AN ACT TO PROMOTE THE EXPLORATION, DEVELOPMENT, EXPLOITATION, AND UTILIZATION OF THE PETROLEUM RESOURCES OF THE PHILIPPINES; TO ENCOURAGE THE CONSERVATION OF SUCH PETROLEUM RESOURCES; TO AUTHORIZE THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES TO CREATE AN ADMINISTRATION UNIT AND A TECHNICAL BOARD IN THE BUREAU OF MINES; TO APPROPRIATE FUNDS THEREFOR; AND OTHER PURPOSES.

• Number: Republic Act No. 387
• Sections: 116

Preamble

GENERAL PROVISIONS

CONCESSIONS

NON-EXCLUSIVE EXPLORATION PERMIT

EXPLORATION CONCESSION

EXPLOITATION CONCESSION

REFINING CONCESSION

PIPE LINE CONCESSION

PENALTIES AND EXTINCTION OF RIGHTS

OFFICIALS IN CHARGE AND DUTIES

FINAL PROVISIONS

Article 1 Short Title of Act.

ARTICLE 1. Short Title of Act.—The short title of this Act shall be "Petroleum Act of 1949."

Article 2 Definition of terms.

ART. 2. Definition of terms.—When used in this Act, the following terms shall, unless the context otherwise indicates, have the following respective meanings:

(a) "Petroleum" shall include any mineral oil, hydrocarbon gas, bitumen, asphalt, mineral wax, and all other similar or naturally associated substances; with the exception of coal, peat, bituminous shale, and/or other stratified mineral fuel deposits.

(b) "Crude oil" means oil in its natural state before the same has been refined or otherwise treated, but excluding water and foreign substances.

(c) "Natural gas" means gas obtained from boreholes and wells and consisting primarily of hydrocarbon.

(d) "Government" means the Government of the Philippines.

(e) "State" means the Republic of the Philippines.

(f) "Permittee," "concessionaire" or "contractor" means a person to whom a permit, concession, or contract, as the case may be, has been granted or awarded under the provisions of this Act, his successors and assigns.

(g) "Person" includes a natural person, corporation, or Partnership.

(h) A "barrel" is equivalent to 158.98 liters or 42 U. S. gallons.

(i) All measurements of distances, width, length, areas, depth and volume, and weight shall be in the metric systern.

(j) Words in singular shall include the plural, and vice versa.

Article 3 State ownership.

ART. 3. State ownership.—All natural deposits or occurrences of petroleum or natural gas in public and/or e lands in the Philippines, whether found in, on or the surface of dry lands, creeks, rivers, lakes, or other submerged lands within the territorial waters or on the continental shelf, or its analogue in an archipelago

seaward from the shores of the Philippines which within the territories of other countries, belong to the State, inalienably and imprescriptibly.

Article 4 Title to land.

ART. 4. Title to land.—The ownership or the right to the use of lands for agricultural, industrial, commercial, residential, mining, or for any purpose other than for petroleum exploration, development or exploitation doe not include the ownership of, nor the right to explore for exploit, or utilize the petroleum or natural gas deposits in, on or under the surface of such land.

Article 5 Granting of petroleum rights.

ART. 5. Granting of petroleum rights.—The right to ex-plore for, develop, exploit or utilize the petroleum resources described in article three hereof may only be granted to duly qualified persons by means of concessions in accordance with the provisions of this Act. The Government, however, reserves the right to undertake such work either by itself or through its instrumentalities, or through competent persons qualified to undertake such work as independent contractor or contractors under a contract of service executed for the Republic of the Philippines by the President and approved by the Congress of the Philippines in accordance with the provisions of article thirteen of this Act.

Exploration or exploitation rights may be exclusive within certain areas; but no exclusive rights may be granted for refining or transportation.

Article 6 Granting of concession is discretionary with the Government.

ART. 6. Granting of concession is discretionary with the Government.—The granting of concession under this Act is discretionary with the Government, except in the cases mentioned in article eleven hereof, where, upon the fulfillment of the formalities and requirements of this Act, the granting thereof is obligatory upon the Government.

Article 7 Petroleum operation a public utility.

