AMENDING CERTAIN SECTIONS OF PRESIDENTIAL DECREE NO. 463, OTHERWISE KNOWN AS "THE MINERAL RESOURCES DEVELOPMENT DECREE OF 1974".

• Number: Presidential Decree No. 1385
• Sections: 27

Preamble

WHEREAS, the speedy exploration, development and

exploitation of our mineral resources is a matter of national concern;

WHEREAS, in the implementation of Presidential Decree No.

463, the implementing agencies concerned have noted that certain provisions

thereof are not in keeping with the objectives for which the said Decree was

promulgated; and

WHEREAS, there is a need to amend the said provisions to

attain optimum development of the mineral resources and minimize the impact of

mineral resources development to the national economy;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution, do hereby

order and decree the amendment of Presidential Decree No. 463, as follows:

Section 1

SECTION 1. Section 2 of Presidential Decree No. 463 is

hereby amended by amending paragraphs (f) and (o) thereof and by adding a new

paragraphs (g) after paragraph (p) thereof, to read as follows:

"SEC. 2. Definition of Terms. As used in and for

the purpose of this Decree, the following terms, whether in the singular or

plural, unless the context indicates otherwise, shall have the following

meanings:

"x x x x x

"(f) "Minerals" means all naturally occuring inorganic substances in solid,

liquid, or any intermediate state. Soil which supports organic life, sand and

gravel guano, coal, patroleum, geothermal energy and natural gas are included in

this term but are governed by special laws or by regulations promulgated by the

Secretary.

"(o) "Lessee" means a qualified person issued a mining lease contract by the

Secretary.

"(g) "Claimowner" means a qualified person who has registered mining claims

under previous mining laws or under the Decree."

Section 2

SEC. 2. Section 6 of the same Decree is hereby amended to

read as follows:

"SEC. 6. Establishment and Reversion of Mineral

Reservations. Upon the recommendation of the Secretary, based on the report

submitted by the Director, the President may set aside and establish an area of

the public domain as a mineral reservation and prescribe the terms and condition

for its disposition and operation, or may alter or modify the boundaries thereof

from time to time or revert any mineral reservation to the public domain without

prejudice to any prior subsisting rights.

"When lands within reservations which have been established for purposes

other than mining are found more valuable for their mineral contents, they may,

upon recommendation of the Secretary, be withdrawn from such reservation by the

President and established as a mineral reservation."

Section 3

SEC. 3. Section 8 of the same Decree is hereby amended to

read as follows:

"SEC. 8. Prospecting, Exploration and Exploitation of

Minerals in Reserved Lands. Prospecting, exploration and exploitation of

minerals in reserved lands other than mineral reservation may be undertaken by

the proper Government agencies. In the event that the said agencies cannot

undertake the prospecting exploration and exploitation of minerals in reserved

lands, qualified persons may be permitted to undertake such prospecting,

exploration and exploitation, in accordance with the rules and regulations

promulgated by the Secretary. The right to exploit the minerals found therein

shall be awarded by the President under such terms and conditions as recommended

by the Director end approved by the Secretary: Provided, That the party

who undertook prospecting, exploration and exploitation of said area shall be

given priority.

"Notwithstanding the provisions of the preceding paragraph, a special permit

may be issued by the Director to the exploration permittee to extract, remove

and dispose of minerals in limited quantities as verified by the Bureau of

Mines."

Section 4

SEC. 4. Section 9 of the same Decree is hereby amended to

read as follows:

"SEC. 9. Exploration and Exploitation of Minerals in

Mineral Reservations. The Management of mineral reservations established

under Section 6 hereof and the manner of the disposition of the minerals found

therein shall be under the jurisdiction of the Mineral Reservation Development

Board. Mineral reservations are closed to mining location from the time of their

establishment."

Section 5

SEC. 5. Section 11 of the same decree is hereby amended to

read as follows:

"SEC. 11. Location in Public and Private Lands. A

qualified person may locate mining claims within public and private lands.

