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CHAPTER 2

REVIEW OF RELATED LITERATURE

Evolving Mining Policies in the Philippines

1987 Philippine Constitution

The preservation and protection of the environment and natural resources has been

long recognized by the State under the 1987 Philippine Constitution. It expressly

mentioned the authority of the State to regulate the exploration, development and

utilization of natural resources. Also, the State recognizes the rights of the people to have a

balanced and healthful ecology. For the purpose of this research, the articles on the basic

recognition of their rights will be discussed.

1)Article XII, Section 2

“Section 2. All lands of the public domain, waters, minerals, coal,

petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, 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.
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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 60 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 provided by law. In cases of
water rights for irrigation, water supply, fisheries, or industrial uses other than
the development of waterpower, beneficial use may be the measure and limit
of the grant.

The State shall protect the nations marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and
enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources

by Filipino citizens, as well as cooperative fish farming, with priority to
subsistence fishermen and fish workers in rivers, lakes, bays, and lagoons.

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.

The President shall notify the Congress of every contract entered into
in accordance with this provision, within thirty days from its execution.”

The State recognizes the fact that our country is rich in natural resources. It has

fertile, arable lands, diverse flora and fauna, extensive coastlines, and rich mineral

deposits. About 30 million hectares of land areas in our country is deemed as possible
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areas for metallic minerals. About 9 million hectares of land areas is identified as having

high mineral potential, according to Philippine Mines and Geo-Sciences Bureau. In order

to preserve the natural resources, this provision indicates that the exploration, development

and utilization of natural resources must be under supervision of the national government

and this State policy must be incorporated in every statute regarding mining industry.

Thus, mining companies are mandated to comply with law requirements imposed by the

authorized agency of the government such as the Department of Environmental and

Natural Resources (DENR), Environmental Management Bureau and other law enforcers.

The Regalian doctrine extends not only to land but also to “all natural wealth that

may be found in the bowels of the earth.” The constitutional policy of the State’s “full

control and supervision” over natural resources proceeds from the concept of jura regalia,

as well as the recognition of the importance of the country’s natural resources, not only for

national economic development, but also for its security and national defense.” By which,

the concept of State has been stated both in the 1935 and 1973 Constitutions.

The same section also gives the State full control and supervision over the right to

the exploration, development, and utilization of natural resources. The State may directly

undertake such activities or enter into co-production, joint venture, or production-sharing

agreements with Filipino citizens or corporations at 60 percent Filipino owned. It may also

enter into agreements with foreign corporations involving technical or financial-assistance

for large-scale projects involving minerals, petroleum, and other mineral oils.
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Other than the rigorous regulation over the requirements for mining operations, the

State must also guarantee that the local community near the mining sites shall have a

healthy environment as enunciated in the next Constitutional provision.

2)Article II, Section 16

“Section 16. State shall protect and advance the right of the people to
a balanced and healthful ecology in accord with the rhythm and harmony of
nature.”

This section concerns with promotion of environmental protection and mitigate any

health risks of the public against any potential source of environmental degradation. This is

not explicitly stated in the Bill of Rights of the Constitution but these environmental rights

are as fundamental as civil and political rights. As opined in the case of Oposa v. Factoran,

Jr. the Supreme Court opined hat the right to a balanced and healthful ecology need not

even be written in the Constitution for it is assumed, like other civil and political rights

guaranteed in the Bill of Rights, as well as the issue of transcendental importance with

intergenerational implications. Although this right is not a self-executory provision, still it

may be enforced by the judiciary as guided principle in rendering judgment on

environmental cases and used by the legislative in enacting laws.

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The Philippine Mining Act of 1995 (Republic Act 7942)

Former President Fidel V. Ramos signed into law Republic Act 7942 otherwise

known as the “Philippine Mining Act” on March 3, 1995. The law was an undertaking to

deal with the problematic issues of mining which includes a lack of respect for the rights of

indigenous peoples, failure to include local and regional governments in revenue sharing,

and inadequate environmental and social requirements of mining operations. It installed

provisions on environmental, mining and social responsibilities which also includes

government shares, incentives, and mining rights.

This pro-mining law is the fundamental approach which oversees exploration,

development, utilization and processing of all mineral resources in the country and

incorporates different measures to ensure the earth and characterizes zones in which

mining can be permitted. Different forms of a mineral agreement may be made between

the Philippine government and the approved contractor e.g. either of mineral production

sharing agreement, Co-production agreement or Joint venture agreement. All mineral

agreements are subject to approval by Secretary of Department of Environmental and

Resources (DENR) and copies thereof shall be submitted to the President. Said agreements

must satisfy first the requirements under Environmental Impact Assessment (EIA) process

as stated in Section 70 of this law. These are as follows:

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1.Each mining company shall have prior consultation with the local

government units, non-governmental and people’s organizations and other concerned

sectors of the community.

