Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 972)
The short title of Presidential Decree No. 972 is "The Coal Development Act of 1976."
The state declares the policy to immediately accelerate the exploration, development, exploitation, production, and utilization of the country's coal resources by establishing a coal development program.
The Government, through the Energy Development Board or its successors/assigns, shall undertake active exploration, development, and production of coal resources, including executing coal operating contracts.
The blocking system refers to dividing coal regions into meridional blocks of 2 minutes latitude and 1.5 minutes longitude, each approximately 1,000 hectares, to organize coal exploration and exploitation areas.
Qualified parties can be awarded coal operating contracts by bid or negotiation, but no person may own more than fifteen (15) blocks of coal lands in any one coal region.
They must organize or consolidate their contiguous coal areas into coal units within six months, comply with requirements of their permits and leases, and convert these into coal operating contracts or risk automatic cancellation and reversion to the State.
The operator must provide technical service and financing; perform exploration, development, and production; use good mining practices; maintain detailed reports; allow inspections; reimburse operating expenses; and comply with environmental and safety laws.
Incentives include exemption from all taxes except income tax, exemption from customs duties on imported machinery and equipment, accelerated depreciation, right to remit foreign loans and contracts, preference in government loans, and the entry of alien technical personnel subject to conditions.
Coal exploration and exploitation is declared a public use and benefit; coal operators may enter private lands upon written notice, may post bonds for damages, and compensate surface owners based on the type of land and damage caused.
Surface owners of titled land shall receive at least One Peso (P1.00) for every ton of coal extracted on their land, plus compensation for damage to plants, trees, crops, or other improvements.
The initial exploration period is two years, which may be extended for another two years if obligations are met. The contract lapses if coal of commercial quantity is not found by then.
Such equipment and installations become the property of the Energy Development Board if not removed within one year after contract termination.
The operator must pay the government the amount it should have spent but did not in direct prosecution of its work obligations.
Transfers or assignments require prior approval of the Energy Development Board and may only be made to qualified persons capable of continuing mining operations and who have complied with contract obligations.
The Energy Development Board, created under Presidential Decree No. 910, shall carry out the provisions and has the authority to promulgate implementing rules and regulations.