Mineral Resources Development Decree of 1974

Policy, purpose, and modernization thrust

The Decree establishes that mineral production is a major support of the national economy, requiring intensified discovery, exploration, development, and wise utilization of mineral resources for national development.
The Decree recognizes that large undeveloped mineral areas and the proliferation of small mining claims deter modern development and calls for well-planned exploration, development, and systematic exploitation.
The Decree states that modern exploratory and development techniques require considerable capital and resources, so persons with financial resources and technical skills must be encouraged to undertake operations.
The Decree directs modernization by removing deficiencies and limitations in existing laws and improving administration and disposition to promote and encourage development and exploitation.

Core definitions and governing terms

“State” means the Republic of the Philippines (Section 2[a]).
“President” means the President of the Republic of the Philippines (Section 2[b]).
“Government” means the Government of the Republic of the Philippines (Section 2[c]).
“Secretary” means the Secretary of Natural Resources (Section 2[d]).
“Director” means the Director of Mines (Section 2[e]).
“Minerals” means all naturally occurring inorganic substances in solid, liquid, or intermediate states, including coal, but expressly includes soil supporting organic life, sand and gravel, guano, petroleum, geothermal energy, and natural gas while stating they are governed by special laws (Section 2[f]).
“Qualified person” means a Filipino citizen of legal age with capacity to contract, or a corporation or partnership registered with the SEC, with at least 60% of capital owned by Filipino citizens (Section 2[n]).
“Regulations” means rules and administrative orders promulgated by the Secretary to implement the Decree, or issued by the Director as delegated by the Secretary (Section 2[p]).

Ownership and openness of mineral deposits

All mineral deposits in public or private lands within the territorial limits of the Philippines belong to the State, are inalienably and imprescriptibly owned, and are administered, disposed of, and exploited under this Decree and related rules and other laws (Section 3).
Ownership or right to use lands for non-mining purposes does not include the ownership or right to develop, exploit, or utilize mineral deposits found in, on, or under those lands, except for quarry resources as provided in this Decree (Section 4).
Valuable mineral deposits in public land (including timber or forest land as defined in Presidential Decree No. 389, Forestry Reform Code) and in private land not closed to mining location, and the land in which they are found, are free and open to prospecting, occupation, location, and lease, subject to existing rights or reservations (Section 5).

Mineral reservations and offshore coverage

Upon the recommendation of the Secretary based on reports submitted by the Director, the President may set aside and establish an area of the public domain as a mineral reservation and prescribe terms and conditions for disposition and operation.
The President may alter or modify boundaries of mineral reservations and may revert mineral reservations to the public domain without prejudice to any prior subsisting rights (Section 6).
Valid mining claims existing within a reservation at the time the reservation is established are not prejudiced or impaired (Section 7).
When reserved lands established for purposes other than mining are found more valuable for mineral contents, such lands may be withdrawn from the reservation and established as a mineral reservation upon the Secretary’s recommendation (Section 8).
Where practicable, prospecting and exploration in reserved lands may be undertaken by the Bureau of Mines or proper government agency; opening reserved lands to mining may be done by the Government or its instrumentality, or by a qualified person through competitive bidding under Secretary-prescribed terms and conditions, or through contracts of service with duly qualified domestic/foreign parties, subject to President approval (Section 8).
Where proper government agencies cannot undertake prospecting and exploration, qualified persons or corporations may undertake prospecting and exploration under Secretary rules; the right to exploit is awarded by the President, upon Director recommendation and Secretary approval, with priority for persons/corporations who undertook prospecting and exploration (Section 8).
Mineral reservations are closed to mining location, but the Government may prospect, develop, and exploit through agencies/instrumentalities or through an independent contractor selected by negotiated contract or after public bidding conducted by the Secretary through the Director after proper notice published, subject to President approval (Section 9).
All submerged lands beneath territorial waters and on the continental shelf or its analogue in an archipelago are established as mineral reservations subject to existing rights, and the President may declare these reservations or parts open or closed to mining location and dispose them like other mineral reservations (Section 10).
Submerged lands are those under water during low tide, as determined by the Bureau of Coast and Geodetic Survey (Section 10).

