of PECR was opened last September 2014. The guidelines for application were included as

Annex B of DC 2014-02-0005. Therein stated is the requirement that applicants for a COC may be any

Filipino corporation or partnership with at least sixty percent (60%) of its capitalization owned by

Filipinos and duly registered with the SEC, or a cooperative, organized or authorized for the purpose of

engaging in coal exploration and development.

The applicant has to submit the following documents:

a) Three (3) complete sets of legal, technical, and financial documents for evaluation by the Review and

Evaluation Committee (REC) with each application covering only one predefined Contract Area as given

in the PECR 5 Contract Area Map for Coal.

Submitted application must be in both paper and digital (CD-ROM / USB Drive in Microsoft Word or *.pdf

format) copies. Times New Roman 12 font and single line spacing are recommended. Figures shall be

submitted in an appropriate format, no larger than A3 size. For legibility, figures and maps shall be

submitted at a larger scale as appendices.

b) A non-refundable application fee of Php 50,000.00 per area shall be paid by the applicant upon

submission of the application and its supporting documents. Payment may be made in cash,

manager/company cheque payable to Department of Energy or wire/bank transfer. All wire/bank

transfer should be net of all applicable foreign and local bank and financial charges.

c) Legal Documentation:

a. Duly filled-out covering information sheet showing a brief summary of the application

b. Certified true copies of the SEC Certificate of Registration, Articles of Incorporation and By-Laws.

The corporate purpose of the applicant shall include the exploration, development and

utilization of petroleum resources;

c. Certified true copy of the General Information Sheet (GIS) stamped-received by the Securities

and Exchange Commission (SEC) not more than twelve (12) months old at the time of filing of

application;

d. Original Copy of the Certificate of Authority from the Board of Directors of the applicant

authorizing a designated representative/s to apply, negotiate, sign any documents and execute

the petroleum service contract. The said Certificate of Authority shall be executed under oath

by the Corporate Secretary; and,

e. In case the applicant is a partnership or cooperative, it shall submit the legal documents as

specified in in c.a to c.d above, or its equivalent, issued or authenticated by the appropriate

governing authorities.

d) Work Program Documentation:94

a. Geological Report (Narrative presentation of available data such as geology, coal quality,

resource estimate, if available etc. indicating presence of coal resources at depth);

b. Proposed Exploration Work Program (Narrative discussion of the different exploration

strategies and methodologies to be employed in delineating coal resources at depth with

subsequent manpower complement and projected expenditures on annual basis for each

activity with respect to the area or areas specified in the proposal);

c. Schedule of Works and Manpower Requirements in Gantt Chart; and,

d. Projected Exploration Expenditures.

e) Technical Documentation:

a. Particulars of technical and industrial resources available to the applicant for the

exploration of coal resources;

b. Particulars on the technical and industrial qualifications, eligibilities and work-related

experiences of the applicant and its employees;

c. Particulars on the experiences, achievements and track records of the applicant and its

employees related to technical and industrial undertakings;

d. Particulars on organizational and management structures relative to administration,

financial and technical aspects of the applicant.

f) Financial Documentation:

a. For corporations existing for more than two (2) years at the time of filing of application:

i. Original Copy of the Annual Report or Audited Financial Statements (FS) for the last two

(2) years from the filing date and Original Copy of the latest Unaudited FS duly signed

by the responsible official such as the President and/or Chief Finance Officer if the

Audited FS is more than six (6) months old at the time of filing;

ii. Original Copy of the Bank Certification to substantiate the cash balance as of the latest

unaudited FS;

iii. Original Copy of the Projected Cash Flow Statement for three (3) years covering fund

sources and uses for the particular offered area, other applied PECR areas, renewable

energy service contract applications, existing service/operating contracts with DOE and

other existing business, if applicable; and

b. For domestic corporations, certified true copy of the latest income tax return filed with the

Bureau of Internal Revenue, and duly validated with the tax payments made thereon.

c. For newly-organized corporations existing for less than two (2) years at the time of filing of

application:

i. Original Copy of the Audited Financial Statements (FS) or unaudited FS duly signed by

the responsible official such as the President and/or Chief Finance Officer;


unaudited FS; and,




other existing business, if applicable.

d. For Parent Company that guarantees for corporations with insufficient working capital: Parent

Company’s fund guarantee shall be limited to the corresponding participating interest and shall

submit the following:

1. Original Copy of the Parent Company's financial documents per D.1.a and

D.1.b; and

2. Original Copy of duly notarized Letter of Undertaking / Support from the

Parent Company to fund the Work Program.

e. Minimum working capital (Liquid Assets less Current Liabilities) is 100% of the financial

commitment for the first contract year of the proposed work program and budget. Liquid Assets

shall consist only of cash, trade accounts receivables and short term investments/placements.

Credit line is not a Liquid Asset.

f. The applicant shall have available working capital for each PECR application separate from other

applied PECR areas, renewable energy service contract applications and existing energy

service/operating contracts, if applicable.

The application should be sent to the REC, who in turn, will stamp-receive the documents no later

than the announced deadline. A non-refundable application fee of Php 50,000.00 per area shall be paid

by the applicant upon submission of the application and its supporting documents. After evaluation by

the REC, the REC will award one COC for each contract area. Once announced, the winning applicant has

seven (7) days from receipt of notice of award to pay the processing fee of Php 30,000.00 per block. A

company shall be entitled to not more than fifteen (15) blocks of coal lands, including existing COCs, in

any one coal region.95

The REC, for sufficient and valid cause, may reject any or all applications submitted. Should an

applicant wish to file a motion for reconsideration or appeal from the decision of the REC and/or the

Secretary, it should be done in accordance with Department Circular No. DC2002-07-004 or the “Rules

of Practice and Procedure Before the Department of Energy.”96

In evaluating each proposal, the REC considers the legal, technical, financial qualifications and

the Work Program of each proponent. Among all proponents, the proponent that garners the highest

rank is selected; he must then pay the processing fee based on the DOE’s schedule of fees and charges.

Afterwhich, the COC is prepared by the REC using the Model Contract.

After a complete review and evaluation of the legal, technical, and financial qualifications of

the applicant and the production of the execution copy of the service or operating contract, the REC

then transmits to the Secretary its written endorsement of the application. The Secretary may approve

the application, or at his discretion and before the execution of the COC, convene the REC once again

should he have any questions regarding the Committee’s review and evaluation.97

If the Secretary approves the application and the COC is awarded, the Operator has the duty to

secure the Certificate of Non-Coverage and the Certification Precondition (for exploration phase) within

a year from being awarded the COC. The exploration phase under a COC can only be for two (2) years,

renewable only if the coal reserves in commercial quantity as agreed on by both parties has been

discovered and the DOE has agreed to extend the phase for another two (2) years. The extension will

only be granted if the Operator has shown that he has complied with all his obligations, the Work

Program and the budget he submitted, and has an approved submitted a new Work Program and

budget for the extension period. The exploration phase may again be extended if another coal reserve

in commercial quantity is found in the contract area.98

To proceed to the development and production phase, the Operator must submit its Work

Program and feasibility study, the ECC and Certification Precondition for the approval by the DOE. The

development and production phase is good for ten (10) years, with an allowance for either of the parties

to request for an extension for another ten (10) years. However, any subsequent requests for extensions

made by the Operator can only be permitted for a series of three (3)-year periods, the total of which

cannot exceed twelve (12) years.99

The Work Program for the development and production phase should cover five (5) years. This,

along with a feasibility study, the approved ECC and the Certification Precondition must be submitted to

the DOE. It is only upon approval of the Work Program can the Operator begin with the development

and production of coal. Another Work Program for the next five (5) years must be submitted by the

Operator at least six (6) month before the expiration of the first prior Work Program. Failure to meet the

minimum amount prescribed in the Work Program would merit a pecuniary penalty on the part of the

Operator.100

iii) Petroleum Contracts: Oil and Gas

Petroleum exploration can be traced back to Smith & Bell’s foray into drilling of Toledo-1 the

coast of Cebu in 1896, but it was only fifty years later that RA 387 of the Petroleum Act of 1949 was

legislated for the EDU of petroleum resources. The Act gave the Government the right to undertake such

project for itself, through its instrumentalities or through competent persons qualified to undertake

such work as Independent Contractors under a Service Contract (SC). The SC was carried on the

subsequent legislation governing the petroleum industry today, PD 87 or the “Oil Exploration and

Development Act of 1972.”

