The Politics of the Mineral Sector: The Mining Act of 1995

by

Gianna Gayle H. Amul

MA Political Science

2003-46431

Political Science 252

Seminar in Contemporary Philippine Legislation

Dr. Olivia C. Caoili

University of the Philippines, Diliman

October 4, 2007
 The Politics of the Mineral Sector: The Mining Act of 1995

The Political Dynamics of the Mining Act of 1995

This paper presents the political dynamics in the enactment of the Mining Act of 1995

which was one of the laws that were passed during the Ninth Congress during the term of

President Fidel V. Ramos (1992-1998). The researcher will: 1) discuss briefly the current status

of the mining industry today and compare it with the status of the mining industry when the

Mining Act was enacted; 2) trace the history of the mining laws in the Philippines; 3) present the

political and socioeconomic context during the time the Mining Act was enacted; 4) identify the

actors that were vital in the enactment of the law including international financial institutions

(IFIs) and international non-governmental organizations (INGOs), the private sector, and the

government itself (the executive and the legislative branches); and finally 5) present lessons on

policymaking from the dynamics of the context and the actors who were involved in the

enactment of the Mining Act of 1995.

A Question of Development: Mining in the Philippines

The Mining Industry

As a country located in the Pacific Rim of Fire, the Philippines has a wide variety of

mineral resources that can sustain a mining industry. The country‟s potential for copper, gold,

nickel, chromite and other metallic minerals as well as of non-metallic and industrial minerals

like marble, limestone, clays, feldspar, rock aggregates, dolomite, guano and other quarry

resources (MGB, 2004: 2) gives the Philippines an outstanding but important option for

development.

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 According to the Performance of the Philippine Economy for the Second Quarter of 2007

prepared by the National Statistical Coordination Board, mining and quarrying as sub-sectors of

the industry sector registered a record 33.3 percent growth this year compared to only 3.33

percent last year (http://www.gov.ph/news/?i=18721). This impressive upsurge however is

attributed not to large scale mining of gold and chromium but to other non-metallic mining i.e.

coal, crude oil, natural gas and condensate; nickel mining which recorded a growth of 99.2

percent; other metallic mining with 286.7 percent; stone quarrying, clay and sandpits, and copper

mining (http://www.nscb.gov.ph/sna/2007/2ndQ2007/2007ind2.asp). In 1993 however, when the

Mining Bill was first introduced in Congress, the mining sector gross value added to the Gross

National Product was 1.53 percent while its value added to the Gross Domestic Product was 1.58

percent. Mineral exports were down to 6.03 percent since 1991 from 10 percent in 1989. In 1994

(a year before the Mining Act was enacted), the above sectors recorded a dismal performance

contracting only 7 percent to the growth rate of the Gross National Product (GNP) (Reuter, 1995)

i.e. a gross value added of 1.37 percent to the Gross National Product and 1.4 percent to the

Gross Domestic Product. Mineral exports eventually declined to 5.79 percent. In 1995, this poor

performance continued as the mining and quarrying sub-sectors contributed less than 1.5 percent

(1.33 percent) to the country‟s Gross Domestic Product (GDP). Mineral exports dropped to 5.12

percent. (Lyday, 1996: 1, Cabalda, et al., 2002: 12)(See Table 1).

It should be noted that the GDP of a country is an important indicator of the overall

performance of the economy measuring the nation‟s total output of goods and services including

the sum of the peso values of consumption, gross investments, government purchases of goods

and services as well as the net exports produced within a nation during a year while the GNP

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measures the total final output produced with inputs owned by the residents of the country for the

given year (Samuelson and Nordhaus, 2005: 424, 434).

History of Mining Laws in the Philippines

There are several laws regarding mining in the history of the Philippines, however the

researcher would like to focus on six of the most significant including the Royal Decree of 1867,

the Organic Act of 1902, the Mining Law of 1905, Commonwealth Act No. 137, Presidential

Decree No.463 and Executive Order 279.

The first mining law in the history of the Philippines was enacted during the Spanish

colonial regime. The Royal Decree of 1867 (May 14) which in Chapter 12, Article 82 granted the

Spanish governor general the sole authority on deciding on all matters regarding mining

concessions and in Chapter 1, Article 2, vested the ownership of all minerals to the State (War

Department, Division of Customs and Insular Affairs, 1900). During the American regime, the

Organic Act of 1902 or the Philippine Bill not only created a bicameral legislature but also

provided with its enactment, almost thirty sections on mining, e.g. opening all valuable mineral

deposits in public land to exploration, occupation, and purchase and the land in which they are

found to occupation and purchase, by citizens of the United States (Section 21); and the issuance

of mining patents and all matters regarding mining patents including the process of application

(Sections 37-51) (The Philippine Bill, 1902). The Mining Law of 1905 reiterated that all public

lands shall be free and open for exploitation, occupation and purchase by both Filipino citizens

and American citizens to acquire public land for mining purposes and allowed not only mining

leases but also outright ownership. The Mining Bureau was transformed into the Division of

Geology and Mines (War Department, Division of Customs and Insular Affairs, 1900).

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 During the Commonwealth, a fourth mining law was Enacted on November 7, 1936

along with the creation of the Bureau of Mines thru Commonwealth Act No. 136,

Commonwealth Act No. 137 also known as the Mining Act. It provided the terms for the:

ownership of minerals and mineral lands; exploitation and prospecting for mineral deposits;

discovery of mineral deposits and location of mining claims; survey and lease of mineral lands;

and timber and water rights, rights-of-way, mine personnel and officers charged with its

implementation (Chapters 3-7) (Commonwealth Act No. 137, 1936).

On May 17, 1974, President Ferdinand Marcos enacted Presidential Decree No. 463 also

known as the Mineral Resources Development Decree of 1974 revising and amending

Commonwealth Act No. 137. It had provisions on mineral reservations; mining recorders,

districts and regions; annual work obligations, lease of mining claims; protest, adverse claims

and appeals; on fiscal matters; auxiliary mining rights; mines personnel, inspection and safety;

quarry resources as well as penal provisions (Presidential Decree 463, 1974).(See Appendix A)

Through the provisions on the allotment of 10 percent of the annual work obligation for

environmental “protection and enhancement”; on the allocation of ½ percent of 1 percent of the

budgeted operating cost for socioeconomic development; and on posting performance bond for

every hectare of active mining area to be utilized for mine rehabilitation, PD 463 became the first

mining law in the Philippines that incorporated socio-economic and environmental provisions for

the compliance of mining companies. In 1989, two years after the „EDSA Revolution,‟ Executive

Order No. 279 was enacted in pursuant to Section 2 of Article XII of the 1987 Philippine

Constitution, providing sharing agreements (production, co-production, joint venture) and

financial or technical assistance agreements with foreign owned corporations as a breakaway

from the leasehold system of PD 463. Among the EO‟s relevant provisions are on progressive

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rehabilitation, environmental protection and industrial health, development of mining

communities and geosciences and mining technology.

Bearing in mind the number of laws on mining in the country as well as the pertinent

provisions in the above laws, this paper will look into the context of the enactment of the Mining

Act of 1995 (RA 7942).

The Mining Act of 1995: Its Origins and Dynamics

The Setting that led to the Enactment of the Mining Act

The Declining State of the Local Mining Industry Looking at the percent share of the

mining industry‟s value added to the gross national product as well as the gross domestic

product, it can be noted that it has been in decline (constantly at an estimate of 1 percent) since

the 1970s except in 1985 and 1986 when gross value added to GNP reached 2.14 percent and

gross value added to GDP reached 2.08 percent. While percent share of mineral exports reached

its highest at 24.56 percent in 1973, by 1981, it flunked to 17.92 percent and continued its

decline such that in 1991, mineral exports were only at 6.9 percent.

