Philippine

Mining Act of
1995
(R.A. 7942)
 Legislative History
R.A. 7942 (Philippine Mining Act) is a consolidation of
H.B.10816 and S.B.1639.

It was passed by the House of Representatives and the

Senate n February 10, 1995.

It was signed into law by President Fidel V. Ramos on

March 03, 1995.

2
R.A.7642, as a law liberalizing the mining
industry, was hailed to boost the countrys
economic growth.

It was also hyped to bring rural progress and

development especially in communities
hosting large scale mining.
 Introduction
Mining:
Plays a crucial role in industrial development.
Induces and supports economic growth.
Contributes foreign currency
Provides employment
Source of tax revenues.

4
 Introduction
Philippines has $840 billion worth of untapped mineral wealth,
but growth of mining investments have been slower (before the
passage of RA7942).

Such untapped mineral includes copper, gold, nicckel, chromite,

limestone, clays, feldspar and semi-precious stones.

5
 Introduction
RA7942 was designed to revive the mining industry and attract
more foreign investment by defining the agreements for mineral
exploitation, and provide

6
 Introduction
Although the mining industry generates outputs and provides
employment, it also has a destructive impact on the environment
through deforestation, and the loss of vegetation and
biodiversity.

Such facts prompted some of our legislators to revisit R.A.7942.

There is now a pending bill in Congress for some amendments
of the Philippine Mining Act of 1995.

7
 Highlights of RA7942 and
its Revised IRR
RA7942 and its Revised IRR is considered in the industry today
as one of the most socially and environmentally-sensitive
legislations in its class. It has specific provisions that take into
consideration:

Local government empowerment;

Respect and concern for the indigenous cultural
communities;
Equitable sharing of benefits of natural wealth;
8
 Highlights of RA7942 and
its Revised IRR
Economic demands of present generation while providing
the necessary foundation for future generations;
Worldwide trend towards globalization; and
Protection for and wise management of the environment.

These were the products of long periods of assessment,

evaluation, and rectification of the sins of the past, the gaps of
the old mining law, and the realities of the present times.

9
 Governing Principles
The Implementing Rules and Regulations (DENR
Administrative Order No.96-40) of the Philippine Mining Act of
1995 provides strict adherence to the principle of
SUSTAINABLE DEVELOPMENT.

It provides that the use of mineral wealth shall be pro-people

and pro-environment in sustaining wealth creation and improve
quality of life.

10
 Governing Principles
The principles of SUSTAINABLE MINING operates under the
following terms:

Mining is a temporary land use for the creation of wealth,

leading to an optimum land use in post-mining stage as
consequence of progressive and engineered mine
rehabilitation works done in cycle with mining operations;

11
 Governing Principles
Mining activities must always be guided by current Best
Practices in environmental management committed to
reducing the impacts of mining while efficiently and
effectively protecting the environment.

The wealth created as a result of mining accruing to the

Government and the community should lead to other wealth-
generating opportunities for people in the communities and
for other environment-responsible endeavors.
12
 Governing Principles
Mining activities shall be undertaken with due and equal
regard for economic and environmental considerations, as
well as for health, safety, social and cultural concerns.

Conservation of minerals is effected not only through

technological efficiencies of mining operations but also
through the recycling of mineral-based products, to
effectively lengthen the usable life of mineral commodities.

13
 Governing Principles
The granting of mining rights shall harmonize existing
activities, policies and programs of the Government that
directly or indirectly promote self-reliance, development and
resource management. Activities, policies and programs that
promote community-based, community-oriented and
procedural development shall be encouraged, consistent with
the principles of people empowerment and grassroots
development.

14
 Organizational Implementations
The Mining Act reverts back the Mines and Geosciences Bureau
(MGB) from a Staff to a Line Bureau. Under this arrangement,
the MGB Central Office has now the administrative jurisdiction
and responsibility over its regional offices. The Line Bureau
structure was contemplated to ensure organizational efficiency
and flexibility in managing limited resources and technical
expertise.

15
 Organizational Implementations
The authorities/responsibilities of the MGB are as follows:

Management and administration of mineral lands and

resources, including the granting of mining permits and
mineral agreements;

Enforcement and monitoring of Environmental Work

Programs (EWP) and Environmental Protection and
Enhancement Program (EPEP);
16
 Organizational Implementations
Establishment and operationalization of the Contingent
Liability and Rehabilitation Fund (CLRF), as well as the
mandatory Final Mine Rehabilitation and Decommissioning
Plan;

Cancel mining applications and mining rights violating the

provisions of the Mining Act, its implementing rules and
regulations, and/or the terms and conditions of a mining
permit/contract/agreement;
17
 Organizational Implementations
For the Regional Directors to impose Cease-and-Desist
Orders (CDO);

To deputize the PNP, LGUs, NGOs and other responsible

entities to police mining activities;

18
 Role of Local Governments
The IRR highlights the role of local government units (LGUs) in
mining projects, both as beneficiaries and as active participants
in mineral resources management, in consonance with the
Constitution and government policies on local autonomy and
empowerment.

As such, the Mining Act provides the following:

19
 Role of Local Governments
In consonance with the Local Government Code of 1992
(LGC), LGUs have a share of forty percent (40%) of the
gross collection derived by the National Government from
mining taxes, royalties and other such taxes, fees or charges
from mining operations in addition to the occupational fees
(30% to the Province and 70% to the Municipalities
concerned);

20
 Role of Local Governments
In consonance with the LGC and the People Small-Scale
Mining Act (RA 7076), the LGUs shall be responsible for
the issuance of permits for small-scale mining and quarrying
operations, through the Provincial/City Mining Regulatory
Boards (PMRBs/CMRBs);

To actively participate in the process by which the

communities shall reach an informed decision on the social
acceptability of a mining project as a requirement for
securing an Environmental Compliance Certificate (ECC);
21
 Role of Local Governments
To ensure that relevant laws on public notices, consultations
and public participation are complied with;

To participate in the monitoring of mining activities as a

member of the Multipartite Monitoring Team, as well as in
the Mine Rehabilitation Fund Committee;

To act as mediator between the Indigenous Cultural

Communities (ICCs) and the mining contractor as may be
requested/necessary;
22
 Role of Local Governments
To be the recipients of social infrastructures and community
development projects for the utilization and benefit of the
host and neighboring communities; and

To coordinate with and assist the DENR and the MGB in the
implementation of the Mining Act and the IRR.

23
 Areas Closed to the
Mining Application
Pursuant to R.A.7942, and in consonance with State policies and
existing laws, areas may either be closed to mining operations,
or conditionally opened, as follows:

Areas CLOSED to mining applications:

Areas covered by valid and existing mining rights and

applications;

24
 Areas Closed to the
Mining Application
Old growth or virgin forests, mossy forests, national parks,
provincial/municipal forests, tree parks, greenbelts, game
refuge, bird sanctuaries and areas proclaimed as marine
reserve/marine parks and sanctuaries and areas proclaimed as
marine reserve/marine parks and tourist zones as defined by
law and identified initial components of the NIPAS, and
such areas as expressly prohibited thereunder, as well as
under DENR Administrative Order No. 25, s. 1992, and
other laws;
25
 Areas Closed to the
Mining Application
Areas which the Secretary may exclude based, inter alia, or
proper assessment of their environmental impacts and
implications on sustainable land uses, such as built-up areas
and critical watershed with appropriate
barangay/municipal/provincial Sanggunian ordinances
specifying therein the location and specific boundaries of the
concerned area; and

Areas expressly prohibited by law.

26
 Areas Closed to the
Mining Application
The following areas may be opened for mining operations, the
approval of which are subject to the following conditions:

Military and other government reservations, upon prior

written consent by the government agency having
jurisdiction over such areas;

27
 Areas Closed to the
Mining Application
Areas near or under public or private buildings, cemeteries,
and archaeological and historic sites, bridges, highways,
waterways, railroads, reservoirs, dams and 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 and validation by the MGB;

28
 Areas Closed to the
Mining Application
Areas covered by FTAA applications, which shall be
opened, for quarry resources upon written consent of the
FTAA applicants/contractors. However, mining applications
for sand and gravel shall require no such consent;

DENR Project areas upon prior consent from the concerned

agency.

29
 Ancestral Lands and ICC Areas
The Mining Act fully recognizes the rights of the Indigenous
Peoples (IPs)/Indigenous Cultural Communities (ICCs) and
respect their ancestral lands. Thus, in accordance with DENR
Administrative Order No. 2, and consistent with the new
Indigenous Peoples Rights Act (IPRA), the following shall be
observed:

30
 Ancestral Lands and ICC Areas
No mineral agreements, FTAA and mining permits shall be
granted in ancestral lands/domains except with prior
informed consent in: a) CADC/CLC areas; and b) areas
verified by the DENR Regional Office and/or appropriate
offices as actually occupied by Indigenous Cultural
Communities under a claim of time immemorial possession;

31
 Ancestral Lands and ICC Areas
Where written consent is granted by the ICCs, a royalty
payment shall be negotiated which shall not be less than 1%
of the Gross Output of the mining operations in the area.
This Royalty shall form part of a Trust Fund for socio-
economic well being of the ICCs in accordance with the
management plan formulated by the ICCs in the CADC/
CALC area. (In a large-scale mining operation the 1%
Royalty could easily run into several tens of million pesos
per year).
32 Representation in the Multi-partite Monitoring Committee;
 Social & Community Development
and Research & Development
The Mining contractors/operators shall allocate a minimum of
1% of their direct mining and milling costs for the following:

Development of the host and neighboring communities and

mine camp, including the construction and maintenance of
social infrastructures to promote the general welfare of the
inhabitants in the area. Such infrastructures include roads
and bridges, school buildings, churches, recreational
facilities, housing facilities, water and power supplies, etc.;
33
 Social & Community Development
and Research & Development
For the development of mining technology and geosciences,
particularly those related to improved efficiencies and
environmental protection and rehabilitation;
The mining contracts under the regimes of MPSA & FTAA also
provide for the mandatory Filipinization program, technology
transfer, and the training and priority employment of local
residents. These contracts further mandate that mining
operations shall maximize the utilization of local goods and
services, the creation of self-sustaining generating activities, and
34 skills-development.
 Environmental & Safety Concerns
A significant feature of the Mining Act of 1995 and its IRR
is the premium given to environmental protection.
Stringent measures were institutionalized to ensure the
compliance of mining contractors/operators to
internationally accepted standards of environmental
management. On top of the ECC conditionalities, herewith
are some of the highlights provided for in the IRR:

35
 Environmental & Safety Concerns
Mandatory allocation of an approximately 10% of the initial
capital expenditures of the mining project for environment-
related activities;

Mandatory annual allocation of 3-5% of the direct mining

and milling costs to implement an Annual Environmental
Protection and Enhancement Program;

36
 Environmental & Safety Concerns
Mandatory establishment of a MINE REHABILITATION
FUND (MRF) to be composed of: (a) a Monitoring Trust
Fund of P50,000 which is replenishable; and (b) a
Rehabilitation Cash Fund of P5 Million or 10% of the EPEP
cost, whichever is lower. Such Funds are to be deposited as
trust account in a government depository bank to be
managed by MRF Committee composed of the MGB
Regional Director, DENR Regional Executive Director,
representatives from the LGU and an NGO, and the
Contractor;
37
 Environmental & Safety Concerns
Mandatory establishment of the Contingent Liability and
Rehabilitation Fund (CLRF) to be managed by a Steering
Committee chaired by the MGB Director with members
coming from concerned government agencies;

Conduct of Environmental Work Program (EWP) during the

exploration stage and an Environmental Protection and
Enhancement Program (EPEP) during the development and
operations stage.
38
 Environmental & Safety Concerns
Institutionalization of an incentive mechanism to mining
companies utilizing engineered and well-maintained mine
waste and tailings disposal systems with zero-discharge of
materials/effluents and/or with wastewater treatments plants;

Mandatory constitution and operationalization of a

Multipartite Monitoring Team composed of representatives
from the MGB, DENR Regl Office, affected communities,
ICC, an environmental NGO, and the Contractor/Permit
Holder, to monitor mining operations;
39
 Environmental & Safety Concerns
Mandatory establishment and operationalization of a Mine
Environmental and Protection and Enhancement Office
(MEPEO) in each mining/contract area which shall set the
level of priorities and marshal the resources needed to
implement environmental management programs;

Conduct of an independent environmental audit to identify

environmental risks affecting mining operations as a basis
for the development of an effective environmental
management system;
40
 Environmental & Safety Concerns
Mandatory preparation and implementation of a final Mine
Rehabilitation/ Decommissioning Plan at least five (5) year
prior to the end of the life of the mine, to be undertaken in
consultation and in coordination with the concerned
communities, and shall be submitted for approval by the
MGB and LGU concerned;
Imposition of higher penalty (P50.00/MT) to mining
companies that are found to have illegally discharged and/or
discharging solid fractions of tailings into areas other than
41 the approved tailings disposal area;
 Environmental & Safety Concerns
Authorizing the MGB Regional Director to summarily
suspend mining/quarrying operations in case of imminent
danger to human safety or the environment;

Mandatory compliance with the rules and regulations of the

Mines Safety Rules and Regulations by all Contractors,
Permittees, Lessees, Permit Holders and Service Contractors;
and

42
 Environmental & Safety Concerns
Institution of the Presidential Mineral Industry
Environmental Award to be given to exploration or operating
mining companies based on their exemplary environmental
performance and accomplishments.

43
 On Social Acceptability
Mining contractors/operators shall allocate a minimum of 1% of
their direct mining and milling costs for the development of the
following:

Host and neighboring communities and mine camp to

promote the general welfare of inhabitants in the area. This
includes construction and maintenance of infrastructures
such as roads and bridges, school buildings, housing and
recreational facilities, water and power supplies, etc.; and
44
 On Social Acceptability

Mining technology and geosciences, particularly those

related to improved efficiencies and environmental
protection and rehabilitation.

45
 Mining Permits Granted to
Qualified Persons

The following are the types of mining permits granted under the
Mining Act of 1995 and its IRR:

Exploration Permit - these permits are issued to qualified

individuals or local and foreign corporations granting them
to undertake purely mineral exploration activities. Has a term
of two (2) years renewable for like terms but not to exceed a
total term of six (6) years for non-metallic minerals and eight
(8) years for metallic minerals.
46
 Mining Permits Granted to
Qualified Persons
The Permittee may eventually apply for Mineral
Agreement or FTAA, subject to maximum areas
limitations. The maximum areas allowed per qualified
person under an Exploration Permit are: 1,620 hectares
in any one province or 3,240 hectares in the entire
country for an individual; and 16, 200 hectares in any
one province or 32,400 hectares in the entire country
for a corporation, association, cooperative or
partnership.
47
 Mining Permits Granted to
Qualified Persons
Mineral Agreement - are granted to individuals or local
corporations giving them the right to explore, develop and
utilize the minerals within the contract area. There are three
modes of Mineral Agreements namely:

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 the
owner of the minerals therein. The Contractor shall provide the
48 necessary financing technology, management and personnel;
 Mining Permits Granted to
Qualified Persons
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

Joint Venture Agreement (JVA) - an agreement where the

Government and the Contractor organize a joint venture company
with both parties having equity shares. Aside from earnings in
equity, the Government shall be entitled to a share in the gross
output.
49
 Mining Permits Granted to
Qualified Persons
The features of a Mineral Agreement are as follows:

Term of 25 years, renewable for another term of 25 years;

Exploration Period of two (2) years renewable for like terms

but not to exceed a total term of six (6) years for nonmetallic
minerals or eight (8) years for metallic minerals;

50
 Mining Permits Granted to
Qualified Persons
Maximum allowable areas of 810 hectares in any one
province or 1,620 hectares in the entire country for an
individual, or 8,100 hectares in any one province or 16,200
in the entire country for a corporation, association,
cooperative or partnership.

Provides for mandatory relinquishment such that the

maximum final area shall not exceed 5,000 hectares for
metallic minerals or 2,000 hectares for non-metallic mines;
51
 Mining Permits Granted to
Qualified Persons
Subject to Environmental Work Program (EWP) during the
exploration period, and to Environmental Compliance
Certificate (ECC) and Environmental Protection and
Enhancement Program (EPEP) during the development and
operation period;

Approval by the DENR Secretary

52
 Mining Permits Granted to
Qualified Persons
Financial or Technical Assistance Agreements (FTAA) - a
mining contract for large-scale exploration, development and
utilization of minerals which allows up to 100% foreign equity
participation/ownership. The terms and conditions under an
FTAA are as follows::

Term of 25 years, extendable for like periods;

Minimum capitalization, $4Million, or its peso equivalent;

53
 Mining Permits Granted to
Qualified Persons
Minimum investment for infrastructure and development of
$50Million;

Minimum ground expenditures: For Years 1 & 2 $2/ha/yr;

Years 3 & 4 - $8/ha/yr; Year 5 - $19/ha/yr; Year 6 $23/ha/yr

Allowed only for metallic minerals such as gold, copper,

nickel, chromite, lead, zinc and other metals;

54
 Mining Permits Granted to
Qualified Persons
Maximum allowable area: Aggregate total of 81,000 in the
entire country;

Mandatory area relinquishments : 25% on the first 2-yrs;

10% per year thereafter;

Maximum final area: 5,000 hectares for each mining area;

55
 Mining Permits Granted to
Qualified Persons
Maximum periods: Exploration Period 4 years; Pre-
Feasibility Study Period 2 yrs; Feasibility Study Period 2
years;

Subject to Environmental Work Program (EWP) during the

exploration/pre-feasibility study/feasibility study period, and
to Environmental Compliance Certificate (ECC) and
Environmental Protection and Enhancement Program
(EPEP) during the development and operation period;
56
 Mining Permits Granted to
Qualified Persons
Approval by the President, upon recommendation of the
Negotiating Panel composed of the DENR Secretary, the
MGB Director, and representatives from NEDA, DTI/BOE,
Dept. of Finance, DENR Field Operations Office, DENR
Legal Office, and MGB Regional Office.

57
 Mining Permits Granted to
Qualified Persons
While the maximum area allowable for FTAA is apparently
substantial, the eventual significant area reduction is ensured by
the mandatory relinquishment provision. Further, the P50/ha/yr
Occupation Fees and the stipulations for minimum ground
expenditures that correspondingly graduate annually upwards
are expected to deter any company for holding on unnecessarily
any excess land areas that are unmineralized.

58
 Mining Permits Granted to
Qualified Persons
Sand and Gravel Permits - are issued for the extraction, removal
and disposition of sand and gravel and other loose or
unconsolidated materials. Permits with areas not exceeding 5
hectares are issued by the Provincial Governor/City Mayor
while those exceeding 5 hectares but not more than 20 hectares
are issued by the MGB Regional Director. A Sand and Gravel
Permit has a term of 5 years and renewable for like terms.

59
 Mining Permits Granted to
Qualified Persons
Quarry Resources Permits - In accordance with the Local
Government Code of 1991, mining permits with areas not more
than 5 hectares have been devolved to the Provincial Governor
or the City Mayor for approval upon recommendation of the
Provincial/City Mining Regulatory Board. These include the
Quarry Permit, Guano Permit, Gratuitous Permit and Gemstone
Gathering Permit.

60
 Mining Permits Granted to
Qualified Persons
Small-Scale Mining Permits - In consonance with the Local
Government Code and RA No. 7076, small-scale mining
permits are approved and issued by the City Mayor/Provincial
Governor, upon recommendation of the Provincial/City Mining
Regulatory Board.

Mineral Processing Permit a permit granting the right to

process minerals. It is issued by the DENR Secretary with a
term of 5 years and renewable for like terms.
61
 Mining Permits Granted to
Qualified Persons

Ore Transport Permit no minerals, mineral products and by-

products shall be transported unless accompanied by an Ore
Transport Permit. The OTP is issued by the MGB Regional
Director concerned.

62
 Taxes and Incentives
Mining contractors of MPSA and FTAA can avail of fiscal and
non-fiscal incentives granted under the Omnibus Investment
Code of 1987, as amended.

In addition to these incentives, the following are also granted by

the Mining Act.

Incentives for pollution control devises;

Incentives for income tax carry forward of losses;

63
 Taxes and Incentives
Incentives for income tax accelerated depreciation on fixed
assets;

Investment guarantees, such as investment repatriation,

earnings remittance, freedom from expropriation, and
requisition of investment, and confidentiality of information.

64
 Taxes and Incentives
For FTAA contractors, an additional incentive, in the form of a
tax holiday on national taxes is granted from the start of the
construction and development period up to the end of the cost
recovery period, but not to exceed five years from the start of
commercial operation. After the recovery period, the contractor
starts paying these taxes, including the additional government
share based on negotiated scheme.

65
 Taxes Paid

Mining activities generate income both for the local and national
governments. The following tax payments are provided for in
the Mining Act, the National Internal Revenue Code and other
laws:

66
 Taxes Paid
Payments to the National Government:

Corporate Income Tax

Excise Tax on Minerals
Customs Duties
Value Added Tax
Royalties on Minerals Extracted from Mineral Reservation
Documentary Stamp Tax
Capital Gains Tax
67
 Taxes Paid
Payments to Local Government:

Business Tax
Real Property Tax
Registration Fees
Occupation Fees
Community Tax
Other Local Taxes

68
 Taxes Paid
Withholding Taxes on:

Payroll
Interest Income in Banks
Royalties to Technology Transfer
Interest Payments to Foreign Loans
Foreign Stockholders Dividends
Remittance to Principal

69
 Taxes Paid
In addition to the above taxes, duties and fees, mining
contractors are required to pay or expend on:

Additional Government Share for FTAA contractors

Royalties to Landowners/Claim owners
Royalties to Indigenous Peoples
Environmental Obligations
Research and Development of Mining Technology and
Geosciences
70
 Taxes Paid
The benefits of mining projects provides approximately not less
than sixty percent (60%) of the total proceeds of the mining
operations to the government and the Filipino people,
considering that the contractor infused 100% of the capital.
These proceeds include all direct and indirect taxes and fees and
benefits to other Filipinos.

71
Peoples Small-
Scale Mining
Act of 1991
(R.A. 7076)
 Legislative History
Primarily authored by Senator. Aquilino Pimentel, Jr.,
Republic Act 7076 (Peoples Small-scale Mining Act of 1991)
is a consolidation of H.B.10516 and S.B.1333.

It was passed by the House of Representatives and the

Senate n May 30, 1991.

It was signed into law by President Corazon C. Aquino on

June 27, 1991.
73
Undeniably the Philippines is endowed with large
deposits of minerals, and with these, the
exploitation of such contributes largely to the
growth of the national economy. But these mining
operations have adverse effects on the ecological
balance. The large-scale extraction and usage of
mineral resources are inherently and essentially
polluting.

It is for there reasons that mining legislation was

enacted to oblige environmental protection
measures to be undertaken by mining operators.
 Overview of the Law

R.A. 7076 defines small-scale as minimum activities which rely

heavily on manual labor using simple implements and methods,
and, and which do not use explosives or heavy mining
equipment.

75
 Overview of the Law
The main purpose of the law is: (1) To effect an orderly and
systematic disposition of small-scale mining areas in the
country; (2) To regulate the small-scale mining industry with the
view to encourage their growth and productivity; and (3) To
provide technical, financial and marketing assistance and
efficient collection of government revenues.

Through this law, the harmful effects of the classic trade-off

between development and environment could be minimized if
not totally avoided.
76
 Overview of the Law
With R.A.7076 it allows small miners under this law to use only
simple equipment like pick and shovel in extracting gold and
other precious metals in their mining areas.

In this age of modern technology, this law is making sure that

the small mining law should benefit the small miners and not
only the big-time operators who are using the skills and sweat of
small-scale miners to accumulate a fortune.

77
 Overview of the Law
Under R.A.7076, no ancestral land may be declared as a
peoples small scale mining area without the prior consent of the
cultural communities concerned. This respects the rights of the
indigenous peoples to their ancestral lands which are fully
guaranteed under existing laws.
The law defines small miners as Filipino citizens who,
individually or in tandem with others, voluntarily form a
cooperative, duly licensed by the DENR, to engage in the
extraction or removal of minerals or ore-bearing materials from
78 the ground.
 Highlights of R.A.7076 and its IRR
Its implementing rules lay down the powers and functions of
the Department of Environment and Natural Resources, the
Provincial/City Mining Regulatory Board and in coordination
with other concerned government agencies. The DENR together
with the other concerned government agencies is designed to
achieve an orderly, systematic and rational scheme for the
small-scale development and utilization of mineral resources in
certain mineral areas in order to address the social, economic,
technical, and environmental connected with small-scale mining
activities.
79
 Highlights of R.A.7076 and its IRR
While the Provincial/City Mining Regulatory Board (PCMRB)
created under the direct supervision and control of the Secretary
which is the board of PCMRB, is the implementing agency of
the Department of Environment and Natural Resources which
has the powers and function subject to review by the Secretary.

80
 Prohibited Acts
Awarded contracts may be canceled on the following grounds:

Non-Compliance with the terms and conditions of the

contract and that of existing mining laws, rules and
regulations including those pertaining to mine safety,
environmental protection and conservation, tree cutting,
mineral processing and pollution control;
Non.-compliance with the contractor's obligations to existing
mining claim holders/private landowners as stipulated in
81 Section 13, 17 and 18 of this Order;
 Prohibited Acts
Non-payment of fees, taxes, royalties or government share in
accordance with this Order and existing mining laws;

Abandonment of mining site by the contractor; and

Ejectment from the People's Small-scale Mining Area of the

Contractor by the government for reasons of national interest
and security.

82
 Penalties/Fines
When contracts are canceled for grounds from the
abovementioned, the Secretary may impose fines of an amount
not less than Twenty Thousand Pesos (P20, 000.00) but not
more than One Hundred Thousand Pesos (P100, 000.00). Non-
payment of the fine imposed shall render the small-scale mining
contractor ineligible for other small-scale mining contracts.

83
 THE IRR
In the revised IRR, contracts for small-scale mining operations
shall now be issued by the Provincial/City Mining Regulatory
Board instead of the Provincial Governor or City Mayor that
often lacks the technical expertise to understand their
operations. The declaration of Minahang Bayan would be
reviewed by the Provincial/City Mining Regulatory Board that
would be submitted to the office of the DENR Secretary for
clearance.

84
 THE IRR
DAO No. 2015-03 limited the extraction of small scale mining
of metallic materials to just three minerals namely: gold, silver
and chromite.

Among the other salient features of DAO No. 2015-03 is the

complete banning of the use of mercury in any phase of mineral
processing. The use of hydraulicking, and compressor mining
methods shall as well be prohibited.

85
 THE IRR
The revised IRR also provides for centralized custom mill
within the confined designated mineral processing zone inside a
Minahang Bayan.

These Minahang Bayan sites will be limited to a maximum

period of six years, including its renewal.

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 THE IRR
Moreover, the revised IRR also limited the qualified applicants
of a Small-Scale Mining Contract to a cooperative or group of
small scale miners. Thus, Small scale miners can organize
themselves into a group or cooperatives and apply for the
establishment of Minahang Bayan sites in their locality.
DAO 2015- 03 also allows the establishment of Minahang
Bayan in areas covered by large-scale mining applications that
have been denied but with pending appeals, provided that
royalties shall be paid in escrow, while awaiting for the final
87 resolution of the said appeals.
 THE IRR
It further requires the Small-Scale Mining Contractors to pay a
Government Share in the amount to be set by the Board, on top
of the payment of the usual taxes and it mandates to require
mineral processors to secure Mineral Processing Licenses from
the Board.

DAO No. 2015- 03 aims to transform the small scale mining

operations in the country to be a more responsible sector in the
mining industry that can contribute to the improvement of the
country.
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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
I. Co-existence of the Small Scale Mining Laws

PD No. 1899 and RA No. 7076 shall continue to govern

small-scale mining operations. For areas not declared as
Peoples Small-Scale Mining area (PSSMA) under RA No.
7076, the pertinent rules and regulations of PD 1899 shall
apply.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
Mines Administrative Order No. MRD-
41, Series of 1984,
Department Administrative Order (DAO) No. 28 and
MRDB Administrative Order Nos. 3 and 3A as provided in
DAO No. 96-40, as amended, shall continue to be the
implementing rules and regulations of PD No. 1899, while
DAO No. 34, Series of 1992, shall continue to be the
implementing rules and regulations of RA No. 7076.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
II. Scope of Small-Scale Mining Permits and Contracts

Small-scale mining operations in areas not declared as

PSSMA shall be covered by Small-Scale Mining Permits
(SSMPs) issued under PD No. 1899. Small-scale mining
operations in PSSMAs declared under RA No. 7076 shall be
covered by Small-Scale Mining Contracts (SSMCs) pursuant
to the pertinent provisions thereof.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
In case, where a PSSMA is declared covering SSMP areas,
the term of the SSMPs, including their renewal, shall be
recognized unless such SSMPs are revoked, cancelled or
terminated with the cause: Provided, that the SSMP shall
have the option to shift to a SSMC pursuant to the provisions
of DAO No. 34, Series of 1997.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
III. Term of a Small-Scale Mining Permit or Contract

The two (2)-year term of an SSMP is renewable only

once: Provided, that the pertinent application shall be filed
prior to the expiration thereof, among other
requirements. No SSMP shall be renewed unless its two (2)-
year term is fully consumed.

In the case of an SSMC, no renewal shall likewise be granted

unless its two(2)-year term is fully consumed.
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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
IV. Qualification of Applicants

For PD No. 1899, any Qualified Person may apply for an

SSMP. For this purpose, a Qualified Person shall mean a
Filipino citizen, of legal age, and with capacity to contract,
or a corporation of partnership authorized to engage in
mining, registered with the Securities and Exchange
Commission, at least 60% of the capital of which is owned t
all times by Filipino citizens.
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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws

For RA No. 7076, only a Filipino small-scale mining

cooperative organized by licensed and registered small-scale
miners may apply.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
V. Maximum Annual Production

For metallic minerals, the maximum annual production

under an SSMP/SSMC shall be 50,000 dry metric tons
(DMT) of ore, while for non-metallic minerals, the
maximum annual production shall be 50,000 DMT of the
material itself, e.g., 50,000 DMT of limestone, 50,000 DMT
of silica, or 50,000 DMT of perlite.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws

The maximum annual production above shall include low-

grade and/or marginal ore, and/or minerals or rocks that are
intended for sampling and/or metallurgical testing purpose/s.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
VI. Maximum Capital Investment

The maximum capital investment for a single small-scale

mining operation under PD No. 1899 or R.A. No. 7076
shall be PHP 10 Million. This shall cover raw, additional
and existing capital, such as processing plants, mine and
hauling equipment, tools, infrastructures, capitalized
exploration and development costs, support facilities and
working capital.
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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
VII. Reliance on Manual Labor
Small-scale mining operations under PD1899 or RA7076 shall
be largely artisanal w/ heavy reliance on manual labor & w/o
the use of explosives and/or blasting accessories. For this
purpose, a single unit small-scale mining operation, in open cast
or shallow underground, shall be prohibited from using
sophisticated and/or heavy equipment, i.e., excavators, loaders,
backhoes, dozers, drilling machines and/or related or similar
equipment for the extraction and/or breakage of materials, as
99 well as hauling equipment w/in the mining/permit/contract area.
Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
VII. Reliance on Manual Labor

Hauling equipment for the transport of the ore or mined

materials from the mine to the shipping point/market are not
included in the prohibited use of sophisticated and/or heavy
equipment.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
VII. Reliance on Manual Labor

In case non-sophisticated and non-heavy equipment shall be

use, the ratio of labor cost to equipment utilization cost of the
small-scale mining operations, including the extraction,
processing and/or marketing activity(ies), shall not exceed
on (1) for this purpose, the rental, lease and/or contracting of
such equipment shall be considered as part of the equipment
utilization.
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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
VIII. Environmental, Safety and Health Concerns

The SSMP/SSMC holder shall strictly comply with the

environmental, safety and health, and social provisions
of R.A. No. 7942, the Philippine Mining Act of 1995, the
Small-Scale Mining Laws and their implementing rules and
regulations, among others.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
In particular, the SSMP/SSMC holder shall comply with the
following requirements:

A. The Environmental Compliance Certificate (ECC) for a

small-scale mining operation shall be secured from the
Environmental Management Bureau Regional Office concerned
and shall fully conform with the provisions of the Small-Scale
Mining Laws, especially with respect to the annual production
limit of 50,000 DMT, area of 20 hectares per permit/contact,
among others.
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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws
B. The following documents shall be required prior to the start
of small-scale mining under a SSMP/SSMC:

1. Potential Environment Impact Report, which is a

simplified Environmental Protection and Enhancement Program,
and a Final Mine Rehabilitation/Decommissioning Plan duly
approved by the Mine Rehabilitation Fund Committee
concerned.

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Clarificatory Guidelines in the Implementation
of the Small-Scale Mining Laws

2. Community Development and Management

Program, a simplified Social Development and Management
Program, duly approved by the Mines and Geosciences Bureau
Regional Office concerned.

C. Small-Scale mining operations shall strictly comply with the

provisions of DAO No. 97-30 in re: Small-Scale Mine Safety
Rules and Regulations.
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