In the late eighties and early nineties, large gas fields were discovered along the waters of

Palawan and in Isabela. In 1990, Shell began developing the Malampaya gas field which now supplied

about 40% of Luzon’s power requirement, and the San Antonio Gas Field, as developed by the Philippine

National Oil Company, which supplied the natural gas as fuel to the local electric cooperative in the

Province of Isabela until it was discontinued (Department of Energy).

SC for petroleum exploration and extraction are obtained through PECRs. There were three (3)

Petroleum Service contracts granted out of eleven (11) applications in PECR 4 (Feliciano, 2014). For the

5th PECR, DOE offered eleven blocks, covering a total area of approximately 47,840 kilometers, with the

largest block covering 5,760 square kilometers in the east Palawan region (Lectura, 2014).

According to DC 2014-02-0005 which governs PECR 5, applicants for the PECR for a Service

Contract may be any local/foreign individual company or group of companies forming a joint venture or

a consortium, organized or authorized for the purpose of engaging in petroleum exploration and

development. The DC specifies that should the applicant form a joint venture or a consortium, a copy of

the joint venture agreement must be filed. Each member should be legally and financially qualified and

the working capital of each member of the joint venture/consortium should be pro-rata based on its

participating interest in the proposed work program and budget. If any interested party, acting singly or

forming part of a joint venture, that is organized in a foreign country shall submit legal and financial

documents, or its equivalent, as issued by the appropriate governing body and duly authenticated by

the Philippine Consulate having the appropriate jurisdiction.101

The applicant must submit to the REC the following documents:102

a) Three (3) complete sets of legal, technical, and financial documents for evaluation by the REC with

each application shall cover only one predefined Contract Area as given in the PECR 5 Contract Area

Map for Petroleum;103

b) A non-refundable application fee of Php 200,000.00 per area shall be paid by the applicant upon

submission of the application and its supporting documents.104 Payment;

c) Duly filled-out covering information sheet showing a brief summary of the application;

d) Legal Documentation:

a. Certified true copies of the SEC Certificate of Registration, Articles of Incorporation and By-

Laws. The corporate purpose of the applicant shall include the exploration, development and

utilization of petroleum resources;

b. Certified true copy of the General Information Sheet (GIS) stamped-received by the Securities

and Exchange Commission (SEC) not more than twelve (12) months old at the time of filing of

application;

c. Original Copy of the Certificate of Authority from the Board of Directors of the applicant

authorizing a designated representative/s to apply, negotiate, sign any documents and execute

the petroleum service contract. The said Certificate of Authority shall be executed under oath

by the Corporate Secretary.

e) Work Program Documentation:

a. Proposed work program and minimum expenditure for each proposed activity with respect to

the area or areas specified in the proposal. Work program and minimum expenditure with

respect to the proposal:

i. Plan for exploration and work commitment - A description of the exploration strategy

for the Contract Area applied for. This shall include:

1. Seismic data acquisition as appropriate;

2. Exploration and appraisal wells; and other geological and geophysical studies.

ii. Proposed minimum exploration commitment including:

1. Seismic program, size, and timing:

a. Line km 2D

b. Aerial coverage 3D

2. Well program, number, and timing :

a. Depth

b. Target

3. Other geological and geophysical work:

a. Geochemical

b. Sampling

c. Reprocessing

d. Others

Each item in the minimum exploration commitment shall be given a stipulated cost

figure, the sum of which will constitute the minimum cost of the work program.

b. Geological and geophysical evaluation of the Contract Area applied for:

i. Database- Seismic and well data on which the geological evaluation is based must be

listed, and the location must be illustrated on a base map (seismic coverage with wells)

in appropriate scale (1:250,000).

ii. Petroleum Potential Analysis- The following aspects for each Contract Area applied for

must be described briefly:

1. Stratigraphic and sedimentologic framework including reservoir development

and reservoir quality;

2. Structural framework including trap development and evaluation of

seal/retention characteristics;

3. Basin development including source rocks, maturity and migration; and

4. Description of play types.

The analysis must focus on aspects that are considered critical in the evaluation

of the prospectivity of the Contract Area applied for.

iii. Prospect/Lead evaluation-The following shall be evaluated for each prospect:

1. Depositional environment/reservoir type(s);

2. Trap and seal; and

3. Hydrocarbon type, source, migration and trap fill.

The following documentation is required for each prospect:

1. overview map with coordinates and prospect;

2. seismic and geological cross-section(s);

3. seismic line showing well ties, where relevant reservoir horizon time

and-depth maps presented at identical scales; and

4. seismic attribute maps.

iv. Resources- Brief comments may be submitted on the following:

1. Method of resource volume calculation;

2. Hydrocarbon type;

3. Choice of GOR and expansion/shrinkage factors;

4. Choice of reservoir parameters; and

5. Estimate of recovery factor.

v. Probability of Discovery (Whenever applicable) - Component probability factors and

the probability of discovery must be explained and documented. The methods of risk

analysis must also be briefly described.

c. Economics and development concepts of possible petroleum discoveries

i. Plan of Development- Projected production profiles to include:

1. Number of development wells and flow rates;

2. Possible production limitations; and

3. Methods by which the resources will be recovered (e.g. drive mechanisms

and reservoir management)

4. Development and transport scenarios for the different resource outcomes

shall be prepared for each prospect (description shall be given only of the

development and transport scenarios for the expected [most likely]resource

outcome).

ii. Project Economics- Development scenarios and production profiles shall be calculated

for the different outcomes in the resource distribution. Key economic parameters are

calculated either by stochastic (Monte Carlo simulation) or deterministic (P10, P90 and

expected/most likely) methods. Key economic parameters shall be calculated for the

project.

f) Technical Documentation:

a. Upstream Petroleum Projects- The applicant shall submit an overview of all its Upstream

Petroleum-related Projects.

b. Technical Personnel

i. Relevant Experience;

ii. Educational Attainment;

iii. Employment Status;

1. Particulars of the technical and industrial qualifications, eligibilities and work-

related experiences of the applicant and its employees;

2. Particulars on the experiences, achievements, and track records of the

applicant and its employees related to technical and industrial undertakings;

3. Operational organization, including resources, expertise, and experience.

g) Financial Documentation:

a. For corporations existing for more than two (2) years at the time of filing of application:

i. Original Copy of the Annual Report or Audited Financial Statements (FS) for the last

two (2) years from the filing date and Original Copy of the latest Unaudited FS duly

signed by the responsible official such as the President and/or Chief Finance Officer if

the Audited FS is more than six (6) months old at the time of filing;


unaudited FS;




other existing business, if applicable; and,

iv. For domestic corporations, certified true copy of the latest income tax return filed with

the Bureau of Internal Revenue, and duly validated with the tax payments made

thereon.

b. For newly-organized corporations existing for less than two (2) years at the time of filing of

application:

i. Original Copy of the Audited Financial Statements (FS) or unaudited FS duly signed by

the responsible official such as the President and/or Chief Finance Officer;


unaudited FS; and,




other existing business, if applicable.

c. For Parent Company that guarantees for corporations with insufficient working capital:

i. Parent Company’s fund guarantee shall be limited to the corresponding participating

interest and shall submit the following:

1. Original Copy of the Parent Company's financial documents per D.1.a and

D.1.b; and

2. Original Copy of duly notarized Letter of Undertaking / Support from the

Parent Company to fund the Work Program.

ii. Minimum working capital (Liquid Assetsless Current Liabilities) is 100% of the financial

commitment for the first contract year of the proposed work program and budget.

Liquid Assets shall consist only of cash, trade accounts receivables and short term

investments/placements. Credit line is not a Liquid Asset.

iii. The applicant shall have available working capital for each PECR application separate

from other applied PECR areas, renewable energy service contract applications and

existing energy service/operating contracts, if applicable.

The same procedure of review and evaluation is observed by the REC and DOE for both coal and

petroleum resources. The DOE will award one Petroleum Service Contract for each Contract Area. The

winning applicant has seven (7) days from receipt of the notice of award to pay the processing fee of

Php 0.48 per hectare based on DOE’s Schedule of Fees and Charges in compliance with Executive Order

No. 197, series of 2000.

The Model Service Contract for PECR 5 gives the Contractor six (6) months from the effectivity of

the Contract to begin its exploration period. The SC allots seven (7) years for the exploration period,

divisible into sub-phases, the duration of which depends on the proposed Work Program and Budget.

