Amendments to Mining Rules and Regulations

Legal basis, coverage of amendments

Republic Act No. 7942 (the “Philippine Mining Act of 1995”) is the primary enabling law for the amendments through Section 8.
Department Administrative Order (DAO) No. 96-40 provides the Revised Implementing Rules and Regulations for Republic Act No. 7942, and Section 275 of DAO No. 96-40 authorizes revision.
The amendments modify specific provisions of DAO No. 96-40 by amending identified sections and by adding new sections.
The Order is framed to align the implementing framework with an ongoing government regulatory purpose to continuously provide for a responsive regulatory framework.

Quarry and sand-gravel application access

Section 15 of DAO No. 96-40 is amended on “Areas Closed to Mining Applications” to allow the acceptance of Sand and Gravel Permit Applications without consent of prior mining applicants, subject to stated exceptions.
Sand and gravel permit applications do not require consent from an FTAA applicant, an Exploration Permit applicant, or a Mineral Agreement applicant except for Mineral Agreement or Exploration Permit applications concerning sand gravel and/or alluvial gold.
FTAA areas are opened for quarry resources mining applications pursuant to Section 53 of DAO No. 96-40 only upon the written consent of the FTAA applicants.
The Director must formulate the necessary guidelines to govern the amended provision on consent requirements.

Exploration permit term, renewals, and conditions

Section 18 of DAO No. 96-40 is amended to set the maximum term of an Exploration Permit:
- For nonmetallic minerals exploration: total term must not exceed six (6) years.
- For metallic minerals exploration: total term must not exceed eight (8) years.
The term of an Exploration Permit is two (2) years from date of issuance and is renewable for like periods, subject to the stated maximum totals (six (6) years or eight (8) years).
No renewal is allowed unless the permittee:
- complied with all permit terms and conditions, and
- has not been found guilty of violation of any provision of the Act and the implementing rules.
In cases where further exploration is warranted, and when the permittee has substantially implemented the Exploration and Environmental Work Programs verified by the Bureau/concerned Regional Office, the Secretary may grant further renewal beyond the ordinary cap through a renewed exercise of authority.
Any further renewal under the warranted-further-exploration condition requires the permittee to set up a performance surety equivalent to the expenditure requirement of the Exploration and Environmental Work Programs.
Feasibility studies must be included during the Exploration Permit term.
Section 22 is amended to conform the exploration permit terms and conditions to the same two-year term, renewable scheme, verification-based further renewal, performance surety requirement, and feasibility-studies requirement.

Transfers, conversions, and priority rights

A new Section 19-A is added to allow transfer or assignment of Exploration Permit applications:
- Transfer/assignment is allowed only with approval of the Director/concerned Regional Director.
- Approval must take into account national interest and public welfare.
- Transfer/assignment is subject to eligibility requirements.
- Transfer/assignment is not allowed in cases involving speculation.
A new Section 23-A is added to allow conversion of an Exploration Permit to a Mineral Agreement (MA) or Financial or Technical Assistance Agreement (FTAA):
- A permittee who conducted preliminary exploration activities may convert totally or partially at its option.
- Conversion requires filing a Letter of Intent with the Bureau prior to expiration of the Exploration Permit and a copy furnished to the concerned Regional Office.
- The Letter of Intent must state the intention over areas not covered by conversion.
- The MA or FTAA application must be filed with the concerned Regional Office within thirty (30) days upon filing of the Letter of Intent.
- Failure to file the MA or FTAA application within thirty (30) days is construed as an election to continue operations until expiration of the Exploration Permit.
- Upon compliance with mandatory requirements and payment of the required conversion fee, conversion is evaluated and approved subject to Chapter VI and Chapter VII of DAO No. 96-40 and all applicable provisions of the Act and DAO No. 96-40.
- The term of the Exploration Permit is deducted from the terms of the Mineral Agreement or FTAA period categories that include Exploration/Pre Feasibility Study/Feasibility Study.
Section 40-A (new) is added to allow conversion of a Mineral Agreement application into an Exploration Permit application:
- An applicant may convert totally or partially at its option.
- Conversion requires filing a Letter of Intent with the Director/concerned Regional Director.
- Conversion does not lose priority rights over the area.
- The Letter of Intent must include intent over areas not covered by the conversion.
- Upon compliance with mandatory requirements and payment of the required conversion fee, conversion is evaluated and approved subject to Chapter V of DAO No. 96-40 and all applicable provisions of the Act and DAO No. 96-40.
- The date of filing of the Exploration Permit application is reckoned from the date the Mineral Agreement application was filed.
A new Section 57-A is added to allow conversion of an FTAA application into an Exploration Permit application:
- An applicant may convert totally or partially at its option.
- Conversion requires filing a Letter of Intent with the Director/concerned Regional Director without losing priority rights over the applied area.
- The Letter of Intent must state intent over areas not covered by the conversion to an EP application.
- Upon compliance with mandatory requirements and payment of the required conversion fee, conversion is evaluated and approved subject to Chapter V of DAO No. 96-40 and all applicable provisions of the Act and DAO No. 96-40.
- The date of filing of the Exploration Permit application is reckoned from the date the FTAA application was filed.