Mining claim location and registration

Only qualified persons may locate mining claims within public and private lands (Section 11).
A prospector may locate for another person only if first duly authorized by a public instrument registered with the mining recorder concerned before undertaking location work (Section 11).
Before entering public lands covered by concessions/rights other than mining, a prospector must obtain written permission of the concerned government official; for private lands, written permission of the owner or possessor is required (Section 12).
If permission is denied, the Director, at the request of the interested person, may intercede; if intercession fails, the interested person may bring suit in the Court of First Instance of the province where the land is situated (Section 12).
If the court finds the request justified, it issues an order granting permission after fixing compensation and/or rental due the owner or possessor (Section 12).
Pending final adjudication, the court may, upon Director recommendation, permit entry, prospecting, and/or other mining operations upon posting a bond adequate to answer for damages to the owner/possessor (Section 12).
Prospecting and location are prohibited in: (a) military, mineral and other reservations except by the Government; (b) lands covered by valid and subsisting mining claims located under previous mining laws; (c) lands covered by mining claims or leases acquired under this Decree; and (d) near or under specified structures and public works unless authorized by the Secretary with the permission of the Department of Public Works, Transportation and Communications (Section 13).
The Secretary shall prescribe implementing regulations detailing restrictions under Section 13 (Section 13).
The Philippines and its shelf are divided into meridional blocks or quadrangles of one-half minute (1/2') of latitude and longitude, each containing about eighty-one (81) hectares, for mining claim registration (Section 14).
A mining claim covers one such block, though a lesser area may be allowed if warranted; in no case may the locator register twice the area allowed for lease under Section 43 (Section 14).
Location is made by filing with the Director (or designated deputy) a declaration of location covering the meridional block or fraction constituting the claim in a prescribed form (Section 15).
Recording is ministerial upon payment of the required filing fee for a duly accomplished and notarized declaration of location (Section 16).
The Director keeps a mining register in the Bureau of Mines or designated places, recording instruments concerning mining rights in chronological order of receipt upon payment of required fees (Section 17).
Recorded instruments must be annotated with filing date and time, document number, register book/page details, year series, fee amount, and official receipt number (Section 17).
Recording effects: declarations of location, affidavits, authority, and all documents affecting possession of mining areas or mining rights are recorded in order of receipt; after recording, written documents constitute notice to all persons and the whole world of their contents (Section 18).
The Director may charge reasonable registration and filing fees, with registration and filing fees accruing to the Mines Special Fund and other fees to the Fiduciary Fund (Section 19).
Recording of a declaration of location grants the claim owner and successors/assigns the right to occupy, explore, and develop the claim from the date of recording, subject to Section 12 (Section 20).
Voluntary abandonment: a claim owner may file an affidavit of abandonment with the Director or deputy before a lease is granted; from recording of the affidavit, rights and interests in the claim cease; the original locator and successors/assigns cannot relocate directly or indirectly the same claim (Section 21).

Annual work, lease survey, and permits

Claim owners must perform annual work obligations on their mining claims whose value is not less than: PHP 20.00 per hectare per calendar year before the lease contract is granted, and PHP 100.00 per hectare per calendar year after the lease contract is granted (Section 24).
For patentable claims, annual work obligations before patent application must not be less than PHP 250.00 per hectare per calendar year (Section 24).
Annual work obligations start with the calendar year immediately following recording of the mining claim; for patentable and other claims they start with the calendar year following the date of approval of this Decree (Section 24).
Work may be concentrated among contiguous or geologically related claims in one province if shown to the Director that concentration is most advantageous; amounts exceeding the minimum per hectare may be carried forward and credited to group claims in succeeding years (Section 25).
If expenditure incurred for any claim is less than required, the difference must be paid to the Bureau of Mines, accruing to the Mines Special Fund (Section 25).
Legitimate work obligation expenditures include prospecting, exploration, development work, labor/material/equipment, fees and charges for specified surveys, and laboratory/pilot plant testing (Section 26).
Costs of buildings, machinery, equipment, roadways, or other works count as work obligations if clearly shown essential to exploration/development or facilitating extraction of minerals (Section 26).
Proof of annual work obligations must be submitted as a sworn statement within sixty (60) days from the end of the year in which the obligation is required, in a form prescribed by regulation (Section 27).
Failure to file proof for two (2) consecutive years causes forfeiture of all rights to the claim (Section 27).
Lease survey application must be filed with the Director within one (1) year from recording; failure to file results in automatic abandonment, and lands open to location by qualified persons other than the original locator and successors/assigns (Section 28).
Surveys for lease/patent/permit must be performed by a duly licensed geodetic engineer; no geodetic engineer may perform such surveys without prior Director authority.
Geodetic engineers must comply with additional conditions including posting a bond for faithful and diligent execution, and surveys expenses are for the applicant’s account (Section 29).
Astronomical meridian must be made within limits prescribed by regulations; adjusted bearings/distances between consecutive corners adopted and recognized (Section 30).
The geodetic engineer must mark corners with concrete monuments or other permanent objects prescribed by regulations (Section 31).
Survey returns must be submitted within one (1) year after receipt of the survey order; failure is sufficient cause to cancel the surety bond and/or cancel the survey order, and no extension is allowed except for force majeure (Section 32).
A claim owner may apply for a mines temporary permit to extract and dispose of minerals from the claim pending lease issuance, subject to taxes/royalties due and compliance with other obligations, issued for one (1) year, renewable once for a like period.
The claim owner must file a surety bond in an amount fixed by the Director for the temporary permit; the Director may allow extraction of representative samples for laboratory, scientific, and test purposes in quantity determined by the Director (Section 33).