Such period is extendible for a period of three (3) years if the Contractor has complied with all his

obligations and if the DOE has approved the Work Program and Budget for the extension period. The

exploration period cannot be extended further than the allowable three (3) year extension unless

petroleum is discovered. If so discovered, the Contractor can claim another one (1) year extension to

determine of such petroleum is of commercial quantity. This additional year will then be counted as part

of the initial twenty-five (25)-year period for production operations.

The production period is renewable for a series of five (5)-year periods, but such renewal cannot

exceed a total of fifteen (15) years. Renewal may only be granted if it has been shown that the

Contractor has met all the terms in its Work Program and Budget and other obligations; that the SC will

in no case exceed fifty (50) years from the date of its original effectivity; and that if the Contractor fails

to continue production for more than one (1) year without the prior approval of the DOE, then the

latter can terminate the contract.

iv) List of all License Holders in the Extractive Industries in the Philippines

(1) Exploration Permits

(a) Existing Exploration Permits

REGION No. of EPs EPs AREA (Has.)

LUZON

CAR 2 2817.59

I 2 4517.6081

II 6 40645.5044

III 2 2935.1

IVA 6 14988.6088

IVB 1 1663.8452

V 4 13922.6648

Sub-Total 23 81490.9213

VISAYAS

VI 5 41998.20726

VII 2 11707.1217

VIII 1 3757.014

Sub-Total 8 57462.34296

MINDANAO

IX 0 0

X 0 0

XI 2 4942.57

XII 0 0

XIII 3 3154.61

Sub-Total 5 8097.18

TOTAL 36 147,050.44

Table 2: Data on Existing Exploration Permits as provided by MGB.

(b) Granted EP Applications with Clearance to Issue Permits:

REGION No. of EP Applications EP Application AREA (Has.)

LUZON

CAR 0 0

I 0 0

II 0 0

III 0 0

IVA 0 0

IVB 1 3630.9454

V 1 497.7212

Sub-Total 2 4128.6666

VISAYAS

VI 0 0

VII 1 4084.9282

VIII 2 1617.0113

Sub-Total 3 5701.9395

MINDANAO

IX 0 0

X 0 0

XI 1 3228.3775

XII 0 0

XIII 0 0

Sub-Total 1 3228.3775

TOTAL 6 13,058.98

Table 3: Data on Granted EP Applications with Clearance to Issue Permits as provided by MGB.

Three hundred thirty-nine (339) MPSAs are currently operating in the Philippines with a total

area of 602,012,21 hectares: 226,951.76 hectares in Luzon, 110,097.24 in Visayas, and 264,963.22 in

Mindanao. For FTAAs, there are six (6) existing FTAAs with a total of 108,872,45 hectares covered with

85, 301.45 in Luzon and 23,571 hectares in Mindanao.

(2) MPSAs

LUZON

REGION No. of MPSAs AREA (Has.)

CAR 11 15,543.04

R-I 16 19,161.25

R-II 6 58,890.80

R-III 37 43,914.24

R-IVA (CALABARZON) 37 21,797.21

R-IVB (MIMAROPA) 18 40,562.51

R-V 29 27,082.71

Sub-Total 154 226,951.76

VISAYAS


R-VI 15 31,958.24

R-VII 39 25,429.05

R-VIII 22 52,709.95

Sub-Total 76 110,097.24

MINDANAO


R-IX 17 56,449.08

R-X 7 2,311.87

R-XI 24 53,794.42

R-XII 5 17,439.37

R-XIII 56 134,968.49

Sub-Total 109 264,963.22

Total 339 602,012.22

(3) Financial or Technical Assistance Agreements (FTAAs)

LUZON


CAR 0

R-I 1

9,588.24

R-II 2

17,280.84

R-III 0

R-IVA 0

R-IVB 2

58,432.37

R-V 0

Sub-Total 5 85,301.45

VISAYAS


R-VI 0

R-VII 0

Table 4: Data on MPSAs as provided by MGB.

R-VIII 0

Sub-Total 0

MINDANAO


R-IX 0

R-X 0

R-XI 0

R-XII 1

23,571.00

R-XIII 0

Sub-Total 1 23,571.00

Total 6 108,872.45

Data from the DOE’s website show that there are over twenty-nine (29) service contracts and fifty-

one (51) COCs in existence as of 31 December 2013. PNOC currently holds eight (8) SCs and seven (7)

COCS. Below is a summary of the data provided by MGB and DOE.105

(4) Coal Operating Contracts106

COMPANY COC No. DATE AWARDED – DATE OF

EXPIRATION

LOCATION OF CONTRACT AREA

1. Semirara Mining

Corporation

5 17 July 1977 – 11 July 2007 Semirara Island, Caluya Antique

2. Ibalong Resources &

Development

Corporation

13 27 June 1978 – 27 June 2028

02 Sept. 2003 – 02 Sept. 2023

Dalaguete Cebu

3. Adlaon Energy

Development

Corporation

9

89

14 March 1978 – 14 March 2028

31 Aug. 1993 – 31 Aug. 2013

(for relinquishment)

Dalaguete, Cebu

Compostela, Cebu

4. Benguet 83 23 May 1988 – 23 May 2015 Lianga, Marihalag & San Miguel,

Table 5: Data on FTAAs as provided by MGB.

Corporation Surigao del Sur

5. Filipinas (Prefab)

Systems, Inc.

68

77

78

11 July 1984 – 11 July 2013 (request

for moratorium)

06 March 1987 – 06 March 2016

06 March 1987 – 06 March 2016

Bulacao, Mindoro Oriental

Imelda and Payao,

Zamboanga Sibugay

Payao, Zamboanga Sibugay

6. A Blackstone Energy

Corporation

93 02 Feb 1989 – 02 Feb. 2015 Imelda, Zamboanga Sibugay

7. D. M. Wenceslao

and Associates, Inc.

116

123

24 June 2004 – 24 June 2024

24 June 2004 – 24 June 2024

Baculod, Galtaran and Iguig,

Cagayan

8. Bislig Venture

Construction &

Development, Inc.

127 05 May 2003 – 05 May 2015 Bislig, Surigao del Sur

9. PNOC – Exploration

Corporation

41

122

140

141

14 Aug. 1980 – 14 Aug. 2017

23 Dec. 2003 – 23 Dec. 2023

5 July 2005 – 15 Dec. 2013

5 July 2005 – 5 Dec. 2012

Malangas, Zamboanga Sibugay

Cauayan, Isabela

Cagwait & Marihatag, Surigao del

Sur

Naguilan, Isabela

10. BatanCoal

Resources

Corporation

104

137

14 May 1991 – 14 May 2013

(extension under evaluation)

15 May 2009 – 26 May 2019

Liguan, Batan Is., Rapu-rapu Albay

Batan Island, Rapu-rapu Albay

11. Lima Coal

Development

Corporation

125

153

29 May 2001 – 29 May 2021

01 April 2009 – 01 April 2011 (request

for extension)

Calanga and San Ramon Batan

Island, Rapu-rapu, Albay

Bacon and Gubat, Sorsogon

12. Daguma Agro

Minerals, Inc.

126 26 March 2008 – 26 March 2028 Ned, Lake Sebu

South Cotabato and Sultan

Kudarat

13. SAMAJU

Corporation

128

129

04 Feb. 2005 – 04 Feb. 2025

02 Sept. 2003 – 02 Sept. 2023

Bilbao, Batan Island, Rapu-rapu

Albay

San Ramon, Batan Island, Rapu-

rapu Albay

14. Brixton Energy &

Mining Corp.

130 05 May 2008 – 05 May 2018 Diplahan and Buug, Zamboanga

Sibugay

15. Forum Cebu Coal

Corporation

131 23 Feb. 2009 – 23 Feb. 2019 Dalaguete, Cebu

16. First Asia Resource

Mining Corp.

132 28 Aug. 2008 – 28 Aug. 2018 Balamban, Cebu

17. Sultan Energy Phils.

Corporation

134 23 Feb. 2009 – 23 Feb. 2019 Lake Sebu, South Cotabato

18. SKI Energy

Resources, Inc.

135

136

26 May 2007 – 26 may 2017

26 May 2005 – 26 May 2009 (request

for conversion to D/P)

Danao City, Cebu

Alpaco, Naga, Cebu

19. Bonanza Energy

Resources, Inc.