2.Each mining company shall secure permits, licenses and clearances from the

national and local government.

3.Each mining company must submit proper written documents to DENR. It

comprises of true and correct company profile, completed ecological profile of the

proposed mining area and other required documents.

4.If all the requirements have been observed with and passed the qualifications

during the EIA process, issuance of environmental compliance certificate will be

given.

Upon perusal of the cited section, EIA plays a crucial role in the planning stage

for it identifies and considers the impacts of the proposed mining action to the

environment and welfare of the local communities. Section 69 of the same law, clearly

provides that environmental protection must be integrated in the working proposal of

the mining companies.

Section 69: Environmental Protection

Every contractor shall undertake an environmental protection

and enhancement program covering the period of the mineral
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agreement or permit. Such environmental program shall be

incorporated in the work program which the contractor or permittee
shall submit as an accompanying document to the application for a
mineral agreement or permit. The work program shall include not
only plans relative to mining operations but also to rehabilitation,
regeneration, revegetation and reforestation of mineralized areas,
slope stabilization of mined-out and tailings covered areas,
aquaculture, watershed development and water conservation; and
socioeconomic development.

Furthermore, as part of the EIA process, this law also set a provision on

rehabilitation where it expressly mentioned the mine rehabilitation fund in which the

mining companies are mandated to fulfill such obligation. Said fund shall be utilized for

physical and social rehabilitation in the local community near mining sites.

Section 71: Rehabilitation

Contractors and permittees shall technically and biologically

rehabilitate the excavated, mined-out, tailings covered and disturbed
areas to the condition of environmental safety, as may be provided in
the implementing rules and regulations of this Act. A mine
rehabilitation fund shall be created, based on the contractor’s
approved work program, and shall be deposited as a trust fund in a
government depository bank and used for physical and social
rehabilitation of areas and communities affected by mining activities
and for research on the social, technical and preventive aspects of
rehabilitation. Failure to fulfill the above obligation shall mean
immediate suspension or closure of the mining activities of the
contractor/permittee concerned.
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Deposited in a government depositary bank, the fees collected are accounted to a

reserve fund for the sole purpose of paying compensation for damages caused by the

operations of the mine. Such damages includes those that caused damage to personal lives

and safety; lands, agricultural crops and forest products, marine life and aquatic resources,

cultural resources; and infrastructure and the re-vegetation and rehabilitation of silted

farms and other areas devoted to agricultural and fishing caused by mining pollution. The

implementing rules also added that the reserve fund can also be utilized for duly approved

research projects that are needed to further the objective of the fees.

Department Administrative Order No. 2004-54 (DAO 2004-54)

In 2004, DENR issued an administrative order in order to amend the DENR

Administrative Order No. 96-40, As Amended.

There are funds under the law that has been set-up to guarantee that the money

available for contingencies that may happen due to the high-risk operations in mining.

These are:

Contingent Liability and Rehabilitation Fund (CLRF). Mining companies are

mandated by the law to technically and biologically rehabilitate disturbed areas, excavated,
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mined-out and tailings covered to the state of environmental safety. The intent of the law

is to obligate contractors to generate this fund to; (a) implement physical and social

rehabilitation of areas and communities affected by the mining activities, and (b) research

on the preventive, social and technical features of rehabilitation.

The CLRF, an umbrella term for all environmental guarantee fund (EGF) devices

assigned for this objective, is based on the contractor’s approved work program and is

treated as a trust fund deposited in a government depository. It takes the following types:

1. Mine Rehabilitation Fund (MRF). This is in the type of a Monitoring

Trust Fund (MTF) that is used particularly to implement a

monitoring program approved by the MRF Committee; and

Rehabilitation Cash Fund (RCF) which is used to make sure

compliance with the approved rehabilitation activities.

The MRF Committee determines the amount of the MTF which shall not be less

that the amount of Php 150,000 while, the RCF is equivalent to 10% of the total amount

needed to implement the EPEP or Php 5 million, whichever is lower.

2. Final Mine Rehabilitation and Decommissioning Fund (FMRDF).

This fund assures that the full cost of the Final Mine Rehabilitation

and Decommissioning Plan (FMRDP) or mine closure plan is

augmented before the end of the operating life of the mine. It is

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gauged based on the cost of having such rehabilitation and

decommissioning work done by third party contractors, on an annual

basis.

3. Expenditures for the Socio-Economic Well-Being of Indigenous

Peoples/Indigenous Cultural Communities (IP/ICC). Also referred to

as royalty payments to the IP/ICC. These are provided for the

concerned IP/ICC when they have consented that their ancestral land

may be subjected for mining operations. The royalty is construed as

a trust fund for the social-economic well-being of the IP/ICC

community which is managed by them and made upon the use of the

minerals within their ancestral lands.

DENR Administrative Order No. 1996-40, as amended, which specifically provides

the guidelines on the determination of a post-mining land use.

