PHILIPPINE MINING ACT OF 1995

(RA 7942)
PEOPLES SMALL-SCALE MINING ACT
(RA 7076)

EVOLUTION OF MINING LAWS IN THE PHILS.

ROYAL DECREE OF MAY 1867 aka THE SPANISH MINING LAW - Prevailing law
before cession of Philippines to the US

During the American occupation Act of Congress of July 1, 1902 or Philippine Bill of 1902
contained provisions the open and free exploration, occupation and purchase of mineral
deposits and the land where they may be found.

ACT 624 approved on February 7, 1903 amending Phil. Bill of 1902 prescribed
regulations to govern the location and manner of recording mining claims and amount of
work .

On November 15 1935, Commonwealth Constitution took effect. The 1935 Constitution

declared that all natural resources of the Philippines including mineral lands and minerals
to be property of the State.

Adhered to the Regalian Doctrine but respected mineral claims and/or rights
acquired before the enacment of CA 137

EVOLUTION OF MINING LAWS IN THE PHIL.

Under the 1973 Constitution, it did not expressly qualify the application of the Regalian
doctrine as being subject to any right granted before the effectivity of 1935 Constitution.

November 7, 1936 the First National Assembly enacted CA 137 aka the MINING
ACT

Conditional application of Regalian doctrine is appended on PD 463 enacted on May

17, 1974
Required to comply with annual actual work requirement

October 14, 1977 PD 1214 was enacted. Required all the holders of unpatented mining
claims to secure mining lease contracts within one year from effectivity.

Filing of application considered as waiver

Non-filing would cause forfeiture of all their rights to their claims.

1987 Constitution reiterates the dominant features of 1935 and 1973 Constitution
EVOLUTION OF MINING LAWS IN THE PHIL.
On March 3, 1995, RA 7942 or The Philippine Mining 1995 instituting a new system
for the exploration, development, utilization and conservation of the natural resources in
the country, was enacted.

Old system of EDU through licenses, concessions or leases has been omitted under
the new system.

Constitutional policy shifted toward full control and supervision of the State.
1995 Mining Act nonetheless respects previously issued valid and existing licenses

INTENTION OF NATIONALIZATION
Insure conservation for filipino posterity
Serve as an instrument of National Defense, helping prevent the extension to the
country of foreign control thru peaceful economic penetration
Avoid making Philippines as source of intl. conflicts with the consequent danger to its
internal security & independence.

APPLICATION
RA 7942 has repealed or amended all laws, Eos, PDs, RRs that are inconsistent with its
provisions
However, does not apply retroactively to license, concession or lease granted by the govt.
under the 1973 Constitution
Only prospective application
HIGHLIGHTS OF MINING ACT OF 1995
The Philippine Mining Act of 1995 and its Revised Implementing Rules and Regulations
(RIRR) is considered in the industry today as one of the most socially and
environmentally-sensitive legislations in its class. It has specific provisions that take into
consideration:
Local government empowerment;
Respect and concern for the indigenous cultural communities;
Equitable sharing of benefits of natural wealth;
Economic demands of present generation while providing the necessary foundation for
future generations;
Worldwide trend towards globalization; and
Protection for and wise management of the environment.

HIGHLIGHTS OF MINING ACT OF 1995

STATE POLICY:

To ensure for the benefit of the Filipino people the full exploration and development as well as

the judicious disposition, utilization, management, renewal and conservation of the countrys
forest, miner, lands, fisheries, wildlife, off-shore areas and other natural resources, consistent
with the necessity of maintaining a sound ecological balance and protecting and enhancing the
quality of the environment and the objective of making the exploration, development and

utilization of such natural resources equitably accessible to the different segments of the present
as well as future generations.

All mineral resources both in public and private lands within Phil. territory and exclusive
economic zone are owned by the STATE. It shall be the responsibility of the State to
promote their rational exploration, development, utilization and conservation through
combined efforts of govt. and private sector in order to enhance national growth in a way
that effectively safeguards the environment and protect rights of affected communities.
Mineral production is a major support of the national economy, and therefore the
intensified discovery, exploration development and wise utilization of the countrys
mineral resources are urgently needed for national development.
HIGHLIGHTS OF MINING ACT OF 1995
GOVERNING PRINCIPLES
The Implementing Rules and Regulations (DENR Administrative Order No.96-40) of the
Philippine Mining Act of 1995 provides strict adherence to the principle of
SUSTAINABLE DEVELOPMENT.
This strategy mandates that the needs of the present should be met without compromising
the ability of the future generations to meet their own needs, with the view of improving
the quality of life, both now and in the future.
Sustainable development provides that the use of mineral wealth shall be pro-people and
pro-environment in sustaining wealth creation and improve quality of life.