Mineral agreement terms and special approvals

Section 39 is amended to incorporate the following among Mineral Agreement terms and conditions:
- The contractor must make representations and warranties that it has, or has access to, financing and technical capability and technology required to promptly and effectively carry out the agreement objectives.
- The contractor must understand timely utilization of resources under its supervision pursuant to periodic work programs and related budgets.
- When proper, the representations and warranties include an exploration period up to two (2) years, renewable for like periods but not exceeding the same maximum totals for nonmetallic (six (6) years) and metallic (eight (8) years) exploration as set by the exploration rules.
- Renewal of the exploration period requires:
  - annual review and approval by the Director under the implementing rules; and
  - in further exploration-warranted cases, substantial implementation of the Exploration and Environmental Work Programs verified by the Bureau/concerned Regional Office, subject to further renewal by the Secretary.
- The contractor must set up a performance surety equivalent to the expenditure requirement of the Exploration and Environmental Work Programs for further renewal.
- Feasibility studies must be included during the exploration period.
After the exploration period and prior to or upon approval of Declaration of Mining Project Feasibility by the Director, the contractor must finally relinquish to the Government any portion stated within the incorporated terms and conditions.

Temporary exploration permit and cancellation

Section 42 is amended to govern issuance of a Temporary Exploration Permit (TEP):
- After initial evaluation by the Bureau of the Mineral Agreement application, the Director may issue a one-time non-renewable TEP upon request of the applicant.
- The TEP term must not exceed one (1) year.
- The TEP is for undertaking exploration subject to applicable provisions of Chapter V of the implementing rules.
The Bureau’s initial evaluation includes consideration of:
- Area, Status and Clearance,
- financial and technical capability,
- Exploration and Environmental Work Programs,
- proof of consultation with the concerned community(ies),
- and absence of any adverse claim, protest or opposition, certified by the concerned Panel or Arbitrator/Mines Adjudication Board.
The TEP exploration period is deducted from the Mineral Agreement exploration period.
If the Mineral Agreement application is disapproved by the Secretary, the TEP is automatically canceled.
Upon approval of the TEP, the Director must cause registration with the Bureau/concerned Regional Office after payment of the required fees.

Special mines permit issuance and renewals

Section 48 is amended to allow a Special Mines Permit (SMP) application by a Mineral Agreement applicant whose application is valid and existing, and who has:
- Area Status and Clearance,
- NCIP Precondition Certification,
- endorsement from the concerned Sanggunian, and
- no pending mining dispute/conflict certified by the concerned Panel of Arbitrators/Mines Adjudication Board.
An SMP is issued by the Director upon clearance by the Secretary.
The SMP period is one (1) year and is renewable once.
Further renewal depends on:
- the nature of the deposit,
- propriety of mining operation,
- the applicant’s environmental and community relations track record,
- faithful compliance with SMP terms and conditions,
- and diligence in pursuing the Mineral Agreement application,
- all subject to Secretary approval.
If public welfare so requires, the Secretary may, after verification and evaluation of the Bureau, grant other form(s) of Special Mines Permit to address specific conditions in the area concerned.
The SMP is granted subject to conditions and requirements including that the applicant is already operating or has completed development/construction and is ready to begin operations, or has readily available ore for mining subject to Bureau verification.

FTAA filing requirements and feasibility considerations

Section 53 is amended to include additional mandatory requirements for FTAA applications, particularly prior to construction, development and/or utilization:
- Mining Project Feasibility Study,
- Development/Construction/Utilization Work Program,
- Approved Survey Plan of the mining area,
- Environmental Compliance Certificate, and
- Environmental Protection and Enhancement Program.
In approving the Mining Project Feasibility Study, the Director must take into consideration among others:
- expected life of mine,
- grade management,
- mining sequence,
- conservation measures,
- capability to contribute the Government Share, and
- capability of the project to absorb environmental and social costs.

