Presidential Decree
No. 1174
AMENDING
PRESIDENTIAL DECREE NUMBERED NINE HUNDRED SEVENTY TWO, OTHERWISE KNOWN AS THE
“COAL DEVELOPMENT ACT OF 1976”
WHEREAS,
the coal development program envisioned in
Presidential
Decree No. 972, otherwise known as the “Coal Development Act of 1976”
encourages the participation of the private sector with adequate and sufficient
financial, technical and managerial resources to undertake a work program to
effectively explore, develop and exploit indigenous coal resources calculated
yield maximum benefit to the Filipino people and revenues to the Philippine
Government and assure just and fair returns to the participating private
enterprises;
WHEREAS,
in line with the policy of the Government to encourage and accelerate
exploration and development of indigenous resources and in the light of current
conditions in the coal industry, it is imperative that
Presidential
Decree No. 972 be amended granting additional incentives to coal operators
participating in the coal development program;
WHEREAS,
in order that coal operations should not be unnecessarily hampered and snagged by
the difficulties and delays in securing surface rights under existing laws and
regulations for the entry into, access to or occupation of private lands, it is
necessary to provide a just and equitable system of rights acquisition and use
by coal operators which would also be given incentives and protection to
private landowners and occupants;
NOW,
THEREFORE, I, FERDINAND E. MARCOS, President of the
SECTION
1. Section Seven (e) of Presidential Decree No. 972 is
hereby amended to read as follows:
“SEC.
7. Existing Permittees/Leaseholders
“(e) In order to give holders of valid
and subsisting coal revocable permits, coal leases and other existing rights
granted by the government for the exploration and exploitation of coal lands or
the operators thereof duly approved by the appropriate government agency,
sufficient time to upgrade their financial and technical capabilities to develop
a viable work program to be embodied in a coal operating contract, the deadline
for entering and concluding a duly executed coal operating contract is extended
from July 27, 1977 to January 27, 1978: Provided, That the extension shall apply only to those who have
complied with the requirements of unitization: Provided, further That
those who have unitized may be granted by the
Board during the extension period special operating permits in order not to
disrupt existing coal operations:
Provided, finally, That no further
extension shall be allowed after the extension granted in this decree, and coal
permits, leases and other rights not converted to coal operating contract for
any cause by January 27, 1978 shall be deemed automatically canceled and the
area thereby shall be open for coal operating contract in accordance with
Section 6 thereof.”
SEC.
2. Section Nine, Third Paragraph, Sub-Paragraph of the same
Decree is hereby amended to read as follows:
“SEC. 9. Obligations of Operator in a Coal Operating Contract.
xxx xxx xxx
“(a) On behalf of the Government,
reimburse the operator for all operating expenses not exceeding ninety percent
(90%) of the gross proceeds from production in any year: Provided, That if in any year, the operating expenses exceed ninety
percent (90%) of the gross proceeds from production, then the unrecovered
expenses shall be recovered from the operation of succeeding years. Operating expenses mean the total
expenditures for coal operation incurred by the operator as provided in a coal
operating contract;”
SEC.
3. Section Ten of the same Decree is hereby amended to read
as follows:
“SEC. 10. Additional Fee. –
All valid
and subsisting holders of coal revocable permits, coal leases and other
existing rights granted by the government for the exploration and exploitation
of coal lands or the duly qualified operators thereof who have organized their
area into a coal unit, subject to conditions imposed by the
Energy Development
Board, be granted in the coal operating contract, in addition to the operator’s
fee provided in Section 9, a special allowance, the amount of which shall not
exceed forty percent (40%) of the balance of the gross income after deducting
all operating expenses.
“Coal operating contracts entered into
with Philippine citizens or corporations except those already covered under the
proceeding paragraph, shall be granted a special allowance the amount of which
shall not exceed thirty per cent (30%) of the balance of the gross income after
deducting all operating expenses: Provided,
That coal operating contracts in which Philippine citizens or corporations have
a minimum participating interest of forty percent (40%) in the contract area
may, subject to reasonable conditions imposed by the
Energy Development Board,
be granted a special allowance not exceeding twenty percent (20%) of the
balance of the gross income after deducting all operating expenses.