ART. 7. Petroleum operation a public utility.—Everything relating to the exploration for and exploitation petroleum which may exist naturally or below the surface of the earth, and everything relating to the manufacture refining, storage, or transportation by special method petroleum as provided for in this Act, is hereby declared to be of public utility.

Article 8 Concessionaire assumes risks.

ART. 8. Concessionaire assumes risks.—Concessions re-ferred to in this Act shall be granted at the complete risk of the interested party. The Government does not guarantee the existence of petroleum or undertake, in any case, title warranty.

Article 9 Ownership not conferred.

ART. 9. Ownership not conferred.—Exploration and Exploitation Concessions do not confer upon the concessionaire the ownership over the petroleum lands and petroleum deposits, but only the right to explore for, develop, exploit, and utilize them for the period and under the conditions determined by this Act.

Article 10 Kinds of concessions.

ART. 10. Kinds of concessions.—Concessions may be any of the following kinds and have the following respective objects:

a. Non-Exclusive Exploration Permit, which grants to the permittee the non-exclusive right to conduct geological or geophysical exploration on specified areas.

b. Exploration Concession, which grants to the concessionaire the exclusive right to explore for petroleum within specified areas.

c. Exploitation Concession, which grants to the concessionaire the exclusive right to develop petroleum production within the specified areas.

d. Refining Concession, which grants to the concession-aire the right to manufacture or refine petroleum, or to extract its derivatives.

e. Pipe Line Concession, which grants to the concessionaire the right to provide and operate pipe line systems for transporting petroleum.

Article 11 Obligatory concessions.

ART. 11. Obligatory concessions.—Subject to the fulfillment of the formalities and requirements provided for in this Act, the granting of the following concessions shall be obligatory upon the Government:

a. Exploitation Concession, to the holder of an Ex-ploration Concession, for such parcels as he may select for exploitation and to the holders of Petroleum Drilling Leases issued under the Petroleum Act Numbered Twenty-nine hundred and thirty-two, or of petroleum mining claims located and held under the Act of Congress of July first, nineteen hundred and two, which are existing and in force at the time of the enactment of this Act, when said holders shall apply to have the same governed by the provisions of this Act, and be given the privileges granted thereby;

b. Refining Concession and/or Pipe Line Concession, to the holder of an Exploitation Concession, when the manufacturing or transportation is directly related, although not necessarily restricted, to the Exploitation Concession; and

c. Refining Concession, to the holder of a Pipe Line Concession, or Pipe Line Concession to the holder of a Refining Concession, when the two concessions are directly, although not restrictively, related.

The foregoing, however, shall not apply in the case of any concessionaire who is in arrears in any payments due the Government arising out of or in connection with any petroleum concession, lease, or mining claim, until such arrears have been paid, or, if in dispute, until a cash or surety bond has been posted, sufficient to cover all arrears in dispute.

The rights and obligations conferred by concessions which are obligatory under this article are to be regarded as flowing from the initial concessions which, under the provisions of this Act, include the right to receive such subsequent concessions.

Article 12 Designation of petroleum regions.

ART. 12. Designation of petroleum regions.—For pro poses of this Act, the Secretary of Agriculture and Natural Resources, after due study of the different prospects petroleum lands of the Philippines, may divide them into a number of prospective petroleum regions, delimiting their extent and boundaries, and issuing the order and not establishing such regions.

Article 13 Petroleum reservation.

ART. 13. Petroleum reservation.—Upon the recommendation of the Secretary of Agriculture and Natural sources, the President of the Philippines may set apart petroleum reservations, and shall, by proclamation, declare the establishment of such reservations and the boundaries thereof.

The Government may explore, develop, and exploit such petroleum reservation either by itself or through its in-strumentalities, or through competent persons under a contract of service, in accordance with article five of this Act. Proposals by qualified persons to carry out such work for the Government as independent contractor or contractors shall be filed with the Director of Mines who shall forward the same with his findings and recommendations to the Secretary of Agriculture and Natural Resources who, in turn, shall submit the same with his recommendations to the president of the Philippines. The President is hereby authorized to take such necessary action as he may deem proper on such proposals and for this purpose, may execute the necessary contract or contracts for and in behalf of the Government. In the event such contract is executed, the same shall be submitted to the Congress of the Philippines for its approval.