IMF-WB‟s Structural Adjustment Program: Phase 3 Structural adjustment programs in

the Philippines as initiated by the World Bank and the international Monetary Fund began in

1980. It has followed three phases: 1) trade liberalization from 1980 to 1983; 2) stabilization and

debt repayment from 1983 to 1992 and; 3) rapid deregulation, privatization and trade and

investment liberalization from 1992 to present. During this third phase of the structural

adjustment program that the Mining Act was enacted to liberalize the mining industry (CASA

Philippines, 2001:2).

Events that led to the Enactment of the Mining Act

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 On Investment Liberalization: Fidel V. Ramos Under Former President Fidel V. Ramos‟

term, laws on economic reforms totaled 79 and among these are the laws on trade and investment

which numbered to 20. Along trade and investment policies that were pursuant to presidential

programs, such as the institution of the Legislative Executive Development Advisory Council

(RA 7640) and the Export Development Council (RA 7844), the rationalization of equity of

multilateral financial institutions (RA 7888), the amendment to RA 7042 to further liberalize

foreign investments (RA 8179), is the Mining Act of 1995 (RA 7942) (Abueva and Roman,

1998: 698). The abovementioned policies were only part and parcel of the economic program

that was enacted during that time to liberalize investment and trade in the Philippines which can

be summed up in former President Fidel V. Ramos‟s Philippines 2000 program.

The Medium Term Philippine Development Plan: Philippines 2000 Philippines 2000 can

be considered an ambitious program of national development for a president whose term would

end in 1998. According to Aguirre (in Abueva, et al, 1998: 23), Philippines 2000 is an

“organizational strategy for national development which calls for government, business and

organized labor to work together.” With the twin goals “global excellence and competitiveness,

and people empowerment”, Philippines 2000 priority programs included “national stability and

unity, economic recovery, energy and power development, environmental protection and

sustainable development and a responsive bureaucracy (Aguirre in Abueva, et al., 1998:24).”

Among the seven growth strategies that guided development programs and projects was fostering

export industries which included mining.

The Medium Term Philippine Development Plan for 1993-1998 formulated by the

National Economic and Development Authority (NEDA) became the framework for Philippines

2000. The development strategy of the Ramos administration was encapsulated in the five D‟s of

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development: deregulation, democratization, decentralization, devolution, and sustainable

development. Deregulation among others affects (whether positively or negatively) the mining

industry since this involved “opening up the economy to maximize competition both within and

from without (Habito in Abueva et al, 1998: 49).” Sustainable development also affects the

mining industry since it requires “macroeconomic stability and well-managed fiscal and

monetary policies” as well as those encapsulated in the Philippine Agenda 21 which aimed to

established a “strong environmental impact assessment system for development projects,

addressing environmental management through the use of market-based instruments and

promoting community-based natural resources management (Habito in Abueva, et al, 1998:52).”

In the area of socioeconomic development, policies on trade and industry, with a pattern

provided in Philippines 2000, in the thrusts of the Department of Trade and Industry, focused on:

“export development; industry development and investments promotion, both foreign and

domestic; countrywide development; and improved consumer awareness and activism (Bautista

in Abueva, et al, 1998: 626)” Export winners during Ramos‟ term included metal products,

jewelry, marble products, copper products, and iron and steel products and specialties which

come from the mining industry (Bautista in Abueva, et al, 1998: 631). The mining industry also

attracted large portions of foreign investment during Ramos‟ term as may be deemed

consequence of the passage of the Mining Act of 1995 (RA 7942).

Actors involved in the Enactment of the Mining Act

Among the actors that were involved and influenced the enactment of the Mining Act of

1995 were international financial institutions including the International Monetary Fund-World

Bank (IMF-WB) and Asian Development Bank (ADB) and international non-governmental

organizations such as the United Nations Development Programme (UNDP) and the United

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Nations Department of Technical Cooperation and Development (UNDTCD); the private sector

including the Chamber of Mines of the Philippines (COMP), the Miners‟ Association of the

Philippines (MAP), the Federation of Free Farmers of the Philippines (FFF), the Chamber of

Small Scale Mining Industry of the Philippines (CSSMIP), the Mining Communities

Development Center (MCDC), the Ugnayan sa Agham Tao (USAT) and the academe

specifically from the UP National Institute for Geological Sciences (UP-NIGS) and the

Geological Society of the Philippines (GSP); and the Philippine government through the

Congress of the Philippines (the House of Representatives and the Senate), former President

Fidel V. Ramos (FVR) and the Presidential Legislative Liaison Office (PLLO) and the Mines

and Geosciences Bureau (MGB). The roles of the abovementioned will be discussed in the

following sections.

International Financial Institutions and International Non-Governmental Organizations Aside

from sponsoring and participating in seminars, conferences and industry roundtables, the World

Bank also commissioned policy studies on the mineral sector as part of its development policies

for developing countries like the Philippines, Africa and Latin America (CASA Philippines

2001:3, Rovillos et al, 2003:5). Among the strategies that were proposed in World Bank policy

studies “to attract foreign investments to support mineral development” included: 1) “a legal

framework that adequately defines the investors‟ rights and obligations;” 2) “security of tenure to

give the investor assurance of the fruits of success;” 3) “a fiscal package that shares the rent of

profitable production equitably between the government and the investor” and ; 4) “guarantees of

access to foreign exchange at market rates for repayment of debts, repatriation of capital and

profit and purchase of essential inputs (Strongman, 1992 in Rovillos, et al, 2003: 6).” A mining

code, according to World Bank policy studies and technical reports, should: 1) reduce risk and

8
uncertainty for potential investors and ensure easy access to exploration permits and mining

concessions; 2) provide additional assurances to protect the investor from unwarranted

government interference and; 3) provide additional safeguards for the government to ensure that

investors will live up to their obligations [in investment agreements](Strongman, 1992:6).”

The World Bank‟s counterpart in Asia, the Asian Development Bank was also active in

promoting a new mining legislation. In 1994, it released a Mineral Sector Study that defined

specific policies and recommendations for mineral sector development in the Philippines. In a

section entitled “recommendations for immediate action” that should be accomplished from

1994-1996 was outlined as follows: 1) “enact a new mining code;” 2) “remove the divestment

clause from FTAAs;” 3) “removal of income tax holiday;” 4)“establish new MPSA and FTAA

guidelines;” 5) “integrate the Omnibus Investment Code and Foreign Investments Act;” 6)“re-

assess distribution of natural wealth allocation;” 7) “strengthen the Mines and Geosciences

Bureau; ”8) “formalize the Environmental Guarantee Fund;” 9) “improve MPSA and FTAA

negotiations;” and 10)“promote the new mineral investment climate (Clark, 1994: xlvii-xlviii).”

Aside from international financial institutions, international non-governmental

organizations also contributed in the drafting of a Philippine mining law. The United Nations

Development Programme (UNDP), through its mineral investment project in 1988, was “directly

involved” in the drafring process through representatives of the UN Department of Technical

Cooperation for Development (UNDTCD). They eventually published in 1992 a document

published with the Mines and Geosciences Bureau entitled “The Philippines: A Prospectus for

the International Mining Industry.” In 1989, the UNDTCD organized a seminar themed

“Prospects for the Mining Industry to the Year 2000.” where the World Bank and the Mines and

Geosciences Bureau (represented by then MGB Director Guillermo Balce and Michael Cabalda)

9
also participated in. The United Nations also published in 1992, the outputs of the seminar into

“Prospects for Mining to the Year 2000(Rovillos, et al, 2003: 5, 7).” The outputs of these studies

contributed immensely to the drafting of the mining bill and are apparent when examining the

provisions of the Mining Act of 1995.