“For the purpose of this section, a
Philippine corporation means a corporation organized under Philippine laws at
least sixty percent (60%) of the capital of which, including the voting shares,
is owned and held by citizens of the Philippines.”
SEC.
4. Section Eleven (a) of the same Decree is hereby amended to
read as follows:
“SEC. 11. Minimum Terms and Conditions.
–
In addition to those elsewhere provided in this
Decree, every coal
operating contract executed in pursuance hereof shall contain the following
minimum terms and conditions:
“(a)
Every operator shall be
obliged to spend in direct prosecution of exploration work not less than the
amounts provided for in the coal operating contract and these amounts shall not
be less than the total obtained by multiplying the number of coal blocks covered
by the contract by One Million Pesos (P 1,000,000.00) per block annually:
Provided, That if the
area or a portion thereof is suitable for open pit mining as determined jointly
by the operator and the Energy Development Board, the minimum expenditure
requirement herein provided may be reduced up to Two Hundred Thousand Pesos (P
200,000.00) per block annually. From the
time coal reserves in commercial quantity have been determined jointly by the
operator and the Energy Development Board, the operator shall undertake the
development and production of the contract area within the period agreed upon
in the contract and shall be obliged to spend in the development and production
of the contract area an amount which shall be determined by negotiation between
the operator and the Energy Development Board
taking into account factors such as measured reserves, quality of coal, mining
method and location and accessibility to market:
Provided,
further, That with the approval of the Board,
the operator may concentrate all the annual work obligations on any one or more
of several contiguous or geologically related blocks if it is shown that such
concentration of work will be most advantageous and beneficial in the
development and operation of the coal operating contract are:
Provided,
further, That if during any contract year, the operator shall spend more
than the amount of money required to be spent, the excess may be credited
against the money required to be spent by the operator during the succeeding
years; Provided, furthermore:
That should the operator fail to comply with the work obligations provided for
in the coal operating contract, it shall pay to the Government the amount it
should have spent but did not in direct prosecution of its work obligations:
Provided, finally, That except in case
of open pit mining, the operator shall drill at least thirty (30) holes per
block and a minimum footage of exploratory holes before the end of the
exploration period as may be specified in the coal operating contract. The Board may, however, taking into account
the geological and technical factors involved; allow a lesser number of drill
holes and footage giving due credit to other accepted exploration methods and
practices.”
SEC.
5. The same Decree is hereby further amended by adding the
following sections immediately following Section Sixteen thereof.
“SEC. 16-A. Entry and Use of Private Lands. –
“(a) Coal exploration, development and
exploitation is hereby declared of public use and benefit and for which the
power of eminent domain may be invoked and exercised for the entry, acquisition
and use of private lands:
Provided,
That any person or entity acquiring any option or right on such land after the
execution of a coal operating contract covering such land not be entitled to
the compensation herein provided.
“(b) The coal operator shall not be
prevented from entry into private lands for the purpose of exploring,
developing and exploiting coal contract area, upon prior written notification
sent to, and duly received by, the surface owner of the land and occupant
thereof. However, if the surface owner
of the land and occupant thereof refuses to allow the coal operator’s entry
into the land despite his receipt of the written notification, or refuses to
receive said written notification, or cannot be found, then the coal operator
shall notify the Energy Development Board of such fact, and shall be attached
thereto a copy of the written notification.
“(c) In all cases mentioned in the
preceding paragraph, the coal operator shall post a bond with the
Energy
Development Board in the amount to be fixed by said
Energy Development Board
based on type of the land and the value of the trees, plants and other existing
improvements thereon which shall be the basis of compensation of the surface owner
of the land and/or occupant thereof in the appropriated cases mentioned in the
next succeeding paragraph.
