Mining rights and title in Philippines

Mining rights and title

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

Under the Philippine Constitution, the state owns all natural resources, including minerals. Thus, the exploration, development and utilisation of mineral resources are under the full control and supervision of the state, which may directly undertake the same, or enter into co-production, joint venture or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per cent of whose capital is owned by such citizens. The President of the Philippines also may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilisation of minerals, petroleum, and other mineral oils. Because of the state’s full control and supervision over mining rights, owners of surface rights do not automatically have rights over mineral resources found within their properties.

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

The MGB regularly publishes information on the mining industry through its official website (www.mgb.gov.ph). The information published includes details on existing exploration permits (EPs), mineral production sharing agreements (MPSAs), financial and technical assistance agreements (FTAAs), mineral processing permits (MPPs), pending mining applications, and pending cases with the Mining Adjudication Board and Panel of Arbitrators. The MGB also releases current and historical statistics on the mining industry such as the production level and prices of each type of mineral. There is also a list of currently producing mines and a map of where these operate.

Under the Mining Act IRR, holders of EPs and MAs are required to submit mineral assessment reports. The submission of an assessment of the mineral potential in a prospected area is a prerequisite to converting an EP into an MA.

The MGB, through its Land Geological Survey Division and Marine Geological Survey Division, conducts geoscience surveys such as geological mapping, mineral exploration, geo-hazard assessment, vulnerability assessment and other geological and geo-environmental studies. Mineral Land Surveys may also be conducted by geodetic engineers of the MGB and regional offices, deputised geodetic engineers in private practice and company-employed deputised geodetic engineers. These surveys and studies, however, are not readily available online.

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

Under the Philippine Constitution, exploration, development and utilisation of mineral resources shall be under the full control and supervision of the state. Nevertheless, mining rights may be acquired by private parties through an FTAA, an EP or an MA.

The holder of an EP is granted the right to conduct exploration for all minerals in specified areas. The MGB director’s approval of a declaration of a mining project feasibility study grants the holder of an EP the exclusive right to an MA or FTAA. An MA grants to the holder thereof the exclusive right to conduct mining operations and to extract all mineral resources found in the contract area, while an FTAA grants the right to provide financial or technical assistance directly to the government to undertake large-scale exploration, development and utilisation of mineral resources.

EO 79 suspended the issuance of MAs pending enactment of new legislation rationalising existing revenue-sharing schemes and mechanisms. As of the end of March 2019, House Bill No. 422 (An Act Establishing the Fiscal Regime and Revenue Sharing Arrangement for Large-Scale Metal Mining, and for Other Purposes), Senate Bill No. 927 (An Act Establishing the Fiscal Regime and Revenue Sharing Arrangement for Large-Scale Metal Mining, and for Other Purposes), Senate Bill No. 225 (An Act Establishing The Fiscal Regime And Revenue Sharing Arrangement For Large-Scale Metal Mining), and Senate Bill No. 1979 (An Act Amending Chapter VII Title VI and Section 151, And Creating New Sections 151-A and 151-B, of Republic Act No. 8424, Otherwise Known As The National Internal Revenue Code of 1997, As Amended, And For Other Purposes) are currently undergoing public hearing in the Senate Committee on Ways and Means.

What is the regime for the renewal and transfer of mineral licences?

The term of an EP is two years from the date of its issuance. It may be renewed for another two years, but the total term of the permit shall not exceed four years for non-metal mineral exploration or six years for metal mineral exploration. In cases, however, where the permittee failed to file the declaration of mining project feasibility during the total term of the EP and further exploration is warranted, the EP may be further renewed by the DENR secretary for another term of two years for the very purpose of preparing or completing the feasibility studies and the filing of the declaration of mining project feasibility and the pertinent MA or FTAA application. In case the permit expires before the declaration of mining project feasibility is approved and the MA or FTAA is filed, the permit is automatically extended until such time that the MA or FTAA application is approved.

The renewal of an EP may be granted by the DENR secretary, through the MGB director, only if the permittee has complied with all its terms and conditions, and has not been found guilty of violating any provision of the Mining Act and its IRR.

The term of an MA shall not exceed 25 years from its date of execution, renewable for another 25 years under the same terms and conditions, without prejudice to changes mutually agreed upon by the government and the contractor. After its renewal, the mining operations may be undertaken by the government or through a contractor. The contract to operate the mine shall be awarded to the highest bidder in a public bidding, with the contractor having the right to match the highest bid upon reimbursement of all reasonable expenses of the highest bidder.