No petroleum reservation may be established over any areas covered by application for Exploration or Exploitation Concession already filed or granted. If at any time after the establishment of a petroleum reservation, the Secretary of Agriculture and Natural Resources, after due investigation, should find it to the best interest of the Government, that any area within the reservation should be opened to Exploration or Exploitation Concession under the provisions of this Act, such area or areas may be recommended to be released from the reservation and declared open to Exploration or Exploitation Concession under this Act by an executive proclamation of the President concurred in by a joint resolution of the Congress of the Philippines.

Article 14 Free areas.

ART. 14. Free areas.—All lands within the territorial limits of the Philippines including those submerged beneath seas, bays, lakes, rivers, lagoons, or the territorial waters, or on the continental shelf, or its analogue in an archipelago, put which are not within the National Reserve Areas, or Petroleum Reservations, or covered by valid and existing

Exploration or Exploitation Concession, or Petroleum Drilling Leases acquired under the Petroleum Act (Act No. 2932), or of petroleum mining claims located and held under the Act of Congress of July first, nineteen hundred and two, as amended, are called Free Areas and as such are open to application for Exploration Concession by any duly qualified person. Application for said areas shall be filed with the Director of Mines in accordance with the provisions of article twenty-eight of this Act.

Article 15 National Reserve Areas.

ART. 15. National Reserve Areas.—Areas which have been included in any Exploration or Exploitation Conces-sion but which have been subsequently given up by the concessionaire voluntarily or in accordance with the requirement of articles fifty and fifty-three of this Act; or areas covered by Exploration or Exploitation Concession which have expired or have been cancelled; or areas which have been included within any of the two kinds of concession but which are found to be in excess the maximum areas allowed by this Act for such concessions, are called National Reserve Areas, and as such may be applied either for Exploration or Exploitation Concession by duly qualified persons only after the Secretary of Agriculture and Natural Resources shall have first announced by means of notices published in the Official Gazette and in one daily English newspaper of general circulation published in the City of Manila, at least once a month for three consecutive months, that said lands duly described are ready for disposition and that application therefor may be filed within a certain date fixed in the notice. Application for such areas shall be filed with the Director of Mines in accordance with article twenty-eight of this Act, and the concession may be granted by the Secretary of Agriculture and Natural Resources It favor of the applicant whose offer shall be found best t serve the interest of the Government.

Article 16 Lands covered by concessions are subject to public easements.

ART. 16. Lands covered by concessions are subject to public easements.—All lands covered by concessions granted under this Act shall be subject to public easements established or recognized by existing or future laws.

Article 17 Operations of concessionaire subject to existing mining rights.

ART. 17. Operations of concessionaire subject to existing mining rights.—The operations of the concessionaire under the provisions of this Act shall be subject to existing mining rights, grants, permits, leases, and concessions in respect of substances other than petroleum and to existing petroleum rights, grants, leases, or concessions.

Article 18 Right of Government to establish reservations or grant rights.

ART. 18. Right of Government to establish reservations or grant rights.—Concessions granted under this Act are subject to the right of the Government to establish reservations other than petroleum reservations, to grant mining rights, permits, leases, and concessions in respect of substances other than petroleum, and to grant rights other than mining rights in, on, or under any of the lands covered by the concession granted under this Act, provided that the rights of the petroleum concessionaire to search, prospect, and drill for, produce, extract, transport, store, process, and treat petroleum on, under, and from, said lands, and the other rights, granted to him under this Act are not impaired or unreasonably interfered with.

Article 19 Additional benefits to the Government in certain cases.

ART. 19. Additional benefits to the Government in certain cases.—In the disposition of the National Reserve Areas and in case of conflicts of applications for concessions, the Secretary of Agriculture and Natural Resources may require additional benefits to the Government over and above the minimum requirements provided for in this Act. These additional benefits may include, but shall not be restricted to, bonuses or cash payments made singly or on installments over a period of time; or increased royalty on the quantity of oil produced; or undertakings in addition to those required by law for the promotion of education, public health, social welfare and amelioration, and other public services; or increased work obligations on the concession.

