Constitutional Basis:

Section 2, Article XII of 1987 Constitution

All lands of the public domain, xxx and other natural

resources are owned by the State. With the exception of

agricultural lands, all other natural resources shall not be

alienated.

The exploration, development, and utilization of natural

resources shall be under the full control and supervision of

the State.

The State may directly undertake such activities, or it may

enter into co-production, joint venture, or production sharing

agreements with Filipino citizens, or corporations or

associations at least sixty per centum of whose capital is

owned by such citizens. Such agreements may be for a period

not exceeding twenty-five years, renewable for not more than

twenty-five years, and under such terms and conditions as

may be provided by law. xxx

The President may enter into agreements with foreign owned

corporations involving either technical or financial

assistance for large-scale exploration, development, and

utilization of minerals, petroleum, and other mineral oils

according to the general terms and conditions provided by

law, based on real contributions to the economic growth and

general welfare of the country. In such agreements, the State

shall promote the development and use of local scientific and

technical resources. xxx

of Natural Resources (Shall be under the full control and

supervision of the State)

I. The state may directly undertake such activities

II. The state may enter into co-production, joint venture and

production sharing arrangement with

a. Filipino citizen

b. Corporation or association at least 60% of whose capital

is owned by such citizen.

It should not exceed 25 years, renewable for not

more than 25 years

III. Congress may, by law, authorize small-scale utilization of

natural resources by Filipino citizen; (Congress may also

authorize cooperative fish farming, with priority to

subsistence fishermen and fish- workers in rivers, lakes, bays,

and lagoons.)

IV. The President may enter into agreements with foreign owned

corporations involving either technical or financial

assistance for large-scale EDU of minerals, petroleum, and

other mineral oils

It should be based on real contributions to the economic

growth and general welfare of the country

In such agreements, the State shall promote the

development and use of local scientific and technical

resources.

The President shall notify the Congress of every contract

execution.

Management and service contracts are not allowed

under this rule

Large-scale EDU pertains to area covered and not the

amount of investment.

Section 4: Ownership of Mineral Resources. Mineral resources

are owned by the State, and the exploration, development,

utilization and processing thereof shall be under its full

control and supervision. The State may directly undertake

such activities or it may enter mineral agreements with

contractors.

Thus, if a person is the owner of an agricultural land in which

minerals are discovered, his ownership of such land does not

give him the right to extract or utilize the said minerals

without the permission from the State, because the right to

possess or own the surface ground is separate and distinct

from the mineral land over the same land.

Even though location of a mining claim has been perfected, it

does not bar the government’s exercise of its power of

eminent domain.

The right of eminent domain covers all forms of private

property, tangible or intangible, and includes rights which are

attached to the land.

All projects relating to EDUC of natural resources are projects

of the state, thus, the projects nevertheless remain as state

Section 5: Mineral Reservations. When national interest so

requires xxx, the President may establish mineral

reservations upon the recommendation of the Director

through the Secretary. xxx

This section empowers the president to enter into mineral

agreements with contractor if the national interest so

requires.

Hence, it is beyond the power of the DENR Secretary to

withdraw lands from forest reserves and to declare the same

as an area open for mining operations.

Classification of minerals

No. Group Mineral

1 First Group Metals or metalliferous ores

2 Second Group Precious stones

3 Third Group Fuels

4 Fourth Group Saline and mineral waters

5 Fifth Group

Building stone in place, clays,

fertilizers and other non-metals

Definition of terms:

Exploration – searching or prospecting for mineral resources by

surveys, remote testing, etc. for the purpose of the existence,

extent, quantity, quality and feasibility of mining them for profit.

Development – work undertaken to explore and prepare on ore

body or a mineral deposit for mining, including the construction of

Utilization – extraction or disposition of minerals

Foreign owned corporation – Any juridical entity with less than

50% Filipino-owned capital

Qualified Person – any citizen of the Philippines with capacity to

contract, or a juridical entity with technical and financial capability

to undertake mineral resources development with at least 60%

Filipino ownership

1. Individual

a. Must be a Filipino Citizen

b. Of legal age

c. With capacity to contract

2. Juridical entity (corporation, partnership, cooperation or

cooperative)

a. Must be organized or authorized for the

purpose of engaging in mining

b. Duly registered in accordance with law

c. 60% Filipino ownership

Abandonment is the actual relinquishment of right; giving-up

absolutely with intent never again to resume or claim one’s right

or interest.