The Private Sector Crucial to the enactment of the Mining Act of 1995 was the private sector

which included the Chamber of Mines of the Philippines (COMP), the Miners‟ Association of

the Philippines (MAP), the Federation of Free Farmers of the Philippines (FFF), the Chamber of

Small Scale Mining Industry of the Philippines (CSSMIP), the Mining Communities

Development Center (MCDC), the Ugnayan Pang-Agham Tao (UGAT) and the academe

specifically from the UP National Institute for Geological Sciences (UP-NIGS) and the

Geological Society of the Philippines (GSP).

The role of the mining sector evident in the activities of the COMP and MAP in the

enactment of the Mining Act of 1995 can be traced through its participation in the committee

meetings and public hearings1 held by the Committee on Natural Resources (CNR) and

Committee on Ways and Means (CWM) of both chambers of the legislature as well as an

awareness campaign and petition to the government through the country‟s major daily

newspapers in 1993. The officials of the Chamber of Mines including then outgoing President

Rogelio Salazar and then President Gerard Brimo presented their positions favorable to the

immediate passing of the Code in both chambers. Their most crucial proposals included: 1) a

mining code with a new fiscal regime and detailing of the systems of mine development under

EO 279 and the Philippine constitution of 1987; 2) bringing down the 5% excise tax to the

proposed 2% government sharing scheme; 3) clear definition of the real estate tax on pollution

control devices and structures; 4) correct the tax structure for the mining industry and eventually

10
provide a favorable and regulatory tax environment. The MAP through Benjamin Tañedo also

contributed to the enactment of the bill in both chambers. They were also responsible for

proposals regarding the moderation of the powers of the local government over the mining

industry as well as support for the Minerals Production Sharing Agreement. On the other hand,

the Chamber of Small Scale Mining Industry of the Philippines (CSSMIP) through Nelia Cid

recommended the abolition of PD 8099, RA 7076 as well as the MPSA which were detrimental

to small scale miners. She also accused the MGB of graft and corruption as well as ineffective

implementation. She also recommended that in the mining code, foreign investors should bring

in capital commensurate to the equity they want to be able to avoid crowding out local investors

and that there is a need to set up a monitoring body that the law is properly implemented. She

also advocated that a separate law be drafted for small scale miners who are problematic with

their local governments.

On another note, the Federation of Free Farmers of the Philippines (FFF) through Jesus

Montemayor, also advocated a number of proposals including: 1) a proper assessment on

whether any land is more economically and socially preferable to be developed as a mineral land

or as a farming or forest land; 2) a dialogue among parties concerned; 3) a consideration of the

social implications of mining 4) assistance to small scale miners on marketing, capital, security

and technology. The Ugnayan sa Agham Tao (UGAT) through Evelyn Caballero were the main

proponents in including provisions for the indigenous cultural communities. They recommended

that cultural communities should be an integral part of a mining code such that the mining code

must recognize the prior customary rights of claims of traditional small scale miners and

traditional and/or indigenous cultural communities. The Mining Communities Development

Center (MCDC) through Catalino Corpuz was, however very much opposed to industrialization

11
through large-scale mining geared toward an export-oriented economy. They recommended that

the mining code should conserve the preservation, development and exploitation of the country‟s

natural resources to ensure a genuine industrialization for the Filipino people (See Appendix B).

The academe through the UP National Institute for Geological Sciences (UP-NIGS) and

the Geological Society of the Philippines through Rudy Obial and Guillermo Balce expressed

their support to the views and proposals of the multi-sectoral committee led by the Chamber of

Mines on the proposed mining law i.e. on the transfer of the MGB to the Department of Energy,

on the extracting of mineral resource rent from minerals and mineral products only as extracted

form the ground, and introduced amendments to the section on Mineral Production Sharing

Agreement specifically on the sharing of proceeds to be patterned after the production sharing

scheme in oil and gas and a government-operator/ 60-40 mode. They also considered that the

rapid depletion of mineral ore grade as well as of the environment can be attributed to small

scale mining in conflict with medium and large-scale mining. They also recommended that the

administration of the mining industry be transferred to the Department of Energy (See Appendix

B).

The Philippine Government Legislation for mineral sector development is one of the main

imperatives of the 1987 Philippine Constitution. Since Congress was convened again in 1987, a

number of legislators have pushed for the enactment of a mining code like Jerome Paras and

Renato Yap in the House of Representatives. The urgency for a new mining code got the

attention of the Senate only in the Ninth Congress through a number of bills authored by

Francisco Tatad, Heherson Alvarez and Gloria Macapagal. In the process of the enactment of the

mining code, a number of government agencies also advocated and supported Congress‟ efforts

through committee meetings and public hearings, like the Mines and Geosciences Bureau, the

12
Board of Investments and the Bureau of Internal Revenue as well as the Presidential Legislative

Liaison Office.

House Bill 33877: Exploring for a Mining Code2 House Bill 33877 entitled “An Act to Institute

a New System of Mineral Resources Exploration, Utilization and Conservation and for other

Purposes” was filed by Representative Jerome Paras as principal author with forty-seven (47) cu-

authors on 21 March 1993 during the Eight Congress. It was primarily referred to the Committee

on Rules on 8 May 1991. House Committee Report No. 1327 was then submitted by the CNR

and by 5 August 1991, Representative Jerome Paras delivered his sponsorship speech. It

underwent committee amendments on 22 August 1991 and individual amendments on 2

September and 30 September 1991. On 30 September, it was approved on second reading and by

21 October 1991, it was distributed to the members. On 24 October 1991, it was approved on

third reading with the approval of all the representatives present (105). It was transmitted to the

Senate on 25 October 1991 and was received by the Senate on 8 November 1991. The bill failed

to pass in the Senate.

House Bill 10816: The Key for the Revival of the Mining Industry3 House Bill 10816 entitled

“An Act Instituting a New System of Mineral Resources Exploration, Development, Utilization

and Conservation and for other Purposes” was the bill substituted to House Bill No. 234 of

Representative Jerome Paras and House Bill No. 7239 of Representative Renato Yap. Its

counterpart bill in the Senate was Senate Bill 1639. House Bill 10816, whose principal author

was Jerome Paras was co-authored by 85 other representatives, as filed and was submitted along

Committee Report No. 294 (of the CNR and CWM) and was certified an administration bill on

21 September 1993. It was then referred to the Committee on Rules on 29 September 1993 and

on the same date, Representative Renato Yap delivered his sponsorship speech. On 1 October

13
1993, it was approved on second reading. By 17 November 1993, it was distributed to the

members. On 1 December 1993, it was approved on third reading with the approval of all the

representatives present (152). It was then transmitted to the Senate on 13 December 1993 after

three months of consideration in the House of Representatives.

Committee Deliberations: The Urgency for a New Mining Code4

According to transcripts of committee meetings (TCMs), the House CNR held a

committee hearing on 26 May 1993 (See Appendix B), presided by the committee chair,

Representative Renato A. Yap to consider Representative Jerome Paras‟ House Bill No.234 and

Representative Renato Yap‟s House Bill No. 7239. It was during this committee meeting that the

bills were approved for consolidation. The urgency for a new mining code that offers incentives

for foreign investors as well as a new tax structure for the mining industry and is compliant to

environmental safeguards was recognized during this committee hearing. A separate committee

meeting was held by the House CWM on September 2, 1993 (See Appendix B) according to

transcripts of committee meetings (TCMs), presided by the committee chair Representative

Exequiel Javier to consider the tax provisions and tax incentives on the substituted House Bill

10816. A number of themes emerged during this committee hearing including the lowering of

the excise tax for mining operations, providing a package of incentives for foreign and local

investors and a suspension of tax collection from the mining sector. On the other hand,

Representative Renato Yap also proposed 1) to reduce the excise tax from 5% to 2% and 2) to

amend the Local Government Code of 1991 to exempt the tailings dams from real property taxes.