138 25 May 2009 – 25 May 2019 South Cotabato & Sultan Kudarat

20. Visayas Multi-

Minerals Mining

and Trading

Corporation

142 05 July 2009 – 05 July 2019 Toledo City, Cebu

21. Great Wall Mining

and Power

Corporation

145 18 Dec. 2008 – 18 Dec. 2018 San Miguel & Tandag, Surigao del

Sur

22. Abacus Coal

Exploration and

Development Corp.

148 10 Jan 2010 – 10 Jan. 2019 Tandag, Surigao del Sur

23. IL Rey’s Coal Mining

Exploration Corp.

149 27 Aug. 2007 – 27 Aug. 2017 Danao City, Cebu

24. Guidance

Management Corp.

150

151

28 Aug. 2008 – 28 Aug. 2010 (request

for extension)

28 Aug. 2008 – 28 Aug. 2012 (applying

for conversion to D/P)

Bayawan, Negros Occidental

Calatrava, Negros Occidental

25. DMC Construction

Equipment

Resources, Inc.

154 01 April 2009 – 01 April 2012 South Cotabato, Sultan Kudarat

26. MISSING

27. Titan Exploration &

Dev. Corp.

158

159

166

167

168

D/P)

D/P)

18 Nov. 2009 – 18 Nov. 2013

18 Nov. 2009 – 18 Nov. 2011 (request

for extension)

18 Nov. 2009 – 18 Nov. 2011 (MR)

Payao, Zamboanga

Manay, Davao Oriental

Diplahan-Buug, Zamboanga

Sibugay

Diplahan, Zamboanga Sibugay

Siay, Zamboanga Sibugay

28. MISSING

29. ASK Mining &

Exploration Corp.

162 16 Sept. 2009 – 16 Sept. 2012 Kagwait – Marihatag, Surigao del

Sur

30. 3Kings Sunrise

Mining Corp.

165 16 Sept. 2009 – 16 Sept. 2012 (request

for extension)

Carmen, Cebu

31. Blackgem Resources

& Energy, Inc.

169 18 Nov. 2009 – 18 Nov. 2013 Taragona, Davao Oriental

32. Dell Equipment &

Construction Corp.

170 18 Nov. 2008 – 18 Nov. 2013 Sarangani & South Cotabato

33. Cedaphil Mining

Corp.

171 24 March 2010 – 24 March 2012

(request for conversion to D/P)

Toledo City, Cebu

34. Core & Mining Corp. 172 24 March 2010 – 24 March 2012

(request for extension)

Toledo City, Cebu

35. BBB Mining and

Energy Corp.

173 14 December 2011 – 14 December

2013 (request for extension)

Asturias, Balamban, Danao &

Cebu City

36. BlackGem Resources

and Energy, Inc.


2013

Batan Island, Rapu-rapu, Albay

37. BlackGem Resources

and Energy, Inc.


2013

Banganga, Davao Oriental

38. Goodyield Resources

Development, Inc.


2013

Lingig, Surigao del Sur

39. MISSING

40. Kwangming Mineral

Co. Inc.


2013

Naga & Kabasalan, Zamboanga

Sibugay

41. SKI Energy

Resources, Inc.


2013

Carmen, Asturias and Catmon,

Cebu

42. SKI Energy

Resources, Inc.


2013

Pinamungahan and Naga, Cebu

43. Timberwolves

Resources, Inc.


2013

Guigaquit, Surigao del Norte

44. Altura Mining

Philippines, Inc.

182 06 February 2013 – 06 February 2015 Bagamanoc, Caramoran and

Panganiban, Catanduanes

45. Blackstone Mineral

Resources, Inc.

183 06 February 2013 – 106 February 2015 Ipil and Naga, Zamboanga Sibugay


Corporation

184 15 February 2013 – 15 February 2015 Trento, Agusan del Sur and Lingig,

Surigao del Sur


Corporation

186 15 February 2013 – 15 February 2015 Buug and Malangas, Zamboanga

Sibugay


Corporation

186 15 February 2013 – 15 February 2015 Imelda, Zamboanga, Sibugay

49. SKI Mining

Corporation

187 15 February 2013 – 15 February 2015 Trento, Agusan del Sur

50. Mega Philippines,

Inc.

188 26 February 2013 – 26 February 2015 Lake Sebu, South Cotabato,

Palimbang, Sultan Kudarat; and

Maitum, Sarangani

51. Semirara Mining

Corporation

189 29 April 2013 – 29 April 2015 Bulalacao, Oriental, Mindoro

52. Semirara Mining

Corporation

190 07 June 2013 – 07 June 2015 Maitum and Kiamba, Sarangani

53. South Davao

Development Corp., Inc.

191 07 June 2013 – 07 June 2015 San Jose and Magsaysay,

Occidental Mindoro

54. Empire Asia Mining

Corporation

192 14 June 2013- 14 June 2015 Bislig and Lingig, Surigao del Sur

(5) Petroleum Service Contracts

Contractor SC No. Effective Date- Date of

Expiration (Exploration

Stage-Sub-Phase)

Location Area

(hectares)

1. Cadlao Development Company

Limited (CADCO)

6 1 Sept. 1973- 28 Feb. 2024

(production stage)

NW Palawan 3,397.19

2. PITKIN PETROLEUM 6A 1 Sept. 1973- 28 Feb. 2024

(production stage)

NW Palawan 108, 146.59

3. PHILODRILL CORP. 6B 1 Sept. 1973- 28 Feb. 2024

(production stage)

NW Palawan 53, 293. 95

4. PHILODRILL CORP/ GALOC

Production Co. WLL

14 (4

blocks); 14A

(Nido); 14B

(Matinloc

PL); 14C

(Galoc);

14C-2 (West

Linapacan)

17 Dec. 1975- 17 Dec 2025

(production stage)

NW Palawan 19178.88;

2383.85;

15,374.30;

16,300.95;

14649.54

5. PNOC-EC 37 18 July 1990- 18 July 2022

(production stage)

Cagayan 36,000

6. SHELL 38 23 feb. 1989- 23 feb 2024

(production stage)

NW Palawan 83,000

7. FORUM 40 19 feb. 1994- 19 Feb. 2029

(production stage)

North Cebu 458,000

8. GAS 2 GRID 44 28 Jan 2004- 28 July 2015

(exploration stage- SP2)

Central Cebu 75,000

Table 6: Data on CoCs as found on DOE’s Website.

9. PNOC-EC 47 10 JAN 2005- 10 JULY 2012


Offshore

Mindoro

1, 048, 000

10. China International Mining

and Petroleum Inc.

49 1 March 2005- 30 Jun 2014


South Cebu 197, 000

11. FRONTIER OIL

CORPORATION

50 1 March 2005- 11 March

2015


Calauit, NW

Palawan

128,000

12. Otto Energy Investments

LTD.

51 8 July 2005- 31 July 2014


East Visayas

basin

332,000

13. FRONTIER OIL

CORPORATION

52 8 July 2005- 8 July 2014


Piat San Jose,

Cagayan

96,000

14. PITKIN PETROLEUM 53 8 July 2005- 8 July 2014


Onshore

Mindoro

724,000

15. NIDO PETROLEUM 54-A; 54-B 5 August 2005- 5 August

2014 (exploration stage-

SP6)

NW Palawan 87, 616. 15;

314, 000

16. Otto Energy Investments

LTD.

55 5 Aug 2005- 5 Aug. 2013


(request for force majeure)

West Palawan 988,000

17. MITRA ENERGY LTD. 56 1 Sept. 2005- 1 Sept. 2015


Sulu Sea 430,000

18. PNOC- EC 57 15 Sept. 2005- 15 Sept.

2010

(exploration stage- SP5) (SC

on-hold)

Calamian

Block/ NW

Palawan

712,000

19. NIDO PETROLEUM 58 12 jan. 2006- 19 July 2015


West Calamian

Block, NW

Palawan

1, 344,000

20. BHP BILLITON 59 13 Jan. 2006- 13 July 2014


West Balabac,

SW Palawan

1, 476,000

21. PALAWAN SULU SEA GAS

INC.

62 7 July 2006- 7 July 2012


East Palawan 1,302,000

22. PNOC-EC 63 24 Nov. 2006- 28 Nov 2012


SW Palawan 1, 056, 000

23. Ranhill Berhad Bhd. 64 28 Nov 2006- 28 Nov 2012


Sulu Sea 1, 264, 940

24. OTTO ENERGY PHILS. INC.

(OEPI)

69 7 May 2008- 7 Nov. 2013


(under request for

extension)

Visayas Basin 528,000

25. POLYARD PETROLEUM

INTERNATIONAL CO. LTD.

