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PRESIDENTIAL DECREE NO. 1677
PRESIDENTIAL DECREE NO. 1677 -
AMENDING CERTAIN SectionS OF PRESIDENTIAL DECREE NO. 463, OTHERWISE
KNOWN AS "THE MINERAL RESOURCES DEVELOPMENT DECREE OF 1974", AS AMENDED
BY PRESIDENTIAL DECREE NO. 1385
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WHEREAS,
there is a need to discourage mining lessees from sitting on their
claims to the prejudice of the Government and other qualified parties
desirous to undertake the exploitation of the country's mineral
resources;chanroblesvirtualawlibrary
WHEREAS, foreign investments are needed to explore, develop and exploit
said mineral resources;chanroblesvirtualawlibrary
WHEREAS, the Constitution recognizes the validity of service contracts
with foreign companies as a means to accelerate the development of our
mineral resources;chanroblesvirtualawlibrary
WHEREAS, there is a need to clarify the rights and obligations of
parties to mining service contracts.
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 that;chanroblesvirtualawlibrary
Section 1. The word "Secretary" as found in
Presidential Decree Nos. 463 and 1385 is hereby changed to
"Minister". chanroblesvirtualawlibrary
Section 2. Section 16 of Presidential Decree No. 463,
amended by Section 9 of Presidential Decree No. 1385, is further
amended to read, as follows:cralaw:red
"Sec. 16. Recognition of Declaration of Location. —
Upon payment of the prescribed fees and compliance with the
requirements under existing rules and regulations on the matter, the
declaration of location of a mining claim duly accomplished and
notarized shall be registered by the mining recorder concerned."
Section 3. Section 24 of Presidential Decree No. 463,
as amended by Section 13 of Presidential Decree No. 1385, is further
amended to read, as follows:cralaw:red
"Sec. 24. Expenditure Required. — A claim
owner/lessee under this Decree and under the Mining Act (Commonwealth
Act No. 137); as amended, shall perform annual work obligations on his
mining claim, the value of which shall be that as shall be provided in
the Regulations.
"The annual work obligations for each mining claim registered under
this Decree shall start from the date of recording thereof.
"Holders of mining claims who have filed lease applications under
Presidential Decree No. 1214 shall perform annual work obligations on
the mining claims from the date of filing of said applications, the
value of which shall be that as shall be provided in the Regulations.
"Such rate of work obligations may be increased at any time by the
Government after three (3) months notice."
Section 4. Section 25 of Presidential Decree No. 463,
as amended by Section 14 of Presidential Decree No. 1385, is further
amended to read, as follows:cralaw:red
"Sec. 25. Group Development. — The claim owner/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
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 succeeding year: 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
and Geo-Sciences to be used exclusively for the purposes mentioned in
Section 95 of the Decree."
Section 5. Section 27 of Presidential Decree No. 463
as amended by Section 15 of Presidential Decree No. 1385, is
further amended to read, as follows:cralaw:red
"Sec. 27. Proof of Annual Work Obligations. — The
claim owner/lessee shall submit proof of compliance 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 concerned within sixty (60)
days from the end of the year in which the work obligations is
required: Provided, That failure of the claim owner to comply therewith
for two (2) consecutive years shall constitute automatic abandonment of
the mining claim: Provided, further, That if it is found upon field
verification that no such work was actually done on the mining claim,
the claim owner/lessee shall likewise automatically lose all his rights
thereto notwithstanding submission of the aforesaid documents." chanroblesvirtualawlibrary
Section 6. Section 34 of Presidential Decree No. 463
is hereby amended to read, as follows:cralaw:red
"Sec. 34. Application for Lease. — Application for
lease of mining claims shall be filed with the Director within two (2)
years from the date of the recording thereof. Failure to file the said
applications within the prescribed period automatically constitutes
absolute abandonment of the mining claims, and the land embraced
thereby shall be opened to location by qualified persons other than the
original locator, his heirs, successors and assigns.
"No application for lease of mining claims shall be accepted for filing
unless accompanied by an application fee as provided in the Regulations
and by the following supporting papers:cralaw:red
(1) A report under oath of a licensed mining engineer
or licensed geologist to the effect that the mining claim is
mineralized;chanroblesvirtualawlibrary
(2) Proof of compliance with the required annual work
obligations;chanroblesvirtualawlibrary
(3) If the application is filed by an agent of the
applicant, a certified copy of the registered power of attorney granted
by the applicant;chanroblesvirtualawlibrary
(4) In case the area applied for is a public land
covered by concessions or rights other than mining, written notice to
the permittee thereof, or the requirements called for under
Presidential Decree No. 512, in case the area is a private land;chanroblesvirtualawlibrary
(5) The program of work proposed to be undertaken on
the area applied for;chanroblesvirtualawlibrary
(6) Proof of availability of technical competence and
financial resources sufficient to develop the claim applied for as
shall be provided in the Regulations; and
(7) Such other documents as may be prescribed in the
Regulations."