2 elements of abandonment:

1. INTENT to abandon a right or claim

2. EXTERNAL ACT by which intention is expressed and carried

out to that effect.

Mineral resources are BEYOND the commerce of man. Thus,

Section 19: Areas Closed to Mining Operations.

1. In military and other government reservations

2. Near or under public or private buildings, cemeteries,

archeological and historical sites, etc.

3. In areas covered by valid and existing mining rights

4. In areas prohibited by law

5. In areas covered by small-scale miners

6. Old growth or virgin forests, proclaimed watersheds,

forest reserves, etc. and in areas prohibited under NIPAS

In general, these areas are closed to mining operations except

upon prior written clearance by government agency having

jurisdiction over such reservation.

A mining license is a mere privilege and does not vest

absolute rights in the holder. Thus, it may be revoked by the

state if public interest so requires.

Although BMG is vested with quasi-judicial power, it cannot

take cognizance of determining the validity of contract, since

it remains a judicial function and involves a judicial question.

Findings of fact made by quasi-administrative body must be

respected as long as they are supported by substantial

evidence. The administrative decision in matters within the

exclusive jurisdiction can only be set aside on proof of gross

abuse of discretion, fraud or error of law.

Examples of permits issued under Philippine Mining Act

for all minerals in a specified area.

Initial term of exploration

permit

2 years

Renewable Permit

Non-metallic 4 years

Metallic 6 years

Extension* Not to exceed 2years

*In case exploration permit expires prior to the approval

of the declaration of mining feasibility, the permit shall

be deemed automatically extended until such time FTAA

application is approved.

Exploration permit may be transferred or assigned to a

qualified person subject to prior approval of the

Secretary.

Assignment or transfer of right and obligation of any

mineral agreement except FTAA is deemed

automatically approved if not acted upon by the

Secretary within 30working days from OR date, unless

patently illegal.

2. Ore Transport Permit (OTP) – permit specifying the origin

and quantity of non-processed mineral ores from mine site to

warehouse.

The absence of permit shall be considered as prima facie

evidence of illegal mining.

metric tons to be used exclusively for assay and pilot test

purposes

3. Mineral/Ore Export Permit (MOEP) - permit specifying the

origin and quantity of non-processed mineral ores from

warehouse to ship.

La Bugal B’laan Tribal Association v. Ramos

May a foreign corporation hold exploration permit?

Yes. A foreign corporation may hold exploration permit.

This is NOT unconstitutional because in fact, there is no

express prohibition in the constitution prohibiting

foreign/local contractors to hold exploration permits.

The right to conduct exploration is not tantamount to an

authorization to extract or carry off mineral resources that

may be discovered

May the State secure aid of foreign corporation in EDU?

Yes. The State may secure the aid of a foreign company.

The spirit of the law provides that although all minerals

are owned by the State, given the inadequacy of Filipino

capital, it may secure the help of foreign corporation,

PROVIDED that the State maintain its right of FULL

CONTROL.

Are the agreements stated in the Constitution limited to only

MPSA, JVA and CPA or FTAA?

Upon close reading of the Constitution, there is no express

prohibition that restricts other agreements besides MPSA,

undertake such activities, or it may enter into CPA, JV or

MPSA” and “either financial or technical assistance” DOES

NOT restrict nor intend to exclude other modes of

assistance.

If the intent of the constitution is to confine the

agreements, it would have restrict it otherwise.

Discuss degree of control

The Constitution provides that the state must have FULL

control and supervision of the agreements, but full control

and ownership does not mean control and supervision of

EVERYTHING. Degree of control must only be sufficient to

enable the state to regulate the extractive enterprise.