70 28 Aug. 2008- 28 Feb. 2014


(requesting for extension)

Central Luzon

Basin

684, 000

26. FORUM LTD. 72 15 Feb. 2010- 15 August

2015


Reed Bank 880,000

27. OTTO ENERGY PHILS. INC.

(OEPI)

73 15 Aug 2013- 15 Feb. 2015


Mindoro- Cuyo 844,000

28. PITKIN PETROLEUM 74 13 Aug 2013- 13 Feb. 2015


NW Palawan 426, 800

29. PHILEX PETROLEUM

CORPORATION

75 27 Dec. 2013- 27 Dec. 2015


NW Palawan 616,00

v) Procedural and Substantive Reliefs that may be Granted for License Disputes and Rejected

Applications

(1) MAs and FTAAs

Adverse claims, protests or oppositions to any mining right are handled by the Panel of Arbitrators.

The Panel of Arbitrators has exclusive and original jurisdiction to hear and decide on:

a. disputes involving rights to mining areas;

b. disputes involving mining permits, mineral agreements, FTAA’s;

c. disputes involving surface owners/occupants/ claimholders/concessionaires; and

d. disputes pending before the Regional Office and the Department

However, appealed cases before the Department shall be under the jurisdiction of the Board.107

The Panel is given thirty (30) days to decide after the submission of the case, afterwhich its

decision becomes final and executory after the lapse of fifteen (15) days from receipt of the notice of

decision by the aggrieved party. If the aggrieved party so desires, he/she/it may file a Motion for

Reconsideration (MR) once within fifteen (15) days from receipt of the order or decision of the Panel. If

the MR is denied, an appeal may be lodged to the Mines Adjudication Board (MAB) within the same

period.108

The MAB is given thirty (30) days to decide the appeal, and such decision becomes final and

executory after thirty (30) calendar days from receipt of the same. An MR from the decision of the MAB

can only be entertained if it is based on palpable or patent errors, and such MR must be made oath and

filed within ten (10) days from receipt of the Decision, Resolution or Order. Only one (1) MR is be

allowed. Any further reviews of the Decision, Resolution or Order of the MAB are to be done through a

petition for review with the Supreme Court within thirty (30) days from receipt of such Decision,

Resolution or Order.109

The data submitted by Regional Offices as to the cases handled by their respective Panel of

exhibits common grounds for disputes. Many of the disputes arise of overlapping claims from one

permit to another, as well as protests, oppositions or adverse claims on mining applications. Some

regions such as CAR, III and II are where most of the cases are filed, whereas Region 10 reported no filed

Table 7: Data on SCs as found on DOE’s Website.

cases. Table 9 below gives a brief summary of the cases filed, those which have filed MRs and appeals to

the MAB, and the common grounds for license disputes.

Panel of Arbitration: Mining Cases as of September 2014

Region

Cases

Filed

Cases

with MR

Cases

Pending

Cases

Resolved

Appealed to

MAB Common Grounds for Dispute Remarks

CAR 99 9 18 61 8

Opposition to EP/FTAA/ MPSA Application;

Overlap of Areas;

Claim for compensation/ damages;

Environmental and social issues;

TRO and PI;

Validity of sale/ lease/ claims;

preferential rights over excess areas;

Payment of royalties;

Recovery of possession;

Breach of contract;

Surface rights in mining claims;

Issues on denial of applications; cancellation;

Reversion of mining claims 3 cases withdrawn

I 16 0 0 14 1

Disputes involving rights to mining areas/ surface

rights/ occupants/ claim holders/

concessionaires;

Claims for reimbursements/ royalties/ rentals;

1 case returned for non-

compliance with filing procedure

II 68 4 6 52 3

Overlapping;

Opposition/ adverse claim/ protest;

Petition to Enforce Right of Entry and to fix

Disturbance:

Compensation;

Action to Enforce Right of Entries;

Just Compensation;

Petition for Cancellation/ Segregation; revocation

of EP

2 cases archives; 1 case pending

in CA

III 80 0 17 56 7

Protests/ Oppositions/ adverse claims;

Petition for Cancellation;

Annulment or revocation of agreements;

Complaint against illegal mining; Petition for

Exclusion

IV-A 53 0 12 39 2


Protest/ Opposition/ Adverse Claim;

Complaint Affidavit for Non-entry;

Suspension/ disputes of quarry operations;

Disqualification of operators;

Petition for Peaceful Entry

IV-B 9 0 3 5 0

Petition for Cancellation/ Entry and Occupy;

Payment of Compensation/ Royalty/ Damages;

Protest/ Opposition to an EPA 1 case withdrawn

V 17 0 6 10 1


Enforcement of Contract;

Transfer of Rights;


Denial of Application;

Petition to Enforce Right of Entry; Payment of

Compensation/ Royalty/ Damages

VI 17 0 5 12 0

Conflict of Mining Applications;

Private Lot v. MPSA Application;

Mining App within SIFMA;

Environmental Issues;

Overlapping

VII- NO

REPOR

T 0 0 0 0 0

VIII 15 0 8 4 2 EPA, MPSA, APSA, SAG 1 case withdrawn

IX 12 1 9 2 0

Opposition;

Eminent Domain and Just Compensation,

Ejectment of Illegal Surface Occupants;


Annulment of Assignment;

Recovery of Mining Rights

X- NO

CASES

FILED 0 0 0 0 0

XI 19 0 11 6 2

Protest/ Adverse Claim/ Opposition;

Petition for Cancellation

XII 12 0 1 11 0

Petition for Cancellation/ Segregation;

Protest for Exclusion;

Petition for Declaration of Abandonment

XIII 74 0 28 37 6

Petition for Exclusion/ Inclusion/ Termination;

Overlapping;

Consolidation of Irrevocable Option Agreement/

Transfer;


Illegal Encroachment; recovery of Possession and

Ownership;

Damages with TRO and PI;

Settlement of Surface Mining Dispute

2 cases pending in CA; 1 pending

in SC

Total 491 14 124 309 32

Table 8. Panel of Arbitrators Report uploaded by MGB. Region 1: Mining cases filed before the Panel as of 30 June 2012; Region 2: Mining cases filed before the Panel

as of 30 June 2014; Region 5: Mining cases filed before the Panel as of 31 August 2014; Region 8: Mining cases filed before the Panel as of 30 March 2013.

Rejected or denied applications for MAs or FTAAs observe a different procedure as stated in

MGB Memorandum Circular (MC) No. 2000-38. The said circular covers mining applications that have

failed to comply with the requirements set forth in RA 7942, its IRR, and subsequent orders or issuances.

It therein states that mining applications involved in a dispute/case shall not be covered by the circular,

but is given a period of six (6) months after final resolution of said dispute to comply with all the

mandatory requirements. Grounds for rejection or denial of mining applications can range from

submission of incomplete requirements, exceeding the allowable application area, to non-compliance

with three (3) Letters-Notice Policy.cx

If the Regional Office concerned or the Central Office of MGB finds that there is or are grounds

for the denial of the application, it shall issue and Order of Denial and a Notice of Issuance of Order to

be sent to the applicant and posted on its Bulletin Boards for two (2) consecutive weeks. The applicant

may seek relief by filing a MR with the Central Office for Mineral Reservation Areas or with the Regional

Office concerned for non-mineral Reservation Areas. The applicant can also file an appeal with the DENR

Secretary for Mineral Reservation Areas or with the MGB Director for non-Mineral Reservation Areas.

Both the MR and appeal should be filed within fifteen (15) days upon receipt of the Order of Denial.

Should the MR be denied, an appeal may be filed at the Central Office.cxi

The MGB Regional Office of Region 13 has drafted a Citizen’s Charter which details the steps it

takes for all its transactions, including applications for MPSAs, EPs, TEPs, small-scale mining permits;

approval and processing Deeds of Transfers of mining rights; mineral site evaluation; and the denial of

mining application among others.

In denying mining applications for the region, the Regional Office takes the following steps

(DENR-MGB Regional Office No. 13, 2012):

Steps: Administrator’s Office Activity Duration of

Activity

1 Identifies lacking mandatory requirements of EP, MA and FTAA.

2 Drafting of Tracers for compliance of applicant to mandatory requirements and

send to concern mining applicant through registered mail. (DMO 99-34: Three (3)

Letter-Notice Policy)

1 week

3 In case of Return to Sender (RTS) – resent communication letter to the concern

applicant then ask a certification from the Post Office as proof of transmittal.