Mining lease applications and approval

Lease application must be filed within two (2) years from date of recording; failure constitutes absolute abandonment and lands open to location by qualified persons other than the original locator and successors/assigns (Section 34).
A single application and single lease may cover adjoining/contiguous claims belonging to the same owner, but total area under a single lease application must not exceed the maximum hectares that may be held or leased in any one province by the applicant (Section 35).
Lease applications must be in prescribed form and under oath, stating full name, address, citizenship, civil status, place and date of birth; if partnership/corporation, it must include certified copies of duly registered articles and by-laws, a sworn statement certifying ownership percentage by Filipinos and aliens, and a certified list of officers/directors/partners; each application must attach a report prepared by a duly licensed geologist or mining engineer that the claim shows adequate mineralization (Section 36).
Lease applicants must show technical competence and financial resources sufficient to develop the claim; regulations must prescribe additional qualifications (Section 37).
Statements in applications and supporting submissions are conditions of the lease; falsehoods or omissions that substantially alter facts are sufficient cause for denial or cancellation of the granted lease (Section 38).
Publication of lease application requires weekly publication for two (2) consecutive weeks in two (2) newspapers (one general circulation published in Manila in Pilipino or English; another in the municipality/province of the claim if there is such newspaper, otherwise in the nearest municipality/province), plus two-week posting on the Bureau of Mines bulletin board and two-week posting by the applicant on municipal building bulletin boards and the relevant mines regional office bulletin boards, with an affidavit filed immediately after expiration attesting to posting (Section 39).
If no adverse claim is filed within fifteen (15) days after the first publication date, it is conclusively presumed no adverse claim exists and no third-party objection is heard except a protest pending at publication.
The Secretary approves and issues the lease after area verification as to mineralization and due execution of lease survey; lease term is not exceeding twenty-five (25) years, renewable for additional not exceeding twenty-five (25) years under terms provided by law.
Upon expiration, mine operations may be undertaken by the Government through its agencies or through a qualified independent contractor, and the operation contract with an independent contractor is awarded to the highest bidder in a public bidding after due publication; the lessee has the right to equal the highest bid by reimbursing reasonable expenses of the highest bidder (Section 40).

Lease rights, limits, and termination

The mining lease grants the lessee and successors/assigns the right to extract all mineral deposits found on or underneath the surface of the leased mining claims continued vertically downward, remove/process/utilize minerals for their own benefit, and use leased lands for purposes specified in the lease (Section 44).
The Secretary reserves the right to grant and use easements needed by other claim owners/lessees for right-of-way to access and facilitate their mining claims, and the Director mediates conflicts of interest for that purpose (Section 44).
The Government reserves the right to lease or dispose of surface lands within the lease not needed by the lessee for extracting/removing minerals or beneficiation of ores (Section 44).
The lessee may enter, on its own or through the Government, into a service contract with a qualified domestic or foreign contractor for exploration, development, exploitation, and processing/marketing, subject to rules and on condition that if contractor provides necessary financial and technical resources, it may be paid from operation proceeds not exceeding forty percent (40%), with service contracts approved by the Secretary upon Director recommendation (Section 44).
All mining lease contracts require compliance with this Decree and rules on safe operation and sanitary upkeep, and pollution control laws and regulations (Section 45).
Termination/cancellation: immediately after a mining lease contract is cancelled or otherwise terminated, the Director enters it in the mining register and posts notice on the Bureau bulletin board, and the lands become open to location and lease by other qualified persons (Section 46).
After abandonment, termination, or cancellation, the lessee must remove all improvements on the premises within one (1) year, except roads and bridges; otherwise improvements become Government property (Section 47).
Withdrawal: the lessee may apply for cancellation due to force majeure or other causes rendering continued operations no longer profitable (Section 41).
Mining leases may be granted on mining claims located on private lands if the applicant submits landowner written authority; if the landowner refuses or fails to agree, the applicant’s remedy is the court-based permission procedure in Section 12 (Section 42).