Pursuant to Section 8 of Philippine Mining Act of 1995 (RA 7942), this

Department Order was promulgated in 1996 and it provides the revised rules and

regulations for the guidance and compliance of all concerned. The Department shall
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“adhere to the principle of sustainable development which meets the needs of the present

without compromising the ability of the future generations to meet their own needs, with

the view of improving the total quality of life, both now and in the future”. Consequently,

“a mineral resource exploration, development, utilization and conservation shall be

governed by the principle of sustainable mining, which provides that the use of mineral

wealth shall be pro-environment and pro-people in sustaining wealth creation and

improved quality of life”. This Order must take note of the following terms:

1.Mining is a temporary land use for the creation of wealth which leads to an
optimum land use in the post-mining stage as a result of progressive and engineered
mine rehabilitation work done in cycle with mining operations;

2. Mining activities must always be guided by current best practices in

environmental management committed to reducing the impacts of mining and
effectively and efficiently protecting the environment;

Furthermore, this Order provides definition on “Mine Rehabilitation which refers to

the process used to repair the impacts of mining on the environment. The long-term

objectives of rehabilitation can vary from simply converting an area to a safe and stable

condition to restoring the pre-mining conditions as closely as possible with all the area's

environmental values intact and establishing a land use capability that is functional and

proximate to the land use prior to the disturbance of the mine area.” Also, such mine

rehabilitation and decommissioning shall aim to establish “a land use capability that is

functional and proximate to the land use prior to the disturbance of the mine area, unless
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other more beneficial land uses are predetermined and agreed in partnership with local

communities and Local Government Units.”

In line with mine rehabilitation phase, this Order also introduces the Final Mine

Rehabilitation/Decommissioning Plan under Section 187, to wit:

Section 187. Final Mine Rehabilitation/Decommissioning Plan Five

(5) years before the final decommissioning of the contract/mining
area, the Contractors/Permit Holders shall submit to the MRF
Committee through the Regional Office and to the CLRF Steering
Committee through the Bureau its final mine rehabilitation and/or
decommissioning plan(s), including its financial requirements up to
post decommissioning over a ten-year period for monitoring
purposes. The plan shall be subject to pre-evaluation by the MRF
Committee and to final approval by the CLRF Steering Committee.
Detailed guidelines regarding the implementation of this Section shall
be formulated by the Secretary through the Director.

The above section indicates that a mining company is required to submit a Final

Mine Rehabilitation or Decommissioning Plan (FMRDP) five (5) years before the

implementation of the final decommissioning scheme in the mining area. It must also

include financial requirements on the post decommissioning plan for a ten-year period for

monitoring purposes. This shall be submitted to the following DENR committees: Mine

Rehabilitation Fund Committee (MRF) for pre-evaluation of the FMDRP and the

Contingent Liability and Rehabilitation Fund Steering Committee (CLRF) for its final

approval of the same

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Administrative Order 2010-21 - which provides for a Consolidated Department of

Environment and Natural Resources (DENR) Administrative Order for the
Implementing Rules and Regulations of Republic Act No. 7942, otherwise known as
the “Philippine Mining Act of 1995”

In 2010, the Department of Environment and Natural Resources issued an

administrative order which consists of consolidated Department Orders for the

Implementing Rules and Regulations (IRR) of the Philippine Mining Act of 1995 (R.A.

7942). This Order is the prevailing law which governs the enforcement of IRR regarding

the Final Mine Rehabilitation and/or Decommissioning Plan (FMDRP).

Under Section 187 of this Order, the mining company shall submit Final Mine

Rehabilitation and/or Decommissioning Plan (FMDRP) or Mine Closure Plan together

with Environmental Protection and Enhancement Program (EPEP) to the Mine

Rehabilitation Fund (MRF) Committee and to the Contingent Liability and Rehabilitation

Fund (CLRF) Steering Committee. In contrast to Section 187 of the DAO 1996-40, this

provision removed the five (5) year period for submission of FMRDP before the

implementation of the said plan. This FMDRP must include all mine closure scenarios

which can be affected by expected inflation, technological advances, unique circumstances

faced by the mining operation and etc. Further, a budget plan for over a ten-year period, if
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necessary, shall also be included regarding the FMDRP implementation but not limited to

decommissioning, rehabilitation, maintenance and monitoring and employee and other

social costs.

Based from Section 139 of the same Order, the mining company is obliged to

remove all improvements deemed no longer socially usable after having consultation with

Local Government Unit/s or communities concerned therein. This must take place within

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

or lease and consistent with the social aspect of the Final Mine Rehabilitation and/or

Decommissioning Plan. Moreover, this Order reiterates the Section 167 from DAO 1996-

40 which provides that the minesite decommissioning and rehabilitation shall establish a

land use capability that is functional and proximate to the land use prior to the disturbance

of the mine area, unless other more beneficial land uses are predetermined and agreed in

partnership with local communities and LGUs.