HIGHLIGHTS OF MINING ACT OF 1995

Mining activities shall be undertaken with due and equal regard for economic and
environmental considerations, as well as for health, safety, social and cultural concerns.
Conservation of minerals is effected not only through technological efficiencies of mining
operations but also through the recycling of mineral-based products, to effectively
lengthen the usable life of mineral commodities.
The granting of mining rights shall harmonize existing activities, policies and programs of
the Government that directly or indirectly promote self-reliance, development and
resource management. Activities, policies and programs that promote community-based,
community-oriented and procedural development shall be encouraged, consistent with the
principles of people empowerment and grassroots development.
ORGANIZATIONAL IMPLEMENTATION
The Mining Act reverts back the Mines and Geosciences Bureau (MGB) from a Staff to a
Line Bureau. Under this arrangement, the MGB Central Office has now the administrative
jurisdiction and responsibility over its regional offices. The Line Bureau structure was
contemplated to ensure organizational efficiency and flexibility in managing limited
resources and technical expertise.

The Department

Department through the Secretary shall have the authority to enter into mineral
agreements on behalf of the government upon the recommendation of the Director and
promulgate rules and regulations necessary to implement provisions of RA 7942

Mechanism of inspection and visitorial rights over mining operations and institute
reportorial requirements in the manner.

The authorities/responsibilities of the MGB are as follows:

Management and administration of mineral lands and resources, including the granting of
mining permits and mineral agreements;

Enforcement and monitoring of Environmental Work Programs (EWP) and

Environmental Protection and Enhancement Program (EPEP);

ORGANIZATIONAL IMPLEMENTATION

Establishment and operationalization of the Contingent Liability and Rehabilitation Fund

(CLRF), as well as the mandatory Final Mine Rehabilitation and Decommissioning Plan;

Cancel mining applications and mining rights violating the provisions of the Mining Act,
its implementing rules and regulations, and/or the terms and conditions of a mining
permit/contract/agreement;

For the Regional Directors to impose Cease-and-Desist Orders (CDO);

To assist the Environmental Management Bureau (EMB)/DENR Regional Offices in

processing/evaluation/conduct of EIA in mining projects;

To manage and administer Mineral Reservation area (Note: Mineral Reservations, under
the New Act, include offshore marine areas)

To deputize the PNP, LGUs, NGOs and other responsible entities to police mining
activities;

POWERS/AUTHORITIES OF THE MGB

QUASI-JUDICIAL POWERS OF THE MGB

To

effectively discharge its task as the govts arm in the adminstration and disposition of
mineral resources, PD 1281 conferred upon the Bureau original and exclusive jurisdiction
to hear and decide cases involving among others the cancellation and/or enforcement of
mining contracts due to refusal of operator/claimowner to abide by the terms and conditions
thereof.
DOCTRINE OF PRIMARY JURISDICTION

In cases

involving matters that demand the special competence of administrative agencies,

then relief must first be obtained in an administrative proceeding before a remedy will be
supplied by the courts even though the matter is within the proper jurisdiction of the court.

Findings

of government agencies with respect to the construction of statutes the

implementation of which has been reposed in them are controlling on the courts.
NON-INTERFERENCE BY COURTS

Findings of fact made therein must be respected, as long as they are supported by substantial
evidence even not overwhelming or preponderant. It can only be set aside on proof of gross
abuse of discretion, fraud, or error of law.

