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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 1174
PRESIDENTIAL DECREE NO. 1174 -
AMENDING PRESIDENTIAL DECREE NUMBERED NINE HUNDRED SEVENTY TWO,
OTHERWISE KNOWN AS THE "COAL DEVELOPMENT ACT OF 1976"
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chanroblesvirtualawlibrary
WHEREAS,
the coal development program envisioned in Presidential Decree No. 972,
otherwise known as the "Coal Development Act of 1976" encourage 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; chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the authority vested in me by the Constitution of the
Philippines, do hereby decree and declare as part of the law of the
land the following:cralaw:red
Section 1. Section Seven (e) of Presidential Decree
No. 972, is hereby amended to read as follows:cralaw:red
"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 cancelled and the area thereby shall be open for coal
operating contract in accordance with Section 6 thereof."
Section 2. Section Nine, Third Paragraph,
Sub-Paragraph of the same Decree is hereby amended to read as follows:cralaw:red
"Sec. 9. Obligations of Operator in a Coal Operating
Contract. —chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
Section 3. Section Ten of the same Decree is hereby
amended to read as follows:cralaw:red
"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. chanroblesvirtualawlibrary
"Coal operating contracts entered into with Philippine citizens or
corporations except those already covered under the preceding
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.
Section 4. Section Eleven (a) of the same Decree is
hereby amended to read as follows:cralaw:red
"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: chanroblesvirtualawlibrary
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 (P1,000,000.00) 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 (P200,000.00) 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. chanroblesvirtualawlibrary
Section 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. chanroblesvirtualawlibrary
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;chanroblesvirtualawlibrary
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 (P1.00) 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 (P0.50) 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.
Section 6. Separability Clause. — Should any
provisions of this Decree be held unconstitutional, no other provision
hereof shall be effected thereby.
Section 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.
Section 8. Effectivity. — This Decree shall take
effect immediately.
Done in the City of Manila,
this 27th day of July, in the year of Our Lord, nineteen hundred and
seventy-seven.
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