Quarry permits: area, output, cost, renewal

Section 69 is amended to permit extraction of quarry, sand and gravel, guano and gemstone resources in private and/or public lands, subject to the noted quarry-specific framework.
For large-scale quarry operations involving cement raw materials, marble, granite and sand and gravel and construction aggregates, a Qualified Person may apply for a Mineral Agreement subject to Chapter VI of the implementing rules.
Large-scale quarry operations, including sand and gravel and lahar operations, must involve mechanized operation and must not exceed area limits of:
- For sand and gravel (including lahar):
  - Twenty (20) hectares for Individual, Corporation/Partnership/Association/Cooperative (first category),
  - Fifty (50) hectares for Individual, Corporation/Partnership/Association/Cooperative (second category).
- For marble, granite and construction aggregates:
  - Fifty (50) hectares for Individual, Corporation/Partnership/Association/Cooperative (first category),
  - One hundred (100) hectares for Individual, Corporation/Partnership/Association/Cooperative (second category).
- For cement raw materials such as limestone, shale and limestone:
  - Five hundred (500) hectares for Individual, Corporation/Partnership/Association/Cooperative (first category),
  - One thousand (1,000) hectares for Individual, Corporation/Partnership/Association/Cooperative (second category).
Section 71 is amended to set further qualifications for Quarry Permit issuance:
- A Qualified Person may apply with the Provincial Governor/City Mayor through the Provincial/City Mining Regulatory Board.
- The quarry resources area must be not more than five (5) hectares.
- The production rate must be not more than fifty thousand (50,000) tons annually and/or the project cost must be not more than Ten Million Pesos (P10,000,000.00).
- The permit term is five (5) years from date of issuance, renewable for like periods but not to exceed a total term of twenty-five (25) years.
- A renewal application must be filed before the expiry date of the Permit.
- Renewal requires compliance with permit terms and conditions and no finding of guilt for violation of the Act and implementing rules.
No Quarry Permit may be issued or granted on any area covered by a Mineral Agreement or FTAA, except on areas with written consent granted by the Mineral Agreement or FTAA contractor.
Existing Quarry Permits at the effectivity of the Order with production rate more than fifty thousand (50,000) tons annually and/or project cost more than Ten Million Pesos (P10,000,000.00):
- are not renewed; and
- are given preferential right to a Mineral Agreement application evaluated and approved under Chapter VI of DAO No. 96-40 and pertinent provisions of the Order.

Arrest, confiscation, complaints, and reporting enforcement

Section 118 is amended to strengthen enforcement where minerals are seized:
- If seized minerals/mineral products were mined/extracted/removed without any permit or authority under mining laws, final confiscation can be effected, followed by filing a complaint for theft of minerals.
- Bureau officers (including Regional Director and other Bureau personnel duly authorized by the Director), DENR personnel duly authorized by the Secretary, and duly authorized/deputed Permittee, Contractor, Permit Holder and other personnel have authority to arrest offenders and confiscate/seize illegally-sourced minerals/mineral products and the tools, equipment and conveyance used.
- The primary responsibility to police the permit/contract area against illegal mining operations is assigned to the Permittee, Contractor, or Permit Holder.
Section 122 is amended to require the filing of a complaint:
- The concerned Regional Office, Permittee, Contractor, Permit Holder, and/or other duly deputized personnel must file the complaint with the proper court for violation of Section 103 of the Act (Theft of Minerals).
Section 270 is amended to require submission of marketing documentation:
- Contractors/Permit Holders must submit to the Director a copy of existing and future Marketing Contract(s)/Sales Agreement(s) for registration, with a copy furnished to the concerned Regional Director, before any sale and/or shipment of mineral product is made.
- Submission is subject to the confidentiality clause.
- Contractors/Permit Holders must regularly inform the Director in writing of any revisions, changes, or additions to the marketing contract(s)/agreement(s).
- Contractors/Permit Holders must reflect in monthly/quarterly production, sales, and inventory reports and in the Integrated Annual Report the corresponding registration number(s) of the marketing contract(s)/sales agreement(s) governing export or sale of minerals.
- The Director may require other reports under the amended framework.

Fines, withholding, and renewal denials

Section 271 is amended to add consequences for late or non-submission of reports under Section 270:
- Late or non-submission is a ground for the withholding, upon due notice, of other pending transactions or processing of other mining applications of the Permittee/Contractor/Permit Holder with the Bureau and/or concerned Regional Office.
For renewal applications, Permittee/Contractors/Permit Holders must secure a written Certification from the concerned PMRB/Regional Director/Director as to the timely and complete submission of required reports.
Non-submission of required reports is a ground for denial of the renewal application.
The Order also provides that additional fines shall be imposed under Section 271, with the specific fine list appearing after the stated amended insertion.

Repeal clause and administrative legal effect

All existing orders, rules and regulations, memorandum circulars, directives, or parts thereof that are contrary or inconsistent with the Order are repealed, amended and/or modified accordingly.
Effectivity is governed by the dual publication and National Administrative Register registration timing rule: fifteen (15) days after complete publication and fifteen (15) days after registration.