The term of an FTAA shall not exceed 25 years from its date of execution, renewable for another term not exceeding 25 years under such terms and conditions as may be provided for by law and mutually agreed upon by the parties.

EPs may be transferred or assigned subject to the approval of the MGB director. MAs may be transferred subject to the approval of the MGB Regional Director. FTAAs may be transferred subject to the approval of the MGB Regional Director, taking into account the national interest and public welfare.

What is the typical duration of mining rights?

Mining rights involve EPs, MAs, FTAAs, quarry, sand and gravel, guano, gemstone gathering permits and small-scale mining permits.

The term of an EP shall be for a period of two years from the date of its issuance, renewable for another two years, but not to exceed a total of four years for non-metal mineral exploration or six years for metal exploration. The DENR secretary, MGB director or MGB regional director concerned may cancel the EP for violations by the permittee of the terms and conditions thereof, including the failure to secure the required proof of consultation with or project presentation to the Sanggunian (the legislative branch of a local government unit, which may be a barangay, a municipality, a city or a province) concerned.

The term of an MA shall not exceed 25 years from the date of its execution, renewable for another term not exceeding 25 years. The MA shall be cancelled, revoked or terminated for the failure of the contractor to comply with the terms and conditions thereof.

The term of an FTAA shall not exceed 25 years from the date of its execution, renewable for another term not exceeding 25 years. The FTAA may be cancelled, revoked or terminated, after due process, under any of the grounds for the cancellation of a mining permit, MA or FTAA.

The respective terms of a quarry permit and a sand and gravel permit shall be five years from the date of its issuance, renewable for a term of five years but not to exceed a total term of 25 years. The term of a guano permit shall be one year or upon the extraction of the quantity as specified in the permit. The term of a gemstone-gathering permit shall not exceed one year from the date of its issuance, renewable for periods of one year.

The grounds for the cancellation, revocation and termination of a mining permit, MA or FTAA are:

• falsehood or omission of facts in the application for the above permits which may alter, change or affect substantially the facts set forth in said statements;
• non-payment of taxes and fees due to the government for two consecutive years;
• failure to perform all other obligations, including abandonment, under the permits or agreements;
• violation of any of the terms and conditions of the permits or agreements; and
• violation of existing laws, policies and rules and regulations.

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

Yes. Under the Philippine Constitution, only Philippine citizens or corporations where at least 60 per cent of whose capital is owned by such citizens may enter into MAs. Non-Filipino nationals or corporations that are 100 per cent foreign-owned may enter into EPs and FTAAs only.

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

Mining rights are protected by the Philippine Constitution, particularly the non-impairment clause under section 10 of article III, which states that no law impairing the obligation of contracts shall be passed. The non-impairment clause is limited in application to laws that derogate from prior acts or contracts by enlarging, abridging or in any manner changing the intention of the parties. There is impairment if a subsequent law changes the terms of a contract between the parties, imposes new conditions, dispenses with those agreed upon or withdraws remedies for the enforcement of the rights of the parties.

There is a system of arbitration for mining disputes provided under the Mining Act. The Panel of Arbitrators has exclusive and original jurisdiction to hear and decide mining disputes involving the following:

• rights to mining areas;
• mineral agreements, FTAAs or permits; and
• surface owners, occupants and claim holders or concessionaires.

The jurisdiction of the panel is limited only to those mining disputes that raise questions of fact or matters requiring the application of technical knowledge and experience.

Foreign arbitral awards in respect of domestic mining disputes are recognised and enforceable in this jurisdiction. Under section 42 of Republic Act No. 9285 (the Alternative Dispute Resolution Act of 2004), the recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court (RTC). When confirmed by the RTC, they are enforced as a foreign arbitral award and enforced in the same manner as final and executory decisions of Philippine courts of law. Thus, foreign arbitral awards are not immediately executory in the sense that they may still be judicially reviewed and need to be confirmed by the RTC.