4 If the applicant submitted all the mandatory requirements within the prescribed

15 to 30 days period of the deadline of submission its mining application is still

subject for further evaluation.

1 week

5 If not complied, a Letter of Rejection will be issued (final tracer) to the applicant,

given him/her a final thirty days period to file an appeal or submit all the

pertinent documents or the mandatory requirements.

6 If the applicant complied within the prescribed 30 days period of the deadline of

submission, the applicants mining application is still subject for further

evaluation.

1 week

7 If not complied, an Order of Denial will be issued by the MGB Regional Director,

copy furnish MGB central Office Director. This Order of Denial will be posted for

two (2) consecutive weeks or fifteen days at MGB Regional Office Bulletin Board.

An applicant’s mining application that was denied will be given a chance to

appeal within fifteen days after the Order of Denial was being posted.

8 After fifteen (15) days the area will be declared as open for location to other

interested applicant. But if, within that prescribed period of days an appeal will

be sent to this Office, then, this Office will hold the Order of Denial. Send a single

tracer/final tracer for applicant to comply again in another fifteen (15) days.

9 Failure to comply after the final fifteen (15) days given to the applicant the area

will finally be declared as open for location to other interested applicant else

his/her application is still subject for final evaluation.

It is unsure if all regional offices of the MGB have Citizen’s Charters or documents providing this

kind of information accessible online.

(2) Coal Mining; Oil and Gas

Applications for COCs and SCs are handled by the REC and are governed by the DC 2014-02-0005.

The REC, for sufficient and valid cause, may reject any or all applications submitted. Should an applicant

wish to file a motion for reconsideration or appeal from the decision of the REC and/or the Secretary, it

should be done in accordance with Department Circular No. DC2002-07-004 or the “Rules of Practice

and Procedure Before the Department of Energy.”cxii

MRs under DC 2002-07-004 are only allowed when they are based on palpable or patent errors,

provided that the motion is under oath and filed within ten (10) calendar days from receipt of the order,

resolution or decision. Only one MR and the Opposition thereto are allowed under the rulescxiii.

If the applicant is unsuccessful with its MR, it may appeal to the Office of the President the

decision of Department provided that such is perfected by filing a Notice of Appeal within fifteen (15)

Table 9: Regional Office 13’s Citizen Charter on denial of mining rights taken from its website.

calendar days from notice of such order, ruling or decision, a showing that the an MR was filed with the

Department and the same had been denied, and the payment of the appeal fee with the Departmentcxiv.

Appeals may be had only for a final order, ruling, or decision of the Department.

vi) A Summary of Outcome/Status of Applications for Licenses and Permits

Data gathered from MGB shows the number of endorsed applications to the Secretary of DENR

and those which have been approved subsequently. The limitations of the data, however, are that it

covers only the denied, cancelled, endorsed and approved applications as of 30 June 2011 and it does

not show how many applications were in fact filed per region since the enactment of the Mining Law in

1995.

STATUS OF ENDORSED/APPROVED MINING APPLICATIONS AND RECOMMENDED FOR CANCELLATION

REGION

ENDORSED APPROVED RECOMMENDED FOR

CANCELLATION

Number Area (Hectares) Number Area (Hectares) Number Area

(Hectares)

CAR 7 39894 1 330 0 0

I 32 93387 13 180 0 0

II 30 201318 12 180 0 0

III 11 38168 2 38 0 0

IVA 48 194560 14 69 0 0

IVB 3 1048 0 0 0 0

V 13 11400 0 0 2 8474

VI 43 76575 4 30940 0 0

VII 96 224632 0 0 0 0

VIII 54 200412 16 110 0 0

IX 20 154393 3 19 0 0

X 15 26863 1 0 0

XI 27 152349 0 0 0 0

XII 13 59989 0 0 1 1274

XIII 46 115113 6 18896 2 10017

Total 458 1,590,103 72 50,763 5 19765

Table10 shows that out of the 458 endorsed application to either the Director of MGB or the

Secretary, only 72 were approved. Applications that are recommended for cancellation could be those

which were considered as non-moving, pursuant to the mandate EO 79 and its IRRcxv. Unfortunately, the

data provided by MGB does not show the specific reasons behind the cancellation of the applications

from Regions V, XII, and XIII as indicated in the table above.

Table 11, on the other hand, shows the number of applications denied and which among these

filed MRs or appealed the decisions. MGB Memorandum Order (MO) No. 2010-04, which embodies the

“Use It or Lose It” Policy of MGB, enumerates several instances for denial of a mining application.

Among the grounds therein listed is noncompliance with the Three (3) Letters-Notice Policy; the

rejection of a request for FPIC by the IP/ICC concerned; noncompliance of the applicant with any of the

application requirements such the failure to secure the Certificate of Non-Overlap and the Certification

Precondition; failure to secure proof of consultation with the Sanggunian concerned within 2 years from

date of acceptance of the mining application; and the failure to complete the publication, posting and

radio announcement requirements as set in RA 7942 and its IRR. The data provided by MGB, does not

provide the reasons for the denials of the applications corresponding to the table.

Table 10: Data on endorsed, approved and recommended for cancelation application as provided by MGB.

MINING APPLICATIONS PURSUANT TO "USE IT OR LOSE IT" POLICY

STATISTICAL SUMMARY

as of June 30, 2011

REGION APPLICATIONS

FOR FINAL ACTION DENIALS AREA IN HECTARES

With MR/

Appeal

% Of Denied

Applications with

MR/ Appeal

Without MR/

Appeal With MR/

Appeal

Without

MR/

Appeal

Total Area

Denied

CAR 93 64 41% 405,526 46,042 451,569

26 38

I 194 149 11% 106,979 45,843 152,822

17 132

II 121 72 29% 92,067 160,608 252,675

21 51

III 240 223 22% 376,610 126,657 503,267

50 173

IVA 139 75 16% 85,247 7,969 93,216

12 63

IVB 262 243 14% 532,942 131,015 663,957

33 210

V 194 181 40% 287,118 180,238 467,356

72 109

VI 94 47 15% 131,463 33,964 165,428

7 40

VII 114 18 22% 15,359 5,018 20,377

4 14

VIII 156 86 29% 128,001 51,102 179,102

25 61

IX 120 97 27% 308,163 141,722 449,885

26 71

X 84 68 37% 382,315 134,387 516,701

25 43

XI 167 130 39% 333,446 354,081 687,527

51 79

XII 55 42 29% 208,946 50,515 259,461

12 30

XIII 163 111 7% 306,859 67,868 374,727

8 103

Total 2196 1606 389 24% 1217 3,701,042 1,537,029 5,238,071

Table 11: Data on denied applications as provided by MGB.

vii) License Transfer Systems

(1) Mining

Under the Mining Law and its IRR, any transfer or assignment must have for its transferee a

Qualified Person. An EP holder can only transfer or assign his rights over the EP upon approval of the

Director of MGB.cxvi In MAs except for FTAAs, effecting a total or partial transfer or assignment of its

MA require the submission of an application along with the payment of the required fees and a

Deed of Assignment that contains a stipulation that the transferee/assignee assumes all obligations

of the transferor/assignor under the Agreement.cxvii The application, upon the recommendation of

the Director, may then be approved by Secretary. An application for transfer or assignment is

deemed automatically approved if the Secretary does not act upon the application within thirty (30)

calendar days of his official receipt of the documents, unless the transfer is patently unconstitutional

or illegal.cxviii It is within the powers of the Secretary to impose additional conditions for the

approval of transfer/assignment of the MA.

MAs have a term of twenty-five (25) in its maximum, renewal 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. At the expiration of its renewal period, the

MA shall be opened for public bidding, but the original Contractor reserves the right to match the

highest bid, subject to reimbursement of all the expenses of the highest bidder.