However, a person may locate and register mining claims for another:

Provided, That the former is first authorized by the latter by means of

a public instrument duly registered with the Mines Regional Officer concerned

before the registration of such mining claims."

Section 6

SEC. 6. Section 12 of the same decree is hereby amended to

read as follows:

"SEC. 12. Entry into Public and Private Lands.

Subject to the provisions of Presidential Decree No. 512, a qualified person

and/or his authorized representative shall not be prevented from entry into

private lands by surface owners and/or occupants thereof when prospecting,

exploring and exploiting for minerals therein. No prospecting, exploration and

exploitation of mineral resources inside a forest concession shall be allowed

unless proper notice has been served upon the licensee

thereof."

Section 7

SEC. 7. Section 13 of the same decree is hereby amended to

read as follows:

"SEC. 13. Areas Closed to Mining Location. No

prospecting and exploration shall be allowed:

"(a) In military or other Government reservations except when authorized by

the proper Government agency concerned;

"(b) In mineral reservations;

"(c) In lands covered by valid and subsisting mining claims located, and

leases acquired, under previous mining laws and in accordance with the

provisions of this Decree; and

"(d) Near or under buildings, cemeteries, bridges, highways, waterways,

railroads, reservoirs, dams or any other public or private works unless

otherwise authorized by the agencies concerned.

"The Secretary shall, upon recommendation of the Director, prescribe in

detail the regulations implementing the various restrictions under this

Section.

x x x x x"

Section 8

SEC. 8. Section 15 of the same Decree is hereby amended to

read as follows:

"SEC. 15. Declaration of Location of a Mining

Claim. The declaration of location covering the meridional block or

fraction thereof constituting the mining claim shall be filed with the Mining

Regional Officer concerned in a form prescribed for the

purpose."

Section 9

SEC. 9. Section 16 of the same decree is hereby amended to

read as follows:

"SEC. 16. Recording of Declaration of Location

Ministerial. Upon payment of the prescribed fees and compliance with the

requirements under existing rules and regulations on the matter, recording of a

duly accomplished and notarized declaration of location of a mining claim shall

be ministerial on the part of the Mining Recorder concerned."

Section 10

SEC. 10. Section 21 of the same decree is hereby amended to

read as follows:

"SEC. 21. Voluntary Abandonment of a Mining Claim.

A claimowner may, before the grant of the mining lease contract, totally or

partially abandon his mining claim by filing with the Mines Regional Officer an

affidavit of abandonment. From the date of the recording of such affidavit all

his rights and interests in such claim or to the portion thereof abandoned shall

be deemed to have ceased: Provided, That in case of partial abandonment

in any one claim, the area so retained shall be contiguous and the same shall be

duly surveyed and the survey returns submitted within one (1) year from date of

abandonment: Provided, Further, That the original locator or his

successors or assigns shall not be allowed to relocate directly or indirectly

the abandoned area."

Section 11

SEC. 11. Section 22 of the same Decree is hereby amended to

read as follows:

"SEC. 22. Creation of Positions of Mines Regional

Recorders. The Mines Regional Officer shall be responsible for the proper

recording of mining instruments and documents, and to ensure effective and

proper recording of the same, the positions of mines regional recorders are

hereby created in every mining region."

Section 12

SEC. 12. Section 23 of the same Decree is hereby amended to

read as follows:

"SEC. 23. Mining Regions. The existing mining

regions with offices at Baguio City, Metro Manila, Daet, Cebu City and Surigao

City shall be retained. Upon the recommendation of the Director, the Secretary

shall establish other mining regions as the need for them arises, the boundaries

of which shall so far as practicable coincide with the boundaries of the

corresponding provisions: Provided, However, That mineral districts may

be established by the Secretary in existing mining regions subject to such rules

and regulations as he may promulgate."