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

Permit holders and contractors, upon written notice and payment of just compensation, are entitled to enter, occupy and explore said mining areas or lands when mining areas are so situated that, for purposes of more convenient operations, it is necessary to build, construct or install on the mining areas or lands owned, occupied or leased by other persons, infrastructure such as roads, railways, mills, waste dump sites, tailings ponds, warehouses, staging or storage areas and port facilities, tramways, runways, airports, electric transmission, telephone or telegraph lines, dams and their normal flood and catchment areas, sites for water wells, ditches, canals, new river beds, pipelines, flumes, cuts, shafts, tunnels or mills. Further, holders of mining rights cannot be prevented from entering their contract areas for purposes of exploration, development and utilisation, provided that written notices are sent to the surface owners, occupants and concessionaires, and that a bond is posted. If the surface owner cannot be found, the permit holder may notify the Regional Director concerned, copy furnished the concerned local officials in case of private land or the government agency concerned in case of concessionaires, which notice shall be deemed notice to the surface owner. In case of disagreement, the matter shall be brought before the Panel of Arbitrators.

Permit holders, however, may execute agreements with the surface owners, occupants or concessionaires regarding entry and use of their land for mining purposes.

Where the surface owners, occupants or concessionaires refuse to allow the permit holder or contractor entry into the lands, the permit holder or contractor shall bring the matter before the Panel of Arbitrators for proper disposition.

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

Yes. The Philippine Constitution allows the government and state agencies to participate in mining projects. The state may directly undertake exploration, development and utilisation of mineral resources. It may also enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per cent of whose capital is owned by such citizens. Finally, the state may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilisation.

Neither the Philippine Constitution nor the Mining Act requires mining project companies to be listed with the PSE.

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

The Mining Act provides that contractors’ properties are generally free from expropriation. By way of exception, however, the government may expropriate when the purpose is public use or in the interest of national welfare or defence. The law does not provide for the specific manner of determining compensation but requires that just compensation be paid.

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

The Mining Act IRR specifically enumerates the areas that are closed to mining applications, as follows:

1. areas covered by valid and existing mining rights and mining applications subject to item (iii);
2. old growth or virgin forests, designated watershed forest reserves, wilderness areas, mangrove forests, mossy forests, national parks, provincial and municipal forests, tree parks, greenbelts, game refuges, bird sanctuaries and areas designated as marine reserves and marine parks and tourist zones as defined by law and identified initial components of the National Integrated Protected Areas System (NIPAS) pursuant to Republic Act 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 that the DENR secretary may exclude based, among others, on the proper assessment of their environmental impacts and implications on sustainable land uses, such as built-up areas and critical watersheds with appropriate barangay, municipal, city or provincial council ordinance specifying therein the location and specific boundary of the concerned area;
4. offshore areas within 500 metres of the mean low tide level and onshore areas within 200 metres of the mean low tide level along the coast;
5. in the case of seabed or marine aggregate quarrying, offshore areas of less than 1,500 metres from the mean low tide level of land or island and where the seabed depth is less than 30 metres, measured at mean sea level; and
6. areas expressly prohibited by law.

The following areas may be opened for mining applications, subject to the pertinent conditions:

• military and other government reservations, upon prior written clearance by the government agency having jurisdiction over such reservations;
• 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 and validation by the bureau;
• areas covered by FTAA applications that shall be opened for quarry resources mining applications upon the written consent of the FTAA applicants (provided that sand and gravel permit applications shall not require consent from the FTAA, EP or MA applicant, except for MA or EP applications covering sand, gravel or alluvial gold and provided, further, that the MGB director shall formulate the necessary guidelines to govern the foregoing);
• areas covered by small-scale mining under Republic Act No. 7076 and Presidential Decree No. 1899 upon prior consent of small-scale miners, in which case a royalty payment, upon the utilisation of minerals, shall be agreed upon by the parties concerned and shall form a trust fund for the socio-economic development of the community concerned; and
• DENR project areas upon prior consent from the agency concerned.

The above enumeration notwithstanding, it appears that the list of protected areas was expanded by EO 79 to include the following:

• prime agricultural lands, in addition to lands covered by Republic Act No. 6657, or the Comprehensive Agrarian Reform Law of 1988, as amended, including plantations and areas devoted to valuable crops, and strategic agriculture and fisheries development zones and fish refuge and sanctuaries declared as such by the secretary of the Department of Agriculture;
• tourism development areas, as identified in the National Tourism Development Plan; and
• other critical areas, island ecosystems and impact areas of mining as determined by current and existing mapping technologies, that the DENR may hereafter identify pursuant to existing laws, rules and regulations such as, but not limited to, the NIPAS Act.

Further, under the IRR, no MAs, FTAAs or mining permits shall be granted in areas subject to certificates of ancestral domains or ancestral land claims or in areas verified by the Department Regional Office or other office or agency of the government authorised by law for such purpose as actually occupied by the indigenous cultural communities (ICCs) under a claim of time-immemorial possession except with their prior consent.