An additional step for FTAA transfers and assignments is the approval of the President of the

Philippines upon recommendation of the Secretary. The transfer or assignment is also deemed

automatically approved if not acted upon by the President within thirty (30) calendar days from

official receipt thereof.cxix The President, in turn, must notify Congress of such act within thirty (30)

from the date of approval.cxx

The case of La Bugal-B’LaanTribal Association, Inc. v. Ramos is instructive insofar as the necessity of

the President’s approval. The transfer of the FTAA in this case did not garner such approval, but this

was remedied when the Office of the President approved the Order of the DENR Secretary granting

the application for assignment. The Court held:

“x x x Moreover, when the transferee of an FTAA is another foreign corporation, there is a logical

application of the requirement of prior approval by the President of the Republic and notification to

Congress in the event of assignment or transfer of an FTAA. In this situation, such approval and

notification are appropriate safeguards, considering that the new Contractor is the subject of a

foreign government.

On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need

for such safeguard is not critical; hence, the lack of prior approval and notification may not be

deemed fatal as to render the transfer invalid. Besides, it is not as if approval by the President is

entirely absent in this instance. x x x That case involved the review of the Decision of the Court of

Appeals dated November 21, 2003 in CA G.R. SP No. 74161, which affirmed the DENR Order dated

December 31, 2001 and the Decision of the Office of the President dated July 23,

2002, both approving the assignment of the WMCP FTAA to Sagittarius.”

Quarry/Commercial or Industrial Sand and Gravel/ Guano/Gemstone Gathering Permits can be

transferred or assigned only to Qualified Persons and only with the approval of the Regional

Director/Provincial Governor/City Mayor concerned.cxxi

(2) Coal Mining

PD 972 sets up that transfer or assignment to a Qualified Person of any right or obligation under COC

needs to prior approval of the Energy Department Board (now DOE) and that the transferor has fulfilled

all his obligations under the COC. This is echoed in the Model COC for PECR 5 which further requires that

the prior approval from the DOE must be in writing and that the transferee must be a qualified person

or corporation possessing the resources and capability to continue the coal operations as stated in

the COC. Transfers or assignments during the Exploration Phase, however, can only be done if the

transferee or assignee is an affiliate of the Operator if such transferee or assignee is created for

the special purpose of handling the project

(3) Petroleum: Oil and Gas

DOE’s DC 2007-04-0003 lays down the guidelines and procedures for transfer of rights and

obligations in petroleum service contracts. Any and all requests for transfer or assignment must be done

in writing, signed by an authorized officer or representative of the service Contractor, and filed with the

DOE Undersecretary in charge of the Energy Resource Development Bureau (ERDB), along with the

following documents

a) History of the Service Contract:

a. Effective date of the Service Contract;

b. Original parties involved and extent of participating interest;

c. Subsequent changes or variation in the service contract, if any; and

d. Work accomplishments/ updates on on-going activities.

b) Proposal for Transfer or Assignment:

a. Extent of interest that is the subject of the assignment or transfer;

b. Reason for the assignment to establish basis, reasonableness and urgency of the matter (e.g.

financial constraints, logistic issues, etc.);

c. Approval of the respective Board of Directors of the transferor/ assignor and transferee or

assignee

c) Technical Justification for the Transfer or Assignment:

a. Implication of the proposed transfer or assignment to the Work program, if any;

b. Revised Work Program and Budget with specific timetable for each phase of the Work program,

if any; and

c. Benefits and technical advantages in fulfilling work commitments under the service contract.

d) Duly executed Deed of Transfer or Assignment;

e) Documents evidencing financial, legal and technical qualifications of the transferee or assignee:

a. Financial qualification

i. Audited financial statements and annual reports for the last three (3) years; and

ii. Particulars of finaical resources available to the prospective transferee or assignee

including capital, credit facilities and guarantees to undertake its obligations under the

service contract

b. Legal qualification

i. Certified copy of the Articles of Incorporation;

ii. Certified copy of the corporate by-laws;

iii. SEC Registration Certificate;

iv. Certified copy of latest GIS submitted to the SEC

c. Technical qualification

i. Technical and industrial qualifications, eligibilities and work related experiences of the

prospective assignee/ transferee and its officers and employees; and

ii. Technical and industrial resources available to the prospective assignee/ transferee for

the exploration, development and production of petroleum resources, if applicable,

depending on the participation of the prospective assignee/ transferee in the service

contract.

f) DOE may also request the submission of additional information or documents.

After the receipt of the abovementioned documents, DOE must within ten (10) days be able

evaluate the qualifications of the prospective assignee/ transferee and issue a memorandum containing

the results of such review to the ERDB Director. The ERDB Director must then issue a memorandum to

the Undersecretary of ERDB detailing the background of the SC, the proposal and justification for the

transfer or assignment, result of the legal, financial, and technical evaluation, and his own

recommendation for the approval or denial of the request. The Undersecretary will forward his

recommendation to the Secretary of DOE who has the final say on the approval or disapproval of the

application. Such approval by the Secretary of the DOE will operate automatically.cxxii

viii) Description of Current State of Available Information on Licenses and Permits Relating to

Extractive Industries in the Philippines and the Accessibility of the Foregoing Information

Data from MGB, specifically on mining applications, was gathered with relative ease as this was provided immediately by Engineer Rolando M. Fernandez, Chief of the Mineral Rights Management System Section. The same could be said for the PNOC as the information used for this paper was obtained by the EITI Secretariat beforehand, and those which the writer had to search for were available through the PECR 5 website. Email requests for validation of the documents retrieved from the PECR 5 website, however, were not responded to. Files which should have been accessible through the MGB website such as the tables on Panel Arbitration were unavailable, and it was only through some manipulation of the web address that the writer was able to get the reports of the regional offices. Unfortunately, some items such as the bidding procedures and bidding reports have yet to be obtained by the writer. Data requests directed to state-owned enterprises regarding their quasi-fiscal expenditures are also pending.

1 The trail of a mining law: ‘resource nationalism’ in the Philippines*; Minerva Chaloping-March, PhD. Citing Caballero, E. J.

(1996). Gold from the Gods: Traditional Small-scale Miners in the Philippines. Quezon City: Giraffe Books.

2 The Regalian Doctrine, also known as “jura regalia”, is a fiction of Spanish colonial law that has been said to apply to all

Spanish colonial holdings. It refers to the feudal principle that private title to land must emanate, directly or indirectly, from the

Spanish crown with the latter retaining the underlying title.

3 Section 21, PD 87.

4 CA 137, Section3. All mineral lands of the public domain and minerals belonging to the State, and their disposition,

exploitation, development, or utilization, shall be limited to citizens of the Philippines, or to corporations, or associations, at least sixty

per centum of the capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the

inauguration of the Government established under the Constitution.

CA 137, Section4. The ownership and the right to the use of land for agricultural, industrial, commercial, residential, or for any purpose

other than mining does not include the ownership of, nor the right to extract or utilize, the minerals which may be found on or under

the surface.

5 The 1935 Constitution Article XII Section 1 holds all minerals, coal petroleum, and other mineral oils, and all other natural

resources of the Philippines as belonging to the State.

6 Section 1, EO 279 of 1987.

7 G.R. No. 127882. December 1, 2004.

8 Section 7, DAO 2012-07A.

9 Section 14, DAO 2010-21.

10 Section 19, RA 7942; Section 15, DAO 2010-21.

11 Section 16, RA 7942.

12 Section 11, DAO 2010-21.

13 Section 5, DAO 2010-21.

14 Section 8, DAO 2012-07.

15 “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…”

16 Section 9, DAO 2010-21.

17 Section 10, DAO 2010-21.

18 Section 11, DAO 2010-21.

19 MGB Primer on Exploration Permits.

20 One meridional block is equivalent to approximately 81 hectares.

21 An Exploration Work Program

22 MGB Primer on Exploration Permits.

23 Section 18, DAO 2010-21.

24 Section 3, DENR DAO 98-03 defines Area Status as the classification of the area covered by Mining Application, that is,

whether it is alienable and disposable land, agricultural land, timber or forest land, public of private land as issued by the concerned

DENR Sector(s) or Concerned Government Office(s), and whether or not such lands are covered by

valid/expired/abandoned/cancelled mining rights or claims, as issued by the MGB.

25 Section 21, DAO 2010-21.

26 Ibid.

27 Where necessary, the Notice shall be in a language generally understood in the concerned locality where it is posted.

28 Section 21, DAO 2010-21.

29 Ibid.

30 Ibid.

31 Section 23, DAO 2010-21.

32 An EWP details the environmental impact control and rehabilitation activities proposed during the exploration period

including the costs to enable sufficient financial resources to be allocated to meet the environmental and rehabilitation commitments.