ROLE OF LOCAL GOVERNMENTS

The

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

In consonance with the Local Government Code of 1992 (LGC), LGUs have a share of forty

percent (40%) of the gross collection derived by the National Government from mining taxes,
royalties and other such taxes, fees or charges from mining operations in addition to the
occupational fees (30% to the Province and 70% to the Municipalities concerned);

In consonance with the LGC and the People Small-Scale Mining Act (RA 7076), the LGUs shall

be responsible for the issuance of permits for small-scale mining and quarrying operations,
through the Provincial/City Mining Regulatory Boards (PMRBs/CMRBs);

ROLE OF LOCAL GOVERNMENTS

To actively participate in the process by which the communities shall reach an informed
decision on the social acceptability of a mining project as a requirement for securing an
Environmental Compliance Certificate (ECC);

To ensure that relevant laws on public notices, consultations and public participation are
complied with;

To participate in the monitoring of mining activities as a member of the Multipartite

Monitoring Team, as well as in the Mine Rehabilitation Fund Committee;

To act as mediator between the Indigenous Cultural Communities (ICCs) and the mining
contractor as may be requested/necessary;

To be the recipients of social infrastructures and community development projects for the
utilization and benefit of the host and neighboring communities; and

To coordinate with and assist the DENR and the MGB in the implementation of the
Mining Act and the IRR.

SCOPE OF APPLICATION
AREAS OPEN TO MINING OPERATIONS

All mineral resources in public or private lands, including timber or forestlands as defined
in existing laws, shall be open to mineral agreements or financial or technical assistance
agreement applications.

This is subject to any existing rights or reservations and prior agreements.

Any conflict to be heard and resolved by the pane of arbitrators.

AREAS CLOSED TO THE MINING APPLICATION

Pursuant to the Mining Act of 1995 and in consonance with State policies and existing laws,
areas may either be closed to mining operations, or conditionally opened, as follows:

Areas covered by valid and existing mining rights and applications;

SCOPE OF APPLICATION
Old growth or virgin forests, mossy forests, national parks, provincial/municipal forests,
tree parks, greenbelts, game refuge, bird sanctuaries and areas proclaimed as marine
reserve/marine parks and sanctuaries and areas proclaimed as marine reserve/marine
parks and tourist zones as defined by law and identified initial components of the NIPAS,
and such areas as expressly prohibited thereunder, as well as under DENR Administrative
Order No. 25, s. 1992, and other laws;
Areas which the Secretary may exclude based, inter alia, or proper assessment of their
environmental impacts and implications on sustainable land uses, such as built-up areas
and critical watershed with appropriate barangay/municipal/provincial Sanggunian
ordinances specifying therein the location and specific boundaries of the concerned area;
Areas expressly prohibited by law.

SCOPE OF APPLICATION
The following areas may be opened for mining operations, the approval of which are subject to
the following conditions:

Military and other government reservations, upon prior written consent by the government
agency having jurisdiction over such areas;

Areas near or under public or private buildings, cemeteries, and archaeological and historic

sites, bridges, highways, waterways, railroads, reservoirs, dams and other infrastructure
projects, public or private works, including plantations or valuable crops, upon written consent
of the concerned government agency or private entity, subject to technical evaluation and
validation by the MGB;

Areas covered by FTAA applications, which shall be opened, for quarry resources upon written

consent of the FTAA applicants/contractors. However, mining applications for sand and gravel
shall require no such consent;

DENR Project areas upon prior consent from the concerned agency.

ANCESTRAL LANDS AND ICC AREAS

The Mining Act fully recognizes the rights of the Indigenous Peoples (IPs)/Indigenous
Cultural Communities (ICCs) and respect their ancestral lands. Thus, in accordance with
DENR Administrative Order No. 2, and consistent with the new Indigenous Peoples Rights
Act (IPRA), the following shall be observed:

No mineral agreements, FTAA and mining permits shall be granted in ancestral

lands/domains except with prior informed consent in: a) CADC/CLC areas; and b) areas
verified by the DENR Regional Office and/or appropriate offices as actually occupied by
Indigenous Cultural Communities under a claim of time immemorial possession;

Where written consent is granted by the ICCs, a royalty payment shall be negotiated which
shall not be less than 1% of the Gross Output of the mining operations in the area. This
Royalty shall form part of a Trust Fund for socioeconomic well being of the ICCs in
accordance with the management plan formulated by the ICCs in the CADC/CALC area.

(In a large-scale mining operation the 1-% Royalty could easily run into several tens of
million pesos per year).

Representation in the Multi-partite Monitoring Committee;

PERMITS GRANTED TO QUALIFIED PERSONS

EXPLORATION PERMIT - these permits are issued to qualified individuals or local and
foreign corporations granting them to undertake purely mineral exploration activities.