Section 7. Section 36 of Presidential Decree No. 463
is hereby amended to read, as follows: chanroblesvirtualawlibrary
"Sec. 36. Application Form. — All applications for
mining lease shall be in the form prescribed for the purpose, under
oath, and shall state, among others, the full name, address,
citizenship, civil status of the applicant, his place and date of
birth."
Section 8. Section 37 of Presidential Decree No. 463
is hereby amended to read, as follows:cralaw:red
"Sec. 37. Program of Work. — A claim owner shall upon
the filing of an application for mining lease, undertake exploration,
development and/or mining activities thereon in accordance with the
approved five-year program of work: Provided, That within the said
period of five years, the mining area shall be placed in actual
commercial production: And provided, further, That failure to do so
within the period aforestated shall constitute automatic abandonment of
the mining claims.
"In pursuance of the aforestated five-year program of work, the claim
owner shall, at the start of every calendar year and during the
existence of the mining lease, submit to the Bureau of Mines and
Geo-Sciences for the approval of the Director an annual work program
describing in detail the kind and nature of mining activities to be
undertaken thereof for that particular year. Any deviation from the
approved work program shall be with the approval of the
Director." chanroblesvirtualawlibrary
"Holders of existing mining leases shall submit a revised or updated
work program within six (6) months from the date of approval of this
Decree.
"The Regulations shall prescribed in detail the contents of the work
program."
Section 9. Section 44 of Presidential Decree No. 463,
as amended by Section 20 of Presidential Decree No. 1385, is further
amended to read, as follows:cralaw:red
"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 Minister
shall reserve the right to grant and use easements in, over, through or
upon the said claims as may be needed by other lessees 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 benefication 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 Minister.
"Service contracts entered into pursuant to this Section shall contain
among others, the following salient features to wit:cralaw:red
"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 forty per cent (40%) of the net proceeds of the
operations, before tax, the actual rate to be determined by the
economics of each project; 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 per cent (40%)
of the net proceeds of the operations before tax; chanroblesvirtualawlibrary
"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 organizations of the lease and acceptable to the
Minister as recommended by the Director;chanroblesvirtualawlibrary
"c) Repayment scheme of operating costs which shall
include, among others, all fees and taxes except income tax;chanroblesvirtualawlibrary
"d) Scheme for the repayment of service fees and
repayment of advances which may include the following:cralaw:red
"i) Foreign exchange payments duly approved by the
Central Bank;chanroblesvirtualawlibrary
"ii) Except for repayment of preproduction expenses
which shall adhere as closely as possible of 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 utilization of the natural
resources. chanroblesvirtualawlibrary
"e) A stipulation that the foreign entity shall not
acquire any title or interest in the leased area;chanroblesvirtualawlibrary
"f) 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;chanroblesvirtualawlibrary
"g) A stipulation that the service contract shall be
cancelled for repeated failure to comply with the terms and conditions
thereof;chanroblesvirtualawlibrary
"h) A preference for Filipinos in employment in all
phases of operations for which they are qualified;chanroblesvirtualawlibrary
"i) 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
"j) In every case where foreign technologists and
executives are employed, an effective program of training of
understudies. chanroblesvirtualawlibrary
"Service contracts shall be approved by the Minister upon
recommendation of the Director."
Section 10. Section 69 of Presidential Decree No.
463 is hereby amended to read, as follows:cralaw:red
"Sec. 69. Maximum Area of Quarry License or Permit.
— Notwithstanding the provisions of Section 14 hereof, a quarry license
or permit shall cover any area of not more than one hundred (100)
hectares in any one province and not more than one thousand (1,000)
hectares in the entire Philippines."
Section 11. Section 92 of Presidential Decree No.
463 is hereby deleted.
Section 12. All laws, decrees, executive orders,
rules and regulations which are in conflict or inconsistent with this
Decree are hereby amended, modified or repealed accordingly.
Section 13. This Decree shall take effect
immediately.
Done in the City of Manila,
this 19th day of February, in the year of Our Lord, nineteen hundred
and eighty.
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