Maximum areas that may be leased

Maximum mining lease areas are set by hectare ceilings (Section 43):
- In any one province: 500 hectares to individuals; 5,000 hectares to mining partnerships or corporations.
- In the entire Philippines: 1,000 hectares to individuals; 10,000 hectares to mining partnerships or corporations.
The Director, with Secretary approval, may allow lease of a larger area up to 10,000 hectares in any one province, depending on nature of deposit, kind of minerals, and other operation circumstances justifying the grant (Section 43).
Lease applications covering contiguous claims are still limited by the maximum holdings/lease area in any one province by the applicant (Section 35).

Protests, adverse claims, and appeals

Protests/adverse claims involving right to possession, lease, exploration, or exploitation of any mining claim are filed with the Bureau of Mines for investigation and decision under Presidential Decree No. 309 and Letter of Instructions No. 119, as amended by Letter of Instructions No. 135 (Section 48).
Protests/adverse claims must be under oath, stating in detail nature of the claim and accompanied by plans, documents, and other data supporting the claim (Section 48).
For adverse claims against a lease application filed under Section 34, the adverse claim must be filed within fifteen (15) days after the first publication date if not previously investigated/decided under Presidential Decree No. 309 (Section 48).
Upon filing an adverse claim under that paragraph, all proceedings are stayed except publication of the notice, submission of affidavit connected with publication, and processing applications for temporary permit; temporary permit operations already issued may continue subject to bond posting requirements in Section 33 (Section 48).
Priority of recording determines right to the area in conflicts of mining claims, notwithstanding defects in form/technicality under Presidential Decree No. 99-A.
When there is discrepancy between the area described in the declaration of location and the actual area occupied, the declaration controls, subject to challenges on validity of location and compliance with requirements of this Decree (Section 49).
Appeals must be filed within five (5) days from receipt of the Director’s decision/order with the Secretary, and Secretary decisions are appealable within five (5) days from receipt to the President, whose decision is final and executory (Section 50).
Director and Secretary decisions/orders are immediately executory notwithstanding appeal unless the President directs otherwise; the prevailing party has the right to immediately take possession, exploration, and exploitation of the mining claims (Section 50).
If mines administrative escrow rules apply to deposit of prescribed percentage of gross sales proceeds, compliance is required for protection of the party ultimately awarded the mining claim (Section 50, referencing Mines Administrative Order No. 50).

Fiscal obligations, taxes, and revenue reporting

The claim owner must pay occupation fees, rentals, royalties, and taxes on mining claims and extracted minerals as provided in the National Internal Revenue Code, as amended (Section 51).
Failure to pay all taxes and fees due the Government for two (2) consecutive years causes cancellation of the mining claim and reopening for relocation by other parties (Section 51).
Local government units are prohibited from levying and collecting taxes, fees, rentals, royalties, or charges of any kind on mines, mining claims, mineral products, or operations/process/activity connected thereto (Section 52).
Imported equipment and related articles for use of new mines and old mines resuming operation are exempt from customs duties and all taxes except income tax for a period starting from exploration and ending five (5) years from first date of actual commercial production of saleable mineral products, provided the articles are not locally available in reasonable quantity/quality/price and are necessary or incidental (Section 53).
Tax-exempt articles acquired under Section 53 cannot be sold, transferred, or disposed within five (5) years from acquisition; any sale/transfer/disposal within that period is subject to payment of all taxes and duties due at time of acquisition plus interest and surcharges, which constitute a lien on the articles sold (Section 53).
Mining claims, improvements thereon, and mineral products are exempt from all taxes except income tax for the same five (5) year period, and the exemption is subject to Director rules approved by Secretary (Section 53).
Lessees must submit to the Director, within thirty (30) days from the date of payment of rentals or royalties due on any mining lease or extracted minerals, copies of receipts and names of the mining claims, lease number, and the persons/partnerships/corporations for which payments were made.
Failure to submit copies/information is deemed non-payment and may cause cancellation of the lease contract; the Director maintains a record of such information (Section 54).
If a mining lease is cancelled or otherwise terminated, the lessee is liable for all unpaid rentals and royalties due up to the time of termination/cancellation (Section 55).