Quarry Resources

1. Quarry permit

2. Sand and gravel permit

3. Gratuitous permit

4. Guano permit

5. Gemstone gathering permit

Section 76: Entry into Private Lands and Concession Areas.

Subject to prior notification, holders of mining rights shall not

be prevented from entry into private lands and concessions

by surface owners xxx upon payment of just compensation

xxx and any damaged done shall be properly & justly

compensated.

Easement of Right of Way – ownership will not vest to the

temporarily for the purposes of more convenient mining

operations, in exchange of just compensation.

Holders of mining right may invoke power of eminent

domain.

Under Regalia Doctrine, minerals found in one’s land belong

to the State and not to a private landowner. Nonetheless, a

condition sine qua non is that prospecting, exploration,

discovery and location must be done in accordance with

the law. Omission or failure to comply with the condition

precedent means that its claim for surface rights and right of

way will not mature, hence, it would be to countenance illegal

trespass into private property.

Section 9, Article III of 1987 Constitution: Private property shall

not be taken for public use without just compensation.

Issue: WoN taking under power of eminent domain for mining

is for public use.

Held: Yes. Mining is for public use, since mining is an industry

which is for public benefit. Hence, eminent domain may be

exercised.

Types of mining disputes

1. Rights to mining area (any adverse claim, protest, or

opposition to an application for a mineral agreement)

2. Mineral agreements, FTAAs or permit

3. surface owners, occupants and claim holders/

concessionaires; and
4. disputes pending before the Bureau at the date of

effectivity of Phil. Mining Act

Appeal

Panel Arbitrators

Composed of 3 members: 2 lawyers and

1 licensed mining engineer in regional office



Mines Adjudication Board (MAB)

Composed of 3 members: DENR Secretary,

Director of MGB and USec for Operations



Court of Appeals

Jurisdiction is limited to purely administrative matter,

questions of fact or matters requiring the application of

technical knowledge and experience.

Since MAB is a quasi-judicial body, rules of evidence

prevailing in the court shall not be controlling. The board

shall use all reasonable means to ascertain the facts in each

case speedily and objectively without regard to technicalities

of law or procedure, all in the interest of due process.

Validity of mining contract is a question of law; it involves

exercise of judicial function; it requires determination of what

the law is and the rights of the parties.

If ground for the annulment of a mining contract is due to

non-conformity with the terms and condition of the

jurisdiction of regular courts.

ABC filed to Panel Arbitrators for an alleged dispute regarding

operating agreement against XYZ. Will the action prosper?

Held:

No. The action will not prosper. Panel arbitrators has exclusive

and original jurisdiction over the following disputes: (1) Those

involving rights to mining area; (2) those involving mineral

agreements or permit (3) those involving surface owners,

occupants and claim holders/ concessionaires; and (4) those

pending before the Bureau at the date of effectivity of Phil.

Mining Act.

Upon its nature, an operating agreement is not a “mineral

agreement,” because a mineral agreement requires that it be a

contract between the government and a contractor; nor it is a

“permit,” because permit pertains to exploration permit, quarry

permit and other mining permit.

Hence, being not a “mineral agreement” nor a “permit”, it is not

within the jurisdiction of panel arbitrators. It is a purely civil

contract between two private parties and under the jurisdiction

of regular courts.

Grounds for Cancellation, Revocation and Termination

1. Late or non-filing of requirements

2. Violation of terms and conditions

3. Non-payment of taxes and fees

4. Expiration of permits
5. Falsehood/omission of facts

6. Withdrawal from mineral agreement or FTAA

Penal Provisions

1. False statement

2. Illegal exploration

3. Theft of minerals

Elements of theft of minerals

i. The accused extracted, removed and/or

disposed the minerals

ii. These minerals belong to the government or to

other person

iii. The accused did not possess the required

permits or documents from DENR

In crimes punished by special laws, the act

alone, irrespective of the motive,

constitutes the offense

4. Destruction of mining structure

5. Mines arson

6. Willful damage to a mine

7. Illegal obstruction to permittes or contractors

8. Violations of the terms of ECC

9. Obstruction of government officials

10. Other violations