Has a term of two (2) years renewable for like terms but not to exceed a total term of six (6)

years for non-metallic minerals and eight (8) years for metallic minerals. The Permittee may
eventually apply for Mineral Agreement or FTAA, subject to maximum areas limitations.
MAXIMUM AREAS:

Onshore in any one province

For individuals 20 blocks
Partnerships, corpo, assoc., coops - 200 blocks
Onshore in the entire Philippines
For individuals 40 blocks
For partnerships, corpos, assocs., coops 400 blocks
Offshore, beyond 500 meters from the mean low tide level

For individuals 100 blocks

For partnerships, corpos, assocs., coops 1,000 blocks

MINERAL AGREEMENTS

Mineral Agreement - are granted to individuals or local corporations giving them the
right to explore, develop and utilize the minerals within the contract area. There are three
modes of Mineral Agreements namely:

Mineral Production Sharing Agreement (MPSA) - an agreement wherein the

Government grants to the contractor the exclusive right to conduct mining operations
within, but not title over, the contract area and shares in the production whether in kind or
in value as the owner of the minerals therein. The Contractor shall provide the necessary
financing technology, management and personnel;

Co-Production Agreement (CA) - an agreement between the Government and the

Contractor wherein the Government shall provide inputs to the mining operations other
than the mineral resources; and

Joint Venture Agreement (JVA) - an agreement where the Government and the
Contractor organize a joint venture company with both parties having equity shares. Aside
from earnings in equity, the Government shall be entitled to a share in the gross output.

MINERAL AGREEMENTS
ELIGIBILITY

Filipino citizen, of legal age and with capacity to contract

In case of corp., partner., assoc., or coop must be organized or authorized for the purose of
engaging in mining, duly registered in accordance with law & at least 60% of capital owned by
Filipino citizens

Possess satisfactory envi. track record if applicant has been in industry for any length in time.
TERM: Term of 25 years, renewable for another term of 25 years;
ALLOMAXIMUM ALLOWABLE AREAS:

Onshore in any one province

For individuals 10 block
Partnerships, corpo, assoc., coops - 100 blocks
MINERAL AGREEMENTS

Onshore in the entire Philippines

For individuals 200 blocks

For partnerships, corpos, assocs., coops 400 blocks

Offshore, in the entire Philippines

For individuals 50 blocks

For partnerships, corpos, assocs., coops 500 blocks

Provides for mandatory relinquishment such that the maximum final area shall not exceed
5,000 hectares for metallic minerals or 2,000 hectares for non-metallic mines;

Subject to Environmental Work Program (EWP) during the exploration period, and to
Environmental Compliance Certificate (ECC) and Environmental Protection and
Enhancement Program (EPEP) during the development and operation period;

Approval by the DENR Secretary

Financial or Technical Assistance Agreements (FTAA)

A mining contract for large-scale exploration, development and utilization of minerals

which allows up to 100% foreign equity participation/ownership.

TERMS

Term of 25 years, extendable for like periods;

Maximum allowable area: Aggregate total of 81,000 in the entire country;

Exploration Period 2 years renewable for another 2 years;

Pre-Feasibility Study Period 2 yrs;
Feasibility Study Period 2 Years;
Development, construction utiliization remaining period of FTAA
Allowed only for metallic minerals such as gold, copper, nickel, chromite, lead, zinc and
other metals;

Mandatory area relinquishments : 25% on the first 2-yrs; 10% per year thereafter;
Maximum final area: 5,000 hectares for each mining area;
FTAA
Subject to Environmental Work Program (EWP) during the exploration/pre-feasibility
study/feasibility study period, and to Environmental Compliance Certificate (ECC) and
Environmental Protection and Enhancement Program (EPEP) during the development
and operation period;
Approval by the President, upon recommendation of the Negotiating Panel composed of
the DENR Secretary, the MGB Director, and representatives from NEDA, DTI/BOE, Dept.
of Finance, DENR Field Operations Office, DENR Legal Office, and MGB Regional Office.
While the maximum area allowable for FTAA is apparently substantial, the eventual
significant area reduction is ensured by the mandatory relinquishment provision. Further,
the P50/ha/yr Occupation Fees and the stipulations for minimum ground expenditures
that correspondingly graduate annually upwards are expected to deter any company for
holding on unnecessarily any excess land areas that are unmineralized.

OTHER PERMITS
SAND AND GRAVEL PERMITS

Commercial

sand and gravel permits - are issued for the extraction, removal and
disposition of sand and gravel and other loose or unconsolidated materials. Permits with areas
not exceeding 5 hectares are issued by the Provincial Governor/City with a term of 1 year
renewable for like terms.