Auxiliary mining rights: timber, water, easements

A claim owner may cut trees or timber within mining claims for exploration, development, exploitation, utilization, or operation, subject to Bureau of Forest Development rules.
If mining-claim land is under existing timber concessions, the Director, claim owner, and timber concessionaire determine needed timber and manner of cutting/removal.
If no agreement is reached, the matter is submitted to the Secretary for final decision.
Timber-right holders must perform reforestation work within mining claims as required by Bureau of Forest Development regulations (Section 56).
A claim owner is entitled to water rights for development or operation upon application filed with the Director of the Bureau of Public Works under existing laws on water and its regulations.
Water rights already granted or vested through long use recognized by local customs, laws, and court decisions are not impaired; the Government reserves the right to regulate water rights and equitable distribution to prevent monopoly (Section 57).
Easements/entry rights: where needed to build/install facilities for convenient mining operations (roads, railroads, mills, waste dumpsites, warehouses, port facilities, tramways, electric/telephone/telegraph lines, aerial transport, dams and flood areas, ditches/canals/pipelines/flumes/cuts, shafts/tunnels to drain/convey water or tailings, and mining-purpose shafts/tunnels), the claim owner or lessee may enter and occupy land upon payment of just compensation; such facilities are declared for public purpose, use, or benefit (Section 58).
Eminent domain: if refusal occurs to grant the right to construct/install such facilities, the claim owner or lessee may prosecute eminent domain under the Rules of Court in the Court of First Instance where mining claims are situated.
For just compensation determinations, the court must appoint at least one duly qualified mining engineer or geologist recommended by the Director as one of the commissioners (Section 59).

Mines personnel, safety, and inspection

Lessees must give preference to Philippine citizens in all types of mining employment in the country insofar as citizens are qualified to perform with reasonable efficiency and without hazard.
Lessees must maintain effective training and advancement programs commensurate with demonstrated abilities; they may use employees of their own selection for technical/specialized work requiring highly specialized training or long experience with Director approval.
No employment under the Decree’s foreign-management restriction may exceed five (5) years per employment.
No foreigner may be employed as mine manager, vice-president for operations, or equivalent managerial position in charge of mining/milling/quarrying/drilling operations without passing appropriate/perinent government licensing examination, or in special cases permitted by the Director for a period not exceeding one (1) year (Section 60).
Persons under sixteen (16) years of age may not be employed in any phase of mining operations; persons under eighteen (18) years may not be employed underground (Section 61).
Mining/quarrying/developing/exploitation operations must be directed/supervised in accordance with Section 25 of Republic Act No. 4274, the Mining Engineering Law of the Philippines (Section 62).
Only the Director or duly authorized representative may inquire into or inspect lessees’ activities concerning safety inspection of all installations, surface or underground, within the mining claim/lease, mine safety, mineral conservation, pollution problems, and compliance with lease terms, at reasonable hours and in a manner that will not impede work (Section 63).
If the Director finds a prospecting/mining/processing practice dangerous or defective or not in accordance with anti-pollution laws/regulations, the Director must give written notice and require remedy forthwith or within specified time; in imminent danger, the Director may order suspension until danger is removed (Section 64).
In accidents causing loss of life or serious personal injuries, the person in charge must immediately report to the Director by fastest means and promptly report in writing the facts of the accident to the mayor of the municipality where the works are situated and to the nearest regional office of the Bureau of Mines (Section 65).

Quarry resources: permits, licenses, fees

Quarry resources may be exploited only through permits on privately-owned lands or through licenses on public lands (Section 66).
Private landowners have preferential right to exploit quarry resources found in their land, and are not required to secure a permit to extract or remove quarry resources on their land for personal use (Section 67).
Quarry permit/license applications are filed with the Director or Mines Regional Officer in prescribed form/manner after paying required filing fee as prescribed by regulations; the Director grants upon compliance with requirements in regulations (Section 68).
Quarry license area limits: not more than **