Article 20 Right to enter private land.

ART. 20. Right to enter private land.—Exploration and exploitation concessionaires are granted the right to enter upon private lands covered by their concessions for the purpose of conducting geological or geophysical studies, with the right to use all instruments and apparatus necessary to carry out such studies, subject to the obligations to indemnify the owner or legal occupant of the land for material damage suffered by the property, its annexes or appurtenances as a result of such studies, provided that in no case shall the occupancy of private buildings, yards or gardens be authorized against the will of their owner.

In the event that the right granted in this article shall be denied by the owner of the private land or by its legal occupant, the concessionaire may apply for and, upon posting such bond as may be fixed and approved by the Court of First Instance of the province where the land is situated the court shall issue an order allowing such right pending the final determination of the proper amount that shall be paid by the concessionaire to the landowner or legal occupant.

Article 21 Easements over private land.

ART. 21. Easements over private land.—When easements of temporary occupancy over private lands are needed by a concessionaire for the purpose of carrying out any work essential to his operations under the provisions of this Act, he may enter into the necessary agreement with the owner or legal occupant of such private lands. If no agreement could be reached, or if the owner or legal occupant refuses to grant such easement, or in general, when any obstacle of whatever nature exists to the immediate and certain acquisition of the necessary surface area, or of any right indispensable to the concessionaire for the purpose of the concession, the Court of First Instance of the province where the land is situated shall, upon application of the concessionaire and posting of the necessary bond, grant to the said concessionaire authority to use and occupy the land needed by him in his operations, pending final determination of the case which shall include among others the reasonable value or rental of the land to be occupied and the compensation for any resulting damage that the land owner or legal occupant may suffer as a result of sue occupation.

When the occupation of a private land is needed by the concessionaire in connection with his concession, for purpose of constructing, maintaining, operating, and drilling oil wells, tanks, reservoirs, waterways, pipelines, roads, railroads, tramlines, telephone and telegraph lines, airfields, radio stations, powerhouses, transmission lines, pumping stations, wharves, piers, and terminals, which are hereby declared to be for public use or benefit, the right of eminent domain may be exercised by the Government through the concessionaire, in accordance with the applicable laws on the matter.

In all cases of voluntary agreement between the concessionaire and a private land owner, as referred to in this article, a copy thereof shall be furnished to the Secretary of Agriculture and Natural Resources.

For the purpose of this article the necessity of the work will be presumed in the cases of well drilling and auxiliary works, construction of pipe lines, tanks, pumping plants, power systems, warehouses, shops, and means of transport and communication.

Article 22 Easement over public land.

ART. 22. Easement over public land.—When easement or right of temporary occupancy over public land is needed by a concessionaire for the purpose of carrying out any work essential to his operations under this Act, such right may be granted by the Secretary of Agriculture and Natural Resources with due regard to prior rights of third parties and subject to applicable laws and regulations.

The presumption of necessity stated in article twenty-one applies likewise in this case.

Article 23 Use of water, timber and clay.

ART. 23. Use of water, timber and clay.—Concessionaires under this Act may utilize for any of the work to which his concession relates, timber, water, and clay from any public lands within such concession, all subject to existing prior tights thereto, to the regulations issued under this Act and to other laws and regulations on the matter.

Article 24 General obligations.

ART. 24. General obligations.—Work corresponding to concession granted under this Act shall be commenced with reasonable promptness and prosecuted with reasonable diligence in accordance with good oil field practice; provided, that in the case of Exploration or Exploitation Concession, the performances of the corresponding work, in compliance with the provisions of this article, successively in various areas included in the concession, in accordance with an efficient and economic program determined by the concessionaire and submitted to the Secretary of Agriculture and Natural Resources will be construed as reasonable diligence in regard to the total area included in such concession; con-forming with accepted good practices in connection with modern and scientific methods of exploration, drilling, equip, ping and operating wells to enable maximum economic production of petroleum; avoiding hazards to life, health and property; avoiding the pollution of the air, and of public or private land or waters.

Non-compliance with the provisions of this article may be the cause of the imposition of penalties under the provisions of this or other laws; or of court action to compel compliance therewith; and continued non-compliance shall constitute cause for cancellation of the concession.