The following were among the most important committee amendments to specific provisions of

the HB 10816:

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1) on Section 71 Government Share in Mineral Production Sharing Agreement- the excise tax

on mineral products as provided for under Section 151 of the National Internal Revenue

Code

2) on Section 73 Allocation of Government Share- the government share shall be shared and

allocated in accordance with Sections 290 and 292 of the Local Government Code of 1991

3) on Section 74 Income Taxes- income tax holiday

4) on Section 75 Excise Tax on Mineral Products – the excise tax shall be the government share

5) on Chapter 10 Incentives to be replaced by Section 81 Incentives- regarding fiscal and non-

fiscal incentives

Floor Deliberations: Mining and the Indigenous Cultural Communities5

In the sponsorship speech of Representative Renato Yap on September 29, 1993, he

pointed out the salient features of HB 10816 including:

1) “the shift in the mode of disposition of mineral lands from the leasehold system to three

alternative modes of mineral agreements: production sharing, co-production and joint venture

agreements;”

2) “the exploration permits that will allow foreign-owned corporations to undertake exploration

activities with a term of 2 years subject to annual review and the Financial or Technical

Assistance Agreement that will allow a foreign-owned corporation to undertake large-scale

exploration, development and utilization of mineral resources to be executed by the President

of the Philippines”

3) “a set of incentives for the mining industry to be specified in the Mining Act i.e. applicable

incentives under the Omnibus Investments Code and mining activities as part of the

Investment Priorities Plan”

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4) “the strict compliance by the contractors and permittees: a) with the mines safety rules and

regulations that should be promulgated by the DENR Secretary; b) with the authority of the

DENR Regional Director to suspend mining and quarrying operations in case of imminent

danger to life and property; c) with the requirement to rehabilitate technically and

biologically the excavated, mined-out, tailings covered and disturbed areas”

5) “a panel of arbitrators in each region of the Department to be designated by the Secretary for

the settlement conflicts and an opportunity to appeal to the Mines Adjudication Board”

Representative Gregorio Andolana was the only one who engaged the sponsor in a

debate regarding the HB 10816 specifically on: 1) “the adherence of the Mining Act to the

Regalian doctrine and 2) the recognition and respect of the rights of cultural communities over

their ancestral domain: a) in respect to the ownership of cultural communities over mineral

resources found on their ancestral domain; b) the need for adequate consultation and prior

consent with and of the cultural communities for any exploration or exploitation and; c) such that

cultural communities should also have a certain portion as royalties for the development of the

area and to develop their customs and traditions from the fees or charges to mining operations in

their respective areas.”

Only Representative Elias Lopez proposed individual amendments (also in behalf of

Representative Gregorio Andolana and Bal Sator) to the mining bill during the Second Reading

on 1 October 1993. Among his important amendments were:

a. “on the recognition and protection of the right of the indigenous cultural communities to their

ancestral lands to ensure their economic social and cultural well-being”

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b. “on the definition of ancestral lands as all lands exclusively and actually possessed, occupied

or utilized by indigenous cultural communities by themselves or their ancestors in

accordance with their customs and traditions since time immemorial”

c. “on the definition of indigenous cultural community as a group or tribe of indigenous

Filipinos who have continuously as communities on communally bounded and divine plan

since time immemorial and have succeeded in preserving, maintaining and sharing common

bonds of languages, customs, traditions and other distinctive cultural traits”

d. “an introduction of a new Section 15 Opening of Ancestral Lands for Mining Operations

such that no ancestral land shall be open for mining operations without the prior consent of

the indigenous cultural community concerned”

e. “an introduction of a new Section 16 Royalty Payments for Indigenous Cultural Communities

such that in the event of an agreement with an indigenous cultural community pursuant to the

preceding section, the royalty payment upon utilization of the minerals shall be agreed upon

by the parties and such that said royalties shall form part of a trust fund for the

socioeconomic wellbeing of the indigenous cultural community”

Senate Bill 1639: The Middle Ground for Three Senate Mining Bills and HB 108166 Senate Bill

1639 (SB 1639) entitled “An Act Establishing a New System of Mineral Resources Exploration,

Development, Utilization, and Conservation, Providing for Organizational and Institutional

Arrangements, and for other Purposes” was recommended for approval in substitution of Senate

Bills 560, 1200, 1375 and House Bill 10816. It was prepared by the Senate CNR on 17 February

1994 with Senators Heherson Alvarez, Leticia Ramos- Shahani, Francisco Tatad, Ernesto

Herrera and Gloria Macapagal and the members of the Committee as authors as contained in

17
Committee Report No. 368 and was submitted on 21 February 1994. On 16 January 1995

(almost a year after the committee report was submitted), Senator Francisco Tatad delivered his

sponsorship speech. It was only on 14 February 1995 that the SB 1639 was approved in second

reading. On the same date, it was approved on the third and final reading, 14 members (Aquino,

Biazon, Gonzales, Herrera, Macapagal, Mercado, Osmeña, Rasul, Roco, Romulo, Shahani,

Tatad, Tolentino and Webb) of the Senate voted in favor of the bill while Maceda abstained. On

the same date, the Senate requested the House of Representatives for a conference to deliberate

the disagreeing provisions of Senate Bill 1639 and House Bill 10816.

Committee Deliberations: Foreign Investments, the Environment, Small Scale Mining,

Indigenous Cultural Communities and the Local Government7

According to the transcripts of committee meetings, the Senate CNR held committee

meetings and/or public hearings on three separate days and with an interval of three months in

1993 (See Appendix D). The first Senate committee meeting held on 24 May 1993 was almost

concurrent with the first House committee meeting, being held two days before the House. The

major themes that were discussed included the new mining regime in the 1987 Constitution, a

correction of the tax structure for the mining industry to provide a favorable and regulatory tax

environment, the Minerals Production Sharing Agreement (MPSA), the powers of the local

government, mining technology and the role of the Executive for the mean time to alleviate the

mining industry‟s crisis. During this committee meeting, Senate Committee Vice-Chair Heherson

Alvarez was very vocal about his: 1) disagreement with the medium term development program;

2) agreement with the need for investments in mining; 3) concerns on the environment citing

cases in the Cordilleras, Pangasinan and Marinduque; 4) imperative to address the long-term

problems due to the destruction of the environment through a shared system of responsibility of

18
the mining sector with the government and; 4) concerns in reviewing the package of investment

incentives to take into account environmental concerns i.e. proposal for employment of

environmental technicians or advisors and a call for a cooperative relationship in the private

sector.

The second public hearing/committee meeting was held on August 16 which ended after

three hours of presentations and debates. The extensive and detailed presentations from the

resource persons could be summarized in the following themes: 1) the transfer of the MGB to the

Department of Energy; 2) the FTAA and the MPSA; 3) the immediate enactment of the mining

code; 4) the need to recognize the prior customary rights of claims of traditional small scale

miners and traditional and/or indigenous cultural communities; 5) the strict compliance to the

Environmental Impact Assessment and other environmental concerns; 6) small scale mining; and

7) the sharing of proceeds from production sharing agreements.

