DENR Administrative Order No. 96-40

Series of 1996

SUBJECT: Revised Implementing Rules and Regulations of Republic Act No. 7942 Otherwise Known as the "Philippine Mining Act of 1995"

Pursuant to Section 8 of Republic Act (R.A.) No 7942, otherwise knows as the "Philippine Mining Act of 1995", the following revised rules and regulations are hereby promulgated for the guidance and compliance of all concerned.

CHAPTER I
INTRODUCTORY PROVISIONS

Section 1. Title

The title of this Administrative Order shall be "Revised Implementing Rules and Regulations of R.A. 7942, otherwise known as the Philippine Mining Act of 1995".

Section 2. Declaration of Policy

All mineral resources in public and private lands within the territory and exclusive economic zone of the Republic of the Philippines are owned by the State. It shall be the responsibility of the State to promote their rational exploration, development, utilization and conservation through the combined efforts of the Government and private sector in order to enhance national growth in a way that effectively safeguards the environment and protects the rights affected communities.

Section 3. Governing Principles

In implementing the policy stated in the preceding Section, the Department shall adhere to the principle of sustainable development which meets the needs of the present without compromising the ability of the future generations to meet their own needs, with the view of improving the total quality of life, both now and in the future. Consequently:
a. Mineral resource exploration, development, utilization and conservation shall be governed by the principle of sustainable mining, which provides that the use of mineral wealth shall be pro-environment and pro-people in sustaining wealth creation and improved quality of life under the following terms:

1. Mining is a temporary land use for the creation of wealth which lead to an optimum land use in the post-mining stage as a result of progressive and engineered mine rehabilitation work done in cycle with mining operations;
   
2. Mining activities must always be guided by current best practices in environmental management committed to reducing the impacts of mining and effectively and efficiently protecting the environment;
   
3. The wealth accruing to the Government and communities as a result of mining should also lead to other wealth-generating opportunities for people and to other environment-responsible endeavors;
   
4. Mining activities shall be undertaken with due and equal emphasis on economic and environmental considerations, as well as for health, safety, social and cultural concerns; and
   
5. Conservation of minerals is effected not only though recycling of mineral-based products to effectively lengthen the usable life of mineral commodities but also through the technological efficiency of mining operations
   

b. Investments in commercial mining activities from both domestic and international sources shall be promoted in accordance with State policies and the principles and objectives herein stated,
c. The granting of mining rights shall harmonize existing activities, policies and programs of the Government that directly of indirectly promote self-reliance, development and resource management. Activities, policies and programs that promote community-based, community-oriented and processual development shall be encouraged, consistent with the principles of people empowerment and grassroots development.
These principles are implemented through the specific provisions of these implementing rules and regulations.

Section 4. Objectives

These rules and regulations are promulgated toward the attainment of the following objectives:
a. To promote the rational explorations, development, utilization and conservation of mineral resources under the full control and supervision of the State;
b. To enhance the contribution of mineral resources to economic recovery and national development, with due regard to the protection of the environment and the affected communities, as well as the development of local science and technical resources;
c. To encourage investments in exploration and commercial mining activities to assure a steady supply of minerals and metals for material needs of both present and future society and to generate wealth in terms of taxes, employment generation, foreign exchange earning and regional development;
d. To promote equitable access to economically efficient development and fair sharing of benefits and costs derived from the exploration development and utilization of mineral resources; and
e. To enable the Government and the investor to recover their share in the production, utilization and processing of minerals to attain sustainable development with due regard to the environment, social equity and fair return of investment.