Industrial sand and gravel permits -

covering an area of more than 5 hectares but not to

exceed 20 hectares for term of five years from date of issuance. Renewable for like periods but
not to exceed 25 years.

Exclusive sand and gravel permits derived from public land for own use of applicant

covering an area of not more than 1 hectare for a non-renewable period not exceeding 60 days
with a maximum volume of 50 cubic meters.
QUARRY RESOURCES PERMITS - In accordance with the Local Government Code of 1991,
mining permits with areas not more than 5 hectares have been devolved to the Provincial
Governor or the City Mayor for approval upon Recommendation of the Provincial/City Mining
Regulatory Board. These include the Quarry Permit, Guano Permit, Gratuitous Permit and
Gemstone Gathering Permit.

OTHER PERMITS

SMALL-SCALE MINING PERMITS - In consonance with the Local Government Code

and RA No. 7076, small-scale mining permits are approved and issued by the City
Mayor/Provincial Governor, upon recommendation of the Provincial/City Mining
Regulatory Board.

MINERAL PROCESSING PERMIT a permit granting the right to process minerals.

It is issued by the DENR Secretary with a term of 5 years and renewable for like terms.

ORE TRANSPORT PERMIT no minerals, mineral products and by-products shall be

transported unless accompanied by an Ore Transport Permit. The OTP is issued by the
MGB Regional Director concerned.

MINERAL TRADING REGISTRATION must be registered with the DTI and

accredited by the Department with a copy of said registration submitted to the Bureau.

Absence of any of the permits is considered prima facie evidence of illegal mining and shall
cause the confiscation/seizure of minerals or mineral products, and the tools and
equipment including conveyance used in commission of offense

CUSTODY:

PNP, EIIB, Coast Guard shall notify Regional Office concerned and turn over siezed
items for proper investigation and disposition
For confiscated gold or precious metals, RO shall first determine if they conform with BSP
specifications
SURFACE RIGHTS

The contractor is given right to enter and occupy mining areas or lands upon payment of
just compensation, under sec 75 of RA 7942 when for convenience it is necessary to build,
construct or install infrastructures such as roads, railroads, mills, waste dumpsites etc..

Section 76 constitutes compensable taking for public use.

Mining operators may invoke the power of eminent domain for entry, acquisition and use
of private lands and not only to build or construct infrastructures.

Determination of just compensation by Panel of Arbitrators is only preliminary and the

courts are not exlcuded from taking cognizance of expropriation and just compensation
cases.

Sec 76 was first found in Sec 27 of CA 137 which took effect on November 7, 1936
Similarly found in PD 463 aka The Mineral Resources Development Decree of 1974
Hampered by difficulties and delays in securing surface rights for entry into private lands
for purposes of mining operations, PD 512 was passed on July 19, 1974. It provided a new
system of surface rights acquisition by mining prospectors and claimants.

ASSIGNMENT OR TRANSFER & FILING OF MAs

Transfer of rights & obligations of Mineral agreements except FTAA subject to the prior
approval of the Secretary.

Deemed automatically approved if not acted upon by the Secretary within 30 days from
official receipt thereof unless patently illegal or unconstitutional.

Copies to be submitted to the President and the latter shall provide a list to Congress
approved MAs within 30 days from approval by the Secretary

MAs shall be filed in the region where the areas of interest are located except in mineral
reservations it shall be filed with the Bureau

FTAAs may be assigned or transferred in whole or in part, to a qualified person subject to

the prior approval of the President. The president shall notify congress of such transfer or
assignment within 30 days from the approval thereof.
ENVIRONMENTAL AND SAFETY PROTECTION

A significant feature of the Mining Act of 1995 and its IRR is the premium given to
environmental protection. Stringent measures were institutionalized to ensure the
compliance of mining contractors/operators to internationally accepted standards of
environmental management.