Article 25 Submission of information and reports by the concessionaires.

ART. 25. Submission of information and reports by the concessionaires.—Concessionaires shall submit to the Secretary of Agriculture and Natural Resources all information that the latter may require from time to time, particularly but not limited to, reports on the results of geological and geophysical examinations including a complete history of each well formation record; electric logs, and result of all tests; production reports showing all pertinent production data, etc., in the form and manner and at intervals prescribed by the regulations.

Article 26 Employment of Filipinos.

ART. 26. Employment of Filipinos.—Concessionaires under this Act are obligated to give preference to Philippine citizens in all types of employment within the country, insofar as such citizens are qualified to perform the corresponding work with reasonable efficiency and without hazard to the safety of the operations; and are obligated likewise to maintain effective programs of training and advancement commensurate with the demonstrated abilities of such citizens to perform satisfactorily the various types of operations involved in working the concession The concessionaires, however, shall not be hindered from using employees of their own selection and without restriction for executive or technical work and for all other work, which, in their judgment, and with the approval of

Director of Mines, requires highly specialized training or long experience.

Each concessionaire shall submit to the Government annual report giving statistical and descriptive information relevant to the provisions of this article, as provided in the Regulations, and shall be obligated to demonstrate to the satisfaction of the Secretary of Agriculture and Natural Resources, upon request, that these provisions are being complied with. In the event that, in the opinion of the Secretary of Agriculture and Natural Resources, such provisions are not complied with, he is empowered to require the concessionaire to take such steps as may be necessary to effect such compliance; without prejudice, however, to the right of the concessionaire under the exception provided in the last sentence of the first paragraph of this article.

Article 27 Force majeure.

ART. 27. Force majeure.—Failure on the part of the concessionaire to fulfill any of the terms and conditions provided by this Act or its regulations or by other relevant laws shall not be deemed a breach of such obligation on the part of the concessionaire in so far as such failure results from force majeure, including the act of God, war, insurrection, riot, civil commotion, strike, tide, storm, flood, lightning, explosion, fire, earthquake, and any other happening which the concessionaire could not reasonably prevent or control or avoid.

Article 28 Application for concession.

ART. 28. Application for concession.—Application for concession under this Act shall be filed with the Director of Mines who shall examine and pass upon the same as well as upon the qualifications of the applicant. If he finds the application in order and the applicant duly qualified, he shall forward the said application, together with his findings and recommendations thereon, to the Secretary of Agriculture and Natural Resources who may, unless other wise provided for in this Act, publish a notice thereof at least once a week for three consecutive weeks in the Official Gazette and in any newspaper of general circulation, published in English in the City of Manila.

At any time during the period of publication of the said notice, an adverse claim stating the nature and grounds thereof, may be filed with the Director of Mines. If no adverse claim is filed within the said period of publication it shall be conclusively presumed that no such adverse claim exists and thereafter no objection from third parties to the granting of the concession shall be heard; and the contract of concession shall be executed by the Secretary of Agriculture and Natural Resources for the Republic of the Philippines, and the concessionaire, in accordance with existing laws and regulations for the conveyance of leasehold rights, which contract of concession shall state definitely the principal rights and obligations of the parties concerned.

Article 29 Disposition of adverse claims.

ART. 29. Disposition of adverse claims.—Adverse claims based upon applications filed at any time after the first date of publication of the notice mentioned in article twenty-eight shall not be considered. Adverse claims based upon conflict of applications shall be disposed of in accordance with the provisions of article thirty hereof. Adverse claims based upon other grounds shall be decided by the Secretary of Agriculture and Natural Resources.

Article 30

ART. 30. Disposition of applications in conflict—In case an adverse claim is filed in accordance with article twenty-eight of this Act, covering areas in conflict and the adverse claimant is found to be duly qualified to apply for concession under this Act, the Director of Mines shall inform the applicant and the adverse claimant of the existence of such conflict and of any additional benefits to the Government which the Secretary of Agriculture and Natural Resources may require in accordance with the provisions of article nineteen of this Act, whereupon each of them shall, within sixty days from the date of the receipt of such information, submit to the Director of Mines an amended application stating therein such additional benefits to the Government as he may desire to offer for the area in conflict. Secretary of Agriculture and Natural Resources may accept such application which, in his opinion, will best serve the national interest. The right of any party to appeal to the courts as in ordinary cases is recognized.