A third committee meeting was held by the Senate Committee on Natural Resources on

November 17 to which representatives from various government agencies that will be affected

by the proposed law were invited. The only legislator present was Senate Committee Chair

Francisco Tatad. It is evident that the committee is one of those that are sacrificed because of

multiple memberships of senators in different committees. The committee hearing focused on the

roles of the local government units and local communities as well as on the issue tax and

incentives. The major themes discussed included: 1) the proposed mining code‟s impact on the

local government revenues and the protection of environment in the local government unit

concerned including the development of the local government unit concerned; 2) the incentives

in the Omnibus Investment Code and excise tax exemptions for the mining industry at the local

19
level; 3) environmental concerns like anti-pollution devices and EIA; and 4) the status and

functions of the MGB under the DENR.

Eventually, the Senate CWM and CNR held a joint committee meeting on 11 January

1994. The main issues that were discussed during the joint committee hearing revolved mainly

on the tax incentives of the bills in question. The one hour committee meeting could be

described as a debate between then COMP President Gerard Brimo and Senate Committee Chair

(CWM) Ernesto Herrera over the issue of taxation on the mining industry.

Floor Deliberations: The Mad Dash for a Legislation on Mining8

In the sponsorship speech of Francisco Tatad on 16 January 1995, he pointed out the

“revival of the distressed mining industry” and making the mining industry as the “major

contributor to the country‟s economic development” as the rationale for SB 1639. Tatad stated

that there is need for a “unified mining law” for the “long-term development of the mining

industry.” The salient features of the bill that Tatad discussed were similar to those presented by

Representative Yap except for those on the provisions: 1) establishing a Mine Rehabilitation

Fund; 2) on the exemption from taxes on pollution control devices and structures constructed or

installed by mining contractors and; 3) on the transformation of the MGB into a line bureau of

the Department of Energy.

Members of the Senate like Ernesto Maceda, Leticia Ramos-Shahani, Orlando Mercado,

Rodolfo Biazon, Freddie Webb, John Osmena and Santanina Rasul showed the enthusiasm over

the issues in the mining bill during the period of debate on SB 1639. During the second reading,

committee amendments were introduced on the floor incorporating the individual amendments of

Osmena (on retaining the MGB in the DENR), of Webb (on force majeure), of Maceda and

Macapagal (on small scale mining), of Mercado (on the consideration of the track record of the

20
applicants, the prior consultation with local government units, nongovernmental and peoples

organizations and other concerned sectors of the economy and the creation of the mine

rehabilitation fund), of Alvarez (on gravel and construction aggregates), and of Shahani (on the

violation of the terms and conditions of the environmental compliance certificate which shall be

penalized with imprisonment). On February 14, final individual amendments were introduced by

Mercado on: 1) banning mining applications in proclaimed watershed forest reserves as well as

maximum protection areas under the National Integrated Protected Areas System Law; 2) the

need for a completed ecological profile of the proposed mining areas as part of the

environmental impact assessment; and 3) introduction of two new terms: ecological profile and

carrying capacity.

The Bicameral Conference Committee Meeting: A Bargain and a Compromise9

The Committee on Natural Resources held its bicameral conference meeting on 15

February 1995 at the Senator‟s Lounge at the Manila Hotel. It was presided over by

Representative Renato Yap and Senator Francisco Tatad, the chairmen of the Committee on

Natural Resources in the House and the Senate, respectively. On the Senate panel were Senators

Ernesto Herrera, Heherson Alvarez, Gloria Macapagal, Orlando Mercado, Freddie Webb, and

Wigberto Tañada. On the House Panel were Representatives Exequiel Javier, Jerome Paras,

David Ponce-de Leon and Ronaldo Zamora. The conference committee reached an agreement on

almost all the provisions except for the provisions on incentives which remained to be resolved

with the Department of Finance. The meeting convened for only three minutes because of the

absence of Senate members in the committee. On 16 February 1995, the conference committee

meeting was again convened at the Senator‟s Lounge at the Manila Hotel. It was presided over

by Representative Renato Yap and Senator Francisco Tatad. The major changes that were

21
incorporated by the House panel were on the provisions on incentives. On behalf of the Senate

panel, Senator Tatad accepted the House proposal on the incentives as supported by Senator

Herrera. The proposal pushed for the inclusion of the incentives under Executive Order 226

which will be institutionalized by enumerating the provision on accelerated depreciation and the

carry forward of losses provision. On 20 February 1995, the conference committee report was

approved by the Senate and on the next day, 21 February 1995, it was approved by the House of

Representatives.

The Mines and Geosciences Bureau10

Through MGB Director Joel Muyco, the MGB was represented in the committee hearings

of the CNR and CWM of both chambers. He recommended that the MGB should be granted line

functions and should be transferred to the Department of Energy (DOE). There were also MGB‟s

proposals regarding the FTAA which: 1) offers foreign equity up to 100% in certain conditions

to be negotiated by the Department and approved by the President of the Philippines; 2) is for

large scale mining; 3) the financing from the investments should not be raised from domestic

sources and; 4) taxes including corporate taxes are considered as part of the 60% share of the

government. The MGB also recommended that the bill should adopt provisions on exemptions

from excise tax, on BOI incentives on loss-carry-forward and accelerated depreciation, on an

entitlement of a 15% investment allowance based on real assets and on investment guarantees.

Furthermore, the also wanted to include provisions for the exemption from real estate tax, local

tax and export tax of any mining operation. They also pushed for an immediate enactment of the

mining act that year (1993).

Aside from the MGB, other agencies of government also submitted their positions and

proposals to the mining code including the Department of Environment and Natural Resources,

22
the Department of Trade and Industry-Board of Investments, the Department of Finance, the

Bureau of Internal Revenue and the Department of Interior and Local Government especially on

taxation, incentives and the role of the local government (See Appendix E).

Fidel V. Ramos and the Presidential Legislative Liaison Office

The delay of the passage of a new mining law that was first introduced in the Eighth

Congress and its one and a half year delay during the Ninth Congress (from filing on 1993

September 21 to signing into law on 1995 March 3) can be attributed to the Presidential

Legislative Liaison Office which supposedly undermined the House Committee on Natural

Resources‟ ability to tackle three administration bills at once (the Forestry Code, the Land Use

Code and the Mining Code) and which supposedly prioritized the Forestry Code and Land Use

Code.

The President can also be put to blame because he only certified the mining bill for

immediate enactment on 24 January 199511 during the Senate‟s second reading (16 January 1995

to 14 February 1995) with emphasis on the need to “meet the public emergency consisting of the

need to bring about imperative reforms and structural changes in the Philippine mining industry.”

According to the letter addressed to Senate President Edgardo Angara, the Philippine mining

industry is a “vital segment in the country‟s thrust to attain newly industrialized status at the turn

of the century, in order to make it more globally competitive especially in the context of a post-

GATT/WTO era.”

President Fidel V. Ramos signed the consolidated bill from the bicameral conference

committee report into Republic Act 7942 entitled “An Act Instituting a New System of Mineral

Resources Exploration, Development, Utilization, And Conservation or the Philippine Mining

Act of 1995” on 3 March 199512. It was considered as 1) one of the “last batch of measures

23
passed by the Ninth Congress;” 2) an update to the last mining law of 1936; 3) an affirmation of

the concept of small scale mining; 4) a law that “calls for social responsibility by mining

companies, for environmental protection and for sustainable development of resources” and

lastly; 5) a “go-signal for entry of foreign capital into the [mining] industry as it provides for

more equitable and competitive arrangements (Reuter, 4 March 1995). ”

Conclusions: The Mining Act of 1995 as a Means to an End

The process of the successful but slow enactment of the Mining Act which spanned

almost four years (from 1991 to 1995) in the context of an ailing mining industry, a long history

of mining, tremendous pressure from international actors who require a rapid liberalization

regime and an imposing national development program can be attributed to a number of assertive

international actors, a committed mining sector, a supposedly powerful but small government

mining agency, a meticulous legislative body and a hands-on chief executive. The context not

only defined the policy environment for the legislation but also the actors who will benefit from

the law (with a package of incentives and tax exemptions in the law), in this case, foreign

investors who are interested in conducting mining operations in the Philippines. For example, the

structural adjustment program that entailed investment liberalization of the mining industry

defined the role of international financial institutions in putting pressure to the government to

enact a new mining code that will address the crisis of the mining industry and that is geared

toward an export-oriented economy.