Section 13

SEC. 13. Section 24 of the same Decree is hereby amended to

read as follows:

"SEC. 24. Expenditures Required. A

claimowner/lessee under this Decree and under the Mining Act (Commnonwealth Act

No. 137), as amended, shall perform annual work obligations on his mining claim,

the value of which shall not be less than the following amounts:

"Before the lease contract is granted,

per hectare per calendar year

P 20.00

"After the lease contract is granted,

per hectare per calendar year

P100.00

"The annual work obligations for each mining claim registered under this

Decree shall start from the date of recording thereof.

"Holders of mining claims required to file lease application under

Presidential Decree No. 1214 shall perform annual work obligations (the value of

which is as stated above) on the mining claims from the date of filing of said

applications."

x x x x x x x x x x

Section 14

SEC. 14. Section 25 of the same decree is hereby amended to

read as follows:

"SEC. 25. Group Development. The claimowner/lessee

may concentrate all the annual work obligations on any one or more of several

contiguous or geologically related mining claims in one province if it can be

shown to the Director that such concentration of work will be most advantageous

and beneficial in the development and operation of said mining claims:

Provided, That any expenditure in any calendar year in excess of the

minimum amount required for work obligations per hectare may be carried forward

and credited to the work obligations of the group claims for the suceeding year

of years: Provided, Further, That if the expenditure incurred for any

claim is less than that required in any year, the difference shall be paid and

accrue to the Bureau of Mines to be used exclusively for the purpose mentioned

in Section 95 of the Decree.

"x x x x"

Section 15

SEC. 15. Section 27 of the same Decree is hereby amended to

read as follows:

"SEC. 27. Proof of Annual Work Obligations. The

claimowner/lessee shall submit proof of complaince with the annual work

obligations by filing an affidavit therefor and the statement of expenditures

and technical report in the prescribed form in support thereof with the Mines

Regional Officer within sixty (60) days from the end of the year in which the

work obligation is required: Provided, That failure of the claimowner

to comply therewith for two (2) consecutive years shall constitute automatic

abandonment of the mining claims: Provided, Further, That, if it is

found upon field verification that no such work was actually done on the mining

claims, the claimowner/lessee shall likewise lose all his rights thereto

notwithstanding submission of the aforesaid documents."

Section 16

SEC. 16. Section 32 of the same Decree is hereby amended to

read as follows:

"SEC. 32. Period for Submittal of Lease Survey

Returns. A geodetic engineer ordered to survey mining claims shall submit

the survey returns thereof to the Director within one (1) year from receipt of

the survey order. Failure to submit the same within said period shall cause the

automatic forfeiture of the surveyor's surety bond and the cancellation of the

survey order. No extension of the period within which to submit the survey

returns shall be allowed unless for reasons of force

majeure."

Section 17

SEC. 17. Section 33 of the same Decree is hereby amended to

read as follows:

"SEC. 33. Mines Temporary Permit. Pending the

issuance of a mining lease contract, a claimowner may, upon proper application

duly filed with the Mines Regional Officer concerned, be issued a mines

temporary permit by the Director upon compliance with all the obligations due on

the mining claims subject thereof and the posting of the surety bond in an

amount to be approved by the Director. The Mines temporary permit shall be for a

period of one (1) year, renewable once only for a like period.

"A special permit may be issued by the Director for the removal, extraction

and disposal of minerals found to exist in limited quantities. Subject to the

approval of the Secretary, the Director shall issue rules and regulations to

ensure proper removal, extraction and disposition of such

minerals."