Article 31 Qualifications of applicants.

ART. 31. Qualifications of applicants.—Applicants for concessions under this Act shall have the following qualifications:

In case of an individual, he shall be a citizen of the Philippines, be of legal age, and have the capacity to contract obligations.

In case of an association of individuals, it shall be either a partnership or a corporation duly organized and constituted under the laws of the Philippines, at least sixty per centum of the capital of which is and shall at all times be owned and held by citizens of the Philippines.

During the effectivity and subject to the provisions of the ordinance appended to the Constitution of the Philippines, citizens of the United States and all forms of business enterprises owned and controlled, directly or indirectly, by citizens of the United States shall enjoy the same rights and obligations under the provisions of this Act in the same manner as to, and under the same conditions imposed upon, citizens of the Philippines or corporations or associations owned or controlled by citizens of the Philippines.

Any applicant shall present satisfactory evidence showing that sufficient finance, organization, resources, technical competence, and skills necessary to conduct the operations to be undertaken under the concession being applied for, in a manner which is in accordance with the best method known to the industry, are available to such applicant.

Article 32 Officials and employees of the Government disqualified.

ART. 32. Officials and employees of the Government disqualified.—Officials and employees of the executive branch of the Government connected with the administration and disposition of mineral resources including petroleum, shall not be allowed, directly or indirectly during their incumbency and for five years thereafter, to apply or acquire concessions, or to be interested, in anywise, in any application filed, or concession acquired, under this Act.

Article 33 Who may apply.

ART. 33. Who may apply.—Any person legally qualified to acquire concession under the provisions of this Act may, upon application, acquire a permit for a non-exclusive right to undertake surface geological or geophysical investigation within Free Areas as defined in article fourteen of this Act, subject to the provisions of article thirty-five and thirty-six of this Act and the Regulations.

Article 34 Application for Non-Exclusive Exploration Permit.

ART. 34. Application for Non-Exclusive Exploration Permit.—Application for Non-Exclusive Exploration permit shall be filed with the Director of Mines who shall examine and pass upon the application and qualifications of the applicant. He shall forward the same with his findings and recommendation to the Secretary of Agriculture and Natural Resources for his final action. The applicant shall pay an application fee of one hundred pesos in the manner prescribed by the Regulations. In the event that no concession is granted corresponding to such application, the sum paid shall be returned to the applicant less such amount as corresponds to the expenses incurred by the Government in connection with the consideration of the application, as determined by the Regulations.

Article 35 Entry upon private property.

ART. 35. Entry upon private property.—Right to enter upon or to occupy private property in connection with the Non-Exclusive Exploration Permit must be secured from the owner or legal occupant thereof.

Article 36 Right conveyed under Non-Exclusive Exploration Permit.

ART. 36. Right conveyed under Non-Exclusive Exploration Permit.—Non-Exclusive Exploration Permit issued under this Act conveys no right for the permittee to make any exploratory drilling, nor carry any priority or preferential right to the area it covers so as to entitle the permittee to exclusive Exploration or Exploitation Concession, but is intended only to permit geological and/or geophysical exploration, preparatory to making application for exclusive Exploration Concession.

The permittee shall inform the Secretary of Agriculture and Natural Resources prior to undertaking any exploratory work as to the general nature of the work proposed to done, the size of the parties to be put in the field, and areas to be covered by such work. He shall submit at the end of every six months a report on the result of the geological and/or geophysical surveys conducted by him.

Article 37 Term of Non-Exclusive Exploration Permit.

ART. 37. Term of Non-Exclusive Exploration Permit.— Non-Exclusive Exploration Permit shall be for a term of not exceeding two years, renewable for another two years, at the discretion of the Secretary of Agriculture and Natural Resources.

Article 38 Definition of Exploration.

ART. 38. Definition of Exploration.—The term "Exploration" means all work that have for their object the discovery of petroleum, including, but not restricted to, surveying and mapping, aerial photography, surface geology, geophysical investigations, testing of subsurface conditions by means of borings or structural drillings, and all such auxiliary work as are useful in connection with such operations.