Although significant provisions on environmental protection were incorporated into the

law, only a minute fraction of the law served to address its socio-cultural consequences

specifically on the rights of indigenous cultural communities on their ancestral lands. This can be

attributed to the then absence of enabling law to recognize and respect the rights of indigenous

24
cultural communities or indigenous peoples which was only passed two years after the Mining

Act of 1995.

The Mining Act of 1995, in effect, is a means to an end for the mining industry but

essentially a hardly cooperative effort between the executive and the legislative. The findings of

the research point to a number of lessons in the enactment of the Mining Act. First, it can be

concluded that in the context of globalization, it is inevitable that international financial

institutions like the World Bank and international non-governmental organizations like the

United Nations Development Programme will be involved at the outset of policy formulation for

economic liberalization, in this case, investment liberalization through the Mining Act of 1995.

Second, it can be surmised that the active role of Fidel V. Ramos as the proponent for a national

development program, the Philippines 2000, that includes promoting mining in an export-

oriented economy cannot be taken for granted by the legislature. Third, the legislature is in fact

adept and if not thoroughly compliant to the concerns of the mining sector that effectively

advocated significant provisions in the Mining Act of 1995 amid vital concerns for the

environment, small-scale mining and indigenous peoples. Finally, there exists a symbiotic

relationship between the legislature and the executive that effectively pushes the speedy

enactment of a bill once it is certified by the President even if the bill has been pending since the

last Congress in a dynamic process of bargaining and compromise.

25
Notes

1. See House of Representatives. Records of House Bill 10816, Legislative Archives

2. See House of Representatives. Records of House Bill 33877, Legislative Archives

3. See House of Representatives. Records of House Bill 10816, Legislative Archives

4. See Committee on Natural Resources. 1993. Transcript of Committee Meeting (TCM) on May
26. House of Representatives. and Committee on Ways and Means. 1993. Transcript of
Committee Meeting (TCM) on September 2. House of Representatives.

5. See House of Representatives. Records of House Bill 10816, Legislative Archives

6. See Legislative Bills and Index Service. “History of Bills and Resolutions ”. Senate of the
Republic of the Philippines Ninth Congress, 1992- 1995.

7. See Committee on Natural Resources. 1993. Transcript of Committee Meeting (TCM) on May
24. Senate of the Philippines, Committee on Natural Resources. 1993. Transcript of
Committee Meeting (TCM) on August 16. Senate of the Philippines., Committee on Natural
Resources. 1993. Transcript of Committee Meeting (TCM) on November 17. Senate of the
Philippines. and Committee on Natural Resources and Committee on Ways and Means. 1994.
Transcript of Joint Committee Meeting (TCM) on January 11. Senate of the Philippines.

8. See Senate of the Republic of the Philippines. Record of the Senate. Ninth Congress. Third
Regular Session. December 5, 1994 to January 18, 1995. Volume III. Nos. 46-52, Senate of
the Republic of the Philippines. Record of the Senate. Ninth Congress. Third Regular Session.
January 19, 1995 to February 9, 1995. Volume IV. Nos. 52-61 and Senate of the Republic of
the Philippines. Record of the Senate. Ninth Congress. Third Regular Session. February 13-28,
1995 and May 22-June 5, 1995. Volume V. Nos. 62-65

9. See Legislative Archives. Bicameral Conference Committee Meeting on HB 10816 and SB

1639. February 15, 1995. Senators Lounge, Manila Hotel and Legislative Archives. Bicameral
Conference Committee Meeting on HB 10816 and SB 1639. February 16, 1995. Senators
Lounge, Manila Hotel

10. See Committee on Ways and Means. 1993. Transcript of Committee Meeting (TCM) on
September 2. House of Representatives. and Committee on Natural Resources. 1993.
Transcript of Committee Meeting (TCM) on November 17. Senate of the Philippines.

11. See Senate of the Republic of the Philippines. Record of the Senate. Ninth Congress. Third
Regular Session. January 19, 1995 to February 9, 1995. Volume IV. Nos. 52-61

12. See Reuters, 1995. “Party List System Signed into Law.” Philippine Daily Inquirer. March 4.

26
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Abueva, J. and E. Roman. 1998. The Ramos Presidency and Administration: Record and Legacy
(1992-1998). Quezon City: University of the Philippines Press
Aguirre, A.P. 1998. “Executive Direction and Coordination” in J. Abueva and E. Roman, The
Ramos Presidency and Administration: Record and Legacy (1992-1998). Quezon City:
University of the Philippines Press
Cabalda, M.V., et al,. 2002. Sustainable Development in The Philippine Minerals Industry: A
Baseline Study. Mining, Minerals and Sustainable Development Report No. 184. February
2002. 25 June. www.iied.org/mmsd/mmsd_pdfs/184_cabalda.pdf
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on Indigenous Peoples, Upland Communities and the Rural Poor, and on the Environment: A
Summary Report. 1 June. www.saprin.org/philippines/research/phi_mining.pdf
Clark, A. 1994. The Philippine Mineral Sector to 2010: Policy and Recommendations. Mineral
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House of Representatives. Rear Entrance, Batasang Pambansa Complex
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2. House of Representatives. Magnolia Room, AIT
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Senate of the Philippines. Senator‟s Lounge, Manila Hotel
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17. Senate of the Philippines. Senator‟s Lounge, Manila Hotel
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Committee Meeting (TCM) on January 11. Senate of the Philippines. Executive House,
Senate Library, Manila
Commonwealth Act No. 137. November 7, 1936. An Act To Provide For The Conservation,
Disposition, And Development Of Mineral Lands And Minerals. 9 August.
http://www.chanrobles.com/commonwealthacts/commonwealthactno137.html
Gonzales, S. 1995. “Senate OKs Mining Measure.” Philippine Daily Inquirer. February 16
Gonzales, S. 1995. “Congress Takes a Break after Passing Reform Bills.” Philippine Daily
Inquirer. February 22
Habito, C. 1998. “Social and Economic Development Planning” in J. Abueva and E. Roman, The
Ramos Presidency and Administration: Record and Legacy (1992-1998). Quezon City:
University of the Philippines Press
House of Representatives. Records of House Bill 10816, Legislative Archives
Legislative Archives. Bicameral Conference Committee Meeting on HB 10816 and SB 1639.
February 15, 1995. Senators Lounge, Manila Hotel
Legislative Archives. Bicameral Conference Committee Meeting on HB 10816 and SB 1639.
February 16, 1995. Senators Lounge, Manila Hotel
Legislative Bills and Index Service. “History of Bills and Resolutions ”. Senate of the Republic
of the Philippines Ninth Congress, 1992- 1995.
Lyday, T. 1996. The Mineral Industry of the Philippines. United States Geological Survey
Minerals: Asia and the Pacific. 30 August.

