Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 1174)
The main purpose of Presidential Decree No. 1174 is to amend Presidential Decree No. 972 (Coal Development Act of 1976) to provide additional incentives to coal operators, ensure timely execution of coal operating contracts, and establish just compensation for landowners for the use of private lands in coal operations.
Holders of valid and subsisting coal permits were given an extension until January 27, 1978, to enter into and conclude duly executed coal operating contracts, provided they complied with unitization requirements.
If a coal permit, lease, or other rights are not converted to a coal operating contract by January 27, 1978, they shall be deemed automatically cancelled, and the area shall be open for coal operating contracts under Section 6 of the decree.
Operators shall be reimbursed for all operating expenses not exceeding 90% of the gross proceeds from production in any year. If expenses exceed 90%, the unrecovered expenses shall be recovered from succeeding years' operations.
Operators who have organized their area into a coal unit may be granted a special allowance not exceeding 40% of the balance of gross income after deducting all operating expenses, subject to conditions imposed by the Energy Development Board.
A Philippine corporation is one organized under Philippine laws with at least 60% of its capital, including voting shares, owned and held by Filipino citizens.
Operators must spend not less than P1,000,000 per coal block annually for exploration work. This can be reduced to P200,000 per block annually if open pit mining is suitable, as determined with the Energy Development Board.
Surface owners of titled lands shall receive at least One Peso (P1.00) for every ton of coal extracted. They are also entitled to compensation for damage to plants, trees, crops, and improvements caused directly by coal operations.
Coal operators may enter private lands upon prior written notification to the surface owners and occupants. If entry is refused or owners are uncontactable, the operator must notify the Energy Development Board and post a bond for potential compensation.
Coal operators may cut trees or timber necessary for coal exploration, development, and exploitation, subject to laws and the rules of the Bureau of Forest Development. If lands have existing timber concessions, agreements must be made, or disputes settled by the Energy Development Board.
Coal operators may acquire necessary water rights for their operations by applying to the Bureau of Public Works, without impairing existing water rights, and subject to government regulation to prevent monopolization.
Penal provisions under Chapter XIV of Presidential Decree No. 463 apply to coal operations, with references interpreted to mean PD No. 972 and the Energy Development Board, ensuring compliance and penalties for violations.
If any provision is declared unconstitutional, the other provisions of the decree remain unaffected and continue in full force and effect.