Section 5. Definition of Terms

As used in and for purposes of these rules and regulations, the following terms shall mean:
a. "Act" refers to R.A. No. 7942 otherwise known as the "Philippine Mining Act of 1995."
b. "Ancestral Lands" refers to all lands exclusively and actually possessed, occupied or utilized by Indigenous Cultural Communities by themselves or through their ancestors in accordance with their customs and traditions since time immemorial, and as may be defined and delineated by law.
c. "Annual Environmental Protection and Enhancement Program (AEPEP)" refers to a yearly environmental management work plan based on the approved environmental protection and enhancement strategy.
d. "Archipelagic Sea" refers to all water within the baseline of an archipelago except internal water such as roadsteads, lakes and rivers.
e. "Block or Meridional Block" means an area, bounded by one-half (1/2) minute of latitude and one-half (1/2) minute of longitude, containing approximately eighty-one (81) hectares.
f. "Built-up Areas" refer to portions of land within the municipality or barangay actually occupied as residential, commercial or industrial areas as embodied in a duly approved land use plan by the appropriate Sanggunian .
g. "Bureau" means the Central Office of the Mines and Geosciences Bureau under the Department.
h. "City" refers to an independent component city as classified under the Local Government Code.
i. "Commercial Production" refers to the production of sufficient quantity of minerals to sustain eco~omic viability of mining operations reckoned from the date of commercial operation as declared by the Contractor or as stated in the feasibility study, which ever comes first.
j. "Community Relations Record" refers to the applicant's proof of its community relations which may consist, but is not limited to, socio-cultural sensitivity, the character of its past relations with local communities, cultural appropriateness and social acceptability of its resource management strategies: Provided, That this shall not be required in cases where the applicant has no previous community-relations experience in resource use ventures, locally or internationally.
k. "Conservation" means the wise use and optimum utilization mineral resources.
l. "Contiguous Zone" refers to water, sea bottom and substratum measured twenty-four (24) nautical miles seaward from the baseline of the Philippine Archipelago.
m. "Contract Area" means the land or body of water delineated under a Mineral Agreement or FTAA subject to the relinquishment obligations of the Contractor and properly defined by longitude and latitude.
n. "Contractor" means a Qualified Person acting alone or in consortium who is a party to Mineral Agreement or FTAA.
o. "Critical Watershed" refers to a drainage area of a river system, lake or water reservoir supporting existing and proposed hydroelectric power, domestic water supply, geothermal power and irrigation works, which needs immediate rehabilitation and protection to minimize soil erosion, improve water yield and prevent possible flooding.
p. "DENR Project Area" refers to specific portions of land covered by an existing project of the Department such as , but not limited to, Industrial Forest Management Agreement (IFMA), Community Forest Management Agreement (CFMA), Community Forestry Program (CFP), Forest Land Management Agreement (FLMA), and Integrated Social Forestry Program (ISFP).
q. "Department" means the Department of Environment and Natural Resources of the Republic of the Philippines.
r. "Development" means the work undertaken to explore and prepare an orebody or a mineral deposit for mining, including the construction of necessary infrastructure and related facilities.
s. "Development Stage" as used exclusively for FTAAs means the period to prepare an explored orebody or mineral deposit for mining including the construction of necessary infrastructure and related facilities.
t. "Director" means the Director of the Bureau.
u. "Ecological Profile or Eco-Profile" refers to geographic-based instruments for planners and decision-makers, which presents a description of the environmental setting including the state of environmental quality and evaluation of the assimilative capacity of an area.
v. "Effluent" means any wastewater, partially or completely treated, or any waste liquid flowing out of mining operations, wastewater treatment plants or tailings disposal system.
w. "Environment" refers to the physical factors of the total surroundings of human beings, including the land, water, atmosphere, climate, sound, odors, tastes, the biological factors of animals and plants and the social factors of aesthetics. In a broad sense, it shall include the total environment of human beings such as economic, social, cultural, political and historical factors.
x. "Environmental Audit" refers to a systematic, documented verification process of objectively obtaining and evaluating audit evidence (verifiable information, records or statements of facts) to determine whether or not specified environmental activities, events, conditions, management systems or information about these matters conform with audit criteria (policies, practices, procedures or requirements against which the auditor compares collected audit evidence about the subject matter) and communicating the results of this process to the concerned stakeholders.
y. "Environmental Compliance Certificate (ECC)" refers to the document issued by the Secretary or the Regional Executive Director certifying that bases on the representations of the proponent and the preparers (the proponent's technical staff or the competent professional group commissioned by the proponent to prepare the EIS and other related documents), as reviewed and validated by the Environmental Impact Assessment Review Committee (EIARC), the proposed project or undertaking will not cause a significant negative environmental impact; that the proponent has complied with all the requirements of the Environmental Impact Assessment System; and that the proponent is committed to implement its approved Environmental Management Plan in the Environmental Impact Statement or mitigation measures in the Initial Environmental Examinations.
z. "Environmental Impacts" refer to the probable effects or consequences of proposed projects or undertakings on the physical, biological and socioeconomic environment that can be direct or indirect, cumulative and positive or negative.
aa. "Environmental Impact Assessment (EIA)" refers to the process of predicting the likely environmental consequences of implementing projects or undertakings and designing appropriate preventive, mitigating and enhancement measures.
ab. "Environmental Impact Statement (EIS)" refers to the document(s) of studies on the environmental impacts of a project including the discussions on direct and indirect consequences upon human welfare and ecological and environmental integrity. The EIS may vary from project to project but shall contain in every case all relevant information and details about the proposed project or undertaking, including the environmental impacts of the project and the appropriate mitigating and enhancement measures.
ac. "Environmental Management Record" refers to an applicant's high regard for the environment in its past resource use ventures and proof of its present technical and financial capability to undertake resource protection, restoration and/or rehabilitation of degraded areas and similar activities: Provided, That this shall not be required in cases where the applicant has no previous experience in resource use ventures , locally or internationally.
ad. "Environmental Protection and Enhancement Program (EPEP)" refers to the comprehensive and strategic environment management plan for the life of the mining project on which AEPEPs are based and implemented to achieve the environmental management objectives, criteria and commitments including protection and rehabilitation the disturbed environment.
ae. "Environmental Work Program (EWP)" refers to the comprehensive and strategic environmental management plan to achieve the environmental management objectives, criteria and commitments including protection an rehabilitation of the disturbed environment during the exploration periods.
af. "Exclusive Economic Zone" refers to the water, sea bottom and subsurface measured from the baseline of the Philippine archipelago up to two hundred (200) nautical miles offshore.
ag. "Exploration" means searching or prospecting for mineral resources by geological, geochemical and/or geophysical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining their existence, extent, quality and quantity and the feasibility of mining them for profit.
ah. "Financial or Technical Assistance Agreement (FTAA)" means a contract involving financial or technical assistance for large-scale exploration, development an utilization of mineral resources.
ai. "Force Majeure" means acts or circumstances beyond the reasonable control of Contractor/Permit Holder/Permittee/Lessee including, but not limited to war rebellion, insurrection, riots, civil disturbances, blockage, sabotage, embargo, strike, lockout, any dispute with surface owners and other labor disputes, epidemic, earthquake, storm, flood or other adverse weather conditions, explosion, fire, adverse action by Government or by any instrumentality or subdivision thereof, act of God or any public enemy and any cause as herein described over which the affected party has no reasonable control.
aj. "Foreign-owned Corporation" means any corporation, partnership, association or cooperative duly registered in accordance with law in which less than fifty percent (50%) of the capital is owned by Filipino citizens.
ak. "Forest Reservation" refer to forest lands which have been reserves by the President for any specific purposes or purposes pursuant to P.D. No. 705, or by an appropriate law.
al. Forest Reserves or Permanent Forests" refer to those lands of the public domain which have been the subject of the present system of classification and determined to be needed for forest purposes pursuant to PD.. No. 705.
am. "Government" means the Government of the Republic of the Philippines.
an. "Government Reservations" refer to all proclaimed reserve lands for specific purposes other than Mineral Reservations.
ao. "Gross Output" means the actual market value of minerals or mineral products from each mine or mineral land operated as a separate entity, without any deduction for mining, processing, refining, transporting, handling marketing or any other expenses: Provided, That if the minerals or mineral products are sold or consigned abroad by the Contractor under C.I.F. terms, the actual cost of ocean freight and insurance shall be deducted: Provided, further, That in the case of mineral concentrates which are not traded in commodity exchanges in the Philippines or abroad, such as copper concentrates, the actual market value shall be the world price quotations of the defines mineral products content thereof prevailing in the said commodity exchanges, after deducting the smelting, refilling, treatment, insurance, transportation and other charges incurred in the process of converting mineral concentrates into refined metal trade in those commodity exchanges.
ap. "Ground Expenditures" means the field and laboratory expenditures incurred for searching and delineating new or extension of orebodies in an approved FTAA area, including expenditures for social preparation, prefeasibility studies and reasonable administrative expenses incurred for the FTAA project. Such expenses include those for geological, geophysical, geochemical and air-borne geophysical surveys, borehole drillings, tunneling, test pitting, trenching and shaft sinking. Contributions to the community and environment-related expenses during the exploration period shall form part of the ground expenditures.
a. "Indigenous Cultural Community" means a group or tribe of indigenous Filipinos who have continuously lived as communities on communally-bounded and defined land since time immemorial and have succeeded in preserving, maintaining and sharing common bonds of languages, customs, traditions and other distinctive cultural traits, and as may be defined and delineated by law.
a. "Initial Environmental Examination (IEE)" refers to the document requires of proponents describing the environmental impact of, and mitigation and enhancement measures for projects or undertakings located in an Environmentally Critical Area (ETA) as listed under Presidential Proclamation No. 2146, Series of 1981, as well as other areas which the President may proclaim as environmentally critical in accordance with Section 4 of P.D. No.. 1586.
as. "Lessee" means a person or entity with a valid and existing mining lease contract.
at. "Metallic Mineral" means a mineral having a brilliant appearance, quite opaque to light, usually giving a black or very dark streak, and from which a metallic element/component van be extracted/utilized for profit.
a. "Mill Tailings" means materials whether solid, liquid or both segregated from the ores during concentration/milling operations which have no present economic value to the generator of the same.
a. "Minerals" refer to all naturally occurring inorganic subtonics in solid, liquid, gas or any intermediate state excluding energy materials such as coal petroleum, natural gas, radioactive materials and geothermal energy.
aw. "Mineral Agreement" means a contract between the Government and a Contractor, involving Mineral Production Sharing Agreement, Co-Production Agreement or Joint Venture Agreement.
ax. "Mineral Land" means any area where mineral resources as herein defined, are found.
ay. "Mineral Processing" means the milling , beneficiation, leaching, smelting, cyanidation, or upgrading or ores, minerals, rocks, mill tailing, mine waste and/or other metallurgical by-products or by similar means to convert the same into marketable products.
az. "Mineral Processing Permit" refers to the permit granted to a Qualified Person for mineral processing.
ba. "Mineral Products" mean materials derive from ores, minerals and/or rocks and prepared into a marketable state by mineral processing.
bb. "Mineral Reservations" refer to areas established and proclaimed as such by the President upon the recommendation of the Director through the Secretary, including all submerged lands with the contiguous zone and Exclusive Economic Zone.
bc. "Mineral Resources" mean any concentration of ores, minerals and/or rocks with proven or potential economic value.
bd. "Mine Rehabilitation" refers to the process used to repair the impacts of mining on the environment. The long term objectives of rehabilitation can vary from simply converting an area to a safe and stable condition to restoring the pre-mining conditions as closely as possible with all the area's environmental values intact and establishing a land use capability that is functional and proximate to the land use prior to the disturbance of the mine area.
be. "Mine Waste" means soil and/or rock materials from surface or underground mining operations with no present economic value to the generator of the same.
bf. "Mining Area" means a portion of the contract area identified by the Contractor as defined and delineated in a Survey Plan duly approved by the Director/concerned Regional Director for purposes of development and/or utilization, and sites for support facilities.
bg. "Mining Operations" mean mining activities involving exploration, feasibility study, development and utilization.
bh. "Mining Permits" include Exploration, Quarry, Sand and Gravel (Commercial, Industrial and Exclusive), Gratuitous (Government or Private), Guano, Gemstone Gathering and Small-Scale Mining Permits.
bi. "Mining Right" means a right to explore, develop or utilized mineral resources.
bj. "Mining Application" means any application for mining permit, Mineral Agreement or FTAA.
bk. "Net Income" means gross income from operations less allowable deductions which are necessary or related to mining operations.
bl. "Nonmetallic Mineral" refers to a mineral usually having a dull luster, generally light-colored, transmits light, usually giving either colorless or light colored streak from which a nonmetallic element/component can be extracted/utilized for a profit.
bm. "Non Governmental Organization (NGO)" includes nonstock, nonprofit organizations with qualifications, expertise and objectivity in activities dealing with resources and environmental conservation, management and protection.
bn. "Offshore" means the water, sea bottom and subsurface from the shore or coastline reckoned from the mean low tide level up to the two hundred (200) nautical miles of the Exclusive Economic Zone.
bo. "Onshore" means the landward side from the mean low tide level, including submerged lands in lakes, rivers and creeks.
bp. "Ore" means naturally occurring substance or material from which a mineral or an element can be mined and/or processed for profit.
bq. "Ore Transport Permit" refers to the permit that may be granted to a Contractor, accredited dealer, retailer, processor and other Permit Holders to transport minerals/mineral products.
br. "People's Organization (PO)" refers to a group of people which may be an association, cooperative, federation or other legal entity established by the community to undertake collective actions to address community concerns and need and mutually share the benefits from the endeavor.
bs. "Permitee" means the holder of an Exploration Permit. The permitter referred to in previous administrative orders shall mean holders of permits subject of such orders.
bt. "Permit Area" refers to area subject of mining permits.
bu. "Permit Holder" means a holder of any mining permit issued under the implementing rules and regulations other than Exploration Permit.
bv. "Pollution" refers to any alteration of the physical, chemical and/or biological properties of any water, air and/or land resources of the Philippines; or any discharge thereto of any liquid, gaseous or solid wastes; or any production of unnecessary noise or any emission of objectionable odor, as will or is likely to create or to render such water, air fare, or which will adversely affect their utilization for domestic, commercial, industrial , agricultural, recreational or other legitimate purposes.
bw. "Pollution Control Devises and Facilities" refer to infrastructure, machinery, equipment and/or improvements used for impounding, treating or neutralizing, precipitating, filtering, conveying and cleansing mine industrial waste and tailings, as well as eliminating or reducing hazardous effects of solid particles, chemicals, liquids or other harmful by-products and gases emitted from any facility utilized in mining operations for their disposal.
bx. "Pre-Operating Expenses" refer to all exploration expenses, special allowance, administrative costs related to the project, feasibility and environmental studies and all costs of mine construction and development incurred prior to commercial production.
by. "President" refers to the President of the Republic of the Philippines.
bz. "Private Land" refers to land belonging to any private person or entity which includes alienable and disposable land being claimed by a holder, claimant or occupant who has already acquired a vested right thereto under the law, including those whose corresponding certificate or evidence of title or patent has not been actually issued.
ca. "Public Land" refers to land of the public domain which has been classified as agricultural land, mineral land, forest or timber land subject to management and disposition or concession under existing laws.
cb. "Qualified Person" means any Filipino citizen of legal age and with capacity to contract; or a corporation, partnership, association or cooperative organized or authorized for the purpose of engaging in mining, with technical and financial capability to undertake mineral resources development and duly registered in accordance with law, at least sixty percent (60%) of the capital of which is owned by Filipino citizens: Provided , That a legally organized foreign-owned corporations shall be deemed a Qualified Person for purposes of granting an Exploration Permit, FTAA or Mineral Processing Permit only
cc. "Quarrying" means the process of extracting, removing and disposing quarry resources found on or underneath the surface of public or private land.
cd. "Quarry Permit" refers to the permit granted to a Qualified Person for the extraction and utilization of quarry resources on public or private land.
ce. "Quarry Resources" refer to any common rock or other mineral substances as the Director may declare to be quarry resources such as, but not limited to, andesite, basalt, conglomerate, coral sand, diatomaceous earth, diorite, decorative stones, gabbro, granite, limestone, marble, marl, red burning clays for potteries and bricks, rhyolite, rock phosphate, sandstone, serpentine, shale, tuff, volcanic cinders and volcanic glass: Provided, That such quarry resources do not contain metals or metallic constituents and/or other valuable minerals in economically workable quantities: Provided, further, That nonmetallic minerals such as kaolin, feldspar, bull quartz, quartz or silica, sand and pebbles, bentonite, talc, asbestos, barite, gypsum, bauxite, magnesite, dolomite, mica, precious and semiprecious stones and other nonmetallic minerals that may later be discovered and which the Director declares to be of economically workable quantities, shall not be classified under the category of "Quarry Resources".
cf. "Regional Director" means the Regional Director of any Regional Office.
cg. "Regional Office" means any of the Regional Offices of the Mines and Geosciences Bureau.
ch. "Secretary" means the Secretary of the Department.
ci. "Service Contractor" means a person or entity who enters into an agreement to undertake a specific work or related to mining or quarrying operations of a Contractor/Permit Holder/Permittee/Lessee.
cj. "Special Allowance" refers to payment to the claim owner or surface right owners particularly during the transition period from P.D. No. 462 and Executive Order No. 279 Series of 1987.
ck. "Stakeholders" refers to person(s)/entity(ies) who may be significantly affected by the project or undertaking, such as but not limited to, Contractor/Permit Holder/Permittee/Lessee, members of the local community, Local Government Units (LGUs), Nongovernmental Organizations (NGOs) and People's Organizations (POs).
cl. "State" means the Republic of the Philippines.
cm. "Tailings Disposal System" refers to a combination of methods, equipment and manpower used in handling, transporting, disposing and/or impounding mill tailings.
cn. "Waste Dump" refers to a designated place where the mine waste are accumulated or collected.
co. "Utilization" means the extraction, mineral processing and/or disposition of minerals.

Section 6. Authority of the Department

The Department is the primary Government agency responsible for the conservation, management, development and proper use of the State's mineral resources including those in reservations, watershed areas and lands of the public domain. The Department shall have the following authority, among others:
a. To promulgate rules and regulations as may be necessary to implement the intent and provisions of the Act.
b. To enter into Mineral Agreements on behalf of the Government or recommend FTAA to the President upon endorsement of the Director.
c. To enforce applicable related laws such as Administrative Code, Civil Code, etc.; and
d. To exercise such other authority vested by the Act and as provided for in these implementing rules and regulations.
The Secretary may delegate such authority and other powers and functions to the Director.

Section 7. Organization and Authority of the Bureau

The Mines and Geosciences Bureau shall be a line bureau primarily responsible for the implementation of the Act pursuant to Section 100 thereof, it shall be comprised of a Central Office and the necessary regional, district and such other offices as may be established in pertinent administrative order issued by the Secretary. The staff Bureau created under Department Administrative Order No. 1 Series of 1988, shall become the Central Office of the Mines and Geosciences Bureau while the Mines and Geosciences Development Services created pursuant to Department Administrative Order No. 41 Series of 1990, shall become the Regional Offices.
The Bureau shall have the following authority, among others:
a. To have direct charge in the administration and disposition of mineral land and mineral resources;
b. To undertake geological, mining, metallurgical, chemical and other researches, as well as mineral explorations surveys: Provided, That for areas closed to mining applications as provided for in Section 15 hereof, the Bureau can undertake studies for purposes of research and development;
c. To confiscate, after due process, surety, performance and guaranty bonds after notice of violation;
d. To recommend to the Secretary the granting of Mineral Agreements or to endorse to the Secretary for action by the President the grant of FTAAs, in favor of Qualified Persons and to monitor compliance by the Contractor with the terms and conditions of the Mineral Agreements and FTAAs . For this purpose, an efficient and effective monitoring system shall be established to ascertain periodically whether or not these objectives are realized;
e. To cancel or to recommend cancellation, after due process, mining rights , mining applications and mining claims for noncompliance with pertinent laws, rules and regulations;
f. To deputize, when necessary, any member or unit of the Philippine National Police (PNP) and barangay, duly registered and Department-accredited Nongovernmental Organization (NGO) or any Qualified Person to police all mining activities;
g. To assist the Environmental Management Bureau (EMB) under the Department and/or the Department Regional Office in the processing or conduct Environmental Impact Assessment in mining projects; and
h. To exercise such other authority vested by the Act and as provided for in these implementing rules and regulations.
The Director may delegate such authority and other powers and functions to the Regional Director.

Section 8. Role of Local Government

Subject to Section 8 of the Act and pursuant to the Local Government Code and other pertinent laws, the Local Government Units (LGUs) shall have the following roles in mining projects within their respective jurisdictions;
a. To ensure that relevant laws on public notice , public consultation and public participation are complied with;
b. In coordination with the Bureau/Regional Office(s) and subject to valid and existing mining rights, to approve applications for small-scale mining, sand and gravel, quarry, guano, gemstone gathering and gratuitous permits and for industrial sand and gravel permits not exceeding five (5) hectares;
c. To receive their share as provided for by law in the wealth generated from the utilization of mineral resources and thus enhanced economic progress and national development;
d. To facilitate the process by which the community shall reach an informed decision on the social acceptability of a mining project as a requirement for securing an Environmental Compliance Certificate (ECC);
e. To participate in the monitoring of any mining activity as a member of the Multipartite Monitoring Team referred to in Section 185 thereof;
f. To participate as a member of the Mine Rehabilitation Fund Committee as provided for in Sections 182 and 187 hereof;
g. To be the recipient of social infrastructure and community development projects for the utilization of the host and neighboring communities in accordance with Chapter XIV hereof;
h. To act as mediator between the Indigenous Cultural Community(ies) and the Contractor(s) as may be requested;
i. To coordinate with the Department and Bureau in the implementation of the Act and these implementing rules and regulations in their respective jurisdictions. In areas covered by the Southern Philippines Council for Peace and Development (SPCPD), Autonomous Region of Muslim Mindanao (ARMM) and future similar units, the appropriate offices of said units shall coordinate with the Department and Bureau in the implementation of the Act and these implementing rules and regulations; and
j. To perform such other powers and functions as may be provided for by applicable laws, rules and regulations.

Section 9. Establishment, Disestablishment of Modification of Boundary of a Mineral Reservation

In all cases, the Director shall conduct hearings allowing all concerned sectors and communities, interested Nongovernmental and People's Organizations, as well as Local Government Units, to air their views regarding the establishment, disestablishment or modification of any Mineral Reservation, The public shall be notified by publication in a newspaper of general circulation in the province, as well as by posting in all affected municipalities and barangays, at least thirty (30) days before said hearings are conducted.
The recommendation of the Director shall be in writing stating therein the grounds for the establishment, disestablishment or modification of any specific Mineral Reservation and shall likewise be published after submission to the Secretary.
No recommendation of the Director shall be acted upon the Secretary unless the preceding paragraph has been strictly complied with.
Upon the recommendation of the Director through the Secretary, the President may, subject to valid and existing rights, set aside and establish an area as a Mineral Reservation when the national interest so requires, such as when there is a need to preserve strategic raw materials for industries critical to national development or certain minerals for scientific, cultural or ecological value. The Secretary shall cause the periodic review of existing Mineral Reservations by detailed geological, mineral and ecological evaluation for the purpose of determining whether or not their continued existence is consistent with the national interest and upon his/her recommendation, the President may, by proclamation, alter or modify the boundaries thereof or revert the same to the public domain without prejudice to prior existing rights.
In the proclamation of such Mineral Reservations, all valid and existing mining rights shall be respected.

Section 10. Government Reservations

For Government Reservations, the Department may directly undertake exploration, development and utilization of mineral resources. In the event that the Department can not undertake such activities, these may be undertaken by a Qualified Person: Provided, That the right to explore, develop and utilize the minerals found therein shall be awarded by the President under such terms and conditions as recommended by the Director and approved by the Secretary; Provided, further, That such right shall be granted only after exploration reveals the presence of economically potential deposits: Provided, finally, That the Permittee who undertook the exploration of said Reservation shall be given priority.

Section 11. Mining Operations within Mineral and Government Reservations

Mining operations in Mineral Reservations shall be undertaken by the Department or through a Qualified Person under any of ht following modes:
a. Exploration permit;
b. Mineral Agreement;
c. Financial or Technical Assistance Agreement (FTAA);
d. Small-Scale Mining Permit; and
e. Quarry permit.
Mining operations in Government Reservations shall be first undertaken through an Exploration Permit, subject to limitations prescribed therein, before the same is opened for Mineral Agreement/FTAA application or other mining applications.
Application for Exploration Permit/Mineral Agreement/FTAA/ Quarry Permit within Mineral and Government Reservations shall be governed by Chapters V, VI, VII and VIII of these implementing rules and regulations.

Section 12. Small-Scale Mining Operations within Mineral Reservations

Small-scale mining operations within Mineral Reservations shall be governed by the pertinent rules and regulations provided for in the Mineral Reservations Development Board (MIDRIB) Administrative Order No. 3 Series of 1984, and MIDRIB Administrative Order No. 3-A, Series of 1987, as amended, and as may be applicable, Small-scale mining cooperatives covered by R. A. No. 7076 shall be given preferential right to apply for a small-scale mining contract for a maximum aggregate area of twenty-five percent (25%) of a Mineral Reservation subject to valid and existing mining rights.

Section 13. Payment of Royalty of Mineral/Mineral Products Extracted form Mineral Reservations

The Contractors/Permit Holders/Lessees shall pay to the Bureau a royalty which shall not be less than five percent (5%) of the market value of the gross output of the minerals/mineral products extracted or produced from the Mineral Reservations exclusive of all other taxes. A ten percent (10%) share of said royalty and ten percent (10%) of other revenues such as administrative, clearance, exploration and other related fees to be derived by the Government from the exploration, development and utilization of the mineral resources within Mineral Reservations shall accrue to the Bureau as a Trust Fund and shall be deposited in a Government depository bank to be allotted for special projects and other administrative expenses related to the exploration, development and environmental management of minerals in Government Reservations.

Section 14. Areas Open to Mining Applications

The following areas are open to mining applications:
a. Public or private lands not covered by valid and existing mining rights and mining applications;
b. Lands covered by expired/abandoned/canceled mining/quarrying rights;
c. Minerals Reservations; and
d. Timber or forest lands as defined in existing laws.

Section 15. Areas Closed to Mining Applications

Pursuant to the Act and in consonance with State policies and existing laws, areas may be either closed to mining applications or conditionally opened therefor.
a. The following areas are closed to mining applications:

1. Areas covered by valid and existing mining rights and mining applications subject to Subsection b(3) herein;
   
2. Old growth or virgin forests, proclaimed watershed forest reserves, wilderness areas, mangrove forests, mossy forests, national parks, provincial/municipal forests, tree parks, greenbelts, game refuge, bird sanctuaries and areas proclaimed as marine reserves/marine parks and tourist zones as defined by law and identified initial components of the National Integrated Protected Areas System (NIPAS) pursuant to R.A. No. 7586 and such areas expressly prohibited thereunder, as well as under Department Administrative Order No. 25, Series of 1992, and other laws;
   
3. Areas which the Secretary may exclude bases, inter alia, on proper assessment of their environmental impacts and implications on sustainable land uses, such as built-up areas and critical watersheds with appropriate barangay/municipality/city/provincial Sanggunian ordinance specifying herein the location and specific boundary of the concerned area; and
   
4. Areas expressly prohibited by law.
   

• Mining applications which have been made over the foregoing areas shall be reviewed and, after the process, such areas may be excluded from said applications.
  b. The following areas may be opened for mining applications the approval of which are subject to the following conditions:
  
  1. Military and other Government Reservations, upon prior written clearance by the Government agency having jurisdiction over such Reservations;
     
  2. Areas near or under public or private buildings, cemeteries, archaeological and historic sites, bridges, highways, waterways, railroads, reservoirs, dams or 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 by the Bureau;
     
  3. Areas covered by FTAA applications which shall be opened for quarry resources mining applications pursuant to Section 53 hereof upon the written consent of the FTAA applicants, except for sand and gravel applications which shall require no such consent;
     
  4. Areas covered by small-scale mining under R.A. No. 7076/P.D. No. 1899 upon prior consent of the small-scale miners, in which case a royalty payment, upon the utilization of minerals, shall be agreed upon by the concerned parties and shall form a Trust Fund for the socioeconomic development of the concerned community; and
     
  5. DENR Project Areas upon prior consent from the concerned agency.
     

  The Bureau shall cause the periodic review of areas closed to mining applications for the purpose of determining whether not their continued closure is consistent with the national interest and render its recommendation, if any, to the Secretary for appropriate action.
  
  

Section 16. Ancestral Lands

In no case shall Mineral Agreements , FTAAs or mining permits be granted in areas subject of Certificates of Ancestral Domains/Ancestral Land Claims (CADC/CALC) or in areas verified by the Department Regional Office and/or other office or agency of the Government authorized by law for such purpose as actually occupied by Indigenous Cultural Communities under a claim of time immemorial possession except with their prior consent.
Prior consent refers to prior informed consent obtained, as far as practicable in accordance with the customary laws of the concerned Indigenous Cultural Community. Prior informed consent should meet the minimum requirements of public notice through various media such as, but not limited to , newspaper, radio or television advertisements, fully disclosing the activity to be undertaken and/or sector consultation wherein the Contractor/Permit Holder/Permittee should arrange for a community assembly, notice of which should be announced or posted in a conspicuous place in the area for at least a month before the assembly : Provided, That the process of arriving at an informed consent should be free from fraud, external influence and manipulations.
In the event that prior informed consent is secured in accordance with the preceding paragraph, the concerned parties shall agree on the royalty payment for the concerned Indigenous Cultural Community(ies) which may not be less than one percent (1%) of the gross output. Expenses for community development may be credited to or charged against said royalty. Representatives from the Bureau/concerned Regional Office(s), concerned Department Offices, concerned LGUs, relevant NGOs/POs and the Office of the Northern/Southern Cultural Communities may be requested to act as mediators between the concerned Indigenous Cultural Community(ies) and the Contractor/Permit Holder/Permittee in the negotiation for the royalty payment.
In case of disagreement concerning the royalty due the concerned Indigenous Cultural Community(ies), the Department shall resolve the same within three(3) months. Said royalty shall form part of a Trust Fund for the socioeconomic well-being of the Indigenous Cultural Community(ies) in accordance with the management plan formulated by the same in the ancestral land or domain area: Provided, That the royalty payment shall be managed and utilized by the concerned Indigenous Cultural Community(ies).
Pending the enactment by Congress of a law on ancestral lands or domains the implementation of this Section shall be in accordance with Department Administrative Order No. 2, Series of 1993, and other pertinent laws.

Section 17. General Provisions

Exploration activities may be directly undertaken by the Bureau or on behalf of the Contractor subject to reimbursement of all expenditures. In the event that the Bureau can not undertake such exploration activities, the same may be undertaken by a Qualified Person in specified areas as determined by the Director.

Section 18. Term/maximum Areas Allowed under an Exploration Permit

The term of an Exploration Permit shall be for a period of two (2) years from date if issuance thereof, renewable for like periods but not to exceed a total term of six (6) years; Provided, That no renewal of Permit shall be allowed unless the Permittee has complied with all the terms and conditions of the Permit and has not been found guilty of violation of any provision of the Act and these implementing rules and regulations.
The maximum area that a Qualified Person may apply for or hold at any one time under an Exploration Permit shall be as follows:
a. Onshore, in any one province --

1. For individuals -- twenty (20) blocks or approximately one thousand six hundred twenty (1,620) hectares and
   
2. For corporations, partnerships, associations or cooperatives --- two hundred (200) blocks or approximately sixteen thousand two hundred (16,200) hectares.
   

• b. Onshore, in the entire Philippines ---
  
  1. For individuals --- forty (40) blocks or approximately three thousand two hundred forty (3,240) hectares and
     
  2. For corporations, partnerships, associations or cooperatives --- four hundred (400) blocks or approximately thirty-two thousand four hundred (32,400) hectares.
     

  c. Offshore, in the entire Philippines, beyond five hundred meters (500) from the mean low-tide level ---
  

  1. For individuals --- one hundred (100) blocks or approximately eight thousand one hundred (8,100) hectares and
     
  2. For corporations, partnerships, associations or cooperatives --- one thousand (1,000) blocks or approximately eighty-one thousand (81,000) hectares.
     

  The permit area is subject to relinquishment as provided for in Section 22(f) hereof.
  
  

Section 19. Application for Exploration Permit/Mandatory Requirements

Any Qualified Person may apply for an Exploration Permit (MGB From No. 5-1) with the concerned Regional Office, except for offshore Exploration Permit applications which shall be filed with the Bureau, through payment of the required fees (Annex 5-A) and submission of five (5) sets of the following mandatory requirements:
a. Location map/sketch plan of the proposed permit area showing its geographic coordinates/meridional block(s) and boundaries in relation to major environmental features and other projects using National Mapping and Resources Information Authority (NAMIBIA) topographic map in a scale of 1:50,000 duly prepared, signed and sealed by a deputized Geodetic Engineer;
b. Two-year Exploration Work Program (GB Form No. 5-4) duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;
c. When applicable, a satisfactory Environmental Management Record and Community Relations Record as determined by the Bureau in consultation with the Environmental Management Bureau and/or the Department Regional Office. The detailed guidelines for the determination and applicability of such records shall be specified by the Secretary upon the recommendation of he Director.
d. Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16-1A) as provided for in Section 168 hereof;
e. Proof of technical competence including, among other, curricula vitae and track records in exploration and environmental management of the technical personnel who shall undertake the activities in accordance with the submitted Exploration and Environmental Work Programs;
f. Proof of financial capability to undertake the Exploration and Environmental Work Programs such as the following:

1. For individuals --- Statement of assets and liabilities duly sworn in accordance with existing laws, credit lines and income tax return for the preceding year and
   
2. For corporations, partnerships, associations or cooperatives --- Latest Audited Financial Statement and where applicable, Annual Report for the preceding year, credit lines, bank guarantees and/or similar negotiable instruments.
   

• g. Photocopy of Articles of Incorporation/Partnership/Association, By-Laws and Certificate of Registration, duly certified by the Securities and Exchange Commission (SEC) or concerned authorized Government agency(ies), for corporations, partnerships, associations or cooperatives;
  h. Declaration of the total area covered by approved/pending Exploration Permit(s)/application(s); and
  i. Other supporting papers as the Bureau/concerned Regional Office may require or the applicant may submit.
  For offshore Exploration permit applications, the following additional requirements shall be submitted:
  a. The name, port of registry, tonnage, type and class of survey vessel(s)/platforms(s): Provided, That if a foreign vessel is to used, the expected date of first entry of appearance and final departure of the survey vessel shall be provided and all the necessary clearances obtained;
  b. A certification from the Coast and Geodetic Survey Department of the NAMRIA that the proposed Exploration Work Program was duly registered to provide update in the publication of "Notice to Mariners" together with a list of safety measures to be regularly undertaken to ensure the safety of navigation at sea and prevent accident;
  c. An agreement to:
  
  1. Properly identify all installations, vessels and other crafts involved in exploration recognizable to all vessels within reasonable distance;
     
  2. Notify the Bureau thirty (30) calendar days prior to the intention to remove all scientific installations or equipment and apparatus; and
     
  3. Allow the Bureau's authorized personnel, Philippine Coast Guard and other authorized persons during reasonable hours to board the vessel(s) while within the Exclusive Economic Zone.
     

  d. Other supporting papers as the Bureau may require or the applicant may submit.
  If the applicant conducts or has conducted exploration in a foreign country(ies), the Department shall verify the relevant requirements through the Philippine Embassy(ies) or Consulate(s) based in such country(ies).
  Where the area applied for falls within the administration of two (2) or more Regional Offices, the application shall be filed with the Regional Office where the comparatively larger portion of the area is located, copy furnished the other concerned Regional Office(s) by the applicant within three (3) working days from the date of filing.
  The Regional Office shall regularly provide the Bureau with a list, consolidated map and status report of the Exploration permit applications filed in its jurisdiction.
  
  

Section 20. Area Status/Clearance

Within fifteen (15) working days from receipt of the Exploration Permit application, the Bureau for areas within Mineral Reservations, or the concerned Regional Office(s), for areas outside Mineral Reservations, shall check in the control maps if the area is free/open for mining applications. The Regional Office shall also transmit a copy of the location map/sketch plan of the applied area to the pertinent Department sector(s) affected by the Exploration Permit application for area status, copy furnished the concerned municipality(ies)/city(ies) and other relevant offices or agencies of the Government for their information. Upon the notification of the applicant by the Regional Office as to the transmittal of said document to the concerned Department sector(s) and/or Government agency(ies), it shall be the responsibility of the same applicant to secure the necessary area status/consent/clearance from said Department sector(s) and/or Government agency(ies). The concerned Department sector(s) must submit the area status/consent/clearance on the proposed permit area within thirty (30) working days from receipt of the notice: Provided, That the concerned Department sector(s) can not unreasonably deny area clearance/consent without legal and/or technical basis: Provided, further, That if the area applied for falls within the administration of two (2) or more Regional Offices, the concerned Regional Office(s) which has/have jurisdiction over the lesser area(s) of the application shall follow the same procedure.
In reservations/reserves/project areas under the jurisdiction of the Department/Bureau/Regional Offices(s) where consent/clearance is denied, the applicant may appeal the same to the Office of the Secretary.
If the proposed permit area is open for mining applications, the Bureau/concerned Regional Office(s) shall give written notice to ht applicant to pay the corresponding Bureau/Regional Office(s) clearance fee (Annex 5-A: Provided, That if a portion of the area applied for is not open for mining applications, the concerned Regional Office shall, within fifteen (15) working days from receipt of said written notice, exclude the same from the coverage of Exploration Permit application: Provided, further That in cases of overlapping of claims/conflicts/complaints from landowners, NGOs, LGUs and other concerned stakeholders, the Regional Director shall exert all efforts to resolve the same.

Section 21. Publication/Posting/Radio Announcement of an Exploration Permit Application

Within fifteen (15) working days from receipt of the necessary area clearances, the Bureau/concerned Regional Office(s) shall issue to the applicant the Notice of Application for Exploration Permit of publication, posting and radio announcement which shall be done within fifteen (15) working days from receipt of Notice. The Notice must contain, among others, the name and complete address of the applicant, duration of the permit applied for, extent of exploration activities to be undertaken, are location, geographical coordinates/meridional block(s) of the proposed permit area and location map/sketch plan with index map relative to major environmental features and projects and to the nearest municipalities.
The Bureau/concerned Regional Office(s) shall cause the publication of the Notice once a week for two (2) consecutive weeks in two (2) newspapers: one of general circulation published in Metro Manila and another published in the municipality or province where the proposed permit area is located, if there be such newspapers; otherwise, in the newspaper published in the nearest municipality or province,
The Bureau/concerned Regional Office(s) shall also cause the posting for two (2) consecutive weeks of the Notice on the bulletin boards of the Bureau, concerned Regional Office(s), Provincial environmental an d Natural Resources Office(s) (PENRO(s)), Community Environmental and Natural Resources Office(s) (CENRO(s)) and in the concerned provinces(s) and municipality(ies), copy furnished the barangay(s) where the proposed permit area is located. Where necessary, the Notice shall be in a language generally understood in the concerned locality where it is posted.
The radio announcements shall be made daily for two (2) consecutive weeks in a local radio program and shall consist of the name and complete address of the applicant, area location, duration of the permit applied for and instructions that information regarding such application must be obtained at the Bureau/concerned Regional Office(s). The publication and radio announcement shall be at the expense of he applicant.
Within thirty (30) calendar days from the last date of publication /posting/radio announcements, the authorized officer(s) of the concerned office(s) shall issue a certification(s) that the publication /posting/radio announcement have been complied with. Any adverse claim, protest of opposition shall be filed directly, within thirty (30) calendar days from the last date of publication /posting/radio announcement, with the concerned Regional Office or through any concerned PENRO or CENRO for filing in the concerned Regional Office for purposes of its resolution by the Panel of Arbitrators pursuant to the provisions of the Act and these implementing rules and regulations. Upon final resolution of any adverse claim, protest or opposition, the Panel of Arbitrators shall likewise issue a Certification to that effect within five (5) working days therefrom.
However, previously published valid and existing mining claims are exempted from the publication /posting/radio announcement required under this Section.
No Exploration Permit shall be approved unless the requirements under this Section are fully complied with and any adverse claim/protest/opposition thereto is finally resolved.

Section 22. Terms and Conditions of an Exploration Permit

An Exploration Permit shall contain following terms and conditions:
a. The right to explore shall be subject to valid, prior and existing rights of any party(ies) within the subject area;
b. The Permit shall be for the exclusive use and benefit of the Permittee or its duly authorized representative and shall under no circumstances, be used by the Permittee for purposes other than exploration;
c. The term of the Permit shall be for a period of two (2) years from date of issuance thereof, renewable for like periods but not t exceed a total term of six (6) years: Provided, That no renewal of Permit shall be allowed unless the Permittee has complied with the terms and conditions of the Permit and shall not have be found guilty of violation of any provision of the Act and these implementing rules and regulations;
d. The Permittee shall submit to the Bureau/concerned Regional Office within thirty (30) calendar days after the end of each semester a report under oath of the Exploration Work Program implementation an expenditures showing discrepancies/deviations including the results of the survey, laboratory reports, geological reports/maps subject to semiannual inspection and verification by the Bureau/concerned Regional Office at the expense of the Permittee: Provided, That any expenditure in excess of the yearly budget of the approve Exploration Work Program may be carried forward and credited to the succeeding years covering the duration of the Permit;
e. The Permittee shall submit to the Bureau/concerned Regional Office within thirty (30) calendar days from the end of six (6) months after the approval of the Environmental Work Program (EWP) and every six (6) months thereafter a status report on its compliance with the said EWP;
f. The Permittee shall annually relinquish at least 20% of the permit area during the first two (2) years of exploration and at least 10% of the remaining permit area annually during the extended exploration period. However, if the permit area is less than five thousand (5,000) hectares, the Permittee need not relinquish any part thereof. A separate report of relinquishment shall be submitted to the Bureau/concerned Regional office with a detailed geologic report of the relinquished area accompanied by maps at a scale of 1:50,000 and results of analyses and corresponding expenditures, among others. The minimum exploration expenditures, for the remaining area after relinquishment shall be based on the approved Exploration Work Program;
g. The Secretary of his/her duly authorized representative shall annually review the performance of the Permittee,
h The Permittee shall submit to the Bureau/concerned Regional Office a final report upon the expiration or relinquishment of the Permit or its conversion into Mineral Agreement or FTAA in a form and substance comparable to published reports or respected international organizations and shall incorporate all the findings in the permit area including locations of samples, assays, chemical analyses and assessment of the mineral potential. Such report shall include complete detailed expenditures incurred during the exploration;
i. In case of diamond drilling, the Permittee shall, upon request of the Director/concerned Regional Director, submit to the Bureau/concerned Regional Office a quarter of the core samples which shall be deposited in the Bureau/concerned Regional Office Core Library for reference and safekeeping;
j Offshore exploration activities shall be carried out in accordance with the united Nations Convention on the Law of the Sea (UNCLOS) and in a manner that will not adversely affect the safety of navigation at sea and will ensure accommodation with other marine activities such as fishing, aquaculture, transportation, etc.;
k. Onshore exploration activities shall be carried out in a manner that, will at all times, safeguard the environment;
l. If the Permute applies for a Mineral Agreement or FTAA over the permit area, the exploration period covered by the Exploration Permit shall be considered as the exploration period of the Mineral Agreement or FTAA;
m. The Permittee shall comply with pertinent provisions of the Act and these implementing rules and regulations; and
n. Other terms and conditions which the Bureau/concerned Regional Office may deem appropriate.

Section 23. Registration of Exploration Permit

Upon evaluation that all the terms and conditions are in order and that the subject area has been cleared from any conflict, the Director/concerned Regional Director shall approved and issue the Exploration Permit within thirty (30) calendar days from such evaluation and shall cause the registration of the same to the Bureau/concerned Regional Office after payment of the required fees (Annex 5-A). In case of renewal, the Secretary shall issue the Exploration Permit (MGB Form No. 5-A) within thirty (30) calendar days from the recommendation of the Director.

Section 24. Rights and Obligations of the Permittee

The Permittee, its heirs or successors-in-interest shall have the right to enter, occupy and explore the permit area, all other rights provided for in the Act and these implementing rules and regulations; and the obligation to fully comply with the terms and conditions of the Exploration Permittee.

Section 25. Transfer or Assignment of Exploration Permit

An Exploration Permit may be transferred or assigned to another Qualified Person(s) subject to the approval of the Secretary upon the recommendation of the Director.

Section 26. Relinquishment of Areas Covered by Exploration Permit

The Permittee may, at any time relinquish the whole or any portion of the total permit area by filling a notice of relinquishment with the Bureau/concerned Regional Office.

Section 27. Renewal of Exploration Permit

Within sixty (60) calendar days before the expiration of an Exploration Permit, the Permittee may submit to the Bureau, copy furnished the concerned Regional Office, an application to renew the Exploration Permit accompanied by five (5) sets of the following mandatory requirements:
a. Justification of renewal;
b. Comprehensive and validated technical report on the outcome of the two-year exploration works, including their environmental effects duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;
c. Audited report of expenditure incurred during the exploration period;
d. Two-year Exploration Work Program (MGB Form No. 5-4) duly prepared, signed and sealed by a licensed Mining Engineer of Geologist;
e. Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16-1A) as provided for in Section 168 hereof; and
f. Other supporting papers as the Department /Bureau may require or the applicant may submit.
The Secretary may grant the renewal after field verification by the Bureau/concerned Regional Office of the foregoing requirements, which field verification shall be undertaken at the expense of the Permittee.

Section 28. Cancellation of an Exploration Permit

The Director/concerned Regional Director may cancel the Exploration Permit for failure of the Permittee to comply with any of the requirements and for violation(s) of the terms and conditions under which the Permit is issued. For renewed Exploration Permits, the Secretary upon the recommendation of the Director shall cause the cancellation of the same.
Upon cancellation of the Permit covering the areas within Government Reservations, the said areas shall automatically be reverted back to its original status.

Section 29. Effect of Relinquishment or Cancellation of Exploration Permit

The foregoing provisions notwithstanding, relinquishment or cancellation shall not release the Permittee from any and all obligations it may have, particularly with regard to ecological management, at the time of relinquishment or cancellation.

Section 30. Declaration of Mining Project Feasibility

If results of exploration reveal the presence of mineral deposits economically and technically feasible for mining operations, the Permittee may, within the term of the Exploration Permit, file a declaration of mining project feasibility. The approval of the declaration of mining project feasibility by the Director/concerned Regional Director shall grant the Permittee the exclusive right to a Mineral Agreement or FTAA over the permit area: Provided, That failure of the Permittee to apply for Mineral Agreement or FTAA within a period of one (1) year from the date of approval of the declaration of mining project feasibility.
The application for Mineral Agreement or FTAA by a Permittee shall be accompanied by five (5) of the following mandatory requirements:
a. Mining Project Feasibility Study (MGB Form No. 5-3);
b. Complete Geologic Report of the area;
c. Approved Survey Plan;
d. Three-year Development/Utilization Work Program (MGB Form No. 6-2), as deemed applicable, duly prepared, signed and sealed by a licensed Mining Engineer, Geologist or Metallurgical Engineer;
e. Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16-1A) during the exploration period as provided for in Section 168 hereof or Environmental Compliance Certificate prior to development, construction and/or utilization and Environmental Protection and Enhancement Program (MGB Form No. 16-2) as provided for in Section 169 hereof;
f. Proof of technical competence including, among others, curricula vitae and track records in mining operations and environmental management of the technical personnel who shall undertake the activities in accordance with the submitted Exploration/Development /Utilization Work Program and Environmental Work/Environmental Protection and Enhancement Program, as deemed applicable;
g. Proof of financial capability to undertake the activities pursuant to Exploration/Development /Utilization Work Program and Environmental Work/Environmental Protection, as deemed applicable, such as statement of assets and liabilities duly sworn in accordance with existing laws, credit lines and income tax return for the preceding year;
h. Proof of award of the area by the President for areas within Government Reservations; and
i. Other supporting papers as the Department/Bureau may require or the applicant may submit.
The processing of the application for a Mineral Agreement or FTAA shall be in accordance with Chapters VI and VII, respectively, of these implementing rules and regulations.

Section 31. Kinds of Mineral Agreements and Nature Thereof

There are three (3) kinds of Mineral Agreements, namely:
a. 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 owner of the minerals therein. The Contractor shall provide the necessary, financing technology, management and personnel;
b. 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
c. Joint Venture Agreement (JVA) --- an agreement where a joint venture company is organized by the Government and the Contractor with both parties having equity shares. Aside from earnings in equity, the Government shall be entitled to a share in the gross output.

Section 32. Eligibility of Applicant for Mineral Agreement

The following Qualified Person may apply for a Mineral Agreement for the exploration, development and utilization of mineral resources:
a. In case of an individual --- must be a Filipino citizen of legal age and with capacity to contract; or
b. In case of corporation, partnership, association, or cooperative --- must be organized or authorized for the purpose of engaging in mining, duly registered in accordance with law, at least sixty (60%) percent of the capital of which is owned by the Filipino citizens.

Section 33. Maximum Areas Allowed under a Mineral Agreement

The maximum area that a Qualified Person may apply for or hold at any one time under a Mineral Agreement shall be as follows:
a. Onshore, in any one province ---

1. For individuals --- ten (10) blocks or approximately eight hundred ten (810) hectares; and
   
2. For corporations, partnership, association or cooperatives --- one hundred (100) blocks or approximately eight thousand one hundred (8,100) hectares.
   

• b. Onshore, in the entire Philippines ---
  
  1. For individuals --- twenty (20) blocks or approximately one thousand six hundred twenty (1,620) hectares; and
     
  2. For corporations, partnership, associations, or cooperatives --- two hundred (200) blocks or approximately sixteen thousand two hundred (16,200) hectares.
     

  c. Offshore, in the entire Philippines, beyond five hundred meters (500m) from the mean low tide level ---
  1) For individuals --- fifty (50) blocks or approximately four thousand fifty (4,050) hectares;
  

  1. For corporations, association, or cooperatives --- five hundred (500) blocks or approximately forty thousand five hundred (40, 500) hectares; and
     
  2. For the Exclusive Economic Zone --- a larger area to be determined by the Secretary upon the recommendation of the Director.
     

  The above mentioned maximum areas that a Contractor may apply for or hold under a Mineral Agreement shall not include mining/quarry areas under operating agreements between the contractor and a claim owner/Lessee/Permittee/licensee entered into under P.D. No. 463.
  
  

Section 34. Term of Mineral Agreement

A Mineral Agreement shall have a term not exceeding twenty -five (25) years from the date of execution thereof, and renewable for another term not exceeding twenty -five (25) years under the same terms and conditions thereof, without prejudice to changes mutually agreed upon by the Government and the Contractor.
After the renewal period, the operation of the mine may be undertaken by the government or through a Contractor. The contract for the operation of a mine shall be awarded to the highest bidder in the public bidding after due publication of the notice thereof: Provided , That the original Contractor shall have the right to equal the highest bid upon reimbursement of all reasonable expenses of the highest bidder.

Section 35. Mandatory Requirements for Mineral Agreement Application

The applicant shall submit at least five (5) sets of the following mandatory requirements depending on the type of agreement applied for.
a. For individuals ---

1. Location map/sketch plan of the proposed contract area showing in geographic coordinates/meridional block(s) and boundaries in relation to major environmental features and other projects using NAMRIA topographic map in scale of 1:50,000 duly prepared, signed and sealed by deputized Geodetic Engineer;
   
2. Two-year Exploration Work Program (MGB Form No. 5-4) or three- year Development/Utilization Work Program (MGB Form No. 6-2) as deemed applicable, duly prepared, signed and sealed by licensed Mining Engineer, Geologist or Metallurgical Engineer;
   
3. When applicable, a satisfactory Environmental Management Records and Community Relations Record as determined by the Bureau in consultation with the Environmental Management Bureau and/or the Department Regional Office. The detailed by the Secretary upon the recommendation of the Director;
   
4. Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16- 1A) during the exploration period as provided for in Section 168 hereof or Environmental Compliance Certificate prior to development, construction and/or utilization and Environmental Protection and Enhancement Program (MGB Form No. 16-2) as provided for in Section 169 thereof;
   
5. Proof of technical competence including, among others, curricula vitae and track records in mining operations and Environmental Management of the technical personnel who shall undertake the activities in accordance with the submitted Exploration/Development/Utilization Work Programs and Environmental Work/Environmental Protection and Enhancement Program, as deemed applicable;
   
6. Proof of financial capability to undertake the activities pursuant to Exploration/Development/Utilization Work Program and Environmental Work/Environmental Protection and Enhancement Program, as deemed applicable, such as statement of assets and liabilities duly sworn in accordance with existing laws, credit line and income tax return for the preceding year;
   
7. Declaration of the total area covered by approved/pending Mineral Agreement(s)/application(s); and
   
8. Other supporting papers as the Department/Bureau/concerned Regional Office may require or the applicant may submit.
   

• b. For corporation, partnership, association or cooperative ---
  
  1. Duly certified Certificate of Registration issued by the Securities and Exchange Commission or concerned authorized Government agency;
     
  2. Duly certified Articles of Incorporation/Partnership/Association and By- Laws;
     
  3. Location map/sketch plan of the proposed contract area showing its geographic coordinates/meridional block(s) and boundaries in relation to major environmental features and other projects using NAMRIA topographic map in scale of 1:50,000 duly prepared, signed, and sealed by deputized Geodetic Engineers;
     
  4. Two-year Exploration Work Program (MGB From No. 5-4) or three -year Development/Utilization Work Program (MGB Form No. 6-2), as deemed applicable duly prepared, signed and sealed by licensed Engineer, Geologist or Metallurgical Engineer;
     
  5. When applicable, a satisfactory Environmental Management Record and Community Relation Record as determined by the Bureau in consultation with the Environmental Management Bureau and/or the Department Regional Office. The detailed guidelines for the determination and applicability of such records shall be specified by the Secretary upon the recommendation of the Director;
     
  6. Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16-1A) during the exploration period as provided for in Section 168 hereof or Environmental Compliance Certificate prior to development, construction and/or utilization and Environmental Protection and Enhancement Programs (MGB Form No. 16-2) as provided for in Section 169 hereof;
     
  7. Proof of technical competence including, among others, curricula vitae and track records in mining operations and environmental management of the technical personnel who shall undertake the activities in accordance with the submitted Exploration/Development/ Utilization Work Program and Environmental Work/ Environmental Protection and Enhance Program, as deemed applicable;
     
  8. Proof of financial capability to undertake the activities pursuant to Exploration/ Development/Utilization Work Program and Environmental Work/ Environmental protection and Enhancement Program, as deemed applicable, such as latest Audited Financial statement and where applicable, Annual Report for the preceding year, credit lines, bank guarantees and/or similar negotiable instruments;
     
  9. Declaration of the total area covered by approved/pending Mineral Agreement(s)/application(s); and
     
  10. Other supporting papers as the Department/ Bureau/concerned Regional Office may require or the applicant may submit.
      

  If the applicant conducts or has conducted mining operations in foreign country(ies), the Department shall verify the relevant requirements through the Philippine Embassy(ies) or consulate(s) based in such country(ies).
  c. For holders of valid and existing mining lease contracts, operating agreements, Quarry Permit's/licenses or unperfected mining/quarry claims, the following shall be submitted in addition to the aforesaid requirements, whenever applicable, namely:
  

  1. Certification from the concerned Regional Office that the mining/quarry claims are valid and subsisting;
     
  2. Appropriate environmental report on the rehabilitation of mined out and/or mine waste/tailings-covered areas and anti-pollution measures undertaken during the mining operations;
     
  3. Environmental Compliance Certificate for any new phase outside of the original approved operation under the mining project;
     
  4. Mining Project Feasibility Study (MGB Form No. 5-3)
     
  5. Three-year Development/Construction/Utilization Work Program (MGB Form No. 6-2), as deemed applicable, duly prepared, signed and sealed by a licensed Mining Engineer, Geologist or Metallurgical Engineer;
     
  6. Approved Survey Plan of the Mining area; and
     
  7. Other supporting papers as the Department/Bureau/concerned Regional Office may require or the applicant may submit.
     
     

Section 36. Filling of Mineral Agreement Applicant

The Mineral Agreement application (MGB Form No. 6-1) shall be filed by the applicant personally or through its duly authorized representative with the Bureau/concerned Regional Office: Provided , That any application that transcends into two (2) or more regions shall be filed with the Regional Office which has the largest area covered by the application, copy furnished the other concerned Regional Office(s) by the applicant: Provided, further, That a Mineral Agreement application shall be accepted only upon payment of the required fees (Annex 5-A) to the Bureau/concerned Regional Office: Provided, finally that any application with incomplete mandatory requirements shall not be accepted.
The Regional Office shall regularly provide the Bureau with a list, consolidated map and status report of Mineral Agreement applications filed in its jurisdiction.

Section 37. Area Status/ Clearance

Within fifteen (15) working days from receipt of the Mineral Agreement application, the Bureau/concerned Regional Office(s) shall check in the control maps if the area is free/open for mining applications. The Regional Office shall also transmit a copy of the location map/sketch plan of the applied area to the pertinent Department sector(s) affected by the Mineral Agreement application for area status, copy furnished the concerned municipality(ies)/city(ies) and other relevant offices or agencies of the Government for their information. Upon notification of the applicant by the Regional Office as to the transmittal of said document to the concerned Department sector(s) and/or Government agency(ies) it shall be the responsibility of the same applicant to secure the necessary area status/consent /clearance from said Department sector(s) and/or Government agency(ies). The concerned Department sector (s) must submit the area status/consent/clearance on the proposed contract area within thirty (30) working days from receipt of the notice: Provided , That the concerned Department sector(s) cannot unreasonably deny area clearance/consent without legal and/or technical basis: Provided, further, That if the area applied for falls within the administration of two (2) or more Regional Offices, the concerned Regional Office(s) which has/have jurisdiction over the lesser area(s) of the application shall follow the same procedure.
In reservations/reserves/project areas under the jurisdiction of the Department/Bureau Regional Office(s) where consent/clearance is denied, the applicant may appeal the same to the Office of the Secretary.
If the proposed contract area is open for mining application, the Bureau/concerned Regional Office(s) shall give written notice to the applicant to pay the corresponding Bureau/Regional Office clearance fee (Annex 5-A): Provided , That if a portion of the area applied for is not open for mining applications, the concerned Regional Office shall, within fifteen (15) working days from receipt of said written notice, exclude the same from the coverage of Mineral Agreement application: Provided further, That in cases of overlapping claims/conflicts/complaints from landowners, NGOs LGUs and other concerned stakeholders, the Regional Director shall exert all efforts to resolve the same.

Section 38. Publication /Posting /Radio Announcement of a Mineral Agreement Application

Within fifteen (15) working day from receipt of the necessary area clearances, the Bureau/concerned Regional Office(s) shall issue to the applicant the Notice of Application for Mineral Agreement for publication, posting and radio announcement, which shall be done within fifteen (15) working days from receipt of the Notice. The Notice must contain, among others, the name, and complete address of the applicant, duration of the agreement applied for, extent of operation to be undertaken, area location geographical coordinates/meridional block(s) of the proposed contract area and location map/sketch plan with index map relative to major environmental features and projects and to the nearest municipalities.
The Bureau/concerned Regional Office(s) shall cause the publication of the Notice once a week for two (2) consecutive weeks in two (2) newspapers: one of general circulation published in Metro Manila and another published in the municipality or province where the proposed contract area is located, if there be such newspapers; otherwise, in the newspaper published in the nearest municipality or province.
The Bureau/concerned Regional Office shall also cause the posting for two (2) consecutive weeks of the Notice on the bulletin boards of the Bureau, the concerned Regional Office(s), PENRO(s), CENRO(s) and in the concerned province(s) and municipality(ies), copy furnished the barangay(s) where the proposed area is located. Where necessary, the Notice shall be in a language generally understood in the concerned locality where it is posted.
The radio announcements shall be made daily for two (2) consecutive weeks in a local radio program and shall consist of the name and complete address of the applicant, area location, duration of the agreement applied for and instruction that information regarding such application maybe obtained at the Bureau/concerned Regional Office(s). The publication and radio announcements shall be at the expense of the applicant.
Within thirty (30) calendar days from the last date of publication, posting, radio announcements, the authorized officer(s) of the concerned office(s) shall issue a certification(s) that the publication/posting/radio announcement have been complied with. Any adverse claim, protest or opposition shall be filed directly, within thirty (30) calendar days from the last date of publication /posting/ radio announcement, with the concerned Regional Office or through any concerned PENRO or CENRO for filling in the concerned Regional Office for purposes of its resolution by the Panel of Arbitrators pursuant to the provisions of the Act and these implementing rules and regulations. Upon final resolution at any adverse claim, protest or pposition, the Panel of Arbitrators shall issue a Certification to that effect within five (5) working days therefrom.
However, previously published valid and existing mining claims are exempted from the publication/posting/radio announcement required under this Section.
No Mineral Agreement shall be approved unless the requirements under this Section are fully complied with and any adverse claim/protest/opposition thereto is finally resolved by the Panel of Arbitrators.

Section 39. Terms and Conditions of a Mineral Agreement

The following terms and conditions shall be incorporated in the Mineral Agreement, namely:
a) A stipulation that the Contractor shall not, by virtue of the Mineral Agreement, acquire any title over the contract/mining area without prejudice to the acquisition by the Contractor of the land/surface rights through any mode of acquisition provided for by law;
b) Representations and warranties that the Contractor has, or has access to, all the financing and technical capability and technology required to promptly and effectively carry out the objectives of Agreement with the understanding to timely utilize these resources under its supervision pursuant to the periodic work programs and related budgets, and when proper, providing an exploration period up to two (2) years from date of issuance thereof, renewable for like periods but not to exceed a total term of six (6) years, subject to annual review by the Director in accordance with these implementing rules and regulations;
c) Representations and warranties that the applicant has all the qualifications and none of the disqualifications for entering into the Agreement;
d) A stipulation that the Contractor may relinquish totally or partially the original contract area during the exploration period. After the exploration period and prior to or upon approval of declaration of mining project feasibility, the Contractor shall finally relinquish to the government any portion of the contract area which shall not be necessary for mining operations and not covered by any declaration of mining feasibility with the corresponding submission to the Bureau/concerned Regional Office of geologic report and pertinent maps in the scale of 1:50,000. The minimum exploration expenditures for the remaining area after relinquishment shall not be more than five thousand (5000) hectares for metallic minerals and two thousand (2000) hectares for non metallic minerals: Provided , That the Director, with the approval of the Secretary, may allow a Contractor to hold a larger mining area depending upon the nature of the deposit subject to technical verification and evaluation by the Bureau as to the technical/ financial capability of the Contractor;
f) A stipulation that the mining operations shall be conducted in accordance with the provision of the Act and these implementing rules and regulations;
g) A stipulation that the Contractor shall give preference to goods and services produced and offered in the Philippines of comparative quality and cost. In particular, the Contractor shall give preference to qualified Filipino construction enterprises, construction materials and skill available in the Philippines, Filipino sub-contractors for road construction and transportation, and Philippine household equipment, furniture and food;
h) A stipulation that the Contractor is obliged to give preference to Filipino in all types of mining employment for which they are qualified and that the technology shall be transferred to the same;
i) A stipulation that the Contractor shall not discriminate on the basis of gender and that the Contractor shall respect the right of woman workers to participate in policy and decision-making processes affecting their rights and benefits;
j) A stipulation requiring the Contractor to effectively use the best available appropriate anti-pollution technology and facilities to protect the environment and to restore or rehabilitate mined-out areas and other areas affected by mine waste/mill tailings and other forms of pollution or destruction in compliance with the requirements of the ECC and P.D. No. 984. This should be under taken in coordination with the EMB/Department Regional Office.
k) A stipulation that the Contractor shall furnish the Government an annual report of its mining operations and records of geologic, accounting and other relevant data, and that book of accounts and records shall be open for inspection by the Government;
l) A stipulation requiring the Contractor to dispose of the minerals and by-products produce at the highest market price and to negotiate for more advantageous terms and conditions subject to the right to enter into long-term sales or marketing contracts or foreign exchange and commodity hedging contracts which the Government acknowledges to be acceptable notwithstanding that the sale price of the minerals may from time to time be lower, or the terms and conditions of sales are less favorable, than that available elsewhere; Provided , that the Bureau is furnished a copy of the said Sales Agreement subject to confidentiality between the Bureau and the Contractor;
m) A stipulation providing for consultation and arbitrator with respect to the interpretation and implementation of the terms and conditions of the Agreement;
n) A stipulation that the Contractor shall pay fees, taxes, royalties, and other obligations in accordance with existing laws, rules and regulations;
o) A stipulation that alien employment shall be limited to technologies requiring highly specialized training and experience subject to the required approval under existing laws, rules and regulations;
p) A stipulation that in every case where foreign technologies are utilized and where alien executives are employed, an effective program of training understudies shall be undertaken;
q) A stipulation that the Contractor shall conform with laws, rules and regulation regarding, among others, labor, safety and health standards;
r) A stipulation that the Contractor shall confine its mining operation to its contract/mining area and that it shall not interfere with the rights of other Contractors/Lessees/operators/Permittees/Permit Holders;
s) A stipulation that the Contractor shall recognize and respect the rights, customs and traditions of local communities, particularly Indigenous Cultural Communities;
t) A stipulation that the Contractor shall contribute to the development of the host and neighboring communities of the mining area, local geoscience and mining technology in accordance with Chapter XIV hereof;
u) A stipulation that the Contractor shall comply with its obligations under its Environmental Protection and Enhancement Program (EPEP) and its annual (EPEP), including the allocation of the prescribed annual environmental expense pursuant to Section 171 hereof;
v. A stipulation that the Contractor shall utilize the best available appropriate and efficient mining and processing technologies;
w. A stipulation that the Contractor shall undertake exploration work on the areas specified in its Agreement based on an approved Work Program: Provided , That a negative variance of at least twenty (20%) percent in the Work Program and corresponding expenditures shall be subject to approval to the Director/ concerned Regional Director;
x. A stipulation that the Contractor shall submit annually starting from the date of approval of the Agreement, progress reports of the exploration activities in the prescribed form. This shall be accompanied by a raw geologic, geophysical and geochemical data plotted in a 1:50,000 scale map, at a minimum. A quarterly report containing activities and accomplishments for each quarter shall also be submitted. At the end of the exploration term, the Contractor shall submit the final report with the detailed list of activities with the corresponding expenditures. The final report shall be accompanied by a 1:50,000 geologic map of the contract area acceptable by international standards. All reports referred to herein shall be submitted to the Bureau/concerned Regional Office;
y. A stipulation that the Mineral Agreement shall be canceled, revoked or terminated for failure of the Contractor to comply with the terms and conditions thereof or for other grounds as provided in Section 230 hereof;
z. A stipulation that withdrawal by the Contractor from the Mineral Agreement shall not release it from any and all financial, environmental, legal and fiscal obligations under the Agreement;
aa. A stipulation that the Contractor shall comply with all other applicable provisions of the Act and these implementing rules and regulations; and
ab. Such other terms and conditions not inconsistent with the Constitution, the Act and these implementing rules and regulations, as well as those which the Secretary may deem to be for the national interest and public welfare.
The Department shall formulate and promulgate such other rules, regulations and guidelines necessary to ensure compliance with the terms and conditions herein stated.

Section 40. Transfer or Assignment of Mineral Agreement Application

Transfer or assignment of Mineral Agreement shall be allowed subject to the approval of the Director/concerned Regional Director taking into account the national interest and public welfare: Provided , That such transfer or assignment shall be subject to eligibility requirements and shall not be allowed in cases involving speculation.

Section 41. Evaluation of Mineral Agreement Application

Within fifteen (15) working days from the receipt of the Certification issued by the Panel of Arbitrators as provided for in Section 38 hereof, the concerned Regional Director shall initially evaluate the Mineral Agreement applications in areas outside Mineral Reservations. He/She shall thereafter endorse his/her findings to the Bureau for further evaluation by the Director within fifteen (15) working days from receipt of forwarded documents. Thereafter , the director shall endorse the same to the Secretary for the consideration/approval within fifteen (15) working days from receipt of such endorsement .
In case of Mineral Agreement applications in areas within Mineral Reservations, within fifteen (15) working days from receipt of the Certification issued by the Panel of Arbitrators as provided for in Section 38 hereof, the same shall be evaluated and endorsed by the Director to the Secretary for consideration/approval within fifteen (15) working days from receipt of such endorsement .

Section 42. Temporary Exploration Permit

While awaiting for the approval of the Mineral Agreement application by the Secretary, the Director may, upon the request of the applicant, issue a one-time non-renewable Temporary Exploration Permit with a term not exceeding one (1) year to undertake exploration subject to the applicable provisions of Chapter V of these implementing rules and regulations: Provided , That the term of the TEP shall be deducted from the exploration period of the Mineral Agreement : Provided, further, That in the event that the Mineral Agreement application is disapproved by the Secretary, the TEP is deemed automatically canceled.

Section 43. Registration of Mineral Agreement

Upon approval of the Mineral Agreement by the Secretary, the same shall be forwarded to the Bureau for numbering. The Director shall notify the Contractor to cause the registration of its Mineral Agreement with the Bureau for areas inside Mineral Reservations or with the concerned Regional Office for areas outside Mineral Reservations within fifteen (15) working days from receipt of the written notice. Registration is effected only upon payment of the required fees (Annex 5-A). The Bureau/concerned Regional Office shall officially release the Mineral Agreement to the Contractor after registration of the same.
Failure of the Contractor to cause the registration of its Mineral Agreement within the prescribed period shall be a sufficient ground for cancellation of the same.

Section 44. Rights and Obligations of the Contractor

The Contractor, its heirs or successors-in- interest shall have the right to exclusively conduct mining operations within the contract area with full rights of ingress and egress, the right to occupy the same, all other rights provided for in the Act and these implementing rules and regulations; and the obligation to fully comply with the terms and conditions of the Mineral Agreement.

Section 45. Conversion of a Mineral Agreement into Any Other Mode of Mineral Agreement or FTAA

A Contractor may at its option convert totally or partially its Mineral Agreement into another mode of Mineral Agreement or FTAA by filing a Letter of Intent with the Bureau , copy furnished the concerned Regional Office. All revisions to the Mineral Agreement required by its conversion into any other mode of Mineral Agreement or FTAA shall be submitted to the Director within sixty (60) calendar days from the date of filing the Letter of Intent.
Upon compliance by the Contractor with all the requirements and payment of conversion fee (Annex 5-A), the application for conversion shall be evaluated and approved subject to Chapters VI and VII and all other applicable provisions of the Act and these implementing rules and regulations: Provided , That the term of the new Mineral Agreement or FTAA shall be equivalent to the remaining period of the original Agreement.

Section 46. Transfer or Assignment of Mineral Agreement

A Contractor may file an application for the total or partial transfer or assignment of its Mineral Agreement to a Qualified Person(s) upon payment of an application fee (Annex 5-A) with the Bureau/concerned Regional Officer for evaluation. No application shall be accepted for filing unless accompanied by the pertinent Deed of Assignment that shall contain, among others, a stipulation that the transferee/assignee assumes all obligations of the transferor/assignor under the Agreement. Any transfer or assignment of rights and obligations under any Mineral Agreement shall be subject for approval of the Secretary upon the recommendation of the Director: Provided, That any transfer or assignment of a Mineral Agreement shall not be approved unless the transferor/assignor or Contractor has complied with all the terms and conditions of the Agreement and the provisions of the Act and these implementing rules and regulations at the time of the transfer/assignment : Provided, further , That any transfer or assignment shall be deemed automatically approved if not acted upon by the Secretary within thirty (30) calendar days from official receipt thereof, unless patently unconstitutional, illegal or where such transfer or assignment is violated of pertinent rules and regulations: Provided, finally, That the transferee assumes all the obligations and responsibilities of the transferor/assignor under the Mineral Agreement.
If the circumstances warrant and upon the recommendation of the Director, the Secretary may impose additional conditions for the approval of transfer/assignment of the Mineral Agreement .

Section 47. Withdrawal from a Mineral Agreement

The Contractor shall manifest in writing its request to the Director, copy furnished the concerned Regional Director, for withdrawal from the Mineral Agreement, if in its judgment the mining project is no longer economically feasible, even after it has exerted reasonable diligence to remedy the cause(s) or situation(s).
After verification and validation by the Bureau and upon compliance or satisfaction of all the Contractor's financial , fiscal, environmental and legal obligations at the time of withdrawal, the Director within a period of thirty (30) calendar days shall send an acceptance notice of withdrawal to the Contractor, cause the opening of the subject area to mining applications and release the Contractor's financial guaranty/performance bond.

Section 48. Issuance of Special Mines Permit

All holders of lease contracts which are about to expire and Quarry Permits/licenses with pending Mineral Agreement applications may file an application for Special Mines Permit with the Bureau/concerned Regional Office. A Special Mines Permit (SMP) may be issued by the Director/concerned Regional Director upon clearance by the Secretary and shall be for a period of one (1) year from the expiration of the lease contract or Quarry Permit/license, renewable once, subject to the following conditions and requirements:
a. That the applicant is already operating or has completed the development / construction stage and is ready to begin operations subject to verification by the Bureau;
b. That the applicant has already submitted a proposed Mineral Agreement ;
c. That the applicant has submitted a one-year Work Program duly prepared, signed and sealed by a licensed Mining Engineer, Geologist or Metallurgical Engineer;
d. Submission of Environmental Compliance Certificate, including proof of compliance therewith, if applicable;
e. Submission of Environmental Protection and Enhancement Program (MGB Form No. 16-2) as provided for in Section 169 hereof;
f. Submission of proof of satisfactory Environmental Management Record and Community Relations Record, if applicable;
g. Posting of Surety Bond prior to registration of the SMP; and
h. Such other conditions and requirements not inconsistent with the Act and these implementing rules and regulations, as well as those which the Secretary may deem to be for the national interest and public welfare.
Provided , That quarterly progress production reports shall be submitted by the holders of Special Mines Permits covering the subject areas for the purpose of computing the share of the Government from production as provided for in Chapter XXI hereof. Such share of the Government shall be the excise tax as provided for in R.A. No. 7729.

Section 49. Eligibility of Applicant for Financial or Technical Assistance Agreement (FTAA)

Any Qualified Person may apply for an FTAA for large-scale exploration, development and utilization of mineral resources as enumerated in Section 50 hereof.

Section 50. Minerals Subject of FTAA

An FTAA may be entered into for the exploration, development and utilization of gold, copper, nickel, chromite, lead, zinc and other minerals: Provided , That no FTAAs may be granted with the respect to cement raw materials, marble, granite, sand and gravel and construction aggregates.

Section 51. Maximum Areas Allowed under an FTAA

The maximum FTAA contract area that may be applied for or granted per Qualified Person in the entire Philippines shall be as follows:
a. One thousand (1,000) meridional blocks or approximately eighty-one thousand (81,000) hectares onshore;
b. Four thousand (4,000) meridional blocks or approximately three hundred twenty-four thousand (324,000) hectares offshore or;
c. Combination of one thousand(1,000) meridional blocks onshore and four thousand (4,000) meridional blocks offshore.

Section 52. Term of an FTAA

An FTAA shall have a term not exceeding twenty-five (25) years from the date of execution thereof, and renewable for another term not exceeding twenty-five (25) years under such terms and conditions as may be provided for by law and mutually agreed upon by the parties. The activities of each phase of mining operations must be completed within the following periods:
a. Exploration-up to two (2) years from the date of FTAA execution, extendible for another two years subject to the following requirements:

1. Justification of renewal;
   
2. Comprehensive and validated technical report on the outcome of the two year (2) exploration works, including environmental effects duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;
   
3. Audited report of expenditures incurred;
   
4. Work Program (MGB Form No. 5-4) duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;
   
5. Relinquishment report; and
   
6. Other supporting paper as the Department /Bureau/concerned Regional Office may require or the applicant may submit.
   

• b. Prefeasibility study, if warranted-up to two (2) years from expiration of the exploration period;
  c. Feasibility study-up to two (2) years from the expiration of the exploration/prefeasibility study period or from declaration of mining project feasibility; and
  d. Development, construction and utilization-remaining years of FTAA.
  Any two (2) or more of the above periods may be simultaneously undertaken in one approved contract area, as the need of the Contractor may arise, subject to the pertinent provisions of Section 59 hereof.
  
  

Section 53. Filing of FTAA Applications/Mandatory Requirements

The FTAA application (MGB Form No. 7-10) shall be filed with the Bureau for areas inside Mineral Reservations or with the concerned Regional Office for areas outside Mineral Reservations. The proposed contract area shall be closed to other mining applications for minerals mentioned in Section 50 hereof, but shall be open for quarry resources