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 http://minerals.usgs.gov/minerals/pubs/country/1995/9326095.pdf
Melanes, M. 1995. “Mining Code Bad for Small Miners.” Philippine Daily Inquirer. February 27
Mines and Geosciences Bureau. 2004.Briefing Kit on the Philippines Mineral Sector. Quezon
City: Mines and Geosciences Bureau. December. 9 August. http://www.mgb.gov.ph/
miningportal/industryprofile/industryprofile2004.pdf
NBS Editorial Staff. 1978. Presidential Decrees on Mining with Implementing Regulations,
Special Laws and other Materials. Manila: National Book Store
Reuter. 1995. “Mining Sector Law Suffers Another Delay.” Philippine Daily Inquirer.
February 4.
_____.1995. “1994 GNP Growth placed at 5.1%.” Philippine Daily Inquirer. February 7
_____.1995. “New Law Seen Restoring Glitter to RP Mines.” Philippine Daily Inquirer.
February 22
_____.1995. “Party List System Signed into Law.” Philippine Daily Inquirer. March 4.
Presidential Decree No. 463. May 17, 1974. “Providing for a Modernized System of
Administration and Disposition of Mineral Lands and to Promote and Encourage the
Development and Exploitation thereof”August 9. http://www.chanrobles.com/
presidentialdecrees/presidentialdecreeno463.html
Rovillos, R.D., et al. 2003. When the ‘Isles of Gold’ turn into Isles of Dissent: A Case Study on
the Philippine Mining Act of 1995. Forest Peoples Programme Tebtebba Foundation. 25
June. http://www.forestpeoples.org/documents/prv_sector/eir/
eir_internat_wshop_philippine_case_eng.pdf
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Session. January 19, 1995 to February 9, 1995. Volume IV. Nos. 52-61
Senate of the Republic of the Philippines. Record of the Senate. Ninth Congress. Third Regular
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28
 Table 1
Share of Mining in the Gross National Product (GNP), Gross Domestic Product (GDP) and Total
Exports (1970-2000)
(Source: Cabalda, et al, 2002)

29
 Appendix A
Other Presidential Decrees on Mining
(Source: NBS Editorial Staff, 1978)

Aside from Presidential Decree 463, there were other presidential decrees regarding
mining:

1. Presidential Decree 309 on settlement of conflicting mining claims;

2. Presidential Decree 398 on incentive allowance for Bureau of Mines personnel;
3. Presidential Decree 512 on prospecting, development and exploitation;
4. Presidential Decree 581 on gold theft;
5. Presidential Decree 1100 on continuity of mining operations over conflicting areas and
transfer of profits, shares and proceeds to the Bureau of Mines;
6. Presidential Decree 1070 on assistance to primary gold producers;
7. Presidential Decree 1150 on regulating gold panning or sluicing inside mining claims or
in public or private lands;
8. Presidential Decree 1198 on mine rehabilitation;
9. Presidential Decree 1213 on opening certain excluded areas to mining;
10. Presidential Decree 1214 on mining lease contracts;
11. Presidential Decree 1251 on mine wastes and tailings fees and;
12. Presidential Decree 1281 on revising CA 137 and creating the Bureau of Mines.

30
 Appendix B
Notes on Proposals of the Federation of Free Farmers, Ugnayan sa Agham Tao and the Mining
Communities Development Center
(Sources: Committee on Natural Resources. 1993. Transcript of Committee Meeting (TCM) on
May 24. Senate of the Philippines. Senator‟s Lounge, Manila Hotel and Committee on Natural
Resources. 1993. Transcript of Committee Meeting (TCM) on August 16. Senate of the
Philippines. Senator‟s Lounge, Manila Hotel)

The Federation of Free Farmers of the Philippines also proposed very specific
amendments to certain sections of the bills considered significantly on: 1) the declaration of
policy ; 2) mineral reservations; 3) processing of applications; 3) areas open to mining
operations; 4) rights and obligations of the permittee; 5)terms and conditions; 6) the expansion
of the section on small scale mining to a chapter; 7) environmental impact assessment; 8)
reclamation; 9) easement rights; 10) eminent domain; 11) entry into private lands and
concessions areas; 12) mines adjudication committee; 13) regional panel of arbitrators and 14)
mine waste and tailing fees.

The Ugnayan Pang-Agham Tao (UGAT) proposed amendments to certain sections

regarding Areas Open to Mining Operations and Areas Closed to Mining Applications. They also
demanded that there should be a strict compliance to the Environmental Impact Assessment
(EIA) before the granting of an Environmental Compliance Certificate (ECC). USAT also
introduced amendments on certain sections regarding Expenditure for Community Development
and Science and Mining Technology, Credited Activities, Environmental Impact Assessment,
Easement Rights, Mine Waste and Tailings Fees and Eminent Domain. The mining code,
according to USAT, should legitimize traditional land tenure and management as well as grant
clear claim rights and titles.

The Mining Communities Development Center recommended that the mining code: 1)
should systematically develop the industrialization effort not to fast-tack it; 2) should ensure the
protection of the environment by integrating with it vital environmental laws; and 3) should
ensure respect of indigenous peoples‟ rights especially their rights to ancestral domain.

31
 Appendix C

1. Notes on the Transcript of the Committee Hearing (TCM) held on 26 May 1993 by the House
Committee on Natural Resources at the Rear Entrance of the Batasang Pambansa Complex
The bills in consideration were Jerome Paras‟ House Bill No.234 entitled “An Act to
Institute a New System of Mineral Resources Exploration, Development, Utilization and
Conservation, and for other Purposes or the Mining Code of the Philippines” and Representative
Renato Yap‟s House Bill No. 7239 entitled “An Act to Institute a New System of Mineral
Resources Exploration, Development, Utilization and Conservation, and for other Purposes or
the Philippine Mining Act of 1993. The other representatives that were present were Elias Lopez,
David Ponce-de Leon, Simeon Datumanong, Socorro Acosta, Asani Tammang, Thelma Almario,
Hortensia Starke and Sergio Antonio Apostol.
Among the resource persons of the committee hearing who presented their positions
were, then President Gerard Brimo of the COMP and Philex, then Director Joel Muyco of the
MGB, then President Benjamin Tañedo of the Miners Association of the Philippines (MAP), and
Jerry Montemayor, President of the Federation of Free Farmers(FFF). Among the guests were
then Assistant Secretary Cirilo Serna of the Department of Environment and Natural Resources,
Atty. Deo Contreras, then Executive Vice President of the Chamber of Mines of the Philippines
and Division Manager of Benguet Corporation, Atty. Ted Gabor, Corporate Counsel of
Marcopper, Jose Vitug; Antonio Katigbak of Atlas; Atty. Vicente Conlu of Philex; Dr. Pablito
Ong then Vice President of Atlas; Atty. Wilfredo Tuyac of Quisimbing Law Office; Atty. Leo
Dominguez all from the Chamber of Mines, Atty. Danilo Luna and Atty. Anselmo Abungan of
the Mines and Geosciences Bureau.
Before the presentations of the resource persons and inquiries of individual members of
the Committee, the following transpired:
1. the acknowledgement of the role of the Mines and Geosciences Bureau and the Chamber
of Mines in advocating for a new mining code
2. the recognition of a House bill on mining approved in the Eighth Congress but failed to
pass in the Senate
3. the role of the Presidential Legislative Liaison Office in the prioritizing of other bills like
the Forestry Code and the Land Code as certified administration bills
4. the recognition of relevant mining laws including former President Corazon Aquino‟s
Executive Order 279 and former President Ferdinand Marcos‟ Presidential Decree 463

2. Notes on the Transcript of the Committee Hearing (TCM) held on 2 September 1993 by the
House Committee on Ways and Means at the Magnolia Room, AIT
Other representatives who were present were Renato Yap, Alberto Veloso, Dante Tinga
and Jerome Paras. Among the resource persons of the committee meeting were then COMP
President Gerard Brimo; Elmer Hernandez, representative from the Department of Trade and
Industry‟s Board of Investments (DTI-BOI); and then Bureau of Internal Revenue‟s Mining Unit
(BIR-MU) Head Jose Roque. Among the guests were then Bureau of Internal Revenue‟s Chief of
Planning and Research Division Lucita Rodriguez; Alvin Diaz and Dante Sy, of the Department
of Finance; then Chamber of Mines Executive Vice President Deogracias Contreras; Pablito Ong
of Atlas Consolidated; then Senior Vice President of Benguet Corporation Eduardo Sacris, Sr.;
Alfredo Tuyal, Rudy Obial, Norman Tiongson, Pablo Paulino, Leo Dominguez, and Jorge
Bernardo of the Chamber of Mines.