Test wells drilled for exploratory purposes may be of such size and type suitable for oil production, but the actual production of oil is not included in the term "Exploration," except that oil found during exploration may be freely used by the concessionaire in his operations for exploration purposes only within the same concession.

Article 39 Application for Exploration Concession.

ART. 39. Application for Exploration Concession.—Application for Exploration Concession shall be filed with the Director of Mines in accordance with the provisions of article twenty-eight of this Act. The Regulations shall prescribe the form and contents of application for Exploration Concession.

Article 40 Map and technical descriptions.

ART. 40. Map and technical descriptions.—A map of the block desired to be explored shall accompany the application for Exploration Concession. This map shall be prepared in accordance with the Regulations, and shall show the location of the block with regard to the municipalities and province or provinces in which it is located, the four corners of the block in case it is rectangular, or the natural boundaries thereof in case the block adjoins rivers, creeks, Jakes, or shore lines, or the extension or projections thereof into these bodies of water in case the block is, in whole or in Part, on submerged lands.

The location of the block shall be plotted on Coast and Geodetic Survey or Army base map, and shall show, among others, the topographic features of the area. The map shall be submitted together with the technical description of the corner markings and the metes and bounds or distances and bearings of the sides of the block. The technical description and map shall also indicate the bearings and distances of the tie line from some known reference location monument to one corner, preferably Number 1, of the block, in such a way that the block desired can be plotted from such tie line and descriptions on the Progress or Index Map of the Bureau of Mines, where all areas applied for shall be plotted to show the relative positions of such areas.

The boundaries of the block desired shall be well established on the ground by placing permanent and conspicuous monuments, posts or mounds of earth on the corners, so that at any time, the block can be identified, and later be tied to accurate surveys. The bearings and distances of the block applied for exploration shall be sufficiently accurate so that the approximate area of the block can be computed from the given bearings and distances on the sides.

Article 41 Application fee for Exploration Concession.

ART. 41. Application fee for Exploration Concession.— When an application for an Exploration Concession is filed, the applicant shall pay an application fee of one thousand pesos in the manner prescribed by the Regulations. In the event that no concession is granted corresponding to such application, the sum paid shall be returned to the applicant less such amount as corresponds to the expenses incurred by the Government in connection with the consideration of the application as determined by the Regulations.

Article 42 Areas available for Exploration Concessions.

ART. 42. Areas available for Exploration Concessions.— Exploration Concessions may be granted on any lands within the Free, and National Reserve, Areas which are not covered by valid and existing Exploration or Exploitation Concessions, or by Petroleum Drilling Leases acquired under the Petroleum Act (Act No. 2932), or by petroleum mining claims located and held under the Act of July first, nineteen hundred and two, as amended.

Article 43 Size and shape of exploration blocks.

ART. 43. Size and shape of exploration blocks.—Exploration Concessions may be granted in lots or blocks as compact as possible, and rectangular in shape except when contiguous with the sea, bays, lakes, rivers, lagoons, roads, or with other concessions already granted which are of irregular boundaries.

Each block or lot shall not be more than one hundred thousand hectares nor less than twenty thousand hectares in area, and in no case shall the long dimension of the rectangle be more than five times the short dimension.

Article 44 Maximum exploration area a person may acquire.

ART. 44. Maximum exploration area a person may acquire.—No person shall be entitled to more than five hundred thousand hectares of exploration areas m any one petroleum region established in accordance with the provisions of article twelve of this Act, nor more than one million hectares in the whole territory of the Philippines.

Article 45 Rights conveyed under Exploration Concession.

ART. 45. Rights conveyed under Exploration Concession.—The Exploration Concession conveys upon the con-cessionaire, his heirs and assigns, from the date of the granting of the concession, and during the exploration period and any extension thereof, the exclusive right to explore the block granted, to do geological and geophysical work, to open test pits, to conduct drilling operations, and to do such other work related to exploration.

Article 46 Term of Exploration Concession.