The EWP shall provide a description of the expected and considered acceptable impacts and shall set out the environmental

protection and enhancement strategies based on best practice in environmental management in mineral exploration. It shall include a

statement on post-exploration land use potential for various types of disturbed land and extend to the completion of the

commitments in the rehabilitation of the disturbed land in a technically, socially and environmentally competent manner. The

program shall be based on acceptable, practical and achievable options and demonstrated practice. Finally, the program shall include

implementation schedules,

system of environmental compliance guarantees, monitoring, reporting and cost provisions. Where proposed practices are

unproven, a research program to prove the impact control and rehabilitation technology shall be required. Section 186, DAO 2010-21.

33 MGB Primer for Exploration Permit.

34 Section 19, DAO 2010-21.

35 NCIP AO No.3, series of 2002 defines the Certificate Precondition as the certification issued by the NCIP that the site

covered and affected by any application for concession, license or lease, or production sharing agreement does not overlap with any

ancestral domain area of any indigenous cultural community or indigenous peoples, or if the site is found to be within an ancestral

domain area, that the required FPIC was properly obtained from the

ICC/IP community concerned

36 NCIP DAO 03-2003 defines Field-Based Investigation as the the on-site inspection and investigation to ascertain the

presence or absence of ICC/IPs and/or ancestral domains in the areas covered by application for certification precondition to any

concession, license or lease, or enter into any production-sharing agreement.

37 Section 7, DAO 2012- 07.

38 Section 27, 2010-21.

39 Section 23-A, 2010-21.

40 Section 7, DAO 2012-07A.

41 Sections 1 and 2, DAO 2013-11.

42 G.R. No. 183573, July 16, 2003.

43 Section 26, RA 7942.

44 MGB Primer on Mineral Agreements.

45 MGB Primer on Mineral Agreements.

46 Section 35, DAO- 2010-21.

47 An ECC refers to the document issued by the Secretary or the Regional Executive Director certifying that based on the

representations of the proponent and the preparers (the proponent's technical staff or the competent professional group

commissioned by the proponent to prepare the EIS and other related documents), as reviewed and validated by the Environmental

Impact Assessment Review Committee (EIARC), the proposed project or undertaking will not cause a significant negative

environmental impact; that the proponent has complied with all the requirements of the Environmental Impact Assessment System;

and that the proponent is committed to implement its approved Environmental Management Plan in the Environmental Impact

Statement or mitigation measures in the Initial Environmental Examination.

48 An EPEP refers to the comprehensive and strategic environmental management plan for the life of the mining project on

which AEPEPs are based and implemented to achieve the environmental management objectives, criteria and commitments including

protection and rehabilitation of the disturbed environment.

49 A CEMCRR is the applicant's proof of satisfactory environmental management and community relations in its past and/or

present mineral resource use or mining-related ventures. It refers to the applicant's high regard for the environment in its past and/or

present mineral resource use or mining-related ventures and proof of its present technical and financial capability to undertake

resource protection, restoration and/or rehabilitation of degraded areas and similar activities, as well as to its proof of its past and/or

present community relations which may consist, but is not limited to, socio-cultural sensitivity, the character of its past relations with

local communities, cultural appropriateness and social acceptability of its resource management strategies.

50 Section 38, DAO 2010-21.

51 Section 40, DAO 2010-21.

52 Section 41, DAO 2010-21.

53 Section 42, DAO 2010-21.

54 Section 38, DAO 2010-21.

55 Ibid.

56 Section 39, DAO 2010-21.

57 Section 45, DAO 2010-21.

58 Section 46, Dao 2010-21.

59 Section 48, DAO 2010-21.

60 Section 48, DAO 2010-21.

61 Section 50, DAO 2010-21.

62 MGB Primer on FTAA.

63 Ibid.

64 Section 52, DAO 2010-21.

65 Section 57, DAO 2010-21.

66 Section 61, DAO 2010-21.

67 Section 62, DAO 2010-21.

Section 62. Temporary Exploration Permit

“While awaiting for the approval of the FTAA application by the President, the Secretary may, upon the request of

the FTAA applicant, issue a one-time nonrenewable Temporary Exploration Permit (TEP)with a term not exceeding one (1)

year to undertake exploration subject to the applicable provisions of Chapter V of these implementing rules and regulations:

Provided, That the term of the TEP shall be deducted from the exploration period of the FTAA: Provided, further, That in the

event that the FTAA application is disapproved by the President, the TEP is deemed automatically canceled.”

68 Section 57, DAO 2010-21.

69 Section 57-A, DAO 2010-21.

70 Section 63, DAO 2010-21.

71 Section 9, DAO 2012-07.

72 Section 65, DAO 2010-21.

73 Section 66, Dao 2010-21.

74 Ibid.

75 Section 109, DAO 2012-07.

76 MGB Primer on Mineral Processing Permit

77 MGB Primer on Mineral Processing Permits.

78 Section 111, DAO 2010-21.

79 Section 115, DAO 2010-21.

80 Section 74, DAO 2010-21.

81 Section 71, DAO 2010-21.

82 Ibid.

83 Section 72, DAO 2010-21.

84 Section 73, DAO 2010-21.

85 Section 81, DAO 2010-21.

86 Section 88, DAO 2010-21.

87 Section 82, DAO 2010-21.

88 Section 89, DAO 2010-21.

89 Area Status requirements for Quarry or Sand and Gravel / Guano / Gemstone Gathering Permit are found in Sections 75, 83,

and 90 of DAO 2010-21

90 Posting requirements for Quarry or Sand and Gravel / Guano / Gemstone Gathering Permit are found in Sections 76, 84, and

91 of DAO 2010-21

91 Processing/Registration/Issuance of Quarry or Sand and Gravel / Guano / Gemstone Gathering Permit are found in Sections

77, 85, and 91 of DAO 2010-21

92 Section 98, DAO 2010-21.

93 Republic Act No. 7638, as amended, otherwise known as ”The Department of Energy (DOE) Act of 1992”, mandates the DOE

to prepare, integrate, coordinate, supervise and control all plans, programs, projects and activities of the Government relative to

energy exploration, development, utilization, distribution, and conservation.

94 Only exploration work program in the application for coal operating contract that conforms to the exploration Work

Program Documentation as required under this Circular shall be accepted.

95 Annex B, DOE DC No. 2014-02-0005.

96 Section 4, DOE DC No. 2014-02-0005.

97 Ibid.

98 Model Coal Operating Contract.

99 Ibid.

100 Ibid.

101 Annex A, DOE DC 2014-02-0005.

102 Ibid.

103 The format of submission for the documents are the same for PECR requirements for coal

104 Payment form of the fee is the same for PECR requirements for coal.

105 Data from MGB were given by Engineer Rolando M. Fernandez, Chief, Mineral Rights Management System Section and data

from DOE were downloaded from DOE’s PECR 5 website.

106 The list is numbered 1-54 but numbers 26, 28, and 39 were skipped; information on the hectarage occupied were not

provided.

107 Section 202, DENR DAO 2010-21.

108 Section 205 and 206, DENR DAO 2010-21.

109 Rule IV and V of the Rules on Pleasing, Practice and Procedure before the Panel of Arbitrators and the Mines Adjudication

Board.

cx DENR Memorandum Order 99-34 provides that The Mines and Geosciences Bureau shall adopt the Three (3) Letters-Notice

policy in exacting compliance of mining applicants with all requirements to support mining applications. Thus, each Letter-Notice shall

give the mining applicant fifteen (15) to thirty (30) days upon receipt of the Letter-Notice to comply with the pertinent requirements:

Provided, That an interval of no more than thirty (30) days between deadlines shall be observed in sending the Letters-Notice. The

failure of the mining applicant to fully comply with the requirement as embodied in the Letters-Notice shall be a ground for denial of

the mining application.

cxi Section 3, MGB Memorandum Circular No. 2000-38.

cxii Section 4, DOE DC No. 2014-02-0005.

cxiii Rule 16 Section 3, DOE DC 2002-07-004.

cxiv Rule 17, Section 2, DOE DC 2002-07-004.

cxv Section 6, DAO 2012-07.

cxvi Section 25, DAO 2012-21.

cxvii Section 40, DAO 2010-21.

cxviii Section 46, DAO 2010-21.

cxix Section 66, DAO 2010-21.

cxx Section 40, RA 7942.

cxxi Section 99, DAO 2010-21.

cxxii DOE DC 2007-04-0003.