Mandatory allocation of an approximately 10% of the initial capital expenditures of the

mining project for environment-related activities;

Mandatory annual allocation of 3-5% of the direct mining and milling costs to implement
an Annual Environmental Protection and Enhancement Program;

Mandatory establishment of a MINE REHABILITATION FUND (MRF) to be composed of:

a) a Monitoring Trust Fund of P50,000 which is replenishable; and b) a Rehabilitation
Cash Fund of P5 Million or 10% of the EPEP cost, whichever is lower. Such Funds are to be
deposited as trust account in a government depository bank to be managed by MRF
Committee composed of the MGB Regional Director, DENR Regional Executive Director,
representatives from the LGU and an NGO, and the Contractor;

ENVIRONMENTAL AND SAFETY PROTECTION

Mandatory establishment of the Contingent Liability and Rehabilitation Fund (CLRF) to

be managed by a Steering Committee chaired by the MGB Director with members coming
from concerned government agencies;

Conduct of Environmental Work Program (EWP) during the exploration stage and an
Environmental Protection and Enhancement Program (EPEP) during the development
and operations stage.

Institutionalization of an incentive mechanism to mining companies utilizing engineered

and well-maintained mine waste and tailings disposal systems with zero-discharge of
materials/effluents and/or with wastewater treatments plants;

Mandatory constitution and operationalization of a Multipartite Monitoring Team

composed of representatives from the MGB, DENR Regional Office, affected communities,
Indigenous Cultural Communities, an environmental NGO, and the Contractor/Permit
Holder, to monitor mining operations;

Mandatory establishment and operationalization of a Mine Environmental and Protection

and Enhancement Office (MEPEO) in each mining/contract area which shall set the level
of priorities and marshal the resources needed to implement environmental management
programs;

ENVIRONMENTAL AND SAFETY PROTECTION

Imposition of higher penalty (P50.00/MT) to mining companies that are found to have
illegally discharged and/or discharging solid fractions of tailings into areas other than the
approved tailings disposal area;

Authorizing the MGB Regional Director to summarily suspend mining/quarrying

operations in case of imminent danger to human safety or the environment;

Mandatory compliance with the rules and regulations of the Mines Safety Rules and
Regulations by all Contractors, Permittees, Lessees, Permit Holders and Service
Contractors; and

Institution of the Presidential Mineral Industry Environmental Award to be given to

exploration or operating mining companies based on their exemplary environmental
performance and accomplishments.

No person under 16 shall be employed in any phase of mining operations and no person
under 18 shall be employed underground in a mine.

If more than 50 workers, at least 1 licensed mine engineer with 5 years experience in
mining operation and 1 registered foreman must be assigned in the mining area.

ENVIRONMENTAL AND SAFETY PROTECTION

No person under 16 shall be in any phase of mining ops.;
No person under 18 shall be employed underground in a mine
Mining & quarrying ops employ more than 50 workers shall have at least one mining
engineering with atleast 5 years experience in mining ops and one registered foreman;
Mines Regl. Director may summarily suspend the mining or quarrying ops in case of
imminent danger to life or property;
PAB under Section 19 of EO 192 vested it the specific power to adjudicate pollution cases.
Section 66 of RA7942 gives the mines regional director exclusive jurisdiction
Social Acceptability
Mining contractors/operators shall allocate a minimum of 1% of their direct mining and
milling costs for the development of the following:
Host and neighboring communities and mine camp to promote the general welfare of
inhabitants in the area. This includes construction and maintenance of infrastructures
such as roads and bridges, school buildings, housing and recreational facilities, water and
power supplies, etc.;
Mining technology and geosciences, particularly those related to improved efficiencies and
environmental protection and rehabilitation.
INCENTIVES & TAXES

Mining contractors of MPSA and FTAA can avail of fiscal and non-fiscal incentives granted
under the Omnibus Investment Code of 1987, as amended.

In addition to these incentives, the following are also granted by the Mining Act.
Incentives for pollution control devises;
Incentives for income tax carry forward of losses;
Incentives for income tax accelerated depreciation on fixed assets;
Investment guarantees, such as investment repatriation, earnings remittance, freedom
from expropriation, and requisition of investment, and confidentiality of information.

For FTAA contractors, an additional incentive, in the form of a tax holiday on national
taxes is granted from the start of the construction and development period up to the end of
the cost recovery period, but not to exceed five years from the start of commercial
operation. After the recovery period, the contractor starts paying these taxes, including the
additional government share based on negotiated scheme.
INCENTIVES & TAXES
Mining activities generate income both for the local and national governments. The
following tax payments are provided for in the Mining Act, the National Internal Revenue
Code and other laws:

Payments to the National Government:

Corporate Income Tax

Excise Tax on Minerals
Customs Duties
Value Added Tax
Royalties on Minerals Extracted from Mineral Reservation
Documentary Stamp Tax
Capital Gains Tax