32
 Appendix D

1. Notes on the Transcript of the Committee Hearing (TCM) held on 24 May 1993 by the Senate
Committee on Natural Resources at the Senator‟s Lounge, Manila Hotel
The members of the Senate who were actually present in the committee meeting were
Senate Committee Chair Francisco Tatad and Committee Vice-Chair Heherson Alvarez.
The resource persons and legislators who were active in the presentations and debate
(aside from Senate Committee Chair Francisco Tatad) were then COMP President Gerard Brimo,
then MAP President Benjamin Tañedo, then outgoing COMP President Rogelio Salazar, then
Consultant to the COMP Atty. Leo Dominguez, COMP‟s Jose Vitug and Senate Committee
Vice-Chair Heherson Alvarez.
Guests included Norman Tiongson, Mario Ymbang, C.B. Evengelista, and Atty Deo
Contreras of Benguet Corporation; Delfin Gonzalez and Corneho Gison of the Chamber of
Mines; Atty. Ted Gabor, Corporate Counsel of Marcopper; Pablito Ong and Atty. Antonio
Katigbak of Atlas Mining; Alfredo Tuyac of Quisimbing, Torres and Evangelista Law Firm;
Atty. Vicente Cu of Philex; Dr. Rudy C. Obial of R.C. Obial and Associates; and Dr. Guillermo
Balce of UP National Institute of Geological Sciences.

2. Notes on the Transcript of the Committee Hearing (TCM) held on 16 August 1993 by the
Senate Committee on Natural Resources at the Senator‟s Lounge, Manila Hotel
Resource persons included Dr. Rudy Obial of the UP National Institute for Geological
Sciences (UP-NIGS), Dr. Evelyn Caballero of the Ugnayan sa Agham Tao (USAT), Guillermo
Balce of the Geological Society of the Philippines (GSP), then President of the Chamber of
Small Scale Mining Industry of the Philippines (CSSMIP) Nelia Cid, then MGB Director Joel
Muyco, then Executive Director of the Mining Communities Development Center (MCDC)
Engr. Catalino Corpuz and then President of the FFF Jesus Montemayor. Haydee M.M. Quintana
Malubay of the Presidential Legislative Liaison Office was also present.

3. Notes on the Transcript of the Committee Hearing (TCM) held on 17 November 1993 by the
Senate Committee on Natural Resources at Room 410, Executive House, Manila
The resource persons invited were: Undersecretary Alexander Aguirre of the Department
of Interior and Local Government; Alvin Diaz and Ben Marcelino of the Department of Finance;
Atty. Anselmo Abungan of the Department of Environment and Natural Resources; Jose Roque
of the Mining Unit of the Bureau of Internal Revenue; Elmer Hernandez and Gil Laquindanum
of the Board of Investments-Department of Trade and Industry.

33
 Appendix E
Notes on the Proposals from the Department of Trade and Industry-Board of Investments, The
Department of Finance and the Bureau of Internal Revenue and the Department of Interior and
Local Government

(Sources: Committee on Ways and Means. 1993. Transcript of Committee Meeting (TCM) on
September 2. House of Representatives. Magnolia Room, AIT and Committee on Natural
Resources. 1993. Transcript of Committee Meeting (TCM) on November 17. Senate of the
Philippines. Senator‟s Lounge, Manila Hotel)

Department of Environment and Natural Resources

Anselmo Abungan of the Department of Environment and Natural Resources 1)
recommended the reduction of excise tax from 55 for metallic and 3% for non-metallic to 2%
gross and a moratorium or deferment of the payment of excise taxes in case of depressed metal
prices He opposed the power of the local government to impose additional tax for the mining
industry and wanted to: 1) retain the MGB in the DENR; and 2) that the code incorporate that
the MGB be furnished information related to the exploration, development and utilization, the
use of local technology and preference for local technology in the provisions on Section 30
Minimum Terms and Conditions for Mineral Production Sharing Agreement and the
environmental protection or measures in Section 2 of EO 279. He also proposed that a project
description for exploration activities be submitted and for development and commercial
production, an environmental impact assessment should be submitted to the MGB for any mining
application.

Department of Trade and Industry-Board of Investments

Elmer Hernandez of the DTI-BOI at the House committee (CWM) meeting/public
hearing presented the BOI‟s position regarding certain provisions on the proposed Mining Act
like: 1) a policy environment that will enable the industry to endure the cyclical downturns in
prices and eventually reduce it dependence on fiscal incentives such that it must address the
following- i) immediate problems of the industry with its corrective measures ii) medium term
problems and the need to set directions for development iii) bottlenecks in the flow of mineral
investments; 2) their support on the provisions on - i) the deduction for expansion reinvestment
(Section 87) ii) the income tax carry forward of losses (Section 98) iii) the income tax
accelerated depression (Section 99) iv) the incentives for necessary and major infrastructures and
public facilities (Section 89) v) the deduction of organizational and pre-operating expenses
(Section 88); 3) their opposition to the provisions on i) the inclusion of the income tax holiday
incentive ii) the waiver (Section 96) and the iii) the authority to defer financial obligations
(Section 97). On another public hearing at the Senate CNR, Director Hernandez also
recommended 1) the reduction of the present excise tax on metallic and non-metallic minerals
from 5% and 3% respectively to 2%; on Section 91 Exemption from the Excise Tax; 2) on
Sections 92-99 on Incentives that the incentives being provided for under the Omnibus
Investment Code of 1987 or EO 226 are already deemed sufficient for the mining industry and;
3) suggested that a separate provision be included in the bill that will state that qualified mining
firm may register with the Board of Investments and avail of all the applicable incentives
provided under EO 226.

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 Department of Finance and the Bureau of Internal Revenue
The Department of Finance through Alvin Diaz 1) recommended that the provision of
incentives to preferred economic activities like mining should be aligned with the Omnibus
Investments Code; 2) affirmed that the decision to whether to grant an exemption from local
taxes, fees and charges, should be made by local government units concerned; 3) proposed that
there be a provision under the chapter of Safety and Environmental Protection on the installation
of anti-pollution devices and; 4)proposed a suspension or temporary suspension of the payment
from excise tax to be lifted when the mining firm has economically recovered rather than
exemption of mining firms from the payment of an excise tax.
Through Jose Roque of the BIR-MU, the BIR expressed their positions 1) against the
abolition of the excise tax on mineral products and 2) preference for the suspension of the
collection of taxes during the interim period i.e when the mining industry is in distress such that
there will be an automatic mechanism to lift the suspension and vice versa. He argued that the
excise tax should be maintained in the proposed bills over and above the agreements, proposed
agreement and government share.

Department of Interior and Local Government

Department of Interior and Local Government Undersecretary Alexander Aguirre during
the joint Senate committee hearing of the CNR and CWM: 1) recommended that the taxing
power already granted the LGUs under the Local Government Code be preserved to also
preserve their revenue base and; 2) accepted the provisions on the section on The Allocation of
Government Share such that basic government share is apportioned as follows: National
Government, 90%; provincial government covering the area of the mining operation, 5%;
municipal government covering the area of the mining operation, 5%.

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