Section 18

SEC. 18. Section 40 of the same Decree is hereby amended to

read as follows:

"SEC. 40. Issuance of Mining Lease Contract. Except

protests pending at the time of publication, it shall be conclusively presumed

that no adverse claim exists if no such adverse claim is filed within fifteen

(15) days after the first date of publication of the notice of the application

and thereafter, no objection from third parties to the grant of the lease shall

be heard. Adverse claims based on mining claims registered on or after the first

publication of the notice of application shall not be entertained. After the

mining claim has been verified as to its mineral contents and it, actual

location on the ground as determined through reports submitted to the Director,

the Secretary shall approve and issue the corresponding mining lease contract,

which shall be for a period not exceeding twenty-five (25) years, renewable upon

the expiration thereof for another period not exceeding twenty-five (25) years

under such terms and conditions as provided by law. After the expiry of the

renewal period, the operation of the mine may be undertaken by the Government

through one of its agencies or through a qualified independent contractor. The

contract for the operation of the mine by an independent contractor shall be

awarded to the highest bidder in a public bidding held after due publication of

the notice thereof; Provided That the lessee shall have the right to

equal the highest bid upon reimbursement of all reasonable expenses of the

highest bidder.

"x x x x"

Section 19

SEC. 19. Section 42 of the same Decree is hereby amended to

read as follows:

"SEC. 42. Mining Lease on Private Lands. A Mining

lease may be granted on mining claims located on private lands subject to the

submittal of proof of compliance with Section 2 of Presidential Decree No.

512."

Section 20

SEC. 20. Section 44 of the same Decree is hereby amended to

read as follows:

"SEC. 44. Mining Lease Rights. A mining lease

contract shall grant to the lessee, his heirs, successors and assigns, the right

to extract all mineral deposits found on or underneath the surface of his mining

claims covered by the lease, continued vertically downward; to remove, process

and otherwise utilize the mineral deposits for his own benefit and to use the

lands covered by the lease for the purpose or purposes specified therein:

Provided, That the Secretary shall reserve the right to grant and use

easements in, over, through or upon on the said claims as may be needed by other

leases for right-of-way to enable them to have access to and/or facilitate the

operation of their mining claims: Provided, Further, That in case of

conflict of interest between the lessees for this purpose, the Director is

hereby authorized to mediate: Provided, Furthermore, That in granting

any lease under this Decree, the Government reserves the right to lease or

otherwise dispose of the surface of the lands embraced within such lease which

is not needed by the lessee in extracting and removing the mineral deposits from

his mining claims or in the beneficiation of the ores extracted therefrom:

Provided, Finally, That a lessee may on his own or through the

Government, enter into a service contract with a qualified domestic and/or

foreign contractor for the exploration, development and exploitation of his

claims and the processing and marketing of the products thereof, subject to such

rules and regulations that shall be promulgated by the Director with the

approval of the Secretary.

"Service contracts entered into pursuant to this Section shall contain, among

others, the following salient features, to wit:

"a) A stipulation that the foreign service contractor shall not be entitled

to any other fee except a service fee which shall in no case exceed forth

percent (40%) of the net proceeds of the operations, and in case the foreign

service contractor or another foreign company holds an equity in the local

mining corporation involved in a service contract the equity participation

including the service fee shall in no case exceed forty percent (40%) of the net

proceeds of the operations;

"b) The financing, technical, management and other services committed to be

rendered under the service contract, specifying a minimum amount of

expenditures, which should be over and above the minimum work obligations of the

lease and acceptable to the Secretary of Natural Resources as recommended by the

Director of Mines;

"c) Scheme for the repayment of service fees and repayment of advances which

may include the following:

"i) Foreign exchange payments duly approved by the Central Bank;

"ii) Except for repayment of pre-production expenses which shall adhere as

closely as possible to international practice, a provision that the interest

charged on the fair value of the services rendered and actual funds advanced by

the foreign entity shall not be more than the prevailing international interest

rates charged for similar types of transaction; and

"iii) A stipulation allowing payment of service fees in cash or in allotment

of production which may be exported subject to domestic requirements of the

country, or in equity which shall not exceed the constitutional limits:

Provided, That such stipulation shall not defeat the citizenship

requirement of the Constitution in the exploration, development, exploitation

and utulization of the natural resources;

"d) A stipulation that the foreign entity shall not acquire any title or

interest in the leased area;

"e) A commitment by the service contractor to pay the Government the amount

which should have been spent, but was not, in direct prosecution of the approved

work program;

"f) A stipulation that the service contract shall be cancelled for repeated

failure to comply with the terms and conditions thereof;

"g) A preference for Filipinos in employment in all phases of operations for

which they are qualified;

"h) A stipulation that alien employees shall be limited to technologists and

executives requiring highly specialized training and long experience, and whose

employment shall be subject to the required approval under existing decrees,

laws and regulations on the matter; and

"i) In every case where foreign technologists and executives are employed, an

effective program of training of understudies.

"Service contracts shall be approved by the Secretary upon recommendation of

the Director."

Section 21

SEC. 21. Section 47 of the same Decree is hereby amended to

read as follows:

"SEC. 47. Removal of Improvements. The lessee shall

within one (1) year from the abandonment, termination or cancellation of the

lease, remove all improvements on the mining premises found on public lands,

except roads and bridges; otherwise, said improvements shall become the property

of the Government."

Section 22

SEC. 22. Section 50 of the same Decree is hereby amended to

read as follows:

"SEC. 50. Appeals. Any party not satisfied with the

decision or order of the Director, may, within five (5) days from receipt

thereof, appeal to the Secretary. Decisions of the Secretary are likewise

appealable within five (5) days from receipt thereof by the affected party to

the President whose decision shall be final and executory.

"In all cases, the decision or order of the Director and the Secretary shall

be immediately executory notwithstanding the appeal, unless the President of the

Philippines directs otherwise, and the prevailing party has the right to

immediately take possession, exploration and exploitation of the mining claims:

Provided, However, That the provisions of Section 3 of Presidential

Decree No. 1000, pertaining to the deposit in escrow of the prescribed

percentage of the proceeds of the gross sales of the mines produced, shall be

complied with for the protection of the interest of the party to whom the mining

claims are ultimately and finally awarded."

Section 23

SEC. 23. Section 78 of the same Decree is hereby amended to

read as follows:

"SEC. 78. Theft of Minerals. Any person who,

without a mining lease or a temporary permit or any other permit granted by the

Secretary or the Director under existing mining decrees, laws and regulations to

mine, shall extract, remove and/or dispose of minerals belonging to the

Government or from a mining claim or claims leased, held or owned by other

persons, shall be deemed to have stolen the ores or the products thereof from

the mines or mills. He shall, upon conviction, be imprisoned from six (6) months

to six (6) years or pay a fine from one hundred pesos (P100.00) to ten thousand

pesos (P10,000.00) or both, in the discretion of the court, besides paying

compensation for the minerals removed, extracted and disposed of, the royalty

and the damage caused thereby."

Section 24

SEC. 24. Section 94 of the same Decree is hereby amended to

read as follows:

"SEC. 94. Mine Evaluation. The appraisal or

reappraisal, evaluation or re-evaluation of any mine, mining claim or claims

with improvements thereon whether patented, leased or otherwise, for the purpose

of raising capital for the formation or organization of a partnership or

corporation or for determining the present net value of the mines shall be made

by the Director or his duly authorized representative. No mine, mining claim or

claims without improvements thereon, whether patented, leased or otherwise,

shall be accepted as asset or basis of any asset in any formation or

organization of a partnership or corporation without the value thereof having

been first appraised or determined by the Director as herein

provided."

Section 25

SEC. 25. Repealing Clause. The provision of laws,

decrees, orders, rules and regulations or parts thereof which are inconsistnet

with the provisions of this Decree are hereby repealed or modified

accordingly.

Section 26

SEC. 26. Effectivity Clause. This Decree shall take

effect immediately.

Done in the City of Manila, this 25th day of May in the year of Our Lord,

nineteen hundred and seventy-eight.

(Sgd.) FERDINAND E. MARCOS

President of the

Philippines

By the President:

(Sgd.) JACOBO C. CLAVE

Presidential Executive

Assistant