Payments to Local Government:

Business Tax
Real Property Tax
Registration Fees
Occupation Fees
INCENTIVES & TAXES
Withholding Taxes on:
Payroll
Interest Income in Banks
Royalties to Technology Transfer
Interest Payments to Foreign Loans
Foreign Stockholders Dividends
Remittance to Principal

In addition to the above taxes, duties and fees, mining contractors are required to
pay or expend on:
Additional Government Share for FTAA contractors
Royalties to Landowners/Claim owners
Royalties to Indigenous Peoples
Social Development Programs
Environmental Obligations

Research and Development of Mining Technology and Geosciences

The benefits of mining projects provides approximately not less than sixty percent (60%)
of the total proceeds of the mining operations to the government and the Filipino people,
considering that the contractor infused 100% of the capital. These proceeds include all
direct and indirect taxes and fees and benefits to other Filipinos.
SETTLEMENT OF CONFLICTS

Panel of Arbitrators is composed of 3 members, 2 of whom must be members of the

Philippine Bar in good standing and 1 a licensed engineer or a professional in the related
field.

The panel shall serve as such in addition to their work without additional compensation.

Decisions of the panel may be appealed to the Mines Adjudication Board within 15 days
from receipt of decision and the MAB must decide with 30 days from submission.

MAB is composed of 3 members with the Secretary as chairman and the Director of MGB
and Undersecretary for Operations of Department as members.

Adjudication of mining cases is purely an administrative matter and its decisions are
appealable to the CA

MAB has no authority over pollution cases.

PEOPLES SMALL SCALE MINING ACT

The panel shall have exclusive jurisdiction to hear & decide on 1] disputes involving rights
to mining areas; 2] disputes involving mineral agreements or permit and 3] permits
involving surface owners, occupants and claimholders/concessionaires and 4] disputes
pending before the Bureau and the Department at the effectivity of this ACT.

REPUBLIC ACT 7076

June 27, 1991

SMALL SCALE MINING

ART. 12 Sec. 2 x x x x The Congress may, by law, allow small-scale utilization of
natural resources by Filipino citizens . . .

SMALL SCALE MINING

- refers to mining activities that rely heavily on manual labor

using simple tools and methods. It does not use explosives or heavy mining equipment and
requires only small capital investment.

Has been practiced long before Spanish colonization.

In the 70s limited to intermittent alluvial gold placer through direct panning or using crude
sluice box

Became significant contributor to minerals industry and national economy with the discovery
of gold rush site in Davao in the 80s

PD 1899 one of the first laws that governed small scale mining operations in view of its capacity
to generate income for the rural poor.

ANCESTRAL LANDS

No Ancestral land may be declared as a peoples small-scale mining area without the prior
consent of the cultural communities.

If Ancestral lands are declared as such, members of the cultural communities therein shall
be given priority in the awarding of small scale mining contracts as provided under IPRA,
RA 7076 and RA 7942.

If cultural communities give consent, royalties shall be paid to them by the parties to the
mining contracts.

AWARD OF SMCs

Awarded to miners who have voluntarily organized and have been registered as an
individual miner or cooperative.

Only one mining contract may be awarded at any one time within one year from date of
award.

Board shall determine reasonable size and shape of the contract but in no case shall the
area exceed 20 hectares per contractor and the depth or length not the exceed the
recommendation of the Director taking into acct. the following:

Size and capitalization of the coop

Size of mineral deposits
Safety of miners
Quantity of mineral deposits
Environmental Impact

Contract shall have a term of two years, renewable for like periods

CLAIMOWNERS

Claimowners and small-scale miners are encourage to enter into voluntary and acceptable
contractual agreement.

Claimowner is exempt from performance of annual work obligation and payment of

occupation fees, rental and RPT

Royalty equivalent to 1.5% of the gross value of metallic mineral output or 1% of the gross
value of non-metallic mineral outpuT

Mining contractors shall be the owner of all mill tailings and may sell or have it processed
in any custom mill in the area.

If contractor decides to sell, claimowner or landowner shall have preemptive right to

purchase the same at prevailing market prices.

All gold produced by small scale miners shall be sold to Bangko Sentral or duly authorized
representative.

Custom Mills shall be limited to mineral processing zone only to ensure safe and efficient
custom mills

Custom mills shall be constituted as withholding agents for the royalties, production share
or other taxes due the government.