“(d) In the absence of an agreement
between the coal operator and the surface owner of the land and/or occupant,
the surface owner of the land and occupant thereof shall be entitled to the
following compensation;
“(1) Titled Lands.
–
For the conduct of exploration, development
and exploitation within lands covered by Torrens Title or other
government-recognized titles, the surface owner shall receive as compensation
from the coal operator at least One Peso (P 1.00) for every ton of coal
extracted on his hand. However, in the
event that the surface owner suffers damage to his plants, trees, crops and
other improvements on his land as a direct result of the coal operation
conducted by the coal operator, the former shall be entitled to compensation
for the value thereof that are damaged or destroyed.
“(2) Untitled Lands or land with
Incomplete Titles.
–
For the conduct of
exploration, development and exploitation of coal within untitled lands or
lands with incomplete titles, the surface owner shall receive as compensation
from the coal operator at least Fifty Centavos (P 0.50) for every ton of coal
extracted on his land. However, in the
event that the surface landowner suffers damage to his plants, trees, crops and
other improvements on his land as a direct result of operation conducted by the
coal operator, the former shall be entitled to compensation for the value
thereof that are damaged or destroyed.
“Lands with incomplete titles referred
to herein shall mean those possessory rights which can ripen into rights of
ownership registerable under the Torrens System.
“(3) Government Reserved Lands.
–
Government reserved lands for purposes other than
mining shall be open to a coal operating contract by filing an application
therefore with the Energy Development Board, subject always to compliance with
pertinent laws, rules and regulations covering such reserved lands; Provided, That the compensation due the
surface owner shall accrue equally between the supervising agency and of the
Energy Development Board, to be disbursed for conservation measures.”
“SEC. 16-B. Timber Rights.
–
Any provision of law to the contrary
notwithstanding, the operator may cut trees or timber within his coal contract
area subject to applicable law and to the rules and regulations of the
Bureau of Forest Development as may
be necessary for the exploration, development and exploitation of his coal
contract area: Provided,
That if the lands covered in the coal contract area are already covered by
existing timber concessions, the amount of timber needed and manner of cutting
and removal thereof shall be subject to the same rules and agreed upon by the
operator and the timber concessionaire: Provided,
further, That, in case no agreement can be reached between the operator and
the timber concessionaire, the matter shall be submitted to the
Energy
Development Board whose decision shall be final. The operator granted a timber right shall be
obligated to perform reforestation works within the coal contract area in
accordance with the regulations of the Bureau of Forest Development.”
“SEC. 16-C. Water Rights.
–
A coal operator shall also enjoy water rights
necessary for the exploration, development and exploitation of his coal
contract area upon application filed with the Director of the Bureau of Public
Works in accordance with the existing laws of water and the rules and
regulations promulgated thereunder: Provided,
That water rights already granted or legally existing shall not thereby be
impaired: Provided, further, That the
government reserves the right to regulate water rights and the reasonable and
equitable distribution of water supply so as to prevent the monopoly of the use
thereof.”
“SEC. 16-D. Applicability of Certain
Provisions of Presidential Decree No. 463.
–
The provisions of Chapter XIV (Penal Provisions) of
Presidential Decree
No. 463, otherwise known as the “Mineral Resources Development Decree of
1974” shall be applicable to the coal operations:
Provided,
That any reference therein to the Decree and to the
Bureau Director of Mines
shall mean Presidential Decree No. 972 and the
Energy Development Board,
respectively.”
SEC.
6. Separability Clause.
–
Should any provisions of this Decree be held unconstitutional, no other
provision hereof shall be effected thereby.
SEC.
7. Repealing Clause.
–
All laws, decrees, executive orders,
administrative orders, rules and regulations, or parts thereof in conflict or
inconsistent with any provision of this Decree are hereby repealed, revoked,
modified or amended accordingly.
SEC.
8. Effectivity.
–
This
Decree shall take effect immediately.
Done
in the City of
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