ART. 46. Term of Exploration Concession.—The initial term of an Exploration Concession shall be not more than four years counted from the date of its issuance: Provided, however, That if the concessionaire has complied with the provisions of this Act and the Regulations and with the terms and conditions contained in the contract of concession, the Secretary of Agriculture and Natural Resources Way grant an extension of the same for a term of three years, for its entire area or for any part thereof, upon application of the concessionaire made prior to the expiration of the original term. If during the said first extension, the concessionaire has also complied with the Provisions of this Act and the Regulations and the terms and conditions contained in the contract of concession, the Secretary of Agriculture and Natural Resources may, upon application of the concessionaire made prior to the expiration of the first extension, grant, a further extension of the said concession for its entire area or for any part thereof, for another term of three years, making the total term for Exploration Concession not more than ten years.

The extension shall be granted under the same terms and conditions as those contained in the original conces-sion, subject, however, to the provisions of articles forty-seven and forty-nine of this Act.

No further renewal shall be allowed to any exploration concessionaire at the end of ten years from the date of the original concession.

Article 47 Exploration work obligations.

ART. 47. Exploration work obligations.—At the begin-ning of each calendar year during the life of the concession the concessionaire shall submit to the Director of Mines a program of exploration work to be undertaken by the concessionaire within his concession during that year.

He is obligated to spend in the direct prosecution of exploration work within his concession, such as topographic or geological reconnaissance; mapping or cross sectioning; geophysical surveys by magnetometer, gravimeter or seismograph; core or exploratory drilling; or any combination of the said work, the following amounts:

Initial term:

First year—Not less than fifty centavos per hectare per year, or fraction thereof.

Second year—Not less than one peso per hectare per year, or fraction thereof.

Third year—Not less than one peso and fifty centavos per hectare per year, or fraction thereof.

Fourth year—Not less than two pesos per hectare per year, or fraction thereof.

First extension:

Fifth to seventh year—Not less than two pesos and fifty centavos per hectare per year, or fraction thereof.

Second extension:

Eighth to tenth year—Not less than three pesos I hectare per year, or fraction thereof.

The cost of delivered materials or equipment use the exploration work shall be considered as proper expenditures for such work. The concessionaire shall give satisfactory evidence to the Government of such expenditures in accordance with the Regulations.

Any amount actually spent for exploration work in excess of the minimum amount required for any year or years may be carried forward and credited to exploration work obligations required for the succeeding years during the existence of the concession.

For failure to comply with the minimum work obligations in any one year as herein above stipulated, the concessionaire shall pay to the Government the difference between the minimum amount required and that actually spent for any year. Continued failure to perform the necessary exploration work within the area covered by the concession shall, in addition to the above penalty, result in the cancellation of the concession as provided for in this Act.

In order to guarantee faithful compliance with the required exploration work, a bond of sufficient amount to be fixed by the Regulation, shall be posted by the conces-sionaire.

Article 48 Work obligations on two or more exploration blocks within any one petroleum region.

ART. 48. Work obligations on two or more exploration blocks within any one petroleum region.—In case two exploration blocks are held by the same concessionaire which are adjoining to each other in any one petroleum region, the total amount of work obligations for exploration required for the initial term of four years, for the two adjoining blocks, may be spent within any one of the two adjoining blocks or any portion thereof as if they are covered by a single concession.

The total amount of work obligations required to be spent annually during the first and second extensions under article forty-seven of this Act on any two or more exploration blocks, whether adjoining or not, then existing and held by a concessionaire for the first and second extensions within any established petroleum region, may be spent within any one or more of the said blocks or any portion thereof.

Article 49 Annual exploration tax.

ART. 49. Annual exploration tax.—Each holder of an Exploration Concession shall pay during the whole period of such concession and its extension or extensions if any an annual exploration tax as follows:

Initial term:

First year—Not less than five centavos per hectare per year, or fraction thereof.

Second and third year—Not less than seven and one-half centavos per hectare per year, or fraction thereof.

Fourth year—Not less than ten centavos per hectare per year, or fraction thereof.

First extension:

Fifth to seventh year—Ten centavos per hectare per year, or fraction thereof.

Second extension:

Eighth to tenth year—Twelve and one-half centavos